‘Building materials not the cause of high housing prices’

KUALA LUMPUR (Jan 10): The prices of four most-utilised building materials, namely steel, cement, ready-mixed concrete and sand, are not the contributing factors in rising housing costs, says the Malaysia Competition Commission (MyCC).

The MyCC had conducted a market review on building materials in the construction industry given the concerns raised by relevant government agencies in relation to the rising cost of living and the availability of less affordable housing in the country.

The findings from the market review show that the four building materials are not the main factors that influence the rising cost of housing, said MyCC in a statement yesterday.

The market review focused on the four most-utilised building materials namely steel, cement, ready-mixed concrete and sand which accounted for close to 60% of the estimated value of the top eight building materials used in construction projects in 2016. Among the top eight building materials are bricks, plywood, paint and glass.

“No obvious or major anti-competitive concerns were found during this market review. However, there are several areas that may possibly restrict competition in the future or competitiveness of local industry players,” it said in the 221-page report.

“Chief among these are the high financial barrier to entry for upstream steel and cement manufacturing, import of steel from China, as well as the common vertical integration and territorial-based operational structure among industry players,” it added.

The report noted that other areas include the potential impact of safeguard duty for the import of steel (which needs to be further assessed), lack of usage of local materials by foreign contractors especially those from China, and the level of awareness among both industry players and users of practices that may be in breach of the Competition Act.

It has been highlighted by manufacturers, distributors and contractors that there is an increasing number of construction projects which are undertaken by contractors from China, according to the report.

“It was claimed that these projects imported most of the building materials from China, which affected the demand for locally produced materials. Although this does not restrict competition, it is a concern shared by all industry players who requested for some form of government intervention to promote usage of local materials,” said MyCC.

This article first appeared in The Edge Financial Daily, on Jan 10, 2018.

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