Cement shortage to end soon, Malaysia

Cement shortage to end soon, Malaysia
10 September 2007

Some parts of the Malaysian construction industry, crippled by the recent shortage of cement in the market, has been assured that supply will return to normal within a month.  
The assurance came from cement manufacturers during a closed-door meeting chaired by Domestic Trade and Consumer Affairs Minister Datuk Mohd Shafie Apdal with manufacturers, contractors, developers and building materials suppliers recently.  
Also present were officials from the International Trade and Industry Ministry and the Finance Ministry.  
Contractors have been finding it difficult to get cement for the past one month because of the "shortage", with some having to pay between RM11.50 and RM14 for a 50kg bag, which normally costs RM10.90.  
Cement is a controlled item, with the retail price fixed at RM10.85 for a 50kg bag and RM217 per tonne.  
The worst affected states are Penang, Johor and Sabah.  
It was reported that several projects in Sabah had to be put on hold and worksites had to be shut down because there was no supply of cement.  
It is learnt that the ministry had instructed the manufacturers to shore up supply "to meet the sudden surge in demand for cement", which the latter had claimed was the reason for the shortage.  
Contractors and developers had claimed that the shortage had caused their projects to be delayed.  
"We can’t complete our projects on time and this is adding to our overhead costs. The hardest hit are the Class F contractors who cannot afford to buy cement in bulk," said an industry source.  
The manufacturers had attributed the problem to distribution, where the 50kg cement bags were not reaching the smaller contractors.  
It is learnt that during the meeting, the manufacturers also agreed to increase the production of the 50kg bags by between 10 and 15 per cent.  
However, industry sources claimed that the "artificial shortage" was created to jack up the price of cement ahead of the automatic pricing mechanism (APM) for cement, which is to be implemented on Jan 1.  
The APM is opposed by developers and contractors who feel that they would be exposed to potential abuse by manufacturers if the price of cement is not controlled.  
General contractor Daniel Charles said he had to absorb the increased cost because of the shortage.  
"As our jobs are undertaken based on a quotation that our clients have agreed upon, we cannot raise the price at the end of the day.  
"So people like us are badly affected."  
He claimed some retailers were now bringing in cement from China and Vietnam to meet the shortage.  
Mohamed Ariffin, a Muar-based Class F contractor, said his projects had been delayed because of the shortage.  
The Domestic Trade and Consumer Affairs Ministry had recently directed its state offices to check the hoarding of cement by wholesalers and retailers.  
Individuals who contravene the Control of Supplies Act 1961 can be slapped with a fine of up to RM100,000 or three years’ jail, while companies would be fined up to RM250,000.  
Published under Cement News