2023-05-12 22:05:00
While the construction of infrastructure in the form Public-Private Partnership (PPP) that continues according to the contract that has already been committed Some parts should be able to continue construction. But some parts may be delayed or have to temporarily stop the project. as well as new projects which has to wait for the consideration of the government, may not be able to proceed in time within this year, causingThe value of private construction investment is stable at 0.0% – 1.0% (YoY).
Each construction business is likely to be affected by the total construction investment value that may shrink. at different levels And there are also cost pressures. Both construction material prices are high and the minimum wage trend may increase.
The cost of construction materials-labor costs affect
Kasikorn Research Center views that The total construction investment value (public + private) in 2023 that may shrink should affect construction business income this year. Especially in relation to new government jobs. and projects according to the annual budget. Although entrepreneurs still have a backlog, they still have to monitor political issues and policies of the new government that will affect the progress of the planned construction project. which may have different detailed conditions
In addition to income Kasikorn Research Center views that Entrepreneurs still have cost pressures. Both the construction material prices and the minimum wage policy combined account for more than half of the total cost. which is still uncertain and has issues that need to be monitored as follows
construction material pricesMajor items in 2023, especially iron and steel products It is expected to remain high compared to the pre-COVID-19 period. This is mainly due to the high cost of energy and raw materials, as well as the increasing cost of adapting to the green industry following the sustainability trend.
In addition, the return of the Chinese economy has to be monitored, which may boost construction material prices. while the domestic construction material price index in the first 4 months of 2023 increased by 1.3% from the same period last year. During the remainder of the year, there were factors causing the price of construction materials to remain at a high level. but is expected to decline from the previous year whether energy prices are likely to weaken from last year and the slowdown in the global economy that causes demand in the world market to not fully recover.
In addition, steel products are subject to a review of the need to implement anti-dumping measures. Anti-Dumping (AD) of hot rolled coil from China, Malaysia, Brazil, Iran and Turkey2 and cold rolled coil from China, South Korea and Taiwan3 which are under consideration by the Ministry of Commerce and scheduled to be completed within 1 year following the effective date. The effect has ended. If the AD measures are lifted, it will result in a decline in steel import prices. and affecting the competition of domestic producers
minimum wage It is an issue that affects the cost management of the construction business quite a lot. Because most workers in the construction sector are minimum wage workers. daily wages This will be affected by the trend of the minimum wage that may increase according to the cost of living and the new government’s minimum wage policy. However, the minimum wage increase according to the policy should be a gradual adjustment. which also has to consider other costs of the business, period and rate of increase, consisting of
However, the cost of construction of the above two factors is still at a high level. and higher financial costs will affect the bidding of future construction projects that operators must consider risks and investment worthiness
As for some projects under construction, the contract may not cover the additional costs. Entrepreneurs have to bear the cost in this section. This will affect the profitability and debt serviceability of the business going forward.
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