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Brunei's construction industry facing labour shortage

Publication Date : 03-05-2012


Lack of skilled labour and the fluctuating costs of imported construction materials continue to remain challenges for the industry, which is experiencing a "big change" with the implementation of large-scale housing projects, according to the Oxford Business Group (OBG).

The London-based publication said in "The Report: Brunei Darussalam 2011" that the industry was "starting to experience a shortage of trained professionals, just at a time when the need for qualified labour is greatest".

The report said that this was due to the change in preference of workers from Thailand, many of whom have been attracted to move to China in search of better wages.

"Contractors have noticed a decline in the quality of labour in recent years, as Thais who have been the staple of high-skilled workers within the local industry have been increasingly moving to China, where the pay is better," the OBG said.

It added that a "second wave" of mainly Vietnamese, Indonesian and Indian workers, who were "less experienced", have been filling the gaps.

Public housing projects, some of which are several thousand units in size, will be a major feature of Brunei's construction activities. A total of 17,300 units have been expected to be delivered by 2014, from the on-going housing contracts identified from 2007-2012, a top housing official said.

In an interview with OBG, Housing Development Director Hj Mohd Zakaria Hj Sarudin said that for the housing sector, local contractor will have to step up their respective capacities for manpower, finance, technical and technology.

"The current capacity issues constrain local contractors' abilit(ies) to undertake large-scale housing projects and to complete these projects on time," the housing director said.

Hj Mohd Zakaria added that contractors will have to adopt new construction techniques and technology to overcome this issue.

"This will include recruitment and engagement of more skilled technical support personnel needed for the application of new construction techniques and technology on projects," he said.

The housing development director explained that carrying out such initiatives will make local contractors more competitive.

"They will need to adapt in order to be competitive for public housing contracts."

In May last year, the former chief of the Authority for Building Control and Construction industry (ABCi) also expressed concern in labour limitations as demand in the construction industry rises.

"We need more engineers, surveyors and architects, among others, because there is a lot of demand," OBG quoted Hj Abidin Hj Saidin as saying, and adding that this was because "we do not have enough to cater to the needs".

"Of late, there has been a big change in the construction landscape," John Lee Seng Poh, general manager of United Engineers was said to have told OBG.

"Big internationals have arrived, bringing with them capacity to build housing projects by the thousand(s), rather than the hundred(s) or ten(s) that local developers could handle," he added.

Poh also agreed that contractors would have to "evolve if they want to survive in a market of this size".

"Project demand, driven entirely by the public sector, ebbs and flows. It is essential to understand the importance of flexibility, to take small jobs as well as the big ones."

OBG noted that the private sector only provided an estimated $100 million in work to the construction industry annually, according to the Ministry of Development, with the government and Brunei Shell Petroleum Co Sdn Bhd, as the two main clients for larger local contractors. The work from the private sector "were largely small-scale projects for housing or shop houses", OBG added.

The think-tank, citing an unnamed contractor, has also observed that the industry was "maturing", evident in the authorities' current scrutiny of the performance of bidders in tenders rather than going for the lowest offer.

"The government has traditionally been strongly inclined to accept the lowest offer on any project, even when consulted to accept a higher offer," OBG said.

"This approach has sometimes resulted in the winning bidder not being up to the task, with the job having to be re-tendered later."

High costs for construction materials was another challenge highlighted in "The Report: Brunei Darussalam 2011".

OBG said that production costs were relatively higher compared to the region, since raw materials had to be imported and equipment costs were "significantly higher".

"As materials costs increase, contractors often find their projects going well over budget," OBG said, while pointing out that Brunei contracts did not include escalation clauses for price fluctuations and that contractors had to shoulder a project's financial risk.

The Housing Development director also commented on the "occasional shortfall in volume or type of materials needed" in the industry.

"Not having immediate access to these resources can slow down the entire project delivery. For example, at times, we face shortage of bricks in the (housing) sector."

Venturing into pre-fabricated, or modular and in-situ construction techniques, which less material-intensive" will help to "circumvent" the issue, he added.


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