Security of payment in Malaysian construction industry: issues on sub-contract's direct payment

Azizan Supardi and Hamimah Adnan

MPRA Paper from University Library of Munich, Germany

Abstract: In Malaysia, sub-contractors have to bear with the current structure of payment mechanisms in the standard forms of contract, which are payment upon certification, direct payment from the employer, and contingent or conditional payment. However, „direct payment‟ provision is applied for in most of the nominated sub-contracts and not to the domestic sub-contractors; thus the Construction Industry Payment and Adjudication (CIPA) Act is proposed. This paper, though, is to disclose the findings on legal cases and sub-contractors‟ perspective on direct payment, by preliminary analyzing the quantitative questionnaire survey to the first 81 from the identified 1,500 sub-contractors throughout the country. Before that, from 186 cases, only 5 selected cases are analysed that thoroughly addressed the judgment of direct payment. It is found out that the particularly small sized subcontractors are definitely need to enhance their knowledge of the so-called the „Security of Payment‟ Regime to benefits from the proposed Act.

Keywords: Malaysia; Legal readiness; Sub-contractors; Security of payment; Construction industry (search for similar items in EconPapers)
JEL-codes: K12 K32 L74 (search for similar items in EconPapers)
Date: 2011-08-26, Revised 2011-08-26
New Economics Papers: this item is included in nep-cis and nep-sea
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