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ABSTRACT

The Association of South East Asian Nation (ASEAN) has stated its intention
to establish an economic integration amongst ASEAN country members
called ASEAN Economic Community (AEC). The AEC aims to transform
ASEAN into a single market and production base, a highly competitive
economic region, a region of equitable economic development, and a region
fully integrated into the global economy. In realising a single market, service
liberalisation was introduced and ASEAN has agreed to liberalise the trade of
services through the workings of ASEAN Framework of Agreement in
Services (AFAS) in addition to existing commitments through General
Agreements on Trade in Services (GATS) in the World Trade Organization
(WTO). The aim of this study is to investigate the potential benefits of AECs
policy on free flow of skilled labour to the Malaysian construction industry
and its effects on the Quantity Surveying profession in Malaysia. Data
collection was conducted through questionnaire survey among registered
practicing quantity surveyors (QS). Responses from 31 respondents were
analysed using the average index. This study finds that among the potential
benefits of AEC towards the Malaysian construction industry is that the
construction industry will be opened to more domestic and foreign markets,
construction firms become more competitive and target market becomes
larger. The potential effects of service liberalisation towards the QS
profession include greater competition between domestic and foreign QS,
increase competition of QS employment and more diverse QS services.

APPROVAL PAGE

This dissertation was submitted to the Department of Quantity Surveying and is


accepted as a partial fulfilment of the requirements for the degree of Bachelor of
Quantity Surveying

_____________________
Head, Department of Quantity Surveying

ii

DECLARATION

I hereby declare that this dissertation is the result of my own investigations, except
where otherwise stated. I also declare that it has not been previously or concurrently
submitted as a whole for any other degree at IIUM or other institutions.

AINUL ASHIQIN BINTI AHMAD SHUHAIMI

Signature ______________________

Date ___________________

iii

INTERNATIONAL ISLAMIC UNIVERSITY MALAYSIA

DECLARATION OF COPYRIGHT AND AFFIRMATION OF FAIR USE OF


UNPUBLISHED STUDY

Copyright 2013 by Ainul Ashiqin Binti Ahmad Shuhaimi. All rights reserved.
ASEAN ECONOMIC COMMUNITY (AEC): EFFECTS OF SERVICE
LIBERALISATION TOWARDS THE QUANTITY SURVEYING
PROFESSION THE QS PERCEPTIONS
No part of this unpublished study may be reproduced, stored in a retrieval system or
transmitted, in any form by any means, electronic, mechanical, photocopying,
recording or otherwise without prior written permission of the copyright holder
except as provided below.
1. Any material contained in or derived from this unpublished study may only be
used by others in their writing with due acknowledgement.

2. IIUM or its library will have the right to make and transmit copies (print and
electronic) for institutional and academic purposes.

3. The IIUM library will have the right to make, store in a retrieval system and
supply copies of this unpublished study if requested by other Universities and
research institutions.

Affirmed by Ainul Ashiqin Binti Ahmad Shuhaimi

Signature _______________________

iv

Date ______________

DEDICATION
Specially dedicated to...
My family;
Ahmad Shuhaimi bin Mat Dom
Ainon Jariah binti Muhamad
Amin Arif & Yuslinaniza
Ainil Ainiah & Mohd Zulhairy
Anis Adriana
Amin Ashraf
Ammar Hadif
Zahara Amani
My classmates;
Nawwar Harliyana
Nur Athirah
Nur Ayunni
Nur Najiah
Su Thazin Tun
Najwa Izni & others
My cheerleaders;
Alfatihul Sakinah
Hafizah Mohd Zaidi
Siti Hajar Madina
... for the love and support. Thank you.

ACKNOWLEDGEMENT
In the name of Allah, The Most Gracious, The Most Merciful. All praises be
to Allah (SWT) who gave me the opportunity, time, strength, courage and patience to
complete this dissertation successfully.
My sincere appreciation goes to my supervisor, Asst. Prof. Dr. Sharina
Farihah Hasan for her guidance, encouragement as well as for the academic and
moral support. Her constructive comments and suggestions have contributed to the
success of this research. I am extremely indebted to her who keenly devoted so much
time in giving guidance to me despite her busy schedule.
My highest gratitude goes to my beloved parents, Ahmad Shuhaimi Mat Dom
and Ainon Jariah Muhamad for their unconditional love, prayers and encouragement.
Special thanks also dedicated to my supportive siblings; Amin, Yuslinaniza, Ainil,
Zulhairy, Anis, Ashraf for their endless support and tolerance throughout my
academic years.
To my favourite cheerleaders; Alfatihul, Hajar and Hafizah, thank you for
your undying encouragements and care. To my wonderful classmates; thank you for
making these 4 academic years a joyous one despite of all the stress from exams and
deadlines.
And, to those who have indirectly contributed to this research, your kindness
means a lot to me and may Allah bless you always. Thank you.

vi

CONTENTS

ABSTRACT

APPROVAL PAGE

ii

DECLARATION PAGE

iii

COPYRIGHT PAGE

iv

DEDICATION PAGE

ACKNOWLEDGEMENT

vi

TABLE OF CONTENTS

vii

LIST OF TABLES

xi

LIST OF FIGURES

xii

LIST OF ABBREVIATION

xiii

CHAPTER 1 - INTRODUCTION OF RESEARCH


1.1

INTRODUCTION

1.2

PROBLEM STATEMENT

1.3

AIM & OBJECTIVES

1.4

SCOPE OF RESEARCH

1.5

RESEARCH QUESTIONS

1.6

RESEARCH METHODOLOGY

1.6.1

RESEARCH DESIGN

1.7

SIGNIFICANCE OF THE RESEARCH

1.8

SUMMARY

10

CHAPTER 2 - ASEAN ECONOMIC COMMUNITY

2.1

INTRODUCTION

11

2.2

AN OVERVIEW OF THE ASEAN ECONOMIC COMMUNITY

11

2.2.1

12

Formation Background

vii

2.2.2

2.3

ASEAN Economic Community Blueprints

12

2.2.2.1

Pillar I: Single Market and Production Base

12

2.2.2.2

Pillar II: Competitive Economic Region

16

2.2.2.3

Pillar III: Equitable Economic Development

17

2.2.2.4

Pillar IV: Integration into the Global Economy

18

SERVICES LIBERALISATION

19

2.3.1

ASEAN Framework of Agreement in Services (AFAS)

19

2.3.2

General Agreement on Trade in Services (GATS)

21

2.4

ASEAN ECONOMIC COMMUNITY ASPECTS

23

2.5

CONCLUSION

23

CHAPTER 3 - MALAYSIAN CONSTRUCTION INDUSTRY

3.1

INTRODUCTION

3.2

OVERVIEW OF THE MALAYSIAN CONSTRUCTION


INDUSTRY

3.3

24

24

3.2.1

Background of the Malaysian Construction Industry

24

3.2.2

Current Status

25

SKILLED LABOUR IN THE MALAYSIAN CONSTRUCTION


INDUSTRY
26

3.4

3.5

3.3.1

Definition of Skilled Labour

26

3.3.2

Construction Industrys Professionals

27

3.3.3

Issues on the Professionals in the Malaysian


Construction Industry

27

AEC AND THE CONSTRUCTION INDUSTRY

34

3.4.1

AEC and Development

34

3.4.2

Potential Benefits

35

3.4.3

Potential Effects

37

CONCLUSION

40

viii

CHAPTER 4 - RESEARCH METHODOLOGY

4.1

INTRODUCTION

41

4.2

RESEARCH STRATEGY

41

4.2.1

41

4.3

Reviews on Research Methodology of Similar


Researches

APPROACHES TO DATA COLLECTION

44

4.3.1

Secondary data collection

44

4.3.2

Primary data collection

44

4.4

METHOD OF DATA ANALYSIS

52

4.5

SUMMARY

54

CHAPTER 5 - DATA ANALYSIS AND DISCUSSION

5.1

INTRODUCTION

55

5.2

FEEDBACK FROM SURVEY

56

5.3

PART A - RESPONDENTS PARTICULAR

58

5.3.1

Respondents Gender

58

5.3.2

Respondents Age

58

5.3.3

Respondents Types of Employment Agency

59

5.3.4

Years of Experience

60

5.4

PART B - THE AWARENESS/ UNDERSTANDING OF THE


AEC

61

5.5

PART C - THE POTENTIAL BENEFITS OF AEC ON THE


MALAYSIAN CONSTRUCTION INDUSTRY

63

5.6

PART D - THE AWARENESS ON THE AEC AND THE


SERVICE LIBERALISATION

67

5.7

PART E - THE POTENTIAL EFFECTS OF AFAS AND MNP


TOWARD THE MALAYSIAN QS PROFESSION

68

5.8

SUMMARY

72

ix

CHAPTER 6 - DISCUSSION AND FINDINGS

6.1

INTRODUCTION

73

6.2

FEEDBACK FROM SURVEY

73

6.3

THE POTENTIAL BENEFITS OF AEC ON THE MALAYSIAN


CONSTRUCTION INDUSTRY

74

6.3.1

76

6.4

6.5

Comparison between Literature Review and Findings

THE POTENTIAL EFFECTS OF ASEAN FRAMEWORK OF


AGREEMENT IN SERVICES (AFAS) AND ITS MOVEMENT OF
NATURAL PERSONS TOWARD THE MALAYSIAN QS
PROFESSION

77

6.4.1

79

Comparison between Literature Review and Findings

SUMMARY

80

CHAPTER 7 - CONCLUSION AND RECOMMENDATION

7.1

INTRODUCTION

81

7.1.1

Objective 1

81

7.1.2

Objective 2

82

7.1.3

Objective 3

82

7.2

LIMITATIONS

83

7.3

RECOMMENDATION

83

REFERENCES

xiv

APPENDICES

xxi

LIST OF TABLES
Table 3.1

Summary of Potential Benefits to QS Profession in Malaysia

37

Table 3.2

Summary of Potential Effects to the QS Profession in Malaysia

40

Table 4.1

Reviews on Research Methodology of Similar Researches

43

Table 5.1

Feedback from Survey

56

Table 5.2

Returned Questionnaires

57

Table 5.3

Respondents Gender

58

Table 5.4

Respondents Age

58

Table 5.5

Respondents Types of Employment Agency

59

Table 5.6

Years of Experience

60

Table 5.7

The awareness and understanding

62

Table 5.8

The potential benefits

65

Table 5.9

The awareness

67

Table 5.10

The potential effects

70

Table 6.1

The Potential Benefits According to Scales

74

Table 6.2

Comparison of the Potential Benefits between the Literature Review


and Findings

76

Table 6.3

The Potential Effects According to Scales

77

Table 6.4

Comparison of the Potential Effects between Literature Review and


Findings

79

xi

LIST OF FIGURES
Figure 1.1

Research Background

Figure 2.1

Summarised Relationship

22

Figure 3.1

Factors of Brain Drain

28

Figure 3.2

Issues on Brain Drain

31

Figure 3.3

Professional Vacancies

32

Figure 4.1

Method of Data Collection

45

Figure 4.2

Method of Sampling

51

Figure 4.3

Research Methodology

54

Figure 5.1

Feedbacks from Survey

57

Figure 5.2

Returned Questionnaires

57

Figure 5.3

Respondents Gender

58

Figure 5.4

Respondents Age

59

Figure 5.5

Respondents Types of Employment Agency

60

Figure 5.6

Years of Experience

61

Figure 5.7

The awareness and understanding

62

Figure 5.8

The potential benefits based on Average Index

66

Figure 5.9

The awareness

67

Figure 5.10

The potential effects based on Average Index

71

xii

LIST OF ABBREVIATION
ASEAN - Association of South East Asian Nation
EU - European Union
AEC - ASEAN Economic Community
AFAS - ASEAN Framework of Agreement in Services
MNP - Movement of Natural Persons
BQSM - Board of Quantity Surveyors Malaysia
QS - Quantity Surveyors
AFTA - ASEAN Free Trade Agreement
WTO - World Trade Organization
GATS- General Agreements on Trade in Services
RTA - Regional Trade Agreements
CER - Closer Economic Relations Agreement
AIA - ASEAN Investment Area
FDI - Foreign Direct Investment
AUN - the ASEAN University Network
IPR - Intellectual Property Rights
CLMV - Cambodia, Laos, Myanmar and Vietnam
GDP - Gross Domestic Product
SME - Small And Medium Enterprise
IAI - Initiative for ASEAN Integration
MRA - Mutual Recognition Agreements
AFAFGIT - ASEAN Framework Agreement on the Facilitation of Goods in Transit
AFAMT - ASEAN Framework Agreement on Multimodal Transport
AFAFIST - ASEAN Framework Agreement on Facilitation of Interstate Transport
CIDB - Malaysian Construction Industry Development Board

xiii

CHAPTER 1
INTRODUCTION OF RESEARCH

1.1

INTRODUCTION
The Association of South East Asian Nation (ASEAN) has stated its intention to

establish an economic integration amongst ASEAN country members, an initiative


made upon witnessing the success of the European Union (EU) (Moorthy & Benny,
2012). The ASEAN region is envisioned to be a Zone of Peace, Freedom and
Neutrality (ASEAN Vision 2020), in full reality by 2020 as envisaged in the Kuala
Lumpur Declaration of 1997 (Hartarto, 2011). The Heads of States/ Government of
ASEAN members in the ASEAN Concord II, Bali, Indonesia of 2003 recalled their
earlier decision on the establishment of the ASEAN Economic Community (AEC) to
be accelerated to 2015 during the 12th ASEAN Summit in Philippines (ASEAN
Economic Community Blueprint 2008).
According to Petri, Plummer & Fan Zhai (2010), AEC is considered as an
ambitious and sophisticated initiative which takes into consideration every possible
obstacle that may arise due to different political, social, economic backgrounds and
the population size of each ASEAN country. AEC aims for market liberalisation with
its structural components consisting of four pillars which are; single market and
production base, competitive economic region and equitable economic development
and integration into the global economy (Capannelli, 2012). Capannelli (2012)
further stated that the first pillars core element focuses on the free-flow of good,
skilled-labour, services, investments and capital. This study shall look into the
service liberalisation under the AEC and its free flow of skilled labours on how these
two policies and agenda shall affect the Malaysian QS profession.
Dee (2011) stated that, AEC is intended to deepen economic integration in East
Asia as a whole. Thus, in order to achieve free flow of good, skilled-labour,
services, investments, and capital, the AEC Blueprint has laid out sequential events
designed to achieve an ASEAN single market.

