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

Author

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  • Supardi, Azizan
  • Adnan, Hamimah

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.

Suggested Citation

  • Supardi, Azizan & Adnan, Hamimah, 2011. "Security of payment in Malaysian construction industry: issues on sub-contract's direct payment," MPRA Paper 34023, University Library of Munich, Germany, revised 26 Aug 2011.
    • Handle: RePEc:pra:mprapa:34023
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    File URL: https://mpra.ub.uni-muenchen.de/34023/1/MPRA_paper_34023.pdf
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    References listed on IDEAS

    as
    1. Supardi, Azizan & Adnan, Hamimah & Mohammad, Mohammad Fadhil, 2011. "The adequacy of Malaysian security of payment legislation for sub-contractors in construction industry," MPRA Paper 34013, University Library of Munich, Germany, revised 05 Jul 2011.
    2. Supardi, Azizan & Yaakob, Jamaluddin & Adnan, Hamimah, 2009. "Performance bond: conditional or unconditional," MPRA Paper 34007, University Library of Munich, Germany, revised 2009.
    3. Supardi, Azizan & Adnan, Hamimah & Mohammad, Mohammad Fadhil, 2011. "Security of payment regime in construction industry: are Malaysian sub-contractors ready?," MPRA Paper 34025, University Library of Munich, Germany, revised 2011.
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    1. Supardi, Azizan & Adnan, Hamimah & Mohammad, Mohammad Fadhil, 2011. "The adequacy of Malaysian security of payment legislation for sub-contractors in construction industry," MPRA Paper 34013, University Library of Munich, Germany, revised 05 Jul 2011.
    2. Supardi, Azizan & Adnan, Hamimah & Mohammad, Mohammad Fadhil, 2011. "Security of payment regime in construction industry: are Malaysian sub-contractors ready?," MPRA Paper 34025, University Library of Munich, Germany, revised 2011.

    More about this item

    Keywords

    Malaysia; Legal readiness; Sub-contractors; Security of payment; Construction industry;
    All these keywords.

    JEL classification:

    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • L74 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Construction

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