By Khairie Hisyam
The Malaysia Quarry Association (MQA) has called for a longer operating licence duration from the Selangor state government as the current renewal cycle is too short and denies quarry operators much needed stability and security of tenure.
Teh Quen Chang
In a press conference today, MQA president Teh Quen Chang said that the association hopes to see a renewal cycle of at least every one year.
“This will enable our members to adequately plan and execute their quarry schemes, revegetate the final landforms and terminal faces, invest in more efficient equipment and operate in peace,” said Teh today.
The call came as MQA, on behalf of eight of its members operating on forestry land in the central region of the state, urges the state government to renew their minor licences — which is required to operate quarries — in order for the eight quarries to continue servicing their customers and the construction industry as a whole.
Teh said the eight affected quarries had applied for the licences well before the expiry date of May 31, 2014 but were not granted their licences and consequently the quarries remain closed since the beginning of the month, unable to operate or sell their products.
The eight quarries were affected by a change in the usual licence renewal cycle that was imposed at the same time as the Selangor Menteri Besar announced his intention to implement a profit-sharing scheme.
Renewal cycle changed as MB moots profit-sharing
The renewal cycle was changed in January this year, which saw all quarry operations cease for the first 19 days of the year as licences expired.
This led to a temporary shortage in raw construction material in the state and forced contractors to source what they needed from outside the state.
“We were buying stone from outside of Selangor at higher cost,” said National Ready-Mixed Concrete Association of Malaysia (NRMCA) president Leong Yew Kuen, citing logistics as a major issue.
If supply of ready-mix concrete is disrupted halfway due to insufficient supply then built structures would be disrupted, added Leong at the same press conference.
Traditionally this licence had been issued for a six-month period but quarries were only given a one-month licence on Jan 20, said Teh, which subsequently expired on Jan 31. This monthly duration continued until March 31 and subsequently licences were issued on a two-monthly period between April and May.
Khalid Ibrahim
Prior to the licence issuance on Jan 20, however, Selangor Menteri Besar Khalid Ibrahim called a meeting on the issue of permit renewal for the year 2014 on Jan 8 where he discussed his intention to introduce profit-sharing contract (PSC) scheme whereby the government would get a cut of the profits.
This meeting was attended by various state departments including the Forestry Department, Minerals and Geosciences Department (JMG), Land Office as well as MQA representatives and quarry operators.
Subsequently, on March 18 another meeting was held when quarry operators were informed that they would be required to submit their individual quarry’s costs and revenues — and thus their operating margins — so that the percentage to be taken under the PSC concept can be determined.
Speaking to the media today, Teh said the forestry land quarry operators present at the meeting were under the assumption that failure to submit this information would mean their respective licences would not be renewed, causing their quarries to be closed.
Verbal permission to continue operating
Following the request, quarry operators were granted their licences on April 15 — after receiving verbal okays to continue operations on April 1, similar to what has happened every month since February — on two additional conditions.
The first is that quarries are required to provide detailed information on operational costs and aggregate sales for the licence by using a provided form by April 18 to the state forestry department.
Failure to comply will cause the state forestry department to act in stopping the quarry’s operation activities, according to the second condition.
According to MQA’s Teh, quarry operators had no choice but to comply and those who did not were issued stop work orders and not allowed to operate until the information requested was supplied.
However despite compliance with the request and applying for renewal well in advance of the expiry date on May 31, the eight quarries who were not granted their licences have still not been issued said licences, said Teh.
“As a result, their quarries remain closed and they have been unable to operate or sell as of this date,” said Teh today.
Wider impact on development
The impact is not confined to quarries as quarry products are primarily used for infrastructural development, producing ready-mix concrete as well as road maintenance and other uses, said MQA today and echoed by other affected industry players present at the conference.
“The turnover of the construction industry in Selangor is RM5 billion per month,” said Master Builders Association Malaysia (MBAM) honorary advisor Ng Kee Leen. “Without (sufficient) supply of concrete work cannot move and the impact is very serious.”
Contractors present were in agreement. Sukumar Subrayalu, president of the Malaysian Indian Contractors Association (PKIM) said he had received many complaints from the association’s members on problems that has risen due to the issue.
“Our members complain that the state government’s actions are unreasonable, slows down the industry and delays projects,” said Malay Contractors Association of Malaysia (PKMM) president Mokhtar Samad. “Therefore we hope the Menteri Besar will reconsider — don’t decide politically but reconsider in terms of the development of the state.”
Matthew Tee Kai Woon
“Going forward what local businesses want is certainty,” said MBAM president Matthew Tee Kai Woon, adding that artificial shortages due to hiccups such as these are unnecessary as the supply chain is there. Having to incur higher costs due to unexpected shortages unfairly cut into profit margins that were agreed when construction jobs were awarded, he said.
“We locals also want ease of doing business,” said Tee in an apparent reference to Malaysia’s ascent to 6th place on the World Bank’s ease of doing business ranking last year.”
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