Market liberalisation policy

according to Zhen Li (2012), takes place when a country removes its marketing

barriers allowing foreign investors to invest in the countrys domestic market and the
domestic investors in turn are given the right to invest in foreign shares. This idea of
market liberalisation according to Azryani and Rubi (2009) is an act of removing the
legal and informal restrictions to allow integration of capital market within the
region.
One of the ways towards realising the free flow of skilled labour under the AEC
is through the ASEAN Framework of Agreement in Services (AFAS). This
agreement is made, believing that the ASEAN can benefit from this service
liberalisation through greater efficiencies and greater growth from goods trade
liberalisation (Hartarto, 2011). In 2003, the Labour Ministers noted the need to
accelerate the service liberalisation by 2010 (Chia, 2011). The AFAS 1995 provides
inter alia, regulatory convergence and regulatory harmonisation including MRAs that
allows ASEAN countries to recognise the education and experience gained and
granted licensing or certification to the service providers by the other ASEAN
countries (Chia, 2011).
According to Chia (2011), AEC aims to provide the market access for ASEAN
professionals and skilled workforce under the Movement of Natural Persons (MNP).
According to Steiner and Mohr (1998) as cited by Ponnusamy, Mohamad bin Ayob
and Muhamad Azani Yahya (2011), skilled workers are defined as those with the
acquisition of university degrees and with possession of a long-line of experience in
the field. Chia (2011) mentions that, these skilled workers range from business
visitor, trade and investors, intra-corporate transferees and professional (i.e. doctors,
lawyers, engineers and etc).
Professionals such as engineers, accountants, technical workers and many others
from developing countries were driven to take chances in developed countries to
seek for better payment or better lifestyle standards, and Malaysia is not an exception
to this trend. As a result, this phenomenon has led local entities to seek foreign talent
to fill in the gaps, (Junaimah and Yusliza, 2011). Involvement of foreign
professionals in Malaysias construction industry does make positive changes
towards the local industry. However, this according to Ponnusamy, Mohamad bin

Ayob, Muhamad Azani Yahya, (2011) does not mean that local professionals are
incapable of performing as good.

1.2

PROBLEM STATEMENT
Over the past decade the movement of professionals across country borders has

been a trend and have clearly grown over the years especially in fast developing
countries even during the economic crises (Abella & Ducanes, 2009; Ponnusamy,
Mohamad and Azani, 2011). The main concern is the scale of such movement upon
the establishment of AEC in 2015 that encourages regional market integration
facilitates through free flow of skilled labour among the ASEAN country. The
movement of foreign professionals for the construction industry into Malaysia is
currently restricted by several policies one of which requires foreign talents to be
pre-employed before being granted access into Malaysia (Ponnusamy, Mohamad and
Muhamad, 2011).
In the case of the Quantity Surveying profession, the Board of Quantity
Surveyors Malaysia (BQSM) clearly states the regulations pertaining to the practice
of foreign Quantity Surveyors (QS). According to the Quantity Surveyors Act 487
(1967), Clause 10.A, under the heading Temporary Register Quantity Surveyor, a
foreign QS may practice in the local construction industry provided that the foreign
QS obeys and fits all regulations under the clause. It is also stated that the QS is only
allowed to practice Quantity Surveying for a period not more than two calendar years
and with a job that his physical presence is required in Malaysia. However, with the
encouragement and new arrangements made through AEC, it is forecasted that the
movement of foreign skilled workers into Malaysia shall be even greater. As of 2010
as reported by the Ministry of Home Affairs Malaysia as cited by Luqman Ahmad
(2012) in his report, the number of expatriates in Malaysia has reached 200 000
personnel. However, there is no exact figure to reflect the number of QS moving into
the country to practice Quantity Surveying works. The figure mentioned only reflects
the overall number of expatriates in Malaysia.
Then there is the outflow of professional skills, which according to Ahmed
Usman Awil and Abdul Rashid Abdul Aziz (2001), occurs based on two main factors

that drive local firms and professionals towards foreign market. The first factor
includes the individuals and the organisations goals with regards to their
capabilities, strategies and resources. The second factor is driven by the different
lifestyle standards and the difference in the market policies such as legal
requirements, tax regulations and others. The concern of this study is whether as of
2010 the number of Malaysians residing in foreign countries, like Singapore, United
Kingdom, United states, Brunei, Australia totals 1million in which a third of them
are skilled labours as reported by Luqman Ahmad (2012), citing The World Bank
2012. Furthermore, according to the Australian Governments Department of
Immigration and Citizenship (2012), 4,617 visas on skilled labour were granted to
Malaysian nationals between 2011 and 2012, the professional line includes Contract,
program and project administrators, engineering professionals and others service
sector professionals. Again, there has been no exact statistics on the movement of QS
professionals in particular.

1.3

AIM & OBJECTIVES


AIM
The aim of this study is to investigate the potential benefits of AECs policy

on free flow of skilled labour to the Malaysian construction industry and its effects
on the Quantity Surveying profession in Malaysia.
OBJECTIVES
The objectives of this research are:
1) To understand AEC and its policy
2) To identify the potential benefits of AEC policy on the Malaysian
construction industry
3) To assess the potential effects of AFAS and MNP on the QS profession
in Malaysia.

1.4

SCOPE OF RESEARCH
This study looks at how AEC affects the Malaysian construction industry in

general. It focuses on how the free flow of skilled labour under the establishment of
AEC could affect the QS profession in Malaysia. The allowance for less restriction
of services, goods, skilled labours, and investments will certainly take its toll towards
the local construction industry, thus, this study intends to identify the benefits of this
movements towards the local construction industry through collective perceptions of
experienced QS. Assessment of the impact of AECs free flow of skilled labour will
be gathered from the perceptions of those practicing QS firms. Their collective
genuine perceptions are crucial for this research study because of their years of
experience in the profession and their exposure to how the QS profession in Malaysia
has changed throughout the years.
The collective perceptions of these QS are obtained through primary data
collection, which will be further explained in Chapter 4. The data collected shall then
be analysed using the frequency distribution that uses the average index formula to
find the final weightage on respective potential benefits and potential effects.

1.5

RESEARCH QUESTIONS
Based on the objectives of the research, the research questions to be addressed

are as follows:
1) What are the QS perceptions of the potential benefits of AEC policy on
the Malaysian construction industry?
2) What are the QS perceptions on the potential effects of the free flow
skilled labour policy on the employment of Quantity Surveyors?

1.6

RESEARCH METHODOLOGY
1.6.1 RESEARCH DESIGN
Participant/ Sample
The target sample for this research study are Quantity Surveying firms; in this
research context, Quantity Surveying firms includes QS individuals, Senior
QS, QS companies, QS firms Principles, and QS firms Directors.
Data Collection
Data collected is based on a survey using a self-constructed questionnaire.
Data Analysis
Respondents for the survey questionnaire will be descriptively analysed based
on percentage means.

1.7

SIGNIFICANCE OF THE RESEARCH


The findings of this research study would help cast some light as what and how

the AEC policies affect the movement of the skilled labours, specifically that of the
Quantity Surveying profession in Malaysia. The findings of this study also help the
young graduates and young Quantity Surveyors to be prepared for what is in store
with the establishment of AEC in 2015. Malaysian QS firms and policy makers
would be made more aware of the impacts of the AEC policies on the construction
industry. Knowledge of theirs can therefore be a helpful guide in planning and
decision making.

1.8

SUMMARY

BACKGROUND STUDY
ASEAN ASEAN Economic Community (AEC) Service Liberalisation AEC Core
Element, Free flow of Skilled Labour Professionals in the Construction Industry
Quantity Surveyors Perceptions on AEC

PROBLEM STATEMENT
Issue: Implication of free flow of skilled labour via AEC
Problem: Greater competition for job opportunities locally and predictions on professionals
brain drain

AIM
The aim of this study is to investigate the potential benefits of AECs policy on free flow of
skilled labour to the Malaysian construction industry and its effects on the Quantity
Surveying profession in Malaysia.

RESEARCH QUESTIONS
RESEARCH METHOD
1. What are the QS perceptions of the
potential benefits of AEC policy on the

------

Survey

Malaysian construction industry?


2. What are the QS perceptions on the
potential effects of the free flow skilled

-----Survey

labour policy on the employment of


Quantity Surveyors?

DATA ANALYSIS
Descriptive Analysis Frequency Distribution/ Percentage/ Average Index

OUTCOME OF RESEARCH
The perceptions and views of Quantity Surveyors firms in the establishment of AEC towards
future construction industry, QS profession in particular.
Figure 1.1 - Research Background 1

CHAPTER 2
ASEAN ECONOMIC COMMUNITY

2.1

INTRODUCTION
Chapter 2 is a chapter that presents the review of the literature on ASEAN

Economic Community (AEC) by looking at two major sections. Each section focuses
on two different aspects of AEC with a common aim to explain, describe and analyse
in order to understand the purpose of the AEC agenda and to relate it to the
objectives of this study, which are:
1) To understand AEC and its policy
2) To investigate the potential benefits of AEC policy on the Malaysian
construction industry
3) To investigate the potential effects of AFAS and MNP on the QS
profession in Malaysia.

2.2

AN OVERVIEW OF THE ASEAN ECONOMIC COMMUNITY (AEC)


The Association of the Southeast Asian Nations (ASEAN) was originally

formed for geopolitical reasons (Chia, 2011). It is only later after the formation of
ASEAN, that the country members worked towards economic cooperation (Chia,
2011). The Heads of State/ Government of ASEAN envisioned that the region shall
be a zone of Peace, Freedom and Neutrality in 2020 (ASEAN Secretariat, 1997).As
part of the ASEAN Vision 2020, the leaders have resolved towards an economic
integration through the ASEAN 2020: Partnership in Dynamic Development
(ASEAN Secretariat, 1997). The AEC aims to transform ASEAN into a single
market and production base, a highly competitive economic region, a region of
equitable economic development, and a region fully integrated into the global
economy (ASEAN Secretariat, 2008). The Association of South East Asian Nation
(ASEAN) have stated their intention to establish an economic integration amongst
ASEAN country members, an initiative made upon witnessing the success of the
European Union (EU) (Moorthy& Benny, 2012).
8

2.2.1 Formation Background


In 2003, the ASEAN Economic Community (AEC) was initially planned to
be fully realised by 2020, but later, in 2007 the Leaders made a decision to speed up
the establishment to 2015(AEC Fact Book, 2011). The wide economic gaps between
the ASEAN countries have slowed down the building pace of the regions economic
integration and liberalisation (Chia, 2011). Despite the slow pace, ASEAN members
have been showing progress and maintaining their commitments towards realising
this mission. According to Chia (2011), The economic literature lists several
benefits of integration, including an enlarged market with economies of scale and
scope, improved resources allocation with free movement of factors of production,
improved resources pools with inflows of capital and labour, and competition leading
to improved efficiency and innovation. ASEAN Vision 2020 envisioned that the
regional economic integration shall be built by strengthening the foundation of the
existing collaboration efforts, expanding ASEANs joint efforts and enhancing
mutual aid (ASEAN Secretariat, 1997).
2.2.2 ASEAN Economic Community Blueprints
The ASEAN Economic Community (AEC) Blueprint was adopted in
2007(AEC Fact Book, 2011).

The blueprint defines the characteristics of the

implementation of AEC. There are four pillars under the AEC, which are; (1) single
market and production base, (2) competitive economic region, (3) equitable
economic development and (4) integration into the global economy.
2.2.2.1

Pillar I: Single Market and Production Base


A single market shall be barrier free, with tariff or without tariff to the

movement of goods and services among the 10 countries within the ASEAN region
(Reyes, 2004).

According to Reyes (2004), with full execution of the Green Lane

system for products covered by the ASEAN Free Trade Agreement (AFTA),
electronic

processing

of

trade

documents,

harmonization

of

standards,

implementation of Mutual Recognition Agreements, no visa entry and exit, and


removal of all other non-tariff and technical barriers, there would be free movement
of goods and people. A single market and production base is expected to reduce and

minimise operation cost and to maximise trade gains (Trairatvorakul, 2011). The full
implementation of this pillar shall result in a more advanced competitive production
environment among ASEAN producers (Reyes, 2004). Pillar 1 has five (5) core
elements which are: (i) free flow of goods; (ii) free flow of services; (iii) free flow of
investment; (iv) freer flow of capital; and (v) free flow of skilled labour. There are
also another two additional components under the first AEC pillar, which are: the
priority integration sectors, and food, agriculture and forestry.
(i)

Free Flow of Goods

This could be achieved through the elimination of non-tariff barriers in some


cases (AEC Blueprint, 2008). The aim of the free flow of goods is to minimise the
transaction costs and to achieve trade maximisation (Zakariah, Zhai, Petri, Plummer,
& Chia, 2009). To achieve a single market, it shall require the removal of all border
restrictions and full National Treatment in respect to the taxes and other charges and
regulations (Lloyd, 2007). These steps need to be supported by the harmonisation of
laws and regulations between and across national borders to ensure a single price
ruling among the countries (Lloyd, 2007).

Box 2.1
National Treatment
National treatment is a rule that a good or factor that crosses the border should
receive the same treatment. In World Trade Organization (WTO) and in many
treaties, National Treatment is couched in terms of treatment that is no less
favourable than the treatment accorded national products or corporations or persons.

Source: What is a Single Market? An Application to the Case of ASEAN (Lloyd,


2007).

