Construction industry in Malaysia amidst effects of COVID-19? Any shortages of materials?

These days, when we are buying something online and the country of origin is China, it will take a far longer time for the delivery versus the days before COVID-19. The reason was because of the lockdown in many cities in China and thus this has affected the logistics and connectivity. In fact many may also want to avoid buying the items for now, just in case. What about the construction industry here in Malaysia then? Are we affected by these lockdowns? Do we get a lot of materials from China when we build new high-rise developments here in Malaysia? Even for Chinese developers from China?

Article in Master Builders Association Malaysia (MBAM) and Real Estate and Housing Developers’ Association Malaysia (Rehda) said that most local developers use materials that are sourced domestically, thus the impact is minimal for now. Both however says that should the lockdown period is prolonged, then there are possibilities that the construction may be affected.

MBAM president Foo Chek Lee said, “In fact, there is a surplus of cement and steel in the market. Meanwhile, products like hot and cold rolled coils, flat steel and aluminium — mostly for, but not limited to, architectural finishes — could be imported from China due to the cheaper price. Depending on the product, other source countries for building materials are South Korea, Japan, Turkey, Indonesia, Thailand and Vietnam.”

Rehda president Datuk Soam Heng Choon said, “Finishing materials such as tiles, sanitaryware and mechanical and electrical fittings and equipment could be imported from China. However, some of these materials are available locally, with some raw materials or components being imported from China. Developers constructing high-end products may opt to source their tiles and various types of finishing materials from Europe, such as Italy or Spain.” Please do refer to the full article herein

I think it’s a good news for many home buyers then. The schedule for the delivery of their homes should not be affected amidst current Covid-19 situation. As for all the developers, I think this will also make them realise that it may be best to diversify their sourcing of materials versus just coming from one cheapest source, wherever that may be. I still remember my conversation with one purchasing manager way back in the 1990s on diversification of sourcing.

“Mr XXX, you can choose to buy from that cheapest brand. There is no way that my company will be able to match it as our parts are from Japan and of much higher quality. However, if you do not buy at least 20-30% of your needs from me, it will be impossible for us to support you if the shortage happens suddenly.” The purchasing manager gave me a small purchase order and suddenly due to the Y2K fear, the manufacturing sector faced shortage from electronics part and he was very happy with his decision then. Well, allthese are just cycles. Even for investments, strive for diversification and not putting all eggs into one basket.

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