MGB establishes its IBS goals - MIDA | Malaysian Investment Development Authority
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MGB establishes its IBS goals

MGB establishes its IBS goals

20 Nov 2023

The industrialised building system (IBS) has become a buzzword lately, thanks to the clarion call to find an alternative to foreign labour, the shortage of which was exacerbated by the pandemic.

Before the virus struck, construction and property development solutions provider MGB Bhd, a subsidiary of LBS Bina Group Bhd, had decided to take the path less trodden to use IBS in its construction process. That decision turned out to be a blessing.

“Less than a year after the commencement of our operations in the Nilai (Negeri Sembilan) factory, we were hit by the Covid-19 lockdown, which hampered our production and operations. Fortunately, we were one of the first construction companies to be granted approval to operate, by MITI (Ministry of Investment, Trade and Industry), during the Movement Control Order (MCO) due to our substantially smaller number of workers compared to other traditional construction companies,” executive vice-chairman Tan Sri Lim Hock San, who is also executive chairman of LBS Bina, tells City & Country.

MGB was established in 2006 and listed on Bursa Malaysia in 2016. In May 2018, the company deployed its first mobile IBS plant, which cost RM20 million and has an annual production capacity of 3,000 units, to Alam Perdana, Selangor.

The following year, with an investment of RM40 million, it established a standalone IBS factory in Nilai to produce precast concrete products such as wall panels, solid slabs, staircases, beams and columns. The factory, which has a built-up area of 119,017 sq ft, was developed via a joint venture between MGB and SANY Construction Industry Development (M) Sdn Bhd, a subsidiary of China-based SANY Group Co Ltd.

“We found SANY, which specialises in precast systems. We collaborated with them; initially, the share was 51% and 49% between MGB and SANY. They put in the machinery and technology. Over the years, they have fulfilled their requirements, and we now own 81% but they still share their technology with us. That is what we started in 2018,” says Hock San.

More than just using technology, MGB also looks at providing its customers with a holistic IBS solution. “In MGB, we have our latest technology proposition called Value-Driven Technolo­gy, or VaDTech, which delivers high-quality and cost-competitive end-to-end solutions to bring value to both businesses (B2B) and customers (B2C),” says executive director and CEO Datuk Richard Lim Lit Chek.

For B2B, VaDTech provides end-to-end construction, investment and financing solutions; for customers, the proprietary technology is able to provide affordable housing solutions, from planning, coordination, product design, manufacturing, financing and construction to after-sales service.

When it comes to B2C, MGB is the developer of affordable housing projects, which are sold to the public.

Factory benefits

On a visit, City & Country found that the Nilai factory had a high ceiling with half-covered sides, allowing ample ventilation while providing protection from the wind, rain and sun. The interior felt warm but it was surprisingly bearable. There were not that many workers.

Richard explains that at full capacity, 70 workers are needed to run the three factory lines, adding that the factory can churn out 6,000 home units — be it landed or apartment — a year.

“We have completed and handed over 6,000 units [so far]. We have overcome all technical hurdles and are very confident now, where towards the end of this year, we are looking to complete 4,000 units for a total of 10,000 units,” he explains.

Hock San highlights that MGB does not only produce IBS products for LBS Bina’s projects but also seeks other jobs.

MGB has tied up with Permodalan Negeri Selangor Bhd (PNSB), a subsidiary of the Selangor government under Menteri Besar Selangor (Incorporated) (MBI), to develop the Rumah Idaman MBI series. The six affordable housing projects — Idaman BSP in Jenjarom; Idaman Melur in Dengkil; Idaman Cahaya 1, 2 and 3 in Shah Alam; Idaman Sari in Puchong; Idaman Perdana at Alam Perdana, Puncak Alam; and Idaman Kita at Dengkil — will comprise a total of 7,120 apartments. The series has an estimated gross development value of RM2 billion, according to Hock San.

Richard says IBS is the way of the future. “If you look at this world, everything has been industrialised [made in a factory], except houses. Many years ago, Tan Sri [Lim Hock San] was showing us the vision of a high volume of units we could put to market because our focus is on the affordable segment, which has volume. So, the challenge was given: How are we going to deliver a high volume of homes and at a competitive price?

“So, looking at industrialisation or adopting precast, volume is the No 1 factor. You must have volume. We were blessed by the mother company because there is a constant supply of projects with great volume,” he says.

Richard adds that once economies of scale are reached, they will impact costs. “If you only have one project, it will be expensive [to build] by 10% to 15%; but if you have many projects, when you reach economies of scale, the cost comes down.

“The main challenge in the beginning was, how are we going to set up this factory? We could have invested a lot more money to make the factory look good, have it fully automated. But that would give us a lower ROI (return on investment). So, what we have now is the optimum way to meet the whole demand for affordable housing; we have a semi-automated system,” he says.

“The second challenge is the approach, understanding that it (the process) has to be standardised and repetitive, and this gave guidance to the whole design team. The design approach is already set in place with a meticulous management system from A to Z, which has some savings till the end of the line.”

If required, he adds, the factory can become fully automated.