10

(ii)

Free Flow of Services

This is one key element in AEC, where there will be no extensive restriction
to ASEAN services suppliers in providing services and in establishing companies
across national borders within the ASEAN, subject to domestic set of laws (AEC
Blueprint, 2008).
The role of the service sector in the domestic economy is reflected in the
international economy as well (Zakariah et. al, 2009). According to Zakariah et al
(2009), General Agreements on Trade in Services (GATS) was established by the
Uruguay Round in order to promote trade in services and service liberalisation and
went into full effect in 1995. Seeing how liberalisation has become an important part
of the regional trade agreements (RTA), several other agreements aside from GATS
have been agreed upon; ASEAN concluded on the ASEAN Framework Agreement
on Services (AFAS) and Australia and New Zealand concluded on the Closer
Economic Relations Agreement (CER).
(iii)

Free Flow of Investment

Continued inflows of new investments and reinvestments will promote and


make certain dynamic development of ASEAN economies (AEC Blueprint, 2008).
In order to support the establishment of AEC, the ASEAN Investment Area
(AIA) was signed in 1998 (Hew, 2007). Hew (2007) also stated that the AIA aims to
make ASEAN a highly competitive investment area that will attract foreign direct
investment (FDI) from ASEAN countries and non-ASEAN countries. The AIA is
also expected to provide greater benefits for the investors through greater
investments access to the industries and economic sectors (Hew, 2007).
(iv)

Free Flow of Capital

This is to strengthen ASEAN capital market development and integration and


to allow better capital mobility (AEC Blueprint, 2008).
The free flow of capital is aimed to be achieved by strengthening the
domestic capital market to provide a better channel towards a more efficient use, and

11

enhancing capital account liberalisation that shall allow both inflow and outflow of
capitals (Trairatvorakul, 2011).
(v)

Free Flow of Skilled Labour

This is about allowing controlled mobility or facilitated entry for the


movement of natural person (MNP) engaged in goods, services and investments, in
accordance to existing domestic regulations (AEC Blueprint, 2008).
ASEAN is encouraging the movement of skilled labour through this core
element of AEC pillars. The movement of skills is not limited to practitioners; it aims
to facilitate the movement of knowledge based talents including those involved in the
academic field. ASEAN is working towards facilitating the issuance of skill visas
and employment passes for ASEAN professionals and skilled labours, facilitating the
free flow of services, enhancing the ASEAN University Network (AUN) and
strengthening ASEAN member country research capabilities in promoting skills
(Chia, 2011). Many countries in Asia have eased the allowance for foreign skilled
movement but with a considerable amount of restrictions and policies in order to
protect their local talents from eventually being replaced by expatriates (Iredale,
Turpin, Stahl, & Getuadisorn, 2010).
(vi)

Priority Integration Sectors

Twelve (12) priority sectors were recognized to fasten the economic


integration, which are: agro-based, air transport, automotive products, e-ASEAN
(including IT equipments), electronic goods, fisheries, healthcare, rubber based,
textiles and clothing, tourism, logistics and wood based products (AEC Blueprint,
2008).
(vii)

Food, Agriculture and Forestry

This is to enhance intra and extra-ASEAN trade and long-term


competitiveness of ASEANs food, agriculture and forestry products and goods
(AEC Blueprint, 2008).

12

2.2.2.2

Pillar II: Competitive Economic Region


The main aim for the second pillar is to culture the economy towards a fair

competition (AEC Blueprint, 2008). In order to achieve the fair competition as


envisioned by the ASEAN Leaders, the second pillar covers the competition policies,
protection, tax and etc. The AEC Blueprints provides further explanation on the
background and the activities planned for the second pillar.
(i)

Competition Policy

The objective of the competition policy is to empower a culture of fair


competition (AEC Blueprint, 2008). According to Pupphavesa, Chaisrsawatsuk,
Sudsawasd, and Ongkittikul (2009), the strengthening of the competition policies by
each of the member countries could contribute to economic benefits as well as
ensuring a robust and proficient AEC.
(ii)

Consumer Protection

The formation of the economic integration is constructed around a basic idea


of user too shall have their rights preserved (AEC Blueprint, 2008).
(iii)

Intellectual Property Rights (IPR)

IPR serves as a powerful motivation to (a) cultural, intellectual and artistic


creativity and other commercialisation; (b) proficient implementation and adaptation
of more advanced technology; and continuous learning to meet the ever-rising
threshold of performance expectation (AEC Blueprint, 2008).

According to

Pupphavesa et al (2009), in order to move towards an AEC in which intellectual


property improves competitiveness, many gaps in development and in incentives will
have to be linked especially between the original ASEAN and the newer ASEAN
members.
(iv)

Infrastructure Development

This covers a range of developments, which are: Transport cooperation,


information infrastructure, energy cooperation, mining cooperation and financing of
infrastructure projects (AEC Blueprint, 2008). The Blueprint recommends the

13

creation of roadmaps for an integrated and competitive maritime transport in ASEAN


in order to strengthen the shipping markets and services between ASEAN members
as well as the roadmaps for the air travel sector (Pupphavesa et al, 2009).
Transportation cooperation between ASEAN members requires several framework
agreements; these agreements were initially proposed because the progress of the
service liberalisation was too slow (Pupphavesa et al, 2009).
(v)

Taxation

Complete the network of mutual agreements on the avoidance of double


taxation among all ASEAN countries by 2010, as much as possible (AEC Blueprint,
2008).
(vi)

E-Commerce

This core element is to set out policies and legal infrastructure for electronic
business and permit online trading in goods through the execution of e-ASEAN
(AEC Blueprint, 2008).
2.2.2.3

Pillar III: Equitable Economic Development


Narrowing the economic gap among ASEAN countries are essential towards

forming an economic integration. The third pillar is indirectly related to the


Cambodia, Laos, Myanmar and Vietnam (CLMV) countries which are expected to
be able to narrow down the economic gap with more advanced economic, given their
limited resources (Thanh, 2008). Over the past two decades, CLMV countries have
been doing a good job catching up with the other ASEAN economies: the ratio of
average per-capita GDP of the ASEAN-6 to CLMV countries declined from over 11
times in 1990 to about 4 times in 2010. If 2030 per-capita GDP growth aspirations
are met, the ratio would further fall to about 3 times, (Asian Development Bank
Institute, 2012).
(i)

SME Development

Its objectives are: To accelerate the development of SME development; to


enhance ASEANs SME competitiveness and dynamism; to strengthen the resilience
of ASEAN SME to adhere macroeconomic difficulties; and to increase SME
14

contribution to the overall economic growth in the ASEAN region (AEC Blueprint,
2008).
(ii)

Initiative for ASEAN Integration (IAI)

Its aim is to allow the ASEAN members to move in a uniform manner.


Currently, IAI covers these priority areas, which are: infrastructure, human resource
development, ICT, capacity building for regional economic integration, energy,
investment climate, tourism, poverty reduction and improvement in the quality of life
(AEC Blueprint, 2008).
2.2.2.4

Pillar IV: Integration into the Global Economy


A stronger regional economic integration is crucial in order for ASEAN to

compete in the global market. ASEAN needs to create tighter business integration
beyond the borders of ASEAN (ASEAN Secretariat, 2008). One of the ways to be
recognised in the global market is via production sharing. East Asias trade in parts
and components have been getting lots of attention in the international market, this is
credited through the rise of production sharing (Rosellon & Medalla, 2011;
Bhattacharyay, 2009). Production sharing or production network is a fragmented
production carried out in two or more different countries; eventually the part and
components are assembled into the final products and exported (Chia, 2013).Global
supply chains permit small and medium-sized enterprises (SMEs) to perform as
suppliers of labour-intensive parts and components or to supply other basic services,
largely on a subcontracting basis (Abe, 2012). It is important when it comes to
developing policy for AEC, all external regulations shall be taken into consideration:
(i)

Coherent Approach towards External Economic Relations

All ASEAN members shall work towards sustaining the idea of ASEAN
Centrality in performing their external economic relations (AEC Blueprint, 2008).
(ii)

Enhanced participation in global supply networks

This shall be done through adoption of the international best standards in


production and supply and to develop a comprehensive technical support for the less
developed ASEAN countries in order to develop their industrial potential that shall
15

improve their participation in regional and global integration initiatives (AEC


Blueprint, 2008).
All in all there are four main pillars for the establishments of the AEC.
However, the main focus of this study would only be the first pillar which is on the
free flow of skilled labour. The other three pillars are briefly explained in this chapter
to give a better understanding on the establishment of AEC in 2015.

2.3

SERVICES LIBERALISATION
The ASEAN regional economy growth was designed to accommodate

movements of trades, capital flows and labour flows (Amarjit, 2009). In the market
of services in which the supply is inadequate, the imports of services become
essential (WTO , 2001). WTO (2001) also stated that, service liberalisation is
encouraged due to its positive impacts that go beyond the service industries itself; the
effect that can be felt on other economic activities as well. As of 2005, Malaysia had
received service requests from twenty-one countries (Cheen, 2005).
Immigration from neighbouring countries has also been a successful strategy
for poorer Southeast Asians to improve their economic position (Amarjit, 2009).
According to Amarjit (2009), the economic growth of Singapore, Malaysia and
Thailand have increased the demands for professionals and highly skilled labours.
Amarjit (2009) also stated that, the reduction of conflicts within the region have it
easier for international movement. GATS and AFAS are formed in order to achieve
service liberalisation.
2.3.1 ASEAN Framework of Agreement in Services (AFAS)
AFAS was signed and agreed in 1995 by ASEAN. It was formed towards
realizing the liberalisation of trades in services, as well as to improve the efficiency
and competitiveness of ASEAN service providers, (Chia, 2011). The GATS
framework was used as the basis for negotiations under AFAS. (Zakariah, Zhai,
Petri, Plummer, & Chia, 2009). According to Amarjit (2009), AFAS seeks to
encourage the movement of labour for services within the region moving towards
achieving AEC by 2020 which was then brought forward to 2015. The progress has

16

been weak, due to the nature of certain sector of services that are politically sensitive
(Plummer, 2006). Chia (2011) also stated that new negotiations on the agreements of
World Trade Organisation (WTO) were formed. In terms of regional service
liberalisation, ASEAN has agreed to liberalise the trade through the workings of
AFAS in addition to existing commitments through GATS in the WTO (Indira &
MacLaren, 2012). AFAS was signed by ASEAN Economic Ministers in Bangkok,
1995. AFAS aims to:

enhance cooperation in services among ASEAN Member States to


improve the efficiency and competitiveness of ASEAN services
industries, diversify production capacity and supply, and distribution of
services;

eliminate substantial barriers to trade in services;

liberalise trade in services by expanding the depth and scope of


liberalisation beyond those undertaken under the General Agreement on
Trade in Services of the World Trade Organization

Source: (AEC Fact Book, 2011)


There are seven sectors that are included under AFAS, which are; air
transport, business services, construction, financial services, maritime transport,
telecommunications and tourism (Hew, 2007).
Movement of Natural Persons (MNP) under AFAS
According to Llyod (2007), in the year 2001, AFAS was extended in order to
include services to be delivered under Mode 4, Movement of Natural Persons. Under
the free flow of skilled labour, the main action plan of MNP is working towards
facilitating the issuance of visas and employment passes for ASEAN professionals
and skilled labours that are engaged with a cross-border trade (AEC Blueprint,
2008). The movement are also eased with standardisation of regulations with the
receiving countries (AEC Blueprint, 2008).

17

The 10th ASEAN Summit in 2004 agreed to facilitate the movement of skilled
labours, business people and talents within the ASEAN region and have started
exploring Mutual Recognition of professional qualifications (Lloyd, 2007).
Mutual Recognition Agreements (MRA)
The main action towards realising free flow of skilled labour among ASEAN
countries is through the implementation of Mutual Recognition Agreements (MRA).
MRA was introduced in order to minimize transaction costs that cover several
sectors (Chia, 2011). However, even when a standardised quality assurance was
empowered, MRA still finds difficulty in overseeing the wide economic gaps
between the ASEAN countries (Chia, 2011). MRA enables qualified professional
services suppliers to be recognised by the respective ASEAN countries local
authorities. This mutual recognition requires a great deal of work but it shall offer
good opportunities for the ASEAN region and many would welcome this approach
(Plummer, 2006). As of 2009, several MRA were signed by ASEAN Economic
Ministers:

MRA on Engineering Services (2005)

MRA on Nursing Services (2006)

MRA on Architectural Services and Framework Arrangement for the


Mutual Recognition of Surveying Qualifications (2007)

MRA Framework on Accountancy Services, MRA on Medical


Practitioners,

and MRA on Dental Practitioners (2009)

Source: (AEC Fact Book, 2011)


2.3.2 General Agreement on Trade in Services (GATS)
According to Rajan and Sen (2002), the rising importance of the multilateral
framework and liberalisation of trades in services was then conceptualised in the
form of GATS initiated under Worlds Trade Organization (WTO). According to
WTO (2001), GATS came into force in 1995, the first and only set that covers
international trade in services at the time. There is very little difference between

18

AFAS and GATS (Indira & MacLaren, 2012), however, Indira and MacLaren also
stated that in terms of the depth of the commitments, GATS has greater liberalisation
impact on the service sector, especially on the financial service, in comparison to the
AFAS.
Movement of Natural Persons (MNP) under GATS
Trade in services under GATS have been conventionally classified under these
typologies:

Mode 1, Cross border Supply

Mode 2, Consumption Abroad

Mode 3, Commercial Presence

Mode 4, Movement of Natural Persons.

Mode 1, Cross border Supply


Mode 1 of trade in services is described as the likelihood for non-resident
service suppliers to provide services cross-border into the other ASEAN members
territory (Kaliappan, 2009; Mattoo & Stern, 2008).
Mode 2, Consumption Abroad
Mode 2 of trade in services is described as it gives freedom for the ASEAN
members residents to purchase services in the territory of another member
(Kaliappan, 2009; Mattoo & Stern, 2008).
Mode 3, Commercial Presence
Mode 3 is the ability for a company from an ASEAN member country to
supply professional establishment in the territory of another member, such as a
branch, agency, or wholly owned subsidiary (Kaliappan, 2009; Mattoo & Stern,
2008).

19

Mode 4: Movement of Natural Persons.


MNP refers to the cross border movement of professional and skilled
individuals. However, the movement rules under GATS do not apply to permanent
employment (Kruszka, 2006). Rajan and Sen (2002) explains Mode 4 as presence of
natural persons which involves individuals travelling from their home country to a
host country to supply their services. Professional and skilled personnel covered
under MNP are:

Business visitors: engaging in business without in search of employment

Traders and investors: Natural persons carrying out particular trading and
investment activities

Intra-corporate transferees: employees of MNCs that move their staff


across borders

Professionals: include doctors and nurses, lawyers, accountants,


engineers, IT personnel and other professions

Source: Chia (2011)


The difference between AFAS and GATS are the scope of liberalisation of
services. The scope of liberalisation in services in AFAS goes beyond what has been
covered under GATS (Hew, 2007). AFAS is designed to be GATS-Plus agreement
(Hew, 2007; Hapsari & McLaren, 2012).

