Sectors Involved in the Construction Industry

Private sector

The private sector is usually privately owned and not part of the government organizations. These often include companies (including profit and non-profit), partnerships and charities. A simple way to think about the private sector to consider this thing is not owned or operated by a government organization. For example, retail stores, credit unions, and local companies will work in the private sector.

Sources: (The Difference Between the Private and Public Sector 2014)    

Generally, the size of the organization for the private is smaller compare to public sector. The reason is because the staff of the private sector is lesser, therefore the workability will be not that effective compare to the public sector. Besides that, the capital of the private sector is lesser, therefore the private sector don’t have any funding to hired the skill and experience of the staff to help. Due to so many factor that I mention, the production of work carried out is lesser due to the size of the organization is smaller, capital is lesser, skillful and experience staff is lesser and etc.

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One of the example for the private sector in construction industry is build a hotel in Istanbul, which is Conrad International Hotel. Due to the organization of the private sector is small, therefore build the residential building or commercial building is more suitable, because the area that the building will used is fixing and not that big. (Sources: The Private Sector and Development: Five Case Studies 1998).

Diagram 1: Conrad International Hotel (Sources: Conrad International Hotel 1998)

Public Sector

The public sector is usually owned and operated by government agencies of. This includes federal, provincial, state or municipal governments, depending on where you live. Privacy legislation requires organizations in the public sector are usually public institutions or public institutions. Some examples of public institutions in Canada and the United Kingdom are educational institutions, healthcare institutions, public road, police and prison services, local and central government agencies and departments.

Sources: (The Difference Between the Private and Public Sector 2014)

Normally, the size of the organization for the public sector is more bigger and more legend compare to the private sector. Therefore the production of work carried out by the public sector will be bigger and better due to the capital of the public sector is more. Therefore, they have enough funding to hired the staff which is skillful and high experience of the work. Besides due to the size of the public sector is bigger, thus the staff will be more, therefore the workability of the public sector is better and more effectiveness compare with the private sector. Therefore the production of the public sector is better than private sector.

While for the public sector, the example of the construction industry for the public sector is highway project, which is the Seven River and estuary between the England and Wales. For this kind of size of the project normally is develop by the public sector. Due to the public sector have more experience and skillful staff and the capital is more bigger that private sector. So for the civil engineer project like highway, railway normally is public sector construct. And the area of the highway project will be move to another area, which is means the areas that involved will be bigger, to the public sector to construct this kind of the project will be more suitable compare to private sector

Sources: (Case Studies of Transportation Public-Private Partnerships around the world 2007)

Diagram 2: Highway project in England and Wales (Source: Seven river Bridge 2013)

Residential Project

A Residential Project is a minimum of 5 days, 4 nights away from home on a shared activity with people you’ve never met before. It only has to be done once, and can be done at any time while you are working towards any level of The Award. An example of residential project is terrace house, bungalow, apartment and condominiums.

Sources: (Residential Project Ideas 2015)

One of the case study that for residential project, which is located at KLCC area which is just located just right opposite the KLCC park. The name of the building which is call Park Seven. Park seven is a luxurious high-end condominium. This building is built by the SDB (Selangor Dredging Berhad). The size of the room per unit is around 2,257 sq ft which is 3 rooms. And the building is be complete at 2007. The price of the building is RM640 per sq ft during 2008 but during 2009 the price is quickly rose to more than RM1,000 per sq ft. But from now it was around RM1,500 per sq ft. Sources:( Seven Park 2014)

Civil Engineering Project

Civil engineering projects involving the environment or change the structure of significant construction and renovation projects. An example of civil engineering projects built may have been used to generate electricity and provide flood control and irrigation control, while climate change might involve beach nourish and protect the coastline Station. Civil engineering projects have occurred in a very different scale around the world. Some examples of civil engineering projects include: updating a city sewage treatment system to accommodate the growing population, the construction of the canal, the construction of a bridge, widening the roadway earthquake reconstruction, restoration of wetlands, as well as private homes, so that they meet local building codes.

The case study that I found for civil engineering project is Lebuhraya Kajang Seremban (Lekas highway). It is a highway which is a new dual three lane highway between Kajang and Seremban. South direction through the general, LEKAS immediately begin Kajang Ring Road in the south cloverleaf interchange, ending Paroi, in Seremban, Negeri Sembilan Khusus home branch. Highway concession granted LEKAS in November 2006, and IJM Corporation Berhad and KASEH Private Limited as a shareholder. The project is be complete at December 2009.

With the 44.3 km long, LEKAS an effective toll highway in the heart of Kuala Lumpur between the eastern and the hibiscus. Alignment by Kajang, Semenyih, Pajam, Wending, Setul and highly developed areas Paroi pass. LEKAS is an open toll system Kajang and Setul and Setul and Paroi between, including close three mainline toll charging system and three off ramp toll station.

