Good and cheap houses

Agency says building contractors have no reasons to cut corners

By Nurhafizah Yusof and Joy Akang
Pictures by Victor Lo and Ng Jia Xiang

Buyers have always complained of poor quality houses because building contractors cut corners, according to Idris Haron, chairman of Syarikat Perumahan Nasional Berhad, the national housing company. And he has offered two solutions to builders that he hopes will ensure good and cheap houses for the poor: He forbids them from sub-contracting their projects while his company will no longer retain 5% of their contract money as a guarantee against building defects.

Idris says sub-contracting is one reason for poorly built houses. Contractors work on very thin margins particularly for low-cost houses costing about 66,000 ringgit ($21,710) each under the government Rumah Mesra Rakyat (friendly people’s housing) scheme.

They stand to make between 10% and 15% if they build the houses themselves. But if they sub-contract it to another for the same price, it is clear that the sub-contractor will have to cut corners to make a profit.

Idris says his company has also found that the 5% retention money on project completion has proven to be a disincentive to contractors. This money is meant to ensure that contractors build houses according to specification and rectify any defects before his company releases the money to them at the end of the one-year warranty.

Instead contractors feel that they will not get this money and so they cut corners in order to compensate themselves for what they have given up as a loss on the contract price.

Idris says his company has since January abolished the retention money. “The reason is to give the contractors some breathing space and encourage them to build houses properly,” he says.

But he warns contractors that they will not get another job if they are caught cutting corners.

Idris was in Kota Kinabalu to hand out letters of intent to 28 contractors to build more than a hundred mesra houses in Papar, Tuaran, Sepanggar and Penampang.

Hajiji Noor, Sabah housing and local government minister, says 645 of the 1,723 applications for mesra houses costing about 44m ringgit have been approved. The federal government has approved 18,000 applications for these houses costing about one billion ringgit for the whole country.

Families who earn less than 1,500 ringgit a month are eligible for them. They pay a monthly instalment of 150 ringgit for 22 or 25 years for a subsidised house with an area of 65 square metres (700 square feet). The government pays 30% of its cost.

However building contractor Wan Maimunah Wan Muhammad, 43, says there is money to be made in building mesra houses. Her company, Pasti Maju Enterprise, has been in the construction business since 2003. – Insight Sabah