The recent installation of a wire mesh machine, which produces the internal wire frame for wet concrete to secure to, also helps in precast production and lowering production costs.

Deputy CEO Isaac Lim Kim Hoe, a member of the design team, explains that the machine has helped reduce costs as the company no longer needs to purchase wire mesh from external suppliers.

He also explains that SANY worked closely with MGB to iron out the technical details. This is a great help as several stakeholders, such as subcontractors, were sceptical of the precast process.

According to data collected two years ago from MGB’s projects, there was a reduction of 33% in construction time, 31% in labour costs and 49% in onsite labour costs.

“This year, we have achieved even higher efficiency, recording an increase of 10% to 15% on top of those figures achieved two years ago,” says Isaac.

Richard adds that a typical terraced house will take 24 to 36 months to complete. With IBS, the time is reduced to between 14 and 15 months.

On whether prefab buildings are “boring” aesthetically, Richard says: “More fanciful designs can be done but it is a matter of cost. Anything can be done; it is whether it is worth doing it.”

Isaac says: “We are blessed to have a mother company, LBS Bina, which gives us a free hand in the design. We need to design the units a little bit square and not have odd shapes.”

As for quality, Richard highlights that the group’s product has zero water issues such as leaks. Also, the walls are flat and uniform, eliminating the need for plastering.

He adds that the use of machines in a factory reduces mistakes and stringent quality control ensures that products that leave the factory are of good quality. Product defects are far less compared with conventional building methods.

Moreover, the worksite is cleaner and there are fewer workers. “When bankers or visitors visit, they usually have two questions. First, where are the workers? It is a huge construction site and they don’t see any workers because it is a smaller workforce. Second, how come there is no rubbish? It is very, very clean. There are less hazardous areas,” says Hock San.

ESG in construction

As property development and construction activities produce high carbon emissions, MGB has put in place ESG initiatives to manage not only how it makes its product but also how to take care of its employees.

“We are committed to heavily reducing material wastage and energy usage. We use less raw materials than traditional construction methods,” says Richard, adding that solar panels are installed to take advantage of Malaysia’s sunny days.

“Our social commitments remain strong as well. We always ensure the safety and welfare of our workers, partly by complying with occupational safety and hazard standards.” He points out that efforts have been made to create a conducive work environment and a diverse workforce that encompasses a broad range of elements such as gender, race and ethnicity.

Thus far, there have been no major incidents at the factories. Richard says: “We’ve also kept up with our governance aspects. The factory’s operations are held to a high level of integrity, which includes stringent guidelines on procurement, code of conduct, business ethics, as well as a strong internal control and risk management framework.

“This is supported by our group’s policies such as the Whistleblowing Policy, as well as Anti Bribery and Anti-corruption Policy. So far, we have had zero incidences of impropriety reported through both internal and external channels, which demonstrates the high standard of integrity in our employees and the strong mechanisms put in place to guarantee that our business operations remain clear of any irregularities.”

Projects and plans

The Rumah Idaman MBI series has seen the launch of the following so far — Idaman BSP (launch date: March 7, 2022; 1,312 units), Idaman Melur (Dec 5, 2022; 1,448 units), Idaman Cahaya 1 (March 23, 2023; 568 units), Idaman Cahaya 2 (April 1, 2023; 872 units) and Idaman Sari (May 10, 2023; 513 units). Three others — Idaman Perdana, Idaman Cahaya 3 and Idaman Kita — are being planned.

The launched projects feature two towers of between 22 and 24 storeys. There are only two unit sizes available — 1,000 and 1,022 sq ft — with the former offering three bedrooms and two bathrooms and the latter, three bedrooms and three bathrooms. Selling prices are RM250,000 and RM288,800 respectively.

Besides local projects, MGB is moving to produce precast concrete products in Saudi Arabia. In July, it announced that its subsidiary, MGB International for Industry, had entered into a joint venture with SANY Alameriah Industrial, a branch of SANY Alameriah For Construction Co Ltd, which in turn is a JV company incorporated in Saudi Arabia between SANY and Alameriah, a top developer in the kingdom involved in construction, property development, infrastructure, design and build, and manufacturing of precast concrete products. The factory is located in Al Lith Road, Jeddah 3rd Industrial City, in Jeddah.

Back home, more plans are afoot at the Nilai factory. “We are looking to expand our capacity to meet demand as it comes. We are also continuing to experiment with new developments in the IBS ecosystem and incorporating our VaDTech into our production line to deliver to our customers and end-users value, quality and consistency in our properties,” says Isaac.

What is the outlook for the use of IBS in property development as a whole?

“It is a matter of time before the market will eventually realise and fully grasp the benefits of IBS. As labour costs continue to rise and the supply of skilled labour becomes scarce, the use of IBS will substantially reduce our exposure in relation to manpower, ensuring that our construction can carry on in a manpower shortage or where traditional construction methods are not cost effective,” says Richard.

“The advantages of IBS cannot be overstated and as the demand for IBS-built properties increases, we will be ready to meet that demand and give our IBS precast products the recognition they warrant — one that we have been building on since we started this (Nilai) factory,” says Hock San.

Source: The Edge Malaysia