The Use of Blockchain Technology to Improve Payment Delays in Malaysian Construction Industry

Blockchain technology is an emerging technology that has been linked with many benefits including improving construction industry payment timeliness. Despite the well documented positives of blockchain to improve payment practices such as automated payments through smart contracts, faster payments processing, increased transparency, reduced disputes, better cash flow management etc., its actual implementation in Malaysia has been rather scarce. This study therefore looks into blockchain technology adoption in Malaysian construction industry and its potential to improve payments delays. Focus was placed on investigating the prevalence of payment delays in the industry, industry awareness on blockchain technology, current adoption status, industry readiness as well as the potential of blockchain to improve payment timeliness in Malaysian construction industry. Data collection involved the use of semi-structured interviews on six (6) experts, all of them being quantity surveyors with a minimum of five (5) years’ continuous experience as well as relevant knowledge and experience with blockchain technology. Interview responses were analyzed using content analysis to identify key themes by scrutinizing the frequency of recurring topics. Results indicated that delayed payments are indeed a recurring dilemma due to the domination of inefficient conventional practices and despite the potential of blockchain technology to overcome the problem, it has remained uncommon in the industry practice. Even though exposure to this technology has taken place, awareness on blockchain is quite shallow with very limited actual implementations. Lack of digital maturity, poor infrastructure, domination of old practices and resistance to change have been among the culprits for this unhealthy scenario. Anyhow, the respondents did support the notion that blockchain-enabled automated payment mechanisms have potential to address many shortcomings of old payment practices. This therefore sheds some light at the end of tunnel and portrays strong optimism for future blockchain initiatives in bettering payment processes in Malaysia.

Blockchain Technology, Construction Industry, Malaysia, Payment Process, Payment Delays

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