Covid-19: CIDB Guidance and Initiatives for the Construction Industry
29 April 2020
On 27 April 2020, the Construction Industry Development Board (‘
CIDB’) published on their website guidance documents in relation to the execution of construction works during the Movement Control Order (‘
MCO’). In addition, CIDB outlined their initiatives to assist the construction industry with the impact of the MCO and the COVID-19 pandemic
[1]. A summary of these guidance documents and initiatives are set out below.
Standard Operating Procedures for Construction
There are three sets of standard operating procedures (collectively ‘
Construction SOPs’) which CIDB has published:
- General Standard Operating Procedure and Guidelines for Permission to Operate and Movement of Works for Construction Projects during the MCO[2];
- Guidelines on Implementation of Measures for Prevention of COVID-19 at Construction Sites; and
- Guidelines for the Operation of Centralised Labour Quarters (CLQ) and Construction Workers Accommodation during the MCO.
Companies carrying out construction works during the MCO are required to comply with the operational requirements under the Construction SOPs, which are largely focused on risk management and maintaining the health and safety of construction workers.
For ease of reference, CIDB has also made available an illustrated chart setting out a summary of the Construction SOPs.
Guidelines
In addition to the Construction SOPs, CIDB has also provided three guidelines in the form of:
- A list of the documents required to be kept at construction sites during the MCO, for purposes of inspection by CIDB and/or any other party tasked with enforcement during the MCO;
- A list of the types of construction projects which are eligible to operate during the MCO; and
- A sample of the affirmation to be made by the contractor or applicant in applying for permission to operate during the MCO.
It is to be noted that the list of the documents required to be kept at construction sites during the MCO varies based on the type of construction project being undertaken.
Standard Operating Procedure for Renewal of Local Contractor Registration
Pursuant to section 25(1) of the Lembaga Pembangunan Industri Pembinaan Malaysia Act 1994 (‘
CIDB Act’), any person who carries out or undertakes to carry out construction works is required to be registered with CIDB as a contractor. Such registration is only valid for a period ranging from a minimum of one year to a maximum of three years
[3]. An application for renewal of registration must then be made within 60 days prior to the date of expiry of the registration and received by CIDB no later than 30 days before the said expiry date.
Recognising the difficulties faced by companies in renewing their local contractor registrations during the MCO, CIDB has introduced a temporary policy which takes effect from 27 April 2020. Under this temporary policy, CIDB will, among others, grant the following exemptions:
- Exemption from requirement to attend and pass CIDB’s Contractor Integrity and Ethics Course, Business Management Course and/or Facilities Management Course for companies applying for renewal for the first time;
- Full exemption from the requirement to achieve the amount of Contractor Continuous Development points for the relevant grade of registration, for companies applying for renewal between 27 April 2020 to 31 December 2020; and
- 50% exemption from the amount of Contractor Continuous Development points for the relevant grade of registration, for companies applying for renewal in year 2021.
A detailed flowchart on the online application process for renewal of local contractor registrations is also set out in the Standard Operating Procedure for Renewal of Local Contractor Registration.
CIDB’s Initiative for Contractors in the Construction Industry – Payment of Levy
A significant initiative which CIDB has implemented to assist contractors is in relation to the payment of levy. Pursuant to Section 34(2) of the CIDB Act, a contractor is required to pay to CIDB a levy at the rate of 0.125% of the contract sum
[4]. Payment of the levy must be made within 30 days of the notice of imposition of levy issued by CIDB.
For all construction projects commencing at any time between 1 January 2020 to 20 May 2020, payment of levy will be deferred by a period of two months (which shall be inclusive of the standard 30-days period). Further, with effect from 1 June 2020 until 31 December 2020, contractors for private projects are eligible to apply to CIDB for payment of the levy in instalments, up to a maximum of six instalments.
Commentary
In these unprecedented and challenging times, cost management and maintenance of cash flow have become urgent concerns of companies in various industries. It would seem that the initiatives introduced by CIDB, in the form of the exemptions from renewal requirements and deferment of payment of levy, are intended to assist the construction industry in addressing such concerns.
Our Construction and Engineering Practice Group will continue to keep you updated on the latest developments.
If you have any queries, please contact our Mr. Richard Khoo (Partner) at richard.khoo@skrine.com or Ms. Rachel Chiah (Associate) at rachel.chiah@skrine.com.
[1] The guidance documents and initiatives published by CIDB are available
here.
[2] Our Alert on the General Standard Operating Procedure and Guidelines for Permission to Operate and Movement of Works for Construction Projects during the MCO is available
here.
[3] This validity period only applies to registration as a local contractor. Registration as a foreign contractor is issued on a project-to-project basis, and is valid for the duration of the relevant project.
[4] The requirement to pay levy only applies to construction contracts that have a contract value exceeding RM50,000.