The Minister of Commerce and Industry, Abdullah Al-Joaan, has issued a decision mandating the establishment of a joint coordination committee to study the rise in the prices of construction material and ensure the smooth flow of supply chains within local markets.
The 10-member committee, as outlined in the decision obtained by Al-Qabas, will investigate the reasons behind the surge in construction material costs and propose solutions to address disruptions in private supply chains. Additionally, the committee will assess the logistics services’ expenses within the building materials market, encompassing shipping, transportation, and storage.
This decision coincides with the government’s advancement of major development projects outlined in the seventeenth legislative term’s government work program for 2024-2027.
Informed sources have confirmed that the notable hike in prices of primary raw materials, including structural steel supports, rebar, timber, copper pipes, and cables, coupled with labor shortages in the regional building and construction sector, are the principal drivers behind the recent increase in construction costs.
As per the Minister of Commerce’s directive, the committee is expected to deliver its final report, along with recommendations, within one month of its establishment.
The committee, chaired by the Undersecretary of the Ministry of Commerce and Industry, Ziyad Al-Najem, will include representatives from various entities, including the Public Authority for Industry, the Kuwait Ports Authority, the General Administration of Customs, the Ministry of Public Works, and the Competition Protection Agency.
Additionally, representatives from the Chamber of Commerce and Industry, the Federation of Kuwait Industries, the Kuwait Institute for Scientific Research, and the Office of the Minister of Trade and Industry will also be members.
Concerns over escalating shipping costs have surfaced in recent economic reports, indicating a 250 percent increase in shipping expenses through the Red Sea since late November 2023.
Ongoing attacks on commercial ships in the Red Sea and disruptions to trade movements may exacerbate global inflation, impacting countries in the Gulf and beyond by raising freight charges for imports. Alternative transit routes for ships traversing between East and West have prolonged shipping durations from 10 to 14 days, incurring additional operational expenses for shipping companies, such as labor and fuel costs.
6 reasons cited for the high cost of building materials
- Limited factories that produce building materials in the local market.
- Scarcity of manpower in the construction and electricity sector, which raises the cost of contracting with them, and this is reflected in the cost of the construction process.
- The rise in global inflation has affected the prices of raw materials, especially building materials.
- The escalation in the cost of shipping goods imported from abroad due to the disturbances in the Red Sea.
- High cost of storage space.
- The culture of individual or collective import from abroad does not spread among citizens.