KUALA LUMPUR, March 24 (Xinhua) -- Malaysia's construction sector is under mounting pressure from the fallout of escalating tensions in the Middle East, as surging global oil prices drive up costs and threaten project viability, an industry body has said.
The conflict has triggered sharp increases in fuel prices, raising transportation, machinery and raw material costs through the construction value chain, particularly for steel and cement, the United Malaysia Contractors Association (UMCA) said in a statement on Monday.
This has pushed project expenses beyond initial budgets, squeezing margins across the sector.
"Most contracts were signed at fixed prices and did not anticipate such extreme market fluctuations," the UMCA said, adding that contractors are increasingly being forced to absorb the additional costs, leading to significant financial losses.
The group said the impact is particularly severe for small- and medium-sized contractors, who are facing mounting cash-flow constraints amid rising costs and delayed payments. Limited access to financing is compounding the strain, raising the risk of business closures.
The UMCA also cautioned that the cost shock is already disrupting project timelines, with some developments delayed or temporarily halted, potentially affecting broader infrastructure rollout and economic activity.
If prolonged, the situation could lead to job losses and wider economic repercussions, it said.
The association urged the government to introduce targeted support measures, including temporary fuel subsidies, contract price adjustment mechanisms and low-interest financing, to help contractors weather the challenge.
It also called for faster payment processes for public projects and tax relief to ease financial burdens, stressing that timely intervention is critical to stabilizing the sector and safeguarding growth. ■