Sources: ( Lekas Highway 2015)

Residential Project

The specific benefit of economic that the residential project bring to our country is first to provide a place for the people to live. Residential building like terrace house or apartment. It is a place which is let the people have their activities with their family or their friends. Besides, it also provide a policy for each of the family.

Second is it also provide the economic for the country, which is call taxes. The government will using taxes to improve our country economic. Normally, for the terrace house the taxes will be more cheaper compare to the bungalow. The taxes that is charge for the residential building is assessment tax. It is a local property tax, which is based on the annual rental value of the property. It is determined by the local government, usually in the ratio of six percent of the residential property, is paid in two installments each year. Therefore the taxes that charge by government is the one of the economy growth. Therefore the government will use the money at others economy way. Therefore, if the government known how to use the money, it will improve our country economic growth.

Third, for those high rise residential building like apartment or flat. This can reduce the land use, while it can increase the human occupancy in a building. Therefore, the government could utilize the land more economically. Example, like Kuala Lumpur, there are less land but they are many people is working and stay there. Therefore, to solve this problem, the government uses the land to construct the high rises buildings like condominium or apartment, so the people who work in KL have the enough place to live and continue their works.

Highway Project

While the specific economic that the highway project bring to our country is to shorter the period that from one place going to other place. For example like, from our college legenda, Mantin going back to my home, Serdang Raya, if using the normal road the duration to reach my home is around one and a half hour (1h30m). But if I going home with the highway, the duration that reach my home is only forty-five minute (45m). Therefore the highway is help us to save a lot of time in our destination.

Because, it also easy to access. Which is means, if we want to go Perak, we using highway to go, but let say we miss the first junction to go Perak, but we still got second or third junction to go. Therefore, in Malaysia, we will lost, because any place also have highway. So it let the people easy to access any place that we want to go.

Last, since the highway got so many advantages but it also looks like not helping our country economic. Therefore, in some of the place we have a toll to collecting the money to increase our country economic. For example for place which have toll; Sungai Besi highway, Seremban highway, Kajang highway, and etc. Each of the places, have the toll to collect the user’s money to improve our economics.

Fiscal Policy

It is referred to as involving taxes (taxes) and expenditure (expenditure) government policy. Changes in the level of taxation and government spending will affect aggregate demand (AD) and the level of economic activity. The role of fiscal policy to stimulate economic growth recession. In addition, it is also stable economic growth and prevent chest economic cycle. There are two types of fiscal policies: expansionary policies and austerity. Involving expansionary policy increases AD austerity policies, including in the year dropped

Monetary Policy

It is used by central banks to control the amount of money in the economy, which in turn will affect the interest rate tool. It involves the use of interest rates or other monetary tools to control the level of consumer spending. Monetary policy to promote economic stability and growth by providing interest rate. Its purpose is to stabilize prices, ensure a low level of unemployment. There are two types of monetary policy: monetary policy and tight monetary policy. Loose policy may reduce interest rates and tightening policy will increase interest rates to reduce inflation level.

Fiscal Policy

First, the policy of this issue, in order to promote investment in the economy is more focused on people’s livelihood. Although the investment is still the main means of expanding domestic economy, policy is more important at this time pay attention to people’s livelihood, or low-income groups on this measure at least five to ten, for example, to build more affordable housing, accelerate infrastructure construction in rural areas, speed up to promote poverty reduction and improve the development of health care, culture and education, speed up the ecological construction, sewage and garbage disposal, pollution prevention and post-disaster relief and reconstruction.

Secondly characteristics is the income of urban and rural residents and improve the tax system reform includes measures to expand domestic demand in the first. All regions and sectors will be fully and VAT reform progress, encourage technical reform, about 120 companies and one billion yuan loans to ease the burden on enterprises. It is considered a huge leap forward. In the future, it will also reduce income wage earners, self-employed and small businesses, expand the circle of consumption subsidies for urban and rural residents, to focus more on improving consumer credit, in order to stimulate consumer demand.

Third, the new policy combined with a long-term and short-term goals. This will help promote economic growth and structural adjustment, to encourage independent innovation, to support the development of high-tech, technological advances and services. In addition, the new policy also combined to expand investment and stimulate consumption, and proposed the establishment of primary health care system, such as construction, speed up renovation in high school and middle school in western China, to promote the cultural construction of special education schools measure centers in rural areas, speed up the affordable housing and low-cost housing, reconstruction of houses and herdsmen dangerous construction of settlements, as well as to speed up construction of rural infrastructure. These measures will help to boost consumption and economic growth, and build a well-off and harmonious society.

