Slumping oil prices and a weaker economy are putting a damper on the local construction industry, shrinking 6.6 per cent at constant prices in 2016 compared to the previous year, the minister of development highlighted on Saturday.

“While sectors such as retail and manufacturing have reinvented themselves, construction seems to be stuck in a time warp. Global labour productivity growth in construction averaged only one per cent over the past two decades,” YB Dato Seri Setia Hj Bahrin Abdullah said, citing the February 2017 McKinsey Global Institute report.

During the opening of the Association of Surveyors, Engineers and Architects (PUJA) national conference, the minister cited the study, which indicated the global construction industry has “an intractable productivity problem”.

“It is important for our construction industry to have the right perspective and adopt a constructive attitude in the current challenging time,” he said, calling on relevant stakeholders to be more innovative.

In 2016, the local construction industry contributed $393.1 million (at current prices), which is a 2.5 per cent share of the national GDP value. In order to improve and contribute more towards the national economy, YB Dato Hj Bahrin said that there are certain areas which need to be addressed.

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“While sectors such as retail and manufacturing have reinvented themselves, construction seems to be stuck in a time warp.”

“The reasons cited [by the McKinsey Global Institute report] for productivity problem include stringent regulations and dependence on public-sector demand… ignorance in navigating the construction marketplace, especially in relation to major projects.”

These, he noted, often lead to poor project management, adding that despite the challenges faced in Brunei, the construction industry remains critically important in supporting national development agenda.

“It is imperative that industry players strengthen their resolve and use the current downturn as a stepping stone to continue to learn, evolve, grow and develop.”

Speaking to The Scoop, the president of PUJA said that there are a couple of initiatives the institution is hoping to undertake in order to ensure the construction industry is able to grow.

“Although we don’t have a target figure how much we want to improve [the construction industry’s] contribution to the national GDP, we have an idea of how we plan to… We want to encourage growth outside of Brunei, We have quality talent and we need to be exporting our services,” Hj Mohd Nazri Mohd Yusof (pictured above) said.

Despite Brunei not being able to be competitive in terms of pricing, the PUJA president stressed that local professionals are highly valued within the region. The sultanate’s highly educated workforce puts it at an advantage.

“Currently, we know a few of our members who have secured projects outside of Brunei… So it is feasible. One of the objectives of this conference is so that our members can look at potential opportunities [for growth].”

Some of the keynote speakers during the 3rd PUJA National Conference. Photo: Ubaidillah Masli

The most immediate markets for local industry players to penetrate, according to Hj Mohd Nazri, are ASEAN countries. He also stressed the need for stakeholders to attract more foreign direct investors, noting the improved rankings on ease of doing business recently.

As of 2014, Brunei’s construction industry comprises an estimated  1,500 registered enterprises, ranking it third in the number of enterprises among Brunei’s industrial sectors and employs some 24,000 workers, most of whom are non-locals.