KUCHING: The Works Ministry has estimated about RM1bil in compensation payments to contractors for the variation of prices (VOP) of projects arising from higher cost of building materials.

Deputy Works Minister Datuk Yong Khoon Seng said the ministry has identified 1,311 projects under the VOP.

Some RM44.2mil has been paid out for 270 projects.

"The amount for the other 1,041 projects are being determined," he said at the opening of the ministry's briefing session for VOP and industrialised building system (IBS) at the Kuching Hilton yesterday.

IBS is a construction process which utilises prefab components produced off-site of the project.

Works Minister Datuk Mohd Zin Mohamed said in his opening speech, read by Yong, that the compensation payment was to reduce the losses suffered by the contractors.

The VOP payment was to ensure that projects under the Ninth Malaysia Plan (9MP) could be implemented without delay.

Mohd Zin said the ministry had approved 404 projects worth RM9.4bil under the 9MP which would use the IBS.

"Another 121 projects using the IBS will be tendered out from now to next year," he added.

Mohd Zin said the Government had directed its agencies to use 70% of IBS in their projects, including in the people's housing schemes.

The Government hoped to reduce the number of foreign workers in the construction industry to 250,000 by 2015 with wider use of the IBS.

He said there was an estimated 2.2 million foreign

workers (only 315,000 were registered) who repatriated some RM18bil a year to their home countries, resulting in a big loss to Malaysia in foreign exchange.