Malaysian construction industry payment strategies for reform / Lim Chong Fong

Lim, Chong Fong (2009) Malaysian construction industry payment strategies for reform / Lim Chong Fong. Masters thesis, University of Malaya.

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Abstract

The construction industry in Malaysia is a mature and significant contributor to the economy of the nation. There is ironically much exasparation and complaints on construction payment for work done, materials or goods supplied and services rendered. This disertation is therefore devoted to the examination into the causes of the payment problems and to the suggestion of reform proposal to alleviate them. The examination of the causes initially inquires into the operating norms of the construction industry. Against this background, the examination focuses on the adequacy and effectiveness of construction contract term in use, the common law and statutory framework and dispute resolution procedure prevailing in the construction industry. The examination is undertaken in this manner systematically commencing with the Malaysian position and followed by the positions in the United Kingdom, Australia, New Zealand, Singapore, United States of America and Canada. It is seen that the causes of the Malaysian construction industry payment problems are five-folds, to wit, project finance, unfair contract terms, certification of payment, withholding of payment and dispute resolution and security of payment. These causes of the payment problems also occur but to varying degree in the other countries examined. The experiences and solutions deployed by the construction industry of the other countries provide the strategies that can be adapted for use in Malaysia. Based on the finding , the solution is a statutory one. The recommended strategy of reform propsal is to combine the solution used in the United Kingdom, New Zealand and Singapore. This is done with necessary modification made to suit the Malaysian construction industry environment coupled with the introduction of new ideas such as the payment bond as security of payment. The strategy and solution for Malaysia is ultimately reduced into the proposed Construction Industry Adjudication and security of Payment Act.

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