2.4

ASEAN ECONOMIC COMMUNITY ASPECTS


According to Chia (2011), there are seven service sectors identified under the

ASEAN economic liberalisation; this includes financial services, maritime transport,


air transport, telecommunication, tourism, business services and construction.
Hartarto (2011) emphasised in his paper; that there are four aspects that ASEAN
needs to focus on towards realizing ASEAN Community, which are:

20

Food Security: Rice Economy


This is regarding the consumption of rice by the ASEAN population that is
likely to reach 600 million by 2020. The sensitivity of time, supply and demand
factor shall affect the food security in most ASEAN countries (Hartarto, 2011).
Energy Security: Gas and Electricity
Requires intensified mutual aid from ASEAN countries to assemble and
explore potential energy sources by inviting private sectors to invest in the ASEAN
energy sector (Hartarto, 2011).
Service Sector: People to People Linkages
The service sector plays a vital role towards improving the overall economic
growth in ASEAN. In order to facilitate the movement of the service sector among
the ASEAN countries, ASEAN Economic Ministers signed the ASEAN Framework
of Agreement in Services (AFAS) in 1995, Bangkok (Hartarto, 2011).
Infrastructure and Transportation: ASEAN Connectivity
Several agreements were signed in order to grasp the ASEAN Connectivity
such as (1) ASEAN Framework Agreement on the Facilitation of Goods in Transit
(AFAFGIT), (2) ASEAN Framework Agreement on Multimodal Transport
(AFAMT), (3)ASEAN Framework Agreement on Facilitation of Interstate Transport
(AFAFIST) (Hartarto,2011; Pupphavesa et al, 2009).

21

ASEAN
ASEAN FREE TRADE AREA
(AFTA)
Service
Liberalisation

ASEAN INVESTMENT AREA


(AIA)

ASEAN FRAMEWORK
AGREEMENTS ON
SERVICES (AFAS)

GENERAL
AGREEMENTS
ON TRADE IN
SERVICES
(GATS)

Service
Liberalisation

ASEAN ECONOMIC COMMUNITY


(AEC)

Single Market and


Production Base

Competitive
Economic Region

Mode1:
Cross border
Supply
Mode2:
Consumptio
n Abroad
Mode3:
Commercial
Presence
Mode4:
Movement Of
Natural
Persons (MNP)

Equitable Economic
Development

Integration into the


Global Economy

22
Free Flow of Goods
Free Flow of Services
Free Flow of Skilled
Labour

MUTUAL RECOGNITION
AGREEMENTS (MRA)
Mode1:
Cross border
Supply

Mode2:
Consumptio
n Abroad

Mode3:
Commercial
Presence

Mode4:
Movement Of
Natural
Persons (MNP)

Free Flow of Investment

Figure 2.1 - Summarised Relationship 1

22

Free Flow of Capital

Figure 2.1 shows helps to visually understand the relationship between AEC,
GATS and related policies and agreements.

2.5

CONCLUSION
The AEC Blueprint has clearly stated the contents of the first pillar; from

what aspect does the AEC try to shift it into a single market and production base,
which includes the service sector. Mattoo and Stern (2008), stated that services
activities includes the transport of goods, educations, transport of people, financial
services, communication, distribution, health care, hotels and restaurants, accounting
and constructions. The construction industrys supply and demand of the
manufacturing and construction activities contributes greatly to the economic growth
(Langford & Male, 2001).
This chapter is written to understand the workings and policies of AEC. The
focus of this study is on the free flow of services and how it relates to the free flow of
skilled labour. The discussion surrounds the agreements made by ASEAN for trades
in services covering AFAS, GATS, MRA and MNP.

23

CHAPTER 3
MALAYSIAN CONSTRUCTION INDUSTRY

3.1

INTRODUCTION

Chapter 3 is a chapter that presents the review of the literature on the


Malaysian construction industry. It consists of four major sections. Each section
focuses on four different aspects of the Malaysian construction industry with a
common aim to explain, describe and analyse in order to understand the workings
and the backgrounds of the Malaysian construction industry and to relate it to the
focus of this study. This chapter aims to provide the variables to be included in the
primary data collection in order to achieve the second and the third objectives of this
study. The objectives are:
2) To investigate the potential benefits of AEC policy on the Malaysian
construction industry
3) To investigate the potential effects of AFAS and MNP on the QS
profession in Malaysia.
3.2

OVERVIEW OF THE MALAYSIAN CONSTRUCTION INDUSTRY

The construction industry is considered as a service sector (Langford & Male,


2001). Thus, this chapter attempts to clarify the relationship between the AEC and
the Malaysian construction industry and how each of these two different agenda shall
affect each other. The focus of this research is to look at how the AEC could
potentially benefit the Malaysian construction industry and how AEC, specifically
the AFAS and MNP could potentially affect the QS profession in Malaysia.

3.2.1 Background of the Malaysian Construction Industry

The Malaysian construction industry has developed from low-tech, labour


intensive and craft based industry to a more technologically advanced construction
24

and involvement of highly skilled professionals, which is proven by the construction


of Petronas Twin Tower, Kuala Lumpur International Airport and Sepang Formula 1
Circuit (Ernawati, Syarmila, Norhidayah, & Faizal, 2012). Malaysian construction
industry is generally divided into two categories; one category is general
construction, which comprises of residential, non-residential and civil engineering
construction; the second category consist of special trade works that involves metal
works, electrical, plumbing, sewerage, sanitary, air-conditioning, carpentry, glass
work and many more (Razak, Roy, Zafar&Ghaffar, 2010). The construction industry
plays a very important role in the Malaysian economy, as it is made up of many
crucial components, such as; contractors, clients (government/ private), workers,
developers, management teams, architects, engineers, surveyors (quantity surveyors,
land surveyors), manufacturers, suppliers and plant hirers (Ernawati, Syarmila,
Norhidayah, & Faizal, 2012).

3.2.2 Current Status

3.2.2.1

Demand and Supply of Construction Jobs

The construction work demands which are especially buoyant in developing


countries have attracted many Malaysian professionals (Maznah, Kamaliah,
Hamidah, Rashidah & Khairil, 2012). Globalisation has brought many Malaysian
contractors to expand their services into the foreign markets (Maznah et al, 2012).
Foreign construction demands are greater in the global market and are supported by
the Malaysian Construction Industry Development Board (CIDB). As reported by
CIDB, in the year 2010, the number of international construction contracts awarded
to Malaysian contractors were 652 projects which valued RM92.138 million
(Maznah et al, 2012).

According to the Department of Statistics Malaysia, there has been an


increase in the value of constructions in Malaysia. Bank Negara Malaysia (BNM)
(2012) reported that the economic growth in the fourth quarter of 2012 was led by
the manufacturing and service sectors. The construction sector comes out strong

25

driven by civil engineering works and residential sub-sectors (BNM, 2012). The push
factor for the construction sector is mainly driven by the Mass Rapid Transit (MRT)
projects including other oil and gas related construction projects (BNM, 2012).

The 2012/2013 Economic Report reported that the construction industry is


going strong showing 18.9% of growth in the first half of 2012. This positive growth
is mainly due to the performance of the civil engineering works and demands for
residential development. It also reported that 69.8% of the total construction value
was contributed by the private sector.

The civil engineering subsector showed growth of 27.5% which was of great
contribution from major infrastructure projects such as Ipoh-Padang Besar electrified
double-track, Mass Rapid Transit (MRT) and many more. As for the residential
subsector, it is reported that 22% growth was achieved during the 2012 first half.
This growth was significantly supported by the high demand for housing and
investment purposes. These construction activities show that the Malaysian
construction industry is performing actively and that the impacts are positive towards
the countrys economy.

The Edge Malaysia (March 20, 2013) reported that BNM forecasted that
Malaysias 2013 GDP will grow 5 to 6 percent. According to BNM, the construction
industry is expected to contribute to the growth; the sectors growth could go up to
15.9 percent due to wide infrastructure developments.

3.3

SKILLED LABOUR IN THE MALAYSIAN CONSTRUCTION


INDUSTRY

3.3.1 Definition of Skilled Labour

Skilled labour according to Amarjit (2009), are workers who are considered
professionals, possessing specific skills. These professionals are greatly demanded
and usually being offered high income. In terms of migrant skilled workers,

26

according to Kanapathy (2008), they are all professionals and technical workers who
are in possession of short term contracts or Employment Pass.

3.3.2

Construction Industrys Professionals

There are several professional profession that are involved in the construction
industry such as Engineers, Architect, Landscape Architects, Land Surveyors,
Quantity Surveyors to name some. However, for the purpose of this study, Quantity
Surveyors (QS) will be the main focus. There is no doubt that QS play an important
role in construction projects, especially in terms of procurement, cost and contract
management, (Hee & Ling, 2011). Globalisation and rapid global construction
growth have sky rocketed the demand for construction professionals and workers
around the world. This rise in demand has led to global skill shortage (Smith, 2008).

3.3.3 Issues on the Professionals in the Malaysian Construction Industry

Malaysia suffers an increasing rate of skilled labour loss in comparison to


other nations (Jumaimah &Yusliza, 2011). Malaysian has a high intensity of brain
drain that is 10.5 percent of skilled Malaysians have migrated to foreign countries
(World Bank, 2011). According to Pacific Bridge Inc, as cited by Jumaimah and
Yusliza (2011), Malaysian Engineers and technical workers are gradually finding
opportunities overseas particularly in Singapore, China and the Middle East
countries. Receiving countries of skilled labour are seen as enjoying the brain gain,
(Chia, 2011).

Brain Drain
Definition

Brain drain is the migration of talents across borders (World Bank, 2011).
According to Carrington and Detragiache (1998), Docquier and Rapoport (2004) and
Docquier and Rapoport (2011) as cited by Malaysia Economic Monitor, brain drain

27

is defined as the emigration of skilled individuals, where a high skill emigrant is a


foreign-born individual, 25 years old and above, possess academic qualification or
any professional degree which is higher than high school. Tansel and Gungor (2003)
viewed brain drain as the movement of skilled individuals from their home countries
to other countries that make better offers in their field of specialty as well as better
living standards and lifestyles. Chia (2011) perceived brain drain as a flow of highly
skilled professionals and executives from the less developed countries to the more
developed countries. In the Malaysian context, some authors or researches uses the
term Diaspora - Malaysian-born people who reside outside the international
borders of Malaysia (Koh, 2012).

Reasons for Skilled Labour Movement

Jumaimah and Yusliza (2011) proposed a model that

represents

comprehensive overviews that influences individual decision to leave the country;

Figure 3.1 - Factors of Brain Drain 1

Source: Jumaimah and Yusliza (2011)

28

According to Jumaimah and Yusliza (2011), there has only been little
research on the push and pull factor Malaysian Brain Drain and the data collection
sample was relatively small. Figure 3.1 shows the summarized figure of the push and
pull factor of Brain Drain in general, without particularity in which profession it
covers. The content of Figure 3.1 is further explained later in this chapter.

Push Factors

Lack of Promotion

Immigration from the more neighbouring countries has been a successful


strategy for poorer Southeast Asians to improve their economy (Amarjit, 2009).

Lack of Social Support

Wong (2010), from a survey she conducted in 2010 concluded that, out of
814 Malaysia respondents who study abroad, a total of 530 respondents are residing
overseas. Issues like political situation, economic situation, safety, education and
human rights in Malaysia greatly affect their decisions to migrate.

Quality of Work life


This factor is the influence by the local talents perceptions that the working
environment in foreign countries are better than what they experience locally, as
explained in the Pull Factors; Better Perks & Better Work Environment.

Low Occupational Income

The salary in Malaysia is not at par with the living cost especially in Kuala
Lumpur. The Economic Intelligence Unit (EIU) ranked KL as the worlds most
expensive cities and Kuala Lumpur was spotted at 74th place out of 140 cities in
terms of living costs. However, the salaries have not increased simultaneously with

29

the living cost (Malaysia - Addressing Talent Issue, 2012). According to Chia
(2011), brain drain occurs when some countries failed to efficiently employ the local
talents, which may occur due to slow-moving economic development or high
unemployment rate.

Pull Factors

Promotion Prospects

According to Asian Strategy & Leadership Institute director Tan Sri Ramon
V. Navaratnam (The Star, July 9, 2007), as cited by Jumaimah &Yusliza (2011),
Malaysia is suffering a great loss of skilled labours and professionals due to better
payments offered by foreign companies. Many young Asians wish to further their
studies, whether it degree, masters or even doctorates in western countries, and this
has become a trend (Abella & Ducanes, 2008). Abella and Ducanes (2008) also
stated that these main destination countries; US, Canada, Australia and the UK offers
easier market access, taking advantage of the Asians desires towards meeting their
shortage of skills and talents.

Better Educational Opportunities

The desire to pursue further education, attraction towards better job offers,
better working condition and better living standards are generally the most common
pull factors, (Chia, 2011; Jumaimah & Yusliza, 2011; Tansel & Grungor, 2003). The
movement of these talents are either by personal initiatives or through recruitment
agents, or are sent by their home countries for overseas postings. All these are
closely related to expanding international trade in services, including financial and
communications (Amarjit, 2009).

30

Better Perks & Better Work Environment

Winters (2008) wrote that the movement of talents are fairly driven by higher
wages offered to employees and that different wages corresponds to different
productivities. Better working environment, job experience, and research
opportunities are some of the reasons for the movement of skilled workers (Chia,
2011).

Family Influence
There are two status of skill movements; temporary and permanent mobility.
Temporary skill mobility usually is not accompanied by their family members, in
contrast to the permanent mobility where the tendency for permanent mobility to
bring along family members to the host country is higher (Winters, 2008).

Results of Brain Drain


Yankov and Kleiner (2001), as cited by Hee and Ling (2011) stated that, there
has been a shortage of qualified QS as well as other professions in the construction
industry.

Figure 3.2 - Issues on Brain Drain 1

Source: TalentCorp Analysis, 2012

31

The shortages of skilled and talents in the western industries and the desire of
the young Asian talents to further their degrees in western institutions is the perfect
invitation for migration (Abella & Ducanes, 2008). To fill in the shortages of skilled
and professionals, some countries opt for outsourcing and some prefer foreign
professionals to fill the gaps in their countries (Jumaimah & Yusliza, 2011).
However, the official number of Malaysian students studying abroad whether for
Quantity Surveying or other specific courses was never issued, assuming that a
portion of that sum may seek employment overseas (Kanapathy, 2008).

According to Winters, et al (2007) as cited by Jumaimah &Yusliza (2011), an


estimated 785, 000 Malaysians are residing overseas and that two out of three of that
number are likely to be professionals, still however, the statistics are not as detailed
as to specify which professional groups are included in the figure. The Star Online
(1 Nov 2010) reported that currently there are 784,000 Malaysians working abroad,
with nearly half in Singapore, followed by Australia Britain and the US. The
number of local talents residing in foreign countries shows several implications. One
of it is as reported by The Ministry of Foreign Affairs, 304,358 had left the nation
between March 2008 and August 2009 as compared to 139,696 in 2007. The
process of replacing and hiring the right talent in Malaysia also takes time.

