Women carry bricks at a construction site in Nay Pyi Taw. Pic: AFP

THE construction industry in Myanmar is booming right now, with many companies busy rebuilding the Ayeyarwady Delta and continuing projects in Yangon and Nay Pyi Taw.

And the amount of work underway has created robust demand for the sector’s raw materials – the bricks, sand, cement and steel that the industry literally stands on.

However, this demand has also upped raw material prices and several developers that spoke with The Myanmar Times said they would pass those costs on to consumers.

U Lazarus from Yadanar Shwe Htun construction said any unsold apartments currently being built would be upped by 20 percent in cost to account for increased overall costs.

“We usually stockpile construction materials, which helps us to avoid sudden cost increases but we’re not immune: Steel rods have jumped from K100,000 last year to K300,000 now,” he said.

“This means that we’ll be increasing the price of unsold apartments by 20 percent,” he said, adding that pre-sold apartments would not be affected.
U Zarni Myo Win, the director of Hlaing Tharyar-based Landmark construction, said his company would only increase the cost of new developments by 10pc.

“We store most of our raw material in advance because our construction timeframes are usually only six months. If prices increase unexpectedly, then we will only raise our fees by only 10pc because otherwise people won’t buy,” he said.

Eiksietan construc-tion’s director, U Aung Myin, said the company last year upped pricing per square foot by K10,000 but would be doubling that this year.
“We will be increasing our per-square-foot price this year by K20,000 to account for higher labour and construction costs,” he said.

U Soe Myaing, who has worked as a construction industry wholesaler for 10 years, said the costs of construction materials increase every year through inflation. But this year the price of hand-made bricks have increased by nearly 40pc.

Last year these bricks retailed at K35 each but are now selling for K48, he said. However, factory-made bricks, which are more expensive at K60 each, have remained stable in value.

He cautioned that brick prices always increase in monsoon and that many developers try to avoid being stung by stockpiling.

“Brick wholesalers and developers try to stockpile before monsoon to avoid paying higher prices,” he said.

U Soe Myaing said that many of the larger construction companies are putting their efforts into Nargis recovery projects and supplying these from their stockpiles.

For this reason, he said, brick demand for coming opening season is unlikely to be significantly higher.

Sand is varying from K12,000 to K15,000 for 100 cubic feet and is dependent on the exchange rate for FEC, he said.

“We don’t see that there is any reason to change brick, sand and gravel prices because the exchange rate for FEC has stabilised again,” he added.

U Thein Tun Oo, a cement and corrugated iron wholesaler in Yangon, offered a different opinion and said prices have surged over the last year.

“The construction industry’s peak season runs from October to April. And whatever the raw material prices were in April, they will be the same when companies start building again in October – they will not go below that rate.
“Prices this year are about 15pc higher overall than last year,” he said, adding that US dollar exchange rates do have an impact on prices.

He used cement as an example of how the exchange rate affects pricing. He said domestic cement production does not cover overall demand and companies must rely on imports that mainly come from Thailand and Indonesia.

Most developers, he added, prefer imported cement because it’s higher quality.

U Thein Tun Oo said a 50-kilogram bag of locally made cement ranges from K6300 to K6800, while a bag of imported cement is about K8000.

He said the wholesale price of cement – either imported or local – has increased by about 15pc, mainly through inflation.

Another material that has risen in cost, he said, are corrugated iron sheets measuring 6 feet by 3 feet, which cost about K645 to K680 per foot, up about 10pc from last year.

U San Yi, a sales manager with Zamil Steel, which imports a range of steel construction materials from abroad, said sales volumes after Nargis have jumped by 200pc.

He said prices have increased every month since then but said worldwide demand was at least partly responsible for these rises.

“International prices are increasing day by day and local prices are totally dependent on these rises,” U San Yi said.