Cement shortage grounds Sabah’s building industry, Malaysia

Cement shortage grounds Sabah’s building industry, Malaysia
Published: 05 September 2007

Sabah’s booming construction industry has ground to a slowdown, as the six months- long cement shortage remains unresolved.

Hopes that Cement Industries of Sabah Sdn Bhd (CIS) would ensure supply by last month seemed to have been dashed. 

The state’s construction industry has now called for the state government to intervene and resolve the matter.

"This is a serious delay that is forcing worksites to shut down as there is no cement to carry out any work," Sabah Contractors Consortium chairman Douglas Tay said Tuesday.

Tay, who is also executive member of the Sabah Builders Association, said that if the cement shortage continued, contractors who are already suffering losses might have to abandon their projects.

CIS, a subsidiary of state owned Sabah Economic Development Corporation, the sole clinker plant in the state. 

It has been is unable to cope with the rising demand of cement and had even promised to import cement to meet some 30% shortfall in its production.

"I urge them (CIS) to set up a cement factory in the east coast (Sabah), if not let the private sector participate and set up a cement factory to meet our needs," he said.

Tay said CIS, which operates at Sepangar Bay here, could serve the needs of the west coast of Sabah while a factory in the east coast could serve the needs there.

He said CIS had planned to set up an east coast factory but to date nothing has materialised. "They should speed it up or let the private sector take it up as it going to help cut transport cost for cement to the east coast."

According to Tay and other developers, the delays in cement supplies were from one week to three weeks with limited supply only, making it very difficult for them to complete their projects and they had to bear higher overhead cost.

CIS had said in early August that 29,000 metric tonnes of cement would be imported to meet the shortfall that was expected to "normalise" the situation by end of August but as of Tuesday there were no signs of the problem ebbing.

Sabah alone used 950,000 metric tonnes of cement last year while this year 1.12mil metric tonnes are expected to be used as rapid and major development projects including massive shopping complexes and housing are underway.

Other problems for the cement shortage was blamed lower production by the four major cement plants in peninsular while there is a general reluctance by shipping companies to come towards Sabah as they prefer to supply to China, India and Vietnam in view of the higher demand.

Cement dealers in the west coast are supplying a 50kg bag of cement at rates of between RM14.50 and RM15.40 against the normal price of RM14.20. 

They are also limiting 10 bags per customer who needed to wait at least a week or two to get their supply. 

The bags cost from RM4 to RM6 more in the east coast of the state where CIS said they had plans to set up a bulk cement terminal in Lahad Datu.