The cost of building materials imported from China is set to increase by about 10 per cent to 15 per cent, according to a top supplier.

Costs of Chinese imports, particularly plywood, have witnessed a sharp increase on account of the reduction of rebates granted by the Chinese Government to factory owners and export companies down to five from the previous 11 per cent.

Citing reliable sources in the Chinese market, Danube Building Materials FZCO, a leading player in construction, interior decoration and shopfitting industry, said the remaining five per cent rebate would be removed soon, which will result in an increase in costs by 11 per cent.

China supplies almost onethird of the materials in the construction industry in the UAE, which has a total value of $300 million (Dh1.1 billion) in active projects.

In addition to the expected price increases of Chinese products, freight charges per 40-inch container have also increased in the past two months to $2,300 (Dh8,441) to 2,800 (Dh10,276) in June from $1,300 (Dh4,771) to 1,500 (Dh5,505) in May.

Shipment costs from China have increased to $3,000 (Dh11,010) per container. In some destinations costs are expected to go up by as much as 10 per cent this month and another five per cent in September or October 2007.

"We have established longterm relations with major suppliers in the Chinese market who have informed us about the new rebate policy of their government.

"We anticipate the real estate and construction industry in the UAE will feel a significant impact of the reduced rebates and the rising freight costs in the coming months, considering that the country's bulk of construction and building materials are imported from China," said Rizwan Sajan, Chairman of Danube.

The costs of other Chinese building materials, including steel, sanitary and hardware materials, have also been subject to similar regulation changes.

The rebate on these products was previously 13 per cent but has been reduced since April 2007.