Key Trends and Issues of Malaysian Construction Industry

Key Trends and Issues of Malaysian Construction Industry

Malaysia’s construction sector posted rapid growth (in real gross value added terms) driven by government and private sector investments in infrastructure projects under the 10th Malaysia Plan (2011–2015) and the Economic Transformation Programme (ETP), an initiative aimed at transforming Malaysia into a high-income nation by 2020. The residential sector has also been performing strongly; in the first half of 2012, for example, the number of housing approvals soared to over 135,000 units, the highest level on record.

Malaysia’s property market remains one of the strongest performers in the region, supported by positive investor sentiments, healthy domestic demand, low borrowing cost and attractive loan packages offered by banks. Following a strong performance in 2016, the property market is expected to maintain its growth momentum for the next few years. The government is providing the sector with a major boost: in the budget

Malaysia is one of the key foreign direct investment (FDI) destinations in the Southeast Asian region. Strong economic growth, a favorable business environment and stable interest rates have made the country a hot-spot among foreign investors. Malaysia expects continued high FDI inflows into the oil and gas, infrastructure and real estate sectors. The construction industry will be fueled by the Refinery and Petrochemical Integrated Development (Rapid) project in Pengerang, the Mass Rapid Transit project in Kuala Lumpur, and the Sabah Oil and Gas Terminal in Kimanis.

According to the Asia-Pacific Economic Cooperation (APEC), electricity demand in Malaysia is projected to increase from 93.3 TWh in 2009 to 206 TWh in 2035. The power sector will attract significant investment to accommodate this, considerably aiding the growth of the infrastructure construction market. Key power projects under construction include the Ulu Jelai Hydroelectric Power Plant project, which involves the construction of a hydroelectric power plant with a capacity of 372 MW, the Tanjung Bin Coal-Fired Power Plant project, which involves the construction of a super-critical coal-fired power plant with a capacity of 1,000 MW, and the Hulu Terengganu Hydropower Plant Project, which involves the construction of two hydropower plant units each with a capacity of 125 MW.

The construction of healthcare buildings is expected to benefit from the growth in health tourism. Numerous patients from Indonesia, Singapore, Japan, Australia, the UK, the Gulf Cooperation Council (GCC) and European countries visit Malaysia for the treatment of various health problems. Medical tourism in Malaysia is a rapidly growing business, with the number of tourists expected to reach 2 million by 2020. Consequently, development of the healthcare sector is a government priority, which will ultimately lead to an all-round development and renovation of existing hospitals and medical centers, coupled with the construction of new hospitals over the forecast period.

The Malaysian government has approved the construction of the Light Railway Transit (LRT), Mass Rapid Transit (MRT) and High-Speed Rail (HSR) projects. With an aim to transform the country into a world-class economic and tourism hub, the government announced plans to invest MYR36 billion under the MRT system in the Greater Kuala Lumpur/Klang Valley National Key Economic Area. The project is scheduled to complete by the end of 2020.

About Varun Seepathi 40 Articles
With an experience of over 3 years, Varun Seepathi has aided more than 50 medium to small and large firms for foraying into new markets, by increasing footprint in the existing bracket and understanding the ins and outs of these beasts. These beasts are the companies which have been exclusively engaged in materials, chemicals or packaging activities, and have encountered restraints either in the maintenance of P&L or in beating their competitors. He has also authored more than 300 research papers relating to the industry which consist of crucial information such as addressable serviceable market, strategies of players, growth of the market, market size, forecast, market share estimations and winning strategies along with opinions on the same. The “three slope distributor/off-taker evaluation model” currently in use by a lot of multinational companies has also been pioneered by him. A mood driven writer, a professional consultant, and a born explorer, Varun Seepathi is currently working as a full-time consultant. Healthcare, wealth management and information technology are some of the verticals of the industry where he has demonstrated his skills.