Greenflation, the new normal?

Lily Chang / images by CHEN,MEI-LING

FIABCI-TAIWAN, known as the conscience of the real estate industry, president of the board of directors and Treasure Dragon Corp's president Lily Chang pointed out that this year, there is a carbon fee on the road, the impact of the introduction of a carbon fee in 2025, the cost of the builders are bound to be affected, but how much of the impact of this wave of green inflation, it is not yet possible to assess the degree of impact.The construction industry is now facing two major operating difficulties, namely high construction costs and labor shortages, among which high construction costs, the impact of the carbon fee from this year onwards and the introduction of a carbon fee in 2025 will definitely affect the costs of builders, but it is not yet possible to assess the extent of the impact of this wave of green inflation, depending on the way in which the carbon fee is calculated and the extent to which the government has reduced its emissions.

FIABCI-TAIWAN, known as the conscience of the real estate industry, president of the board of directors and Treasure Dragon Corp's president Lily Chang pointed out that this year, there is a carbon fee on the road, the impact of the introduction of a carbon fee in 2025, the cost of the builders are bound to be affected, but how much of the impact of this wave of green inflation, it is not yet possible to assess the degree of impact.The construction industry is now facing two major operating difficulties, namely high construction costs and labor shortages, among which high construction costs, the impact of the carbon fee from this year onwards and the introduction of a carbon fee in 2025 will definitely affect the costs of builders, but it is not yet possible to assess the extent of the impact of this wave of green inflation, depending on the way in which the carbon fee is calculated and the extent to which the government has reduced its emissions.

In addition to Treasure Dragon Corp., high-quality brand builders such as Ruentex Group, Yuanlih Group, Lehua construction co., and Huaku development Co.all said that the carbon trading, the construction industry in the upstream manufacturers are subjected to changes in the manufacturing process, and they are indeed experiencing a lot of pressure on costs. However, at the initial stage, they will hope to start from their own cost control, start from the cost, process, and so on, and do a good job first, and do a good job of the gatekeeper, and then look at the details of the government's relevant norms and regulations. Details, and then to do further assessment.

Lily Chang said, the current inactive industry just carbon fee, “internal” part, will face from the upstream suppliers of the production cost increases, this part of the fear that will synchronize the builders of higher operating costs. And these upstream manufacturers of cost increases, mainly from the supplier's manufacturing process, equipment, etc. due to the need to meet the low-carbon update of the push up; “external” part, if the building materials need to be imported from abroad, may also need to add the raw materials or building materials imported “carbon exchange” fee.

In addition, Lily Chang said, the construction industry is another major dilemma is the lack of labor, in the impact of childlessness, coupled with the construction site environment, compared with other industries to high-pressure, willing to invest in the industry, relatively fewer talented people, so the lack of labor problem is even more serious.

She pointed out that, in view of the market situation, if the government allows the industry to hire migrant workers, although the short-term labor shortage can be alleviated, but in practice the cost of hiring migrant workers is not low, and even the cost of hiring migrant workers is higher than that of domestic workers, for example, in addition to the basic salary, the industry needs to take care of the cost of food and housing every month, these miscellaneous expenses alone, the cost of building business is 20% to 30% more, and this is not counting the addition of the tax return tax fee.

She said that if all the related expenses are added up, the cost of hiring migrant workers fear higher than the local labor force, and this is only to do general labor services workers, if the employment of foreign professional and technical workers, the cost of fear that the builders can not afford to eat.

Lily Chang analysis, due to global energy reduction and emissions generated by the carbon trading in Taiwan just to start, the government, the immobile industry are groping, try, the market are observing how much impact, as long as there is a brand, there is a credible builders, I believe that they will certainly start from their own management.

Lily Chang emphasized that the global response to climate warming, actively involved in ESG, carbon emissions reduction, but the government can take advantage of this opportunity to lead the industry to upgrade, and from the source, upstream supply chain, to allocate a budget, through tax cuts, low interest, high loan and other incentives, green building materials to achieve the development of modularization or pre-cast, and take the lead from the social housing, not only to achieve the upgrading of the industry, but also synchronized to solve the problem of labor shortages and material inflation. It can not only achieve the industrial upgrading of the immovable industry, but also solve the problems of labor shortage and material increase simultaneously.

In her opinion, although the results of the green transformation of the immovable industry cannot be seen at the initial stage, it is believed that the whole construction industry, builders, and the public will be willing to support it, and “a leader with a high degree of foresight and vision will start with the long-term interests.” Whether the industry can simultaneously achieve industrial upgrading and solve the problems of labor shortages and rising materials through this green wave, as well as achieve the win-win-win situation for the government, the industry, and the public, will be a test of the government's wisdom.