The government has been urged to repay outstanding goods and services tax (GST) refunds to the construction industry to ease their cash flow which has been affected by the movement control order (MCO).
This was among the proposals made by the Master Builders Association Malaysia (MBAM) – which represents a total of 170,000 direct and indirect members – to the government.
"We want the government to look into whether it can release the GST (refunds). There was about RM70 million to RM100 million (paid by taxpayers merely from the construction sector)," MBAM president Foo Chek Lee told Malaysiakini.
On Feb 6, the Federation of Malaysian Manufacturers (FMM) reportedly claimed that the government had yet to repay RM7.8 billion of outstanding GST refunds to the business community, which has caused the cash flow of businesses to be negatively impacted.
"The issue now is everyone (in the construction industry) has problems with their cash flow," said Foo, adding it was a norm for contractors to receive their payment three months after delivering their work.
"They have yet to receive payment for their work in March but they have to pay salaries and the cost of construction materials," he said.
Besides the GST refunds, Foo also urged the government to exempt all companies from paying levy for foreign workers, instead of giving only a 25 percent discount for the levy from April to the end of the year as announced by Prime Minister Muhyiddin Yassin.
Foo also called on the government to allow developers to release the five percent retention sum and wanted local authorities to exempt taxes imposed on the construction industry.
The government had allowed additional sectors, including construction, social health services, hardware shops, electrical and electronic shops as well as laundry services to operate during the third phase of the MCO, which started today.
For the construction industry, only G1 and G2 contractors, among others can resume operations.
Other construction works that are allowed to be carried out are tunnelling works, maintenance works, sloping works as well as professional services related to construction.
The operators of these additional industries, however, need to apply with the International Trade and Industry Ministry (Miti) to obtain permission to operate.
Foo claimed that MBAM members encountered problems when they tried to apply for permission to work via Miti's website which crashed after receiving more than 100,000 applications. Miti has since resolved this problem.
In a statement later, however, Miti said it needs five days to approve the respective applications.
When asked about this, Foo pointed out that the suppliers need to be back to work as soon as the developers and contractors are allowed to operate.
"My question is, even after getting approval, we still need to get ourselves ready in order to start (work after ceasing operations for over a month)," he said.
"Is the supply chain ready or not? Is the system in place? If not, then there will be havoc. When I am allowed to operate, I need my cement and also sand supply, all of them need to be ready to work in tandem," he said.
"MBAM has submitted a list of its members and their suppliers to Miti (prior to this)," he said, adding there is a total of 140 upstream and downstream industries related to the construction industry.
He said workers need to adapt to the standard operating procedure (SOP) which requires operators to practice social distancing at the construction site and premises.
He said the government should also come out with an SOP based on Covid-19 zones.
"Can the suppliers or staff from a red zone (over 41 Covid-19 cases) go to a construction site that is located at a green zone (zero Covid-19 case)?"
Currently, Foo said there are close to one million staff hired in the construction industry and only approximately 450,000 of them are legal workers.
He, however, expressed gratitude to the government for allowing the construction industry, which pays RM40 billion worth in annual income to workers, to return to work. - Mkini
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