“The government plans to adjust VOP to help contractors with rising construction costs from the diesel subsidy, ensuring timely project completion.”
Pahang, 15th July 2024, 11.15am – The government has agreed in principle to implement the Variation of Price (VOP) to support contractors dealing with rising construction material costs due to the recent targeted diesel subsidy, ensuring timely project completion.
Finance Minister II Datuk Seri Amir Hamzah Azizan stated that this decision aims to alleviate the burden on contractors and is currently under discussion between the Finance Ministry (MOF), the Public Works Ministry, and the Construction Industry Development Board (CIDB).
“Discussions have started… we had a meeting last week, so please give us some time. We recognize that the targeted diesel subsidy may have caused some cost increases for contractors,” he said.
“For government contracts, the Finance Ministry is collaborating with the Public Works Ministry and CIDB to fine-tune adjustments for the VOP on existing contracts,” said Finance Minister II Datuk Seri Amir Hamzah Azizan. He made this statement during the GI Transformation Convention: Challenges and Direction of G1 Contractors to Face the Current Era at the Malaysian International Islamic University on Saturday.
Regarding the inclusion of more construction materials in the VOP, he mentioned that the government is open to providing VOP for justified increases, but it requires detailed fine-tuning and validation with CIDB.
“We will evaluate which materials can be justified for inclusion in the VOP by examining the reasons for cost increases and their impact on contracts,” added Amir Hamzah.
Previously, the Malaysian Malay Contractors’ Association expressed hope that the VOP would be reinstated to counterbalance the rising cost of construction materials, which reportedly increased by about 30% following the implementation of the targeted diesel subsidy.
The last update to the VOP list was in 2022, when the government added 11 construction materials, including cement, bricks, glass, ceiling, and roofing materials.