Figure 3.3 - Professional Vacancies 1

Source: World Bank Data

32

Figure 3.3 shows the number of weeks required by each ASEAN country to
fulfil the professional vacancy with the right talent. Indonesia shows the lowest
number of weeks, Indonesia takes only approximately two weeks to fill in the
vacancy while the highest figure is reflected by both Thailand and Malaysia. Both
these fast developing economy countries requires up to 6 week fulfilling a
professional vacancy. This shows how the outflow movement of skilled labour
affects each of the countries.

However, according to Quah (2010), brain drain is not always a zero-sum


game, it is later a brain gain when the talents return to stay and bring back ideas and
start business in domestic markets thereby contributing towards the economic
growth.
Inflow of Professionals

According to the Ministry of Home Affairs and Economic Planning Unit, the
number of expatriates in Malaysia has been decreasing since 2008, especially in the
construction industry. The movement of foreign professionals are restricted by
several restrictions; from persons who could contribute to the countrys commerce
and industrial expansion, and persons who are highly skilled in areas that are not
available locally, to families of the local residents and to those who are on special
compassionate grounds (Amarjit, 2009).

The movement of foreign professionals into Malaysia has been strictly


controlled by several policies by local authorities and respective professional boards.
The Board of Quantity Surveyors (BQSM) made clear guidelines and restrictions
under the QS Act 487 (1967) that limits and allows foreign QS to practice locally.
However, according to the Economic Report 2010/2011 by the Ministry of Finance
(MoF), the Malaysian Government plans to encourage greater employment of highskilled expatriate to work in the country throughout the 10th Malaysian Plan.

33

3.4

AEC AND THE CONSTRUCTION INDUSTRY

Infrastructure development is essential towards removing the economic gaps


and towards realising the economic integration that ASEAN aims for (Bhattacharyay,
2009). In economic terms, Bhattacharyay (2009) defines infrastructure as any
structure that allows for production and exchange of goods and services. The
ASEAN Secretariat firmly identified that infrastructure development is crucial
towards realising AEC under the Priority Integrated Sectors (PIS) (Working Group
for Developing Roadmap toward East Asian Economic Integration, 2008). The
construction infrastructures and transportation systems will be the focussed sectors in
2015 and beyond; land, maritime and air transport (ERIA Study Team, 2010).
3.4.1 AEC and Development

Similar to as previously mentioned in Chapter 2, under the AEC


Connectivity; the AEC Blueprints highlighted seven areas of special concern:

Transport cooperation

Land transport

Maritime and air transport

Information infrastructure

Energy cooperation

Mining cooperation

Financing of infrastructure projects

Source: (Pupphavesa, Chaisrsawatsuk, Sudsawasd, & Ongkittikul, 2009).

According to Puppahavesa et. al (2009), a trans-ASEAN transport network


plan has been completed and consists of 28 major highways, 6 rail lines, 46 seaports
and 51 airports. This inter-ASEAN connectivity is important to achieve efficient,
secure and integrated network in ASEAN. The transport action agenda was adopted
in 1998 in the Hanoi Plan of Action which called for:

34

Progressive service liberalisation

Development of trans-ASEAN transportation network

Implementation of ASEAN Framework Agreement on Multimodal


Transport; and

Standardised and harmonised vehicle standards and regulations.

Source: (Pupphavesa, Chaisrsawatsuk, Sudsawasd, & Ongkittikul, 2009).


3.4.2 Potential Benefits

Deardoff (2001) stated that there are large positive gains through the
elimination of barriers in trades in services. Service liberalisation implies larger scale
of economic activity (Indira & MacLaren, 2012). There are several benefits to
service liberalisation and are seen as potential benefits of service liberalisation
towards the construction industry.
Construction works become more efficient
The standardisation and harmonisation of regulations between host and
receiving countries allows services to be delivered more efficiently (Mattoo & Stern,
2008).
Construction Firms become more competitive
The liberalisation under the AEC pushes service providers to be more
competitive. The competition and competitiveness of these service providers
increases with the implementation of competition policies, protection of intellectual
property rights and open regionalism (Plummer & Chia, 2009).
Construction industry is opened to domestic and foreign markets
The firms become more competitive and efficient in delivering their services. This
allows improvement in service providers performance and opens up service sector to
domestic and foreign entry (Ray, 2013).

35

Higher quality of service


The potential benefits includes: Efficient service performance by respective service
provider, (WTO, 2001; Zakariah et al, 2009). Both WTO (2001) and Zakariah et al
(2009) insists that without the competition, the service providers have the potential to
not excel in their roles.
Easier to venture into foreign construction industry
Liberalisation of trades in services under AEC that ease the movements of
services and movement of skills allows the service providers to venture into another
ASEAN member economy (CIE, 2010).
Larger target market
Service liberalisation opens up new target market for the service sectors (Hermann,
2011). With liberalisation of services under the AEC, the industries are allowed to
have greater expansion, thus creates more job opportunities (Plummer & Chia,
2009).
Greater transfer of technology
Service liberalisation gives potential dynamic productivity through the technology
transfer (Rajan & Sen, 2002). The movement of skilled labours from one service
provider to another allows the transfer of skills and gives them opportunities to learn
new skills as the gain more experience throughout their services (WTO , 2001).
Faster physical development
Rajan and Sen (2002) also stated that the growth of productivity is also
contributed by the introduction of market competition. WTO (2001) mentioned that
service liberalisation under AEC shall trigger faster innovation and physical
improvement.
Greater job opportunities
Foreign participation increases competition and generates growth enhancing
effects (Mattoo, Rathindran, & Subramaniam, 2001). With growing competition and
36

market, there shall be more employers employed in a growing variety of service


(Zakariah et al, 2009).
Author
Potential Benefits
Construction works become more efficient

Mattoo & Stern (2008)

Construction Firms become more competitive

Plummer & Chia (2009).

Construction industry is opened to domestic and


foreign markets

Ray (2013)

Higher quality of service

WTO (2001)
Zakariah et al (2009)

Easier to venture into foreign construction


industry

CIE (2010)

Larger target market

Hermann (2011)
Plummer & Chia (2009)

Greater transfer of technology

Rajan & Sen, (2002)


WTO (2001)

Faster physical development

Rajan & Sen, (2002)


WTO (2001)

Greater job opportunities

Mattoo, Rathindran, &


Subramaniam (2001)
Zakariah et al (2009)

Table 3.1 - Summary of Potential Benefits to QS Profession in Malaysia

3.4.3 Potential Effects

Increase in job opportunities for QS

The increase in job opportunities is influenced by the free flow of skilled


labour. According to Plummer and Chia (2009), the free flow makes ASEAN more
attractive to the foreign investors, thus, more developments are expected that will
result in greater demand for construction professionals to fulfil the job demands for
each development works.
37

Increase competition of QS employment

The movement of skilled labours is expected to be greater under the


establishment of the AEC. Mattoo and Stern (2008) also stated that the competition
between the foreign skills and local skills results in greater productivity that
eventually leads to an increase demand for domestic skilled worker.
More diverse services

The QS practice can widen its range of services from the traditional cost
estimating, measurements and preparing for Bills of Quantities, to the other filled of
optional skills acquire by QS. Those of optional sets of competency skills include
facilities management (Nkado, 2001). According to WTO (2001) liberalisation of
services creates greater development access to world class services. Liberalisation of
services that shall aid the movement of professional shall open more variety of
services to the market (Matoo & Stern, 2009).
Increase in quality of service & Better job qualities

The great access to international movement of services motivates the service


providers to increase their competitive strength and goods. The qualities of the
services and jobs offered are expected to improve due to increase in competition
(Plummer & Chia, 2009).

Change of employment form

According to Hermann (2011), the restructuring of the new competitors have


had impacts on the forms of employment. Mattoo et al (2001) predicted that a
countrys employment rate shall certainly decline if the country is a net importer,
however, such decline in employment may not be completely applicable towards
Malaysias QS profession.

38

Greater competition between domestic and foreign QS Less opportunity for


local firms

Increase in competition between domestic and foreign suppliers, may result in


loss of activity in the country (Indira & MacLaren, 2012). Those who are
uncompetitive, are considered losers for losing out to foreign competition .According
to Hermann (2011), the service liberalisation encourages

more diverse services

offered by service providers.

Loss of talents/ brain drain

Increase in service quality (Hermann, 2011; Ray, 2013) is also a pull factor.
One of the pull factors of Malaysian brain drain is the international exposure
(Jumaimah and Yusliza, 2011). Less restriction on movement of high skilled talents
could lead to a great deal of talent loss. According to Zakariah et al (2009), the
sending countries face brain drain or loss of talents in the short term, but a reverse
brain drain in the medium and long term returnees.

39

Potential Effects

Author

Increase in job opportunities for QS

Plummer and Chia (2009),

Increase competition of QS employment

Mattoo and Stern (2008)

More diverse services

Mattoo and Stern (2008)


WTO (2001)

Increase in quality of service &

Plummer & Chia (2009)

Better job qualities

Plummer & Chia (2009)

Change of employment form

Hermann (2011)
Mattoo et al (2001)

Greater competition between domestic and


foreign QS

Hermann (2011)
Indira & MacLaren (2012)

Less opportunity for local firms

Hermann (2011)
Indira & MacLaren (2012)

Loss of talents/ brain drain

Hermann (2011)
Ray (2013)
Jumaimah and Yusliza (2011)
Zakariah et al (2009)

Table 3.2 - Summary of Potential Effects to the QS Profession in Malaysia

3.5

CONCLUSION
Movement of professionals has a great impact on the economic development

of a country. The outflow and inflow of professionals in the service sectors is not a
new topic, as several studies and research have been conducted to assess these
movements. There has been growing recognition on the movement of talents
(Solimano, 2008). The industry shall face a greater impact from the introduction of
AFAS under the AEC, in support of the movement of natural persons under GATS.
AEC shall accommodate the movement of professionals in the service sectors, with
less restriction implemented.

40

CHAPTER 4
RESEARCH METHODOLOGY

4.1

INTRODUCTION

Chapter 4 of this research describes the details of the research design and the
methodology used in this study. It consists of the research strategy, approaches to
data collection and data analysis used in order to achieve the aim and objectives of
the study, as discussed earlier in the first chapter; Chapter 1.

4.2

RESEARCH STRATEGY

Naoum (2004) stated that there are generally two types of research strategies
that can be applied in research studies which are quantitative and qualitative
research. According to Naoum (2004), deciding on the research strategy depends on
the purpose of the study, the type and the availability of the information required in
order in achieving the research aim and objectives. This study adopts the quantitative
approach, considering the nature of the study that requires collective perceptions and
opinions.
4.2.1 Reviews on Research Methodology of Similar Researches

This section reviews the research methodology adopted by several related


studies. Examples of studies related to service liberalisation are ASEAN Economic
Community (AEC) (Benny et al, 2011; Moorthy & Benny, 2012), ASEAN
Framework of Agreement in Services (AFAS) (Hapsari & MacLaren, 2012),
Movement of Natural Persons (MNP) (Suplico-Jeong, 2010; Kruszka, 2005; Karim
& Naveed, 2011), service liberalisation (Rajan & Sen, 2002; Hermann, 2011), Brain
Drain (Wong, 2010; Jumaimah & Yusliza, 2011) and New Economic Model (NEM)
(Hajar, 2010). The previous studies are chosen as reference due to the similarity in
the research area, except for one study in NEM. The study conducted by Hajar
(2010) also included as a reference due to its similarity, particularly in its study
approach.
41

Several studies use survey as the data collection technique. Benny, Guido and
Kamarulnizam (2011) administered questionnaires in five major cities in Indonesia
to assess the public awareness, understanding and perceptions on the achievements
of the implementation of ASEAN Community. Similarly, Moorthy and Benny (2012)
conducted surveys in three selected ASEAN countries, namely, Malaysia, Indonesia
and Singapore. These countries were selected due to their close trade and diplomatic
ties (Moorthy & Benny, 2012). The survey was conducted to study the public
opinions on the perceived obstacles on the implementation of AEC. Wong (2010) on
the other hand conducted a minor survey on factors that influences Malaysian Brain
Drains. Another study on perceptions that employed the survey technique was also
conducted by Hajar (2010). It was on the perceptions of contractors towards the
introduction of New Economic Model (NEM); the study too was conducted in
Malaysia.

However, there were also studies done on AEC and the service trades
agreements which employed document analysis as the research method (Narjoko &
Wicaksono, 2010; Jumaimah & Yusliza, 2010; Rajan & Sen, 2010; Hapsari &
MacLaren, 2012; Suplico-Jeong, 2010; Kruszka, 2005; Karim & Naveed, 2011;
Hermann, 2011).

For the purpose of this study, the questionnaire survey method is perceived as
the most suitable in relation to the background of this study as it seeks to investigate
the QS perceptions on the potential benefits and effects of AEC towards the QS
profession in Malaysia. All in all, the common research methodologies used were
questionnaire surveys and case studies. The research methodology adopted by the above
mentioned studies are summarised in Table 4.1.

42

No

Author

Year

Research
Methodology

Document
Analysis

43

Rajan & Sen

2002

Kruszka

2005

Hajar

2010

Suplico-Jeong

2010

Narjoko & Wicaksono

2010

Wong

2010

Jumaimah & Yusliza

2011

Benny, Guido &


Kamarulnizam

2011

Karim & Naveed

2011

10

Hermann

2011

11

Moorthy & Benny

2012

Survey

12

Hapsari & MacLaren

2012

Document
Analysis

Document
Analysis
Survey
Document
Analysis
Document
Analysis
Survey
Document
Analysis
Survey
Document
Analysis
Document
Analysis

Country

Indonesia
Malaysia
Thailand
Central and East Europe
Countries
Malaysia

Research Area

Research Focus

Services
Liberalisation

Experience and common themes

MNP

Commitments and movements

NEM

Perception and awareness


Trend, impact, issues, prospects of
enhancements

South Korea

MNP

Indonesia

AEC

Perception

Malaysia

Brain Drain

Decision influences

Brain Drain

Factors

Indonesia

ASEAN
Community

Awareness and understanding

Bangladesh

MNP

Prospects and constraints

Europe

Service
Liberalisation

Firms responses and impacts

AEC

Perceived obstacles

AFAS and GATS

Commitments

Indonesia
Malaysia
Singapore
Indonesia
Malaysia Philippines
Singapore
Thailand

Table 4.1- Reviews on Research Methodology of Similar Researches

43

4.3

APPROACHES TO DATA COLLECTION

There are two types of data collection; those are secondary data collection
and primary data collection (Naoum, 2004). For the purpose of this study, both
secondary and primary data collection are used.
4.3.1 Secondary data collection

According to Naoum (2004), the secondary data collection is known as desk


study approach because the data is obtained from various other researches. The
earlier part of this research applies the secondary data collection which is in the
literature review chapter in Chapter 2 and Chapter 3. The secondary data collected is
from several journals, conference paper, reports; previous researches and some
information gathered through the internet. All these will facilitate greater
understanding on the ASEAN Economic Community (AEC), the pillars, ASEAN
Framework of Agreement in Services (AFAS), the Malaysian construction industry,
and the Malaysian brain drain, to name few.

