COVID-19: construction industry players, start your engines!

Introduction
Types of construction projects and related services allowed
Industry-specific application requirements
Compliance with health and safety protocols and operating conditions
Comment

Introduction

As Malaysia transitions into the third phase of the Movement Control Order (MCO Phase 3), the government has moved to allow additional economic sectors to operate during this period. This includes construction projects and services related to construction works. However, construction industry players that intend to resume operations during MCO Phase 3 should take note that they must comply with the third set of frequently asked questions (MITI FAQs-III) issued by the Ministry of International Trade and Industry (MITI). This article sets out the key information from the MITI FAQs-III.

Types of construction projects and related services allowed

Construction projects and related services
Pursuant to Appendix I of the MITI FAQs-III, only the following construction projects and services related thereto are allowed to operate during MCO Phase 3:

• projects whereby the main contractors are registered with the Construction Industry Development Board of Malaysia (CIDB) as Grade 1 or Grade 2 contractors;
• projects that have achieved physical progress of 90% or above;
• tunnelling works;
• maintenance works;
• sloping works;
• emergency works that are consequent to contractual obligations;
• maintenance, cleaning and drying of stagnant water and the spraying of pesticides at construction sites which prevent the breeding of Aedes mosquitoes and other pests;
• other works that, if left incomplete, may result in danger;
• building projects with an Industrialised Building System (IBS) score of 70 or above;
• construction projects with accommodation facilities for workers (eg, centralised quarters for workers or a workers' camp); and
• professional services related to the construction industry, including architects, engineers, town planners, land surveyors, quantity surveyors, project managers, facility managers and other relevant services.

In addition, MITI has clarified that contractors carrying out works such as building construction, renovation of premises and installation of machines may apply for approval to operate despite such works not being specifically listed in Appendix 1.

Notably, bullet points 3 to 8 above were previously identified as 'critical works' and were allowed to be carried out during the first and second phases of the MCO, subject to the company carrying out such works having obtained prior approval from the Ministry of Works or other relevant authorities.(1) Companies with approvals to operate during the first and second phases of the MCO should be aware that they are now required to re-apply for approval from MITI in order to operate or increase their workforce capacity during MCO Phase 3.

Relevant products, works and services
MITI has clarified that companies not carrying out the types of construction projects or services listed in Appendix 1 may also apply for approval to operate during MCO Phase 3, on the basis that such companies provide relevant products or services. Examples provided in the MITI FAQs-III include:

• the supply of products such as raw materials, components or spare parts;
• the provision of logistic services and machine maintenance services;
• companies related to the machinery and equipment sector; and
• service suppliers within the supply chain of a specific construction project.

Industry-specific application requirements

Companies in the economic sectors listed in the MITI FAQs-III must apply for approval from MITI prior to commencing their operations during MCO Phase 3 in accordance with the procedure set out thereunder.(2) In addition, there are certain application requirements which are specific to the construction industry, including:

• companies must apply for a separate approval for each and every construction project or related service which they are undertaking;
• subcontractors may submit their applications for approval only after the main contractors have received approval; and
• applications will be assessed by MITI based on the class of the contractor (ie, the contractor's grade of registration with CIDB) and the list of criteria in Appendix 1 of the MITI FAQs-III.

Compliance with health and safety protocols and operating conditions

Companies which are granted approval to operate during MCO Phase 3 will be subject to health and safety protocols. These protocols are available on the COVID-19 Intelligent Management System (CIMS 2.0), which is the online system through which applications for approval from MITI are to be made, and must be agreed to by the applicant companies before they can register in CIMS 2.0.

In addition, such companies must comply with the operating conditions imposed by MITI. Failure to comply with these conditions is a criminal offence under Regulation 7 of the Prevention and Control of Infectious Diseases (Measures Within the Local Area of Infection 2020) and a person convicted of such an offence will be liable to:

• a fine of up to RM1,000;
• imprisonment for up to six months; or
• both.

Where the offence is committed by certain 'non-individuals',(3) the directors, certain officers, partners and managers of the non-individual may also be charged severally or jointly with the non-individual offender.

Comment

While the MITI FAQs-III provide that only companies involved in the types of construction projects and related services listed in Appendix I thereto are allowed to operate during MCO Phase 3, it would seem that the government recognises that allowing the resumption of operations will be meaningful only if relevant suppliers or service providers for these companies are also allowed to operate. This move may also assist construction industry players with managing or resolving aspects of construction projects which have been affected by the MCO, in particular project timelines and costs.

Further, construction industry players will have to give careful consideration with respect to their compliance with health and safety protocols. Given that the COVID-19 pandemic is still at a severe stage, the implementation and enforcement of such protocols is a necessary measure to protect the welfare of employees and workers as well as the community at large.

For further information on this topic please contact Shannon Rajan, Rachel Chiah or Jeremiah Ch'ng at SKRINE by telephone (+60 3 2081 3999) or email (shannonrajan@skrine.com, rachel.chiah@skrine.com or jeremiah@skrine.com). The SKRINE website can be accessed at www.skrine.com.

Endnotes

(1) Further information on 'critical works' for the first and second phase of the MCO are available here and here.

(2) Further information on the overview of the MITI FAQs-III, including the application process for approval, is available here. For the fourth phase of the MCO, the government has announced that most sectors are allowed to resume operations with effect from 4 May 2020, subject to stipulated conditions. Companies in the construction industry are no longer required to apply for approval from MITI. Instead, they are merely required to submit a declaration of compliance to the Construction Industry Development Board of Malaysia and to comply with the Standard Operating Procedure for Construction issued by the Ministry of Works (an English translation of this is available here).

(3) A 'non-individual' includes a company, limited liability partnership, firm, society or other body of persons.