Sources: (Three Characteristics make fiscal policy more effective 2008)

Monetary Policy

First characteristic is consideration. IJ Macfarlane, Reserve Bank of Australia to recognize speech in 2002, no one likes the high interest rates, people tend to be regarded as evidence of bad monetary policy. However, high interest rates may be necessary in high-inflation economy. In such an environment of low interest rates will only exacerbate the problem, Macfarlane said adding that low interest rates, but it is necessary in some cases, often means an unhealthy economy.

Second is prevention/ or solution. In a healthy economic good monetary policy requires the central bank to strike a very high interest rates to choke healthy economic growth and low inflation, interest rates are not included among the “compromise”, according to McFarlane. This may require the central bank to determine the annual growth rate of potential health and targeted inflation rate. In this case, monetary policy will focus on a constant currency growth rate, which is consistent with the target level of GDP growth and inflation.

Last is perspective. In addition to setting targets for economic growth and inflation, monetary policy should follow a point of view, taking into account the whole economy, not the performance of a particular sector. McFarlane noted that the housing sector as an example, he said, the price is higher, making it more difficult for a young couple to buy a home reflects the problem of the distribution of wealth, rather than the symptoms, monetary policy should be addressed.

Sources: (Characteristics of Good Monetary Policy 2015)

What is the importance of the government involvement in the project and construction industry. The importance of the government involvement in the construction industry is first some of the project like, government building or the civil engineer building like highway, bridge or etc. Before the company, construct the specific building, they must get the approval like the JKR or PWD (Public Work Department) which is from the government or public company.

If the company construct the building without approval by government like JKR or PWD the building will call as a illegal project. So the company have to register to the government and get the duty stem stamping by the government only can start the project. Therefore this is one of the importance that the government have to involve to the construction industry.

Due to the construction industry is play significant role in the economic growth. So the benefit of the government involved in construction industry is to improve the economics of the country. While this is considering to the Fiscal policy. Fiscal policy is means the government can increase or decrease the taxation, subsidy and spending to stabilize the economic growth. When the government is applying the fiscal policy, it tends to stimulate the aggregate the production and it boost up the income. Therefore this is the benefit of the government involved in the construction industry. Therefore, the taxes also is one of the income to improve the economics in the country.

Besides that, Monetary policy also is involved in construction industry by the government. Sometimes the project is very big like highway, therefore the cost that have to spend is much more higher. Therefore, the government sometimes will not enough funding to continue project. Because the government is not only got one project, sometimes it got few project in one times, therefore they will not enough funding to continue for the project.

So the government will borrow the loan from the bank which is including the interest rate. Because the bank got long term loan and short term loan, So for the big project, normally the company will select the long term loan. So the government can borrow the loan from the bank, therefore it got enough funding to continue the process of the projects.

In my summary, I will suggest the public and private sector combined together as a Public-private partnership. The reason is because, although the private sector have a lot of funding to the construction site, but private sector got a lot of document is complete like the stamping. While for the public sector/ or government, although there got the complete document for the construction but they don’t have enough of funding to continue for their previous project. Therefore to solve the problem for this both types of sector, combined both of the company is the best way.

Bibliography

Characteristics of Good Monetary Policy, (2015), [Online], Available at: http://www.ehow.com/info_7880452_characteristics-good-monetary-policy.html [Accessed on 15 May 2015]

Case Studies of Transportation Public-Private Partnerships around the world, (2007), [Online], Available at: http://www.fhwa.dot.gov/ipd/pdfs/int_ppp_case_studies_final_report_7-7-07.pdf [Accessed on 2nd May 2015]

Lekas Highway, (2015), [Online], Available at: http://www.ijm.com/infrastructure/toll/LEKAS/corporate.asp [19 May 2015]

Park Seven (2014), [Online], Available at: http://klcccondominiums.com.my/park-seven/ [ 19 May 2015]

Residential Project Ideas (2015), [Online], Available at: http://www.dukeofed.org/ab/residential-projectvolunteer-opportunities [Accessed on 7 May 2015]

The Difference Between the Private and Public Sector, (2014), [Online], Available at: http://www.privacysense.net/difference-between-private-public-sector/ [Accessed on 29 April 2015]

Three Characteristics make fiscal policy more effective, (2008), [Online], Available at: http://en.people.cn/90001/90780/6536000.html [Accessed on 16 May 2015]

The Private Sector and Development: Five Case Studies, (1998), [Online], Available at:http://wwwwds.worldbank.org/external/default/WDSContentServer/IW3P/IB/2002/02/16/000094946_02020504015321/Rendered/PDF/multi0page.pdf [Accessed on 1st May 2015]