The literature review chapter therefore gives information regarding the


blueprints of AEC and the frameworks and agreements formed under the AEC. The
literature review chapter also includes the overview on the inflow and outflow
movement of professionals including the push and pull factors. The activities of the
Malaysian construction industry are also reflected through the demand and supply of
the construction projects, reviewing on the total value of completed projects and
more. The information gathered in the literature review is then used in constructing
the questionnaires.
4.3.2 Primary data collection

Naoum (2004) stated that primary data collection has three approaches which
are case studies, surveys and problem solving approach. For the purpose of this
research study, the survey approach is applied. According to Naoum (2004), there are
two types of surveys, which are: (1) the descriptive survey and (2) the analytical
44

survey. This study uses the descriptive survey to show the trends based on the
numbers of respondents that agrees with certain opinions and attitudes towards the
subject matter.

Data Collection

Survey Questionnaire

E-mail

Postal

Face to face

Figure 4.1- Method of Data Collection

Survey Questionnaire

The questionnaire is constructed based on the information in the literature


review chapters. The survey approach is used to address the research questions,
which are:
1) What are the QS firms perceptions of the potential benefits of AEC
policy on the Malaysian construction industry?
2) What are the QS firms perceptions on the potential effects of the free
flow skilled labour policy on the employment of Quantity Surveyors?

The AEC is yet to be fully realised, thus, the potential benefits and the potential
effects of its establishment are still considered as genuine forecasts by previous
researches. Consequently, this research study is looking at the potential benefits and
effects of AEC towards the Malaysian construction industry and the QS profession
from the perspectives of Malaysian QS practices. Data to be gathered from this
questionnaire includes the following:

45

1) Respondents background and particulars


2) The awareness of QS regarding the implementation of AEC
3) Benefits of AEC policy to the Malaysian construction industry
4) The awareness on AEC and service liberalisation
5) Effects of AEC and AFAS to the QS profession in Malaysia

Constructing the Questionnaire

There are three fundamental stages to constructing a questionnaire (Naoum,


2004):
1) Identifying the first thought questions
2) Formulating the final questionnaire
3) Wording the questions
According to Naoum (2004), after deciding on the research approach, the
researcher must list down all questions related to the benefits of AEC to the
Malaysian construction industry and the effects of AFAS to the QS profession.
Initially, the order of the questions is not a concern.

After brainstorming, the next stage is to finalize the questions. At this stage,
Naoum (2004) stated that the researcher needs to form sections for the listed
questions, rearranging the questions to categorise their respective themes. The
questionnaire therefore has been constructed to meet the objectives of the study. This
is achieved when the research questions are answered based on the items in the
questionnaire. The questionnaire is divided into 5 parts, A, B, C, D and E.
Part A

The questions in Part A are questions using a multi-optional format that aims
to gather the respondents particulars. The questions in this section are all closeended format that only requires the respondents to tick in the appropriate box. It

46

comprises of four questions; (1) the respondents gender; (2) the respondents age;
(3) the respondents QS field; and (4) the respondents years of experience in the
construction industry. These questions are asked to just to get a better picture of the
respondents professional background. It is one of the ways to determine the
reliability of the data collected.
Part B

The questions in this section are factual questions designed in closed-ended


questions. The questions enable a quick answer from the respondents (Naoum,
2004), the respondents need only to answer Yes or No for the questions in Part B. It
consists of four questions. The questions are all related to the background of the
study, to know whether the respondents are generally aware of the contents of
ASEAN Economic Community (AEC). The first question is to see whether the
respondents are aware that the AEC that was initially scheduled to take effect in
2020 has been accelerated to 2015. The second and the third questions are asked to
see whether the respondents know what AEC has planned for the liberalisation of the
economic integration and the trade of services. The final question in this part seeks to
uncover whether the respondents are aware that the free flow of skilled labour is also
a part of the AEC agenda. The outcome of these questions shall reflect the level of
knowledge and understanding of the respondents on the AECs general background.
Part C

The questions in Part C are designed to directly achieve the studys second
objective which is; to investigate the potential benefits of AEC policy on the
Malaysian construction industry. It consists of 10 items. The last item, named
Others is provided to allow the respondents to contribute additional ideas that is
related to the potential benefits of the implementation of AEC towards the Malaysian
construction industry. For part C, the items are designed to use the likert scale
format. Naoum (2004) stated that the likert scale format is based on attitudinal
statements that requires the respondents to rate the statement; ranging from the one
extreme of favourableness to the other. Each scale represents the following ratings:

47

1 Strongly Disagree
2 Disagree
3 Not sure
4 Agree
5 Strongly Agree

As mentioned previously, the items listed in this section are in regards to the
benefits of AEC towards the Malaysian construction industry which have been
discussed in the literature review chapter. The respondents are required to rate their
level of agreements for each of the variables by selecting any one of the scale
provided.
Part D

Part D is a factual question consisting only one question. This question is


designed to seek whether the respondent knows about the allocation of the movement
of natural persons (MNP) under the AEC Blueprints. If the respondent answers No
for this question, then that question shall be the final question for the respondent. If
the respondent answers Yes, the respondent is required to proceed to the next
question, which is Part E.
Part E

Part E is designed directly to achieve the third objective of this study, which
is; to investigate the potential effects of MNP on the QS profession in Malaysia. This
section relies on the experience of the respondents in the construction industry. The
10th item in the table named, Others is provided in case the respondent wishes to
provide an additional idea in relation to the potential effects of the MNP toward the
QS profession in Malaysia. The items listed are obtained from the literature review
chapter, Chapter 3. 9 items will be answered using the likert scale. The format used
48

for this question is similar to that in Part C, which is the likert scale format. The scale
used for the question is as follows:
1 Strongly Disagree
2 Disagree
3 Not sure
4 Agree
5 Strongly Agree

The respondents are required to answer by stating their level of agreement for
each of the statement by selecting any of the scale provided.

After the completion of the second stage of the questionnaire construction,


the final stage, which is to check the wordings and the suitability of the variables are
conducted. This is conducted to ensure that the questions are comprehensive and are
able to achieve the objectives of this research study. For the construction of this
questionnaire, the researcher has referred to several other articles and previous
studies. The sample of this questionnaire is attached in the Appendices as per
Appendix A.
Writing the Covering Letter

The researcher has also prepared a covering letter to be attached together with the
survey questionnaires when the questionnaire distribution takes place. The intention
of the covering letter is to briefly explain on the purpose of the survey to the
respondents. The covering letter also acts as a medium to persuade the respondents to
participate in the survey. Among the details mentioned in the covering letter
includes:

49

1) The researchers detail


2) The objectives of the survey
3) Assurance of data confidentiality
4) Methods of returning the questionnaire
Sampling

After the completion of the questionnaire and the covering letter, the
questionnaires are then distributed to target samples. According to Naoum (2004),
there are five types of sampling designs available:
1) Non-random accidental sampling.
2) Non-random purposive sampling
3) Simple random sampling
4) Systematic random sampling
5) Stratified random sampling
For the purpose of this research study, the non-random purposive sampling is used.
This study requires respondents to be among registered Quantity Surveyors because
of their years of experience in the industry. These experienced professionals are the
target samples because they have experienced the change in trends in the
construction industry and in the QS profession. The registered QS are among those
who work as QS consultants, academicians, QS for contracting firms and QS who
work for the clients.

The respondents were divided into several categories of QS fields, which


include, QS practices, QS academicians, QS in Contracting Firms and QS in Client
Organisations/ Developers. The list of practicing QS was acquired from the Board of
Quantity Surveyors Malaysia (BQSM). The list was then narrowed down to
Registered QS Practices in the Klang Valley. The List was finally shortlisted to QS
Practices that are Partnership and Body Corporate. For Academicians, the list was
obtained from the Staff Directory of academic institutions. The academic institutions
were chosen among those accredited under the Royal Institutions of Surveyors
Malaysia (RISM). The survey was then distributed to academicians who are

50

registered with the BQSM. For Contracting Firms, the respondents were chosen from
Corporate Bodies (Total 10); the same goes for Client Organisations (Total: 5).

Sampling for Consultants

Sampling for Academicians

BOARD OF QUANTITY SURVEYORS MALAYSIA (BQSM)


Registered Qs Practices
(Total: 1341)

Accredited Degree Programmes


(Total: 16)

KUALA LUMPUR & SELANGOR


(Total: 562)

Public Universities
(Total: 5)

The list is narrowed down to the first 130 firms


located in Klang Valley as listed in the BQSM
list

The list is narrowed down to the first 2


universities as listed in the BQSM list

KLANG VALLEY
(Total: 130)

Staff Directory
(IIUM)

Staff Directory
(UTM)

The list is narrowed down to the first 55 firms


registered as Partnership & Body Corporate as
listed in the BQSM list

The list is narrowed down to staffs who are


registered with BQSM

BODY CORPORATE & PARTNERSHIP


(Total: 50)

Registered QS Academicians
(Total: 15)

Figure 4.2 - Method of Sampling 1

For this study, the minimum number of respondents required by the


researcher is 30 respondents. In order to meet that minimum requirement, the
researcher needs to distribute questionnaires to more than the number of targeted
respondents.

Distributing the Questionnaires

In this research study, the researcher uses various methods of distribution.


The distribution of questionnaires is as follows:

51

1) Through personal interaction


2) Emailing the questionnaires to the selected samples
3) Manually distributing to the QS offices chosen as samples
Collecting the Questionnaires

The collection methods of the completed questionnaires are as explained in


the covering letter. The methods include:
1) With personal interaction, the questionnaires are collected on the spot
after the respondents have completed the survey.
2) For emailed questionnaires, the respondents may forward the completed
survey to the email address provided.
3) For

manually distributed (hand distributed)

questionnaires,

the

respondents were asked to leave the completed questionnaire with the


office clerk for easy collection by the researcher.
4.4

METHOD OF DATA ANALYSIS

Once the data from the 30 samples has been received, data analysis follows.
The data shall be analysed using frequency distribution and based on the percentage
means.

The data collected from the questionnaires are analysed based on average
index obtained from:
1) The potential benefits of AEC to the Malaysian construction industry.
2) The potential effects of AFAS and MNP towards the QS profession in
Malaysia.

52

The average index can be calculated using this formula:

Average Index =

is weighting given to each factor by respondents;


n is the frequency of the respondents;
N is the total number of respondents;

Source: Shiadri (2008); Hajar (2010)

After the average indexes for each of the potential benefits and effects are
obtained, the results are then rated according to the average index scored. The ratings
of each of the average index obtained are determined by these scales:
( 1.00 Average Index < 1.50 ) = Strongly Disagree
( 1.50 Average Index < 2.50 ) = Disagree
( 2.50 Average Index < 3.50 ) = Not Sure
( 3.50 Average Index < 4.50 ) = Agree
( 4.50 Average Index < 5.00 ) = Strongly Agree
Source: Shiadri (2008); Hajar (2010)

Finally, the potential benefits and effects which have the average index
between 3.50 and 5.0 will be considered critical for this study, while the rest will be
disregarded.

53

4.5

SUMMARY

The research methodology applied for this research study is to achieve the
research objectives. Step by step procedure was laid out to facilitate the research
process. The steps are summarised through the following flow chart.
Formulation of the Research Topic

Development of the Topic and Idea

Formulation of the Research Problem

Defining the Aim and Objectives

Conducting Secondary Data Collection:


Literature Review

Malaysian Construction
Industry

AEC

Conducting Primary Data Collection:


Survey Questionnaire

Analysis of the Results

Discussion on the Findings

Conclusion and Recommendation


Figure 4.3 - Research Methodology

54

CHAPTER 5
DATA ANALYSIS AND DISCUSSION

5.1

INTRODUCTION

Chapter 5 presents the analysis of the data collected from the survey
questionnaire conducted earlier in the study. This study adopts frequency distribution
method as explained previously in Chapter 4.

This chapter aims to convey the results gathered from the survey
questionnaire that seeks achieve the second and the third objectives of this research
study. The objectives are:
1) To investigate the potential benefits of AEC policy on the Malaysian
construction industry
2) To investigate the potential effects of AFAS and MNP on the QS
profession in Malaysia.
In order to achieve these two objectives, a questionnaire is constructed consisting of
five separate parts. The parts are:
1)

Respondents particular

2)

The understanding of the ASEAN Economic Community

3)

The potential benefits of AEC on the Malaysian Construction Industry

4)

The awareness on the AEC and the service liberalisation

5) The potential effects of ASEAN Framework of Agreement in Services


(AFAS) and its movement of natural persons toward the Malaysian QS
profession

55

5.2

FEEDBACK FROM SURVEY

The questionnaire was distributed among local QS practices, ranging from those
working as consultants, academicians, contractors and clients. As explained in
Chapter 4, the questionnaires were distributed by:
1)

Personally meeting and distributing the questionnaire

2)

Emailing the questionnaires to the selected samples

3)

Manually distributing to the offices selected as samples

A total number of 80 questionnaires were distributed among local QS located in


the Klang Valley areas. At the end, a total of 38 completed questionnaires were
received. However, from the 38 completed questionnaires, 7 were rejected because
they were not answered properly. The target number of respondents decided in the
early stage of the study was 30; therefore, having 31 questionnaires is sufficient for
this research study. The statistics of the survey conducted are as presented in Table
5.1 and Table 5.2.
QUESTIONNAIRES NUMBER PERCENTAGE (%)
RETURNED

38

48

NOT- RETURNED

42

52

TOTAL

80

100

Table 5.1 - Feedback from Survey

56

52%

48%

Returned

Not-returned

Figure 5.1 - Feedbacks from Survey

QUESTIONNAIRES NUMBER PERCENTAGE (%)


USEABLE

31

82

REJECTED

18

TOTAL

38

100

Table 5.2 - Returned Questionnaires

82%

18%

USEABLE

REJECTED

Figure 5.2 - Returned Questionnaires

57

5.3

RESPONDENTS PARTICULAR

5.3.1 Respondents Gender

Table 5.3 and Figure 5.3 below show the distribution of the respondents gender.

