21.12.09

Malaysian IBS: Government Incentives and Policies

1. IBS Roadmap 2003-2010 was developed and published to steer the direction of IBS implementation and promotion activities and guide the practitioners and policy makers on IBS related issues (IBS Roadmap, 2003).

2. The importance of IBS was highlighted under the Strategic Thrust 5: Innovate through R&D to adopt a new construction method in the Construction Industry Master Plan 2006-2015 (CIMP 2006-2015) which has been published as means to chart the future direction of the Malaysian construction industry in 2006 (CIMP, 2006).

3. The government through CIDB has introduced exemption of the construction levy (CIDB levy - 0.125 % of total cost of the project according to Article 520) as an incentive on contractors that used IBS at least 50% IBS components in construction of new buildings since 1st January 2007.

4. Through the 2005 and 2006 Budget, the government had pledged to construct 100,000 units of affordable houses using IBS.

5. After the Roadmap’s endorsement by the Cabinet, the first strong indication by the government was through the 2005 Budget announcement back in September 2004.

6. First, it was announced that all new government building projects are required to have at least 50% IBS content; which is calculated through the IBS Score Manual that was developed by CIDB.

7. The decision to make it compulsory for government buildings was to create sufficient momentum for the demand of IBS components. In order to attract private clients, the second announcement was on the levy exemption for housing projects that have a minimum IBS Score of 50%

8. The IBS Agenda was further boosted with the 2006 Budget announcement. Tax incentive was offered through Accelerated Capital Allowance (ACA).

9. IBS manufacturers would be given ACA for expenses occurred in the purchase of moulds used for production of precast concrete components.

10. Also stated in the 2006 Budget was that the government would ensure that all IBS components used in public projects are to be MS 1064-compliance. This would facilitate standardisation of components and increase productivity of construction.

11. The commitment of the government is further strengthened with the announcement of the Ninth Malaysia Plan. Again emphasis was given to IBS in public and affordable housing projects. In addition to that, it was also declared that the government would be offering more incentives for the users of standardised drawings based on the usage of IBS and MC.

12. To create a spill-out effect from public sector projects to private sector project, the new circular of Surat Pekeliling Perbendaharaan Bil. 7 Tahun 2008 dated on October 2008 had emphasized on the full utilization of IBS in government’s projects.

13. Among the pressing matters raised in the circular were the use of IBS component in government projects must not be less than 70% and the inclusion of IBS as part of contract documents for all government’s building works.

14. As on February 2009, in approximate of 320 projects worth RM 9.43 billion had been identified to be carried out using the IBS From 2006 to 2010, in approximate of 320 government’s projects worth RM 9.43 billion had been identified to be carried out using the IBS. It is a huge market sector for IBS.

15. JKR IBS Design is started to be incorporated in its Rekabentuk Bangunan Piawai for government quarters, schools and government administrative offices

16. The government will established a new policy to reduce 50% of current 320,000 foreign workers registered in the sectors. CIDB has allocated RM 100 million to train skilled workers among locals on IBS and other methods to cope with the loss

17. In early 2007, IBS Centre had been established in Cheras to promote IBS in Malaysia and also to play the role of consultant. The centre is equipped with IBS showhouse and Research and Development (R&D) capacity. Construction Research Institute of Malaysia (CREAM) was initiated to manage IBS research

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