RI laborers feel the pinch as work in KL declines
RI laborers feel the pinch as work in KL declines
Liau Y-Sing, Reuters/Kuala Lumpur
Construction worker Andi Suyandi is finishing up a building job in the Malaysian capital, perhaps his last for a while.
"I don't have any work lined up after this," said the 30-year- old Indonesian, peering out from under a hard hat as he laid tiles at Kuala Lumpur's US$146 million convention center. "I don't know where my next job will come from. There is less work these days."
Malaysia's construction industry has hit tough times. Spoon- fed for more than a decade by state projects, and flooded with cheap imported labor, the industry had become accustomed to growing revenues and healthy profit margins.
But in the past two years, the government has cut spending to rein in state debt and even cheap labor is harder to find, thanks to an official crackdown this year on illegal workers, especially from Indonesia, Malaysia's larger, poorer neighbor.
The once-booming sector is expected to shrink for the second straight year in 2005 due to the decline in government projects, the temporary shortage of foreign labor and rising material costs, which have been inflated by record-high crude oil prices.
The sector's contribution to the economy has fallen by half since 1995, when the industry grew by a sharp 21.1 percent. Last year, the sector contracted 1.9 percent.
Times are now so bad that some of the country's 60,000 contractors have been forced out of business.
"We are short of work. We have to survive, so we do other things. When you are cornered, there are many things that you can do," said Roslan Awang Chik who heads a group representing 7,500 ethnic-Malay building contractors.
Boom times
Construction became a big business in Malaysia in the 1980s when the government forked out billions of dollars to build roads, bridges, ports, schools and hospitals as part of a plan to transform the economy's agrarian base into an industrial one.
The building boom extended into recent years as Malaysia spent heavily to pull its economy out of the 1997 Asian financial crisis, which killed many private-sector projects.
The state-led building spree created a whole new skyline in Kuala Lumpur, crowned by its soaring 88-story twin towers, and spawned dozens of supporting industries and thousands of jobs.
It also formed an important pillar of Malaysia's push for a fairer distribution of wealth in favor of its ethnic Malays, who make up about 55 percent of the population, but own only about a fifth of its listed equity. State construction contracts have been the making of many Malay businessmen.
But the binge has taken its toll: Malaysia has run a budget deficit since 1998 and international rating agencies warn that further fiscal loosening may hurt its sovereign credit standing.
Prime Minister Abdullah Ahmad Badawi has put the government on a thrift drive since he took over in October 2003, slashing public spending on infrastructure and scrapping a $3.8 billion rail project.
Such fiscal austerity has halted Malaysia's building boom, leaving too few jobs for too many contractors.
"The government still receives requests, demands and even threats to dish out more work through pump-priming as was done previously," Prime Minister Abdullah said in July. "But in any sentence, there is a full stop. In every book, there's an ending. The government has to take a stand based on reality."
Still, Malaysia plans to revive 8 billion ringgit ($2.1 billion) of previously abandoned projects and speed up execution of 35 projects valued at 2.4 billion ringgit to help builders.
Urge to merge
As jobs run dry, the government is urging construction companies to merge, saying it is difficult to look after each contractor's needs, given the large number of firms.
Medium-sized infrastructure firm IJM Corp Bhd struck a deal in May to buy a 25 percent stake in property firm Kumpulan Europlus Bhd for $8.7 million, in what is seen as a trend for builders going forward.
"The whole pot is getting smaller. The restructuring of the industry is imminent," said Ramli Ahmad who heads listed construction company PECD Bhd
Ramli expects the restructuring to ultimately result in 5-10 construction firms that can compete globally.
Builders are also searching for more jobs abroad, looking beyond places such as India which has in the past provided Malaysian firms with toll road projects.
Gamuda, Malaysia's largest construction firm, is building a $550 million hydro-electric power plant in Laos. It will also partner WCT Engineering Bhd to set up $504 million of airfield systems and facilities in Qatar.
For construction workers like Suyandi, the future is even more challenging. Suyandi hails from the tsunami-devastated province of Aceh, where many families rely more than ever on income sent home from the construction sites of Malaysia.
REUTERS
GetRTR 3.00 -- SEP 23, 2005 08:41:36