GENDER NUMBER PERCENTAGE (%)


MALE

22

71

FEMALE

29

TOTAL

31

100

Table 5.3 - Respondents Gender

71%

29%

MALE

FEMALE

Figure 5.3 - Respondents Gender

Based on the above figure, the total respondents for this survey are 31. The
numbers of male respondents are 71% which is greater than the female which is
29%.
5.3.2 Respondents Age

Table 5.4 and Figure 5.4 below show the distribution of the age of the respondents.
AGE

25-29 30-39 40-49 50-59 60-65

NO. OF RESPONDENTS

Table 5.4 - Respondents Age

58

10

32%
26%
19%

16%
6%

25-29

30-39

40-49

50-59

60-65

Figure 5.4 - Respondents Age

The data above shows that the number of respondents age raging from 50-59
years old represents the majority of the respondents reflected with 32%, while the
minority of the respondents are represented by those aged 60-65 which are 6%.
5.3.3

Respondents Types of Employment Agency

Table 5.5 and Figure 5.5 below show the distribution of the respondents
profession in the Quantity Surveying field.

QS PROFESSION NUMBER PERCENTAGE (%)


CONSULTANT

23

74

CLIENT

CONTRACTING

10

ACADEMICIAN

OTHERS

TOTAL

31

100

Table 5.5 - Respondents Types of Employment Agency

59

74%

10%

3%
CONSULTANT

CLIENT

6%

6%

CONTRACTING ACADEMICIAN

OTHERS

Figure 5.5 - Respondents Types of Employment Agency

Based on both the tables and the figures above, the result shows that the
majority respondents are represented by consultants, reflected by 74%, while the
lowest percentage is represented by client which is equal to 3%. The Academician
and others share the same frequency which is 6%; other QS profession are those
working as both a consultant and as an academician. Another QS profession gathered
from the survey is from contracting firms that take about 10% of the distribution.
5.3.4 Years of Experience
Table 5.6 and Figure 5.6 represent the frequency distribution of the years of
experience of the respondents.
YEARS OF EXPERIENCE NUMBER PERCENTAGE (%)
LESS THAN 5 YEARS

23

6-10YEARS

19

11 15 YEARS

13

16 20 YEARS

MORE THAN 21 YEARS

13

42

TOTAL

31

100

Table 5.6 - Years of Experience

60

42%

23%

19%
13%
3%

Less than 5 years

6-10 Years

11-15 Years

16 - 20 Years

More than 21
Years

Figure 5.6 - Years of Experience

The table and figure above shows that the highest number of respondents
came from those with more than 21 years of experience with 42% which is equal to
13 respondents. The second highest is represented by those with less than 5years
experience with; 7 respondents; which is 23%. Followed by those with 6-10 years
of experience reflected by 19% and then there are those with 11-15 years of
experience that form 13% of the distribution. Those with working experience of 1620 years are represented as the least number of respondents which is only one (3%).

5.4

THE AWARENESS/ UNDERSTANDING OF THE AEC

Question 1: Do you know that AEC is to be fully implemented in 2015?


Question 2: Do you know that AEC aims for regional economic liberalisation?
Question 3: Do you know that AEC also aims for service liberalisation?
Question 4: Do you know that the free flow of skilled labours is part of the AECs
plan?

61

YES

NO

NUMBER PERCENTAGE (%) NUMBER PERCENTAGE (%)


Q1

27

87

13

Q2

29

94

Q3

26

84

16

Q4

22

71

29

Table 5.7 - The awareness and understanding

YES, 94%

YES, 87%

YES, 84%
YES, 71%

NO, 29%
NO, 13%

Q1

NO, 16%

NO, 6%
Q2

Q3

Q4

Figure 5.7 - The awareness and understanding

For the first question, majority of the respondents (87%) answered YES
while only 13% of the respondents are not aware of the implementation of AEC in
2015. As for the second question, still, it can be seen that the majority; which is 94%
of the respondents knows that AEC aims to achieve regional economic liberalisation.
There are only two respondents (6%) that have no knowledge of AECs aim. Similar
pattern can be seen for the third and the fourth question. Even though the percentage
may differ but for most of the respondents, they are aware of service liberalisation
under AEC and majority are aware that free flow of skilled labour is part of the
AECs agenda.

62

5.5

THE POTENTIAL BENEFITS OF AEC ON THE MALAYSIAN


CONSTRUCTION INDUSTRY

For this section, the data is generated from the questionnaires using frequency
analysis, based on the average index on each of the benefits of AEC towards the
Malaysian Construction Industry as listed in Table 5.8 below. The measure of
agreement in the survey provides quantitative indication of qualitative judgements
(Hajar, 2010). The formula used to find the average index is as mentioned in Chapter
4; the formula is:

Average Index =

is weighting given to each factor by respondents;


n is the frequency of the respondents;
N is the total number of respondents;

Source: Hajar (2010)

63

The total number of respondents is 31. Therefore, the average indexes for all
the potential benefits of AEC towards Malaysian Construction Industry are as follow:

Benefit No.1

11 + 25 + 37 + 417 + 51
31

= 3.39

Benefit No.2

11 + 21 + 32 + 424 + 53
31

= 3.87

Benefit No.3

11 + 20 + 33 + 420 + 57
31

= 4.03

Benefit No.4

12 + 21 + 312 + 414 + 52
31

= 3.42

Benefit No.5

11 + 23 + 39 + 416 + 52
31

= 3.48

Benefit No.6

11 + 23 + 35 + 416 + 56
31

= 3.74

Benefit No.7

11 + 21 + 39 + 416 + 54
31

= 3.68

Benefit No.8

12 + 24 + 310 + 413 + 52
31

= 3.29

Benefit No.9

11 + 20 + 314 + 410 + 56
31

64

= 3.65

After all the calculation has been done using the stated formula, all the
average indexes are tabulated as in Table 5.8. The average indexes are then
illustrated into Figure 5.8.
FREQUENCY
ANALYSIS
No.

Benefits

AVERAGE
INDEX

NUMBER OF
RESPONDENTS
1
2

Construction works become more


efficient
Construction Firms become more
competitive

17

3.39

24

3.87

Construction industry is opened


to domestic and foreign markets

20

4.03

Higher quality of service

12

14

3.42

Easier to venture into foreign


construction industry

16

3.48

Larger target market

16

3.74

Greater transfer of technology

16

3.68

Faster physical development

10

13

3.29

Greater job opportunities

14

10

3.65

Table 5.8 - The potential benefits

65

5
4.5
3.87

4
3.5

4.03
3.74
3.48

3.42

3.39

3.68

3.65
3.29

3
2.5
2
1.5
1

0.5
0

Construction works become more efficient

Construction Firms become more competitive

Construction industry is opened to domestic and foreign markets

Higher quality of service

Easier to venture into foreign construction industry

Larger target market

Greater transfer of technology

Faster physical development

Greater job opportunities

Figure 5.8 - The potential benefits based on Average Index

66

5.6

THE AWARENESS ON THE AEC AND THE SERVICE


LIBERALISATION

Table 5.9 and Figure 5.9 below show the distribution of the respondents
awareness towards service liberalisation in AEC.
NUMBER PERCENTAGE (%)
YES

26

84

NO

16

TOTAL

31

100

Table 5.9 - The awareness

84%

16%

YES

NO

Figure 5.9 - The awareness

The original number of respondents is 31. However, based on this question,


only 26 respondents are taken into consideration for the next section. This is due to
the need for the respondents to be aware on the implementation of service
liberalisation under the AEC before their responses can be analysed for the next
section.

In reference to the above table and figure, the results show that only 16%
which is equal to 5 of the respondents are unaware of the implementation of service
liberalisation under AEC. The rest of the respondents who represents the majority are
aware of the said agenda and is reflected by 84% which is equivalent to 26
respondents.
67

5.7

THE POTENTIAL EFFECTS OF ASEAN FRAMEWORK OF


AGREEMENT IN SERVICES (AFAS) AND ITS MOVEMENT OF
NATURAL PERSONS TOWARD THE MALAYSIAN QS
PROFESSION

For this section, the data is generated from the questionnaires using
frequency analysis, based on the average index of each of the potential effects of
AFAS and its movement of natural persons towards the Malaysian QS profession as
listed in Table 5.10 below. The measure of agreement in the survey provides
quantitative indication of qualitative judgements (Hajar, 2010). The formula used to
find the average index is as mentioned in Chapter 4; the formula is:


Average Index =
N
is weighting given to each factor by respondents;
n is the frequency of the respondents;
N is the total number of respondents;

Source: Hajar (2010)

The original number of respondents is 31. However, for this section, only 26
responses are analysed based on their responses on awareness in the previous section.
For the respondents perceptions to be considered in this section, the respondents
need to be aware of the implementation of service liberalisation under AEC. Those
who are aware are represented by those 26 respondents which is equivalent to 84%.
Therefore, it is important to take into consideration opinions of only those who are
aware of the matter.

68

The calculations for the average indexes for the potential effects of AFAS
and its movement of natural persons towards the Malaysian QS profession are as
follows:
Effect No.1

10 + 22 + 35 + 417 + 52

= 3.73

26
Effect No.2

10 + 21 + 30 + 418 + 57

= 4.19

26
Effect No.3

10 + 21 + 313 + 49 + 53

= 3.54

26
Effect No.4

10 + 20 + 37 + 413 + 56

= 3.96

26
Effect No.5

10 + 22 + 38 + 415 + 51

= 3.69

26
Effect No.6

10 + 23 + 311 + 49 + 53

= 3.46

26
Effect No.7

10 + 21 + 30 + 414 + 511
26

= 4.35

Effect No.8

12 + 24 + 37 + 44 + 59
26

= 3.54

Effect No.9

12 + 27 + 37 + 46 + 54
26

69

= 3.12

All the average indexes obtained from the Average Index formula are
tabulated as shown in Table 5.10 below.
FREQUENCY
ANALYSIS
No

Effects

AVERAGE
INDEX

NUMBER OF
RESPONDENTS
1
2

Increase in job opportunities for


QS
Increase competition of QS
employment

17

3.73

18

4.19

Better job qualities

13

3.54

More diverse services

13

3.96

Increase in quality of services

15

3.69

Change of employment form

11

3.46

Greater competition between


domestic and foreign QS

14

11

4.35

Less opportunity for local firms

3.54

Loss of talents/ brain drain

3.12

Table 5.10 - The potential effects

70

4.5
4

4.35

4.19
3.73

3.96
3.54

3.69

3.5

3.46

3.54
3.12

3
2.5
2
1.5

1
0.5
0

Increase in job opportunities for QS

Increase competition of QS employment

Better job qualities

More diverse services

Increase in quality of services

Change of employment form


Greater competition between domestic and foreign
QS
Less opportunity for local firms

Loss of talents/ brain drain

Figure 5.10 - The potential effects based on Average Index

71

5.8

SUMMARY

Overall, data collected through survey conducted are analysed in this chapter.
There are five sections altogether; Part A, B, C, D and E. Part A describes the
respondents professional backgrounds. Part B looks into the level of understanding
of the respondents regarding the aims and backgrounds of the AEC agenda. Part C
provides the potential benefits and Part D determines the awareness of the
respondents on the AECs service liberalisation. Lastly, Part E provides the potential
effects of the movement of natural persons towards the QS profession in Malaysia.

72

CHAPTER 6
DISCUSSION AND FINDINGS

6.1

INTRODUCTION

This chapter discusses the findings of this study. The objective of the
questionnaire as mentioned previously in Chapter 4 is to achieve both the second and
the third objectives. The objectives are:
4) To investigate the potential benefits of AEC policy on the Malaysian
construction industry
5) To investigate the potential effects of AFAS and MNP on the QS
profession in Malaysia.
These objectives are translated into the two research questions to be
addressed in this study which are:
1) What are the QS firms perceptions of the potential benefits of AEC
policy on the Malaysian construction industry?
2) What are the QS firms perceptions on the potential effects of the free
flow skilled labour policy on the employment of Quantity Surveyors?
6.2

FEEDBACK FROM SURVEY

A total of 80 questionnaires were distributed but only 31 questionnaires were


completed and returned. These questionnaires were then analysed in answering the
research questions. Being able to collect 31 respondents was a good outcome,
however, it took longer than expected to achieve the targeted 30 samples, mainly due
to these reasons:
1)

More questionnaires were distributed manually to selected QS firms


compared to personally meeting the selected sample.

2)

Most manually distributed questionnaires were not completed/ answered


when returned to the researcher.

