Local builders have warned that they stand to lose RM1.2 billion in late delivery penalty charges because of a critical labour shortage caused by the expulsion of illegal immigrants.

The Real Estate and Housing Developers' Association (Rehda) said in a statement received yesterday that the forecast 3.8 percent growth in the construction sector was in jeopardy and the industry's losses could shave 0.5 percent off gross domestic product (GDP) growth.

Despite the Home Ministry's recent approval of 369,000 work permits, only 38,000 Indonesian workers had arrived in the country by mid-October, said Rehda President Jeffrey Ng.

This meant the labour situation on most construction sites remained "critical" and many developers were now experiencing difficulty starting or sustaining construction work.

"Almost 90 percent of all on-going projects are currently operating at only 30 to 40 percent capacity," he said.

Lengthy process

Ng said the situation was exacerbated by the lengthy process of hiring foreign workers and he proposed mass recruitment and fast-tracking so that applicants could arrive in Malaysia within two months instead of the current six.

The construction industry was particularly hard hit by a crackdown on illegal immigrants ahead of the introduction of harsh new penalties which came into effect on Aug 1.

Some 468,000 illegal immigrants were reported to have returned home voluntarily during a four-month amnesty period, almost half of them construction workers.

Illegal Indonesian immigrants made up 70 percent of the building industry's 500,000 foreign workers before the crackdown, according to the Master Builders Association of Malaysia. AFP