The study, based on interviews with staff of three construction companies in the Klang Valley, alleged the sector was plagued by multilevel bribery.
It starts even before a single brick is laid and continues on a monthly basis.
Main contractors may even need to set aside about RM20,000 every month for bribes to different enforcement agencies which carry out inspections at their worksite.
Those who do not “play ball” risk losing out on tenders, not getting the necessary approvals for construction, having their foreign workers harassed or having their sites raided.
“Authorities, including police officers, will harass foreign workers by locking them up for two weeks or longer if no bribes are paid,” read the study titled, “Corruption in the Supply Chain: Forms and Impact to Consumers”.
“Such tactics are used to intimidate business owners or contractors – and cause losses by disrupting their operation – who then have to comply with their request,” the report states.
Despite this, some of the interviewees of the study conducted by the Institute for Democracy and Economic Affairs and the Coalition for Business Integrity, said these corrupt practices were a norm and a “cost of doing business”.
On the cost of the bribes the study found that main contractors may have to fork out up to RM1,000 in bribes for each of their foreign workers, often numbering over a hundred, to the relevant government agencies to secure a five-year permit.
Even subcontractors have to pay main contractors if they want a slice of the action, paying them around RM500,000 for a project valued at between RM100 million to RM300 million.
The study said the cost of these corrupt practices are passed on to the consumer in the form of higher property prices, compromised standards or a lower quality end-product. It could hinder foreign investment.
The interviewees said inefficient bureaucratic processes provide opportunities for corruption as businesses sought to “grease the wheel” to speed up approvals or avoid enforcement.
The study called for the strengthening of the Malaysian Anti-Corruption Commission to make it more independent, including having the appointment of senior officers vetted by a Parliamentary panel.
Another recommendation in the report was for the government to simplify high regulatory barriers which can be a driver of corruption.