73

6.3

THE POTENTIAL BENEFITS

This section ranks the findings gained from the data analysis in accordance to
ascending average index of every benefit listed in Table 6.1 below.
No.
1
2
3

Benefits

Average
Index

Rating

Rank

3.39

Not Sure

3.87

Agree

4.03

Agree

Construction works become


more efficient
Construction Firms become
more competitive
Construction industry is
opened to domestic and
foreign markets

Higher quality of service

3.42

Not Sure

Easier to venture into


foreign construction
industry

3.48

Not Sure

Larger target market

3.74

Agree

3.68

Agree

3.29

Not Sure

3.65

Agree

7
8
9

Greater transfer of
technology
Faster physical
development
Greater job opportunities

Table 6.1 The Potential Benefits According to Scales

The ranking for each of the potential benefits of AEC towards the Malaysian
construction industry is achieved by referring to the scale as discussed in Chapter 4.
The potential benefits that obtained average index of 3.50 and above; are considered
critical for this study, while the remaining shall be disregarded. The scales are as
follows:

74

( 1.00 Average Index < 1.50 ) = Strongly Disagree


( 1.50 Average Index < 2.50 ) = Disagree
( 2.50 Average Index < 3.50 ) = Not Sure
( 3.50 Average Index < 4.50 ) = Agree
( 4.50 Average Index < 5.00 ) = Strongly Agree
Source: Hajar (2010)

According to Table 6.1, there are five potential benefits that meet the 3.50
average indexes and shall be considered critical potential benefits of AEC towards
the Malaysian construction industry as a result for this study. The potential benefits
are ranked as follows:
1) Construction industry is opened to domestic and foreign markets (4.03)
2) Construction Firms become more competitive (3.87)
3) Larger target market (3.74)
4) Greater transfer of technology (3.68)
5) Greater job opportunities (3.65)
The researcher also obtained several additional potential benefits from the
respondents through the open-ended item in the questionnaire. They are:
1) There could be greater opportunity to become experts in niche areas
2) International resumes shall add to professional value
3) The trend for cost services are very likely to increase
4) Regional integration compliments domestically established firms
5) Domestic or newly established firms would have to enhance their
competitiveness or be left out unless certain protective incentives are
recorded

75

6.3.1 Comparison between Literature Review and Findings

In accordance to the literature review in Chapter 3, there are nine benefits of


AEC towards the Malaysian Construction Industry that are derived from the review.
Later the potential benefits are analysed upon the completion of primary data
collection, and the perceptions of the QS respondents through the questionnaire
survey are reflected. According to the data analysis in Chapter 5, there are five
potential benefits of AEC towards the Malaysian construction industry. The
differences are as shown in Table 6.2 below.
The potential benefits of AEC on the Malaysian Construction Industry

No.
1
2

LITERATURE REVIEW
Construction works become more
efficient
Construction Firms become more
competitive

FINDINGS

Construction industry is opened to


domestic and foreign markets
Construction Firms become more
competitive

Construction industry is opened to


domestic and foreign markets

Larger target market

Higher quality of service

Greater transfer of technology

Easier to venture into foreign


construction industry

Greater job opportunities

Larger target market

Greater transfer of technology

Faster physical development

Greater job opportunities

Table 6.2 Comparison of the Potential Benefits between the Literature Review and
Findings

76

6.4

THE POTENTIAL EFFECTS

This section ranks the findings gained from the data analysis in accordance to
ascending average index of every benefit listed in Table 6.3 below.
No

Effects

Average
Index

Rating

Rank

3.73

Agree

4.19

Agree

Increase in job opportunities


for QS
Increase competition of QS
employment

1
2
3

Better job qualities

3.54

Agree

More diverse services

3.96

Agree

3.69

Agree

3.46

Not Sure

4.35

Agree

3.54

Agree

3.12

Not Sure

Increase in quality of
services
Change of employment
form
Greater competition
between domestic and
foreign QS
Less opportunity for local
firms

5
6
7
8
9

Loss of talents/ brain drain

Table 6.3 The Potential Effects According to Scales

The ranking for each of the potential effects of ASEAN Framework of


Agreement in Services (AFAS) and its movement of Natural Persons towards the QS
Profession in Malaysia are achieved by referring to the scale as discussed in Chapter
4. The potential effects that obtained average index of 3.50 and more; are considered
critical for this study, while the remaining shall be disregarded. The scales are as
follows:

77

( 1.00 Average Index < 1.50 ) = Strongly Disagree


( 1.50 Average Index < 2.50 ) = Disagree
( 2.50 Average Index < 3.50 ) = Not Sure
( 3.50 Average Index < 4.50 ) = Agree
( 4.50 Average Index < 5.00 ) = Strongly Agree
Source: Hajar (2010)
According to Table 6.3, there are seven potential effects that meet the 3.50
average index and shall be considered critical potential effects of ASEAN
Framework of Agreement in Services (AFAS) and its movement of Natural Persons
towards the QS Profession in Malaysia. The potential effects are therefore ranked as
follows:
1) Greater competition between domestic and foreign QS (4.35)
2) Increase competition of QS employment (4.19)
3) More diverse services (3.96)
4) Increase in job opportunities for QS (3.73)
5) Increase in quality of services (3.69)
6) Better job qualities (3.54)
7) Less opportunity for local firms (3.54)
The researcher also obtained several additional potential effects from the
respondents through the open-ended item, which are:
1) The recognition and appreciation of established domestic registered QS
profession and services in domestic markets could be further diluted
(especially by foreign oriented domestic clients)
2) Liberalisation shall create niche areas
3) Better international exposure
4) Local firms have potential to achieve International recognition

78

6.4.1 Comparison between Literature Review and Findings

In accordance to the literature review, there are nine effects of ASEAN


Framework of Agreement in Services (AFAS) and its movement of Natural Persons
towards the QS Profession in Malaysia. The potential benefits are analysed upon the
completion of primary data collection, and the perceptions of the QS respondents
through the questionnaire survey are reflected. According to the data analysis as in
Chapter 5, there are five potential benefits of AEC towards the Malaysian
construction industry. The differences are as shown in Table 6.4 below.
The potential effects of ASEAN Framework of Agreement in Services (AFAS)
and its movement of Natural Persons towards the QS Profession in Malaysia.

No

LITERATURE REVIEW

FINDINGS

Increase in job opportunities for


QS
Increase competition of QS
employment

Greater competition between


domestic and foreign QS
Increase competition of QS
employment

Better job qualities

More diverse services

More diverse services

Increase in job opportunities for


QS

Increase in quality of services

Increase in quality of services

Change of employment form

Better job qualities

Greater competition between


domestic and foreign QS

Less opportunity for local firms

Less opportunity for local firms

Loss of talents/ brain drain

1
2

Table 6.4 Comparison of the Potential Effects between Literature Review and Findings

79

6.5

SUMMARY

This chapter discusses the findings obtained from the primary data collection
conducted through survey questionnaire as explained in Chapter 4. The findings are
discussed section by section; starting with the findings on the potential benefits of
AEC towards the Malaysian construction industry, followed by the findings on the
potential effects of ASEAN Framework of Agreement in Services (AFAS) and its
movement of Natural Persons towards the QS Profession in Malaysia. The findings
in Chapter 5 are then compared with the review of literature as discussed in Chapter
3. Finally, the following chapter, Chapter 7 shall conclude this study and make
further recommendations on possible research areas.

80

CHAPTER 7
CONCLUSION AND RECOMMENDATION

7.1

INTRODUCTION

Chapter 7 is the concluding chapter of this study. This research has been
designed with the aim of investigating the perceptions of Quantity Surveying firms
on AECs free flow policy of skilled labour in the construction industry and its
effects on the QS profession in Malaysia.

The two research questions to be addressed, crucial in achieving the


objectives of the study are:
1) What are the QS firms perceptions of the potential benefits of AEC
policy on the Malaysian construction industry?
2) What are the QS firms perceptions on the potential effects of the free
flow skilled labour policy on the employment of Quantity Surveyors?
The summary of findings thus will be presented based on the 3 objectives of
the study.
1) To understand AEC and its policy
2) To investigate the potential benefits of AEC policy on the Malaysian
construction industry
3) To investigate the potential effects of AFAS and MNP on the QS
profession in Malaysia.
7.1.1 Objective 1

The first objective is to understand ASEAN Economic Community (AEC)


and its policy. This objective is achieved through Chapter 2. Chapter 2 looks into the
AECs Blueprints and the previous economic agreements that contribute to the
formation of AEC and its frameworks.

81

7.1.2 Objective 2

The second objective is to investigate the potential benefits of AEC policy on


the Malaysian construction industry. This objective is achieved through the primary
data collection technique; the survey questionnaire. The findings of the survey shows
that five (5) out of nine (9) potential benefits dissected from the literature review in
Chapter 3, are found as critical potential benefits of AEC policy on the Malaysian
construction industry. The potential benefits are:
1) Construction industry is opened to domestic and foreign markets
2) Construction firms become more competitive
3) Larger target market
4) Greater transfer of technology
5) Greater job opportunities
7.1.3 Objective 3

The third objective is to investigate the potential effects of AFAS and MNP
on the QS profession in Malaysia. This objective is achieved through the primary
data collection; survey questionnaire. The findings of the survey shows that seven (7)
out of nine (9) potential effects dissected from the literature review in Chapter 3, are
found as critical potential effects of AFAS and MNP on the QS profession in
Malaysia. The potential effects are:
8) Greater competition between domestic and foreign QS
9) Increase competition of QS employment
10) More diverse services
11) Increase in job opportunities for QS
12) Increase in quality of services
13) Better job qualities
14) Less opportunity for local firms

82

7.2

LIMITATIONS

There are several impediments throughout the progress of this research. The
main limitation is due to time constraints. The researcher was given a fixed time
frame to finish this study; the most difficult part was during the data collection. The
accuracy and reliability of the findings could have been better if the researcher was
in possession of more time to conduct more personal interactions with selected
registered QS and QS Directors when filling in the questionnaires.

The researcher also faced difficulties during the data collection stage, as the
process had taken more time than what had been planned. There was lack of
cooperation by some of the selected samples. This could be due to their workload or
work schedule resulting in their reluctance to meet and, or to complete the
questionnaires.

7.3

RECOMMENDATION

Due to the limitations, this study provides only preliminary understanding on


the AEC policies and its implications. It is recommended that a more detailed and
comprehensive research to be carried out in this area. Furthermore, during the
process of completing the study, the researcher has come across many interesting and
beneficial topics pertaining to the AEC and the construction industry. Therefore, the
following are some of the potential topics recommended for future research:
1) A study on quantity surveying firms plans and preparations towards full
implementations of AEC service liberalisation.
2) A study on the implications of AEC towards small and medium sized
quantity surveying.
3) A study on activities and conducts of Quantity Surveying courses in local
universities in supporting ASEAN University Network (AUN).

83

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East Asia. Bangkok: ILO-EU Asian Regional Programme on the Governance
of Labour Migration.
AEC Blueprint. (2008). Jakarta: ASEAN Secretariat.
AEC Fact Book. (2011). Jakarta: ASEAN Secretariat.
Ahmad, L. (2012). Labour Migration: Malaysia as a Receiving Country. Kuala
Lumpur: Economic Planning Unit, Prime Minister's Department.
Amarjit, K. (2009). Labor Crossings in Southeast Asia: Linking Historical and
Contemporary Labor Migration. New Zealand Journal of Asian Studies 11,1 ,
276-303.
ASEAN Economic Community Blueprint. (2008). Jakarta: ASEAN Secretariat.
ASEAN Secretariat. (1997). ASEAN VISION 2020. Kuala Lumpur: ASEAN
Economic Bulletin.
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xx

APPENDIX A

DEPARTMENT OF QUANTITY SURVEYING


KULLIYAH OF ARCHITECTURE AND ENVIRONMENTAL DESIGN

SURVEY

SURVEY TOPIC:
ASEAN ECONOMIC COMMUNITY (AEC): EFFECTS OF SERVICE
LIBERALISATION TOWARDS THE QUANTITY SURVEYING
PROFESSION IN MALAYSIA THE QS PERCEPTIONS

Prepared by

: AINUL ASHIQIN BINTI AHMAD SHUHAIMI

Matric No.

: 0912914

Year/ Semester

: YEAR 4, SEMESTER 2

Session

: 2012/2013

Course Title

: AQS 4270 DISSERTATION

APPENDIX A

SURVEY
____________________________________________________________________
ASEAN

ECONOMIC

COMMUNITY

(AEC):

EFFECTS

OF

SERVICE

LIBERALISATION TOWARDS THE QUANTITY SURVEYING PROFESSION


IN MALAYSIA THE QS PERCEPTIONS
____________________________________________________________________
Dear Sir/ Madam,
I am a final year student in Bachelors of Quantity Surveying from Kulliyah of
Architecture and Environmental Design, International Islamic University Malaysia
(KAED, IIUM). As part of my course requirements, I am required to conduct a
survey to gather data to the above-mentioned research. Under the ASEAN Vision
2020, ASEAN Economic Community (AEC) shall be the goal of regional
economic integration. The objective of this questionnaire is to achieve the
second and the third objective of the research study. The objectives are; (2) to
investigate the potential benefits of AEC policy on the Malaysian construction
industry; and (3) to investigate the potential effects of AFAS and MNP on the
QS profession in Malaysia. Therefore, I would be grateful if you could kindly
participate by being one of my respondents in this research. I would appreciate it if
you could complete the survey by 25 April 2013.For survey distributed via email,
kindly forward the completed survey to the email address provided at the end of this
covering letter. You can rest be assured that ALL THE INFORMATION IN THIS
SURVEY WILL BE STRICTLY CONFIDENTIAL. Last but not least, I would
like to take this opportunity to thank you for your time and kind support. Thank you.
____________________________________________________________________
Should you have any enquiries regarding this questionnaire, please do not hesitate to
contact me at 017-2331660 or you can forward your questions to this email address;
ainulashiqin@gmail.com. Thank you.
____________________________________________________________________
Instructions to Respondents
Please answer all questions

APPENDIX A

PART A: Respondents particulars


1. Gender?
Male
Female

2. Age: __________

3. Which QS field are you in?


Consultant
Client
Contracting
Academician
Others (please specify): ______________________

4. How many years of experience in the construction industry?


Less than 5 years
6 -10 Years
11- 15 Years
16 20 Years
21 Years and more

PART B: The awareness/ understanding of the ASEAN Economic Community


(AEC)
5. Please tick ( ) where applicable:
No.

YES

Do you know that AEC is to be fully implemented in 2015?

Do you know that AEC aims for regional economic liberalisation?

Do you know that AEC also aims for service liberalisation?

Do you know that the free flow of skilled labours is part of the AECs
plan?

NO

APPENDIX A

PART C: The benefits of AEC on the Malaysian construction industry


6. The following is the list of benefits of ASEAN Economic Community (AEC)
to the Malaysian construction industry. Please tick ( ) at the appropriate
space to show your level of agreement for each benefit stated below.

No.

Benefits

Construction works become


more efficient

Construction Firms become


more competitive

Construction industry is
opened to domestic and
foreign markets

Higher quality of service

Easier to venture into foreign


construction industry

Larger target market

Greater transfer of
technology

Faster physical development

Greater job opportunities

10

Others (if any, please


specify)

1
Strongly
Disagree

SCALE
3
2
Not
Disagree
sure

4
Agree

5
Strongly
Agree

PART D: The awareness on the ASEAN Economic Community (AEC) and the
service liberalisation
7. Do you know that the movement of professionals would be less restricted
under the implementation of AEC in 2015 and beyond?
Yes
No (Please skip Part E, your question ends here)

APPENDIX A

PART E: The potential effects of ASEAN Framework of Agreement in Services


(AFAS) and Movement of Natural Persons (MNP) have towards the QS
profession in Malaysia
8. The following is the list of potential effects of the MNP and AFAS under the
ASEAN Economic Community (AEC) on the Malaysian QS profession.
Please tick ( ) at the appropriate space to show your level of agreement for
each effect stated below.
SCALE
No

Effects

Increase in job opportunities for


QS

Increase competition of QS
employment

Better job qualities

More diverse services

Increase in quality of services

Change of employment form

Greater competition between


domestic and foreign QS

Less opportunity for local firms

Loss of talents/ brain drain

10

Others (if any, please specify)

1
Strongly
Disagree

2
Disagree

3
Not
sure

-End of Survey-Thank you for your cooperation and support-

4
Agree

5
Strongly
Agree