Construction workers at a Kuala Lumpur site, as contractors report material cost hikes of up to 30%, prompting calls for support.
SHAH ALAM, April 11 — The government is preparing to submit a proposal to activate the Variation of Price (VOP) clause for construction materials to the Finance Ministry and the Economy Ministry, following rising costs driven by the global energy situation.
Deputy Works Minister Ahmad Maslan said the proposal comes after recent discussions with contractors’ associations, which reported that construction material prices have increased by approximately 20% to 30%. He noted that further evaluation is required before any decision is made.
He added that a detailed study, based on data from the Department of Statistics Malaysia (DOSM), will be conducted to accurately assess the extent of the price increases. Final approval for activating the VOP clause will be decided by the Finance Ministry, in consultation with the Economy Ministry.
Speaking after the UiTM Sports Awards 2025 at Universiti Teknologi MARA (UiTM), Ahmad emphasised that the government will not allow construction projects to be halted despite rising costs.
Contractors have also requested extensions of time (EOT) for certain projects due to the increased expenses. While slight delays in project timelines may be considered, he stressed that stopping work entirely would breach contract conditions and will not be permitted.
Earlier reports highlighted that the Malay Contractors Association of Malaysia (PKMM) had urged the government to take immediate action, including reactivating the VOP mechanism. The association noted that similar measures implemented during past crises, such as the COVID-19 pandemic, had helped contractors manage cost pressures effectively.
PropertyMart Market Perspective
From PropertyMart’s perspective, rising construction costs may create short-term challenges, but they also show that development activity is still ongoing and demand remains in the market. The possible implementation of the VOP mechanism could help keep projects on track and support more stable progress across developments.
As the market adjusts, the difference between projects is likely to become more noticeable. Developments with strong fundamentals, good locations, and solid offerings are more likely to stand out. For buyers and investors, this means focusing on well-positioned projects that are better able to maintain value over the long term.
Source: Malaymail
Image: By Firdraus Latif
