The forecast for the construction industry for the rest of the year is positive since contractors are in a great position to accelerate the completion of ongoing projects and to submit bids for future ones.
RHB Research is optimistic about the sector, sharing some other analysts’ optimism, based on improving operational conditions.
These include the removal of the political cloud surrounding the just concluded state elections. This is where a large amount of development spending budgeted at about RM90bil for 2024, a plentiful labour supply, and reasonable building material prices.
In comparison to RM101.7bil during the same period last year, the total value of projects granted to contractors in the first nine months of this year was RM84.4bil.
The lack of significant government projects is mostly to blame for the slow growth in the value of projects granted.
“According to the guidance of Transport Minister Anthony Loke, we anticipate that projects like the Penang Light Rail Transit (LRT) and the phase 1B packages of the Pan Borneo Highway Sabah would begin operating by the end of 2023.
The flood mitigation projects that was planned to be completed in June or July this year may provide additional upside.
At the same time, non-residential construction jobs are still growing and Mass Rapid Transit 3 (MRT3) is still required.
According to the research firm, the RM60 billion in non-residential construction projects that have already been awarded . This represents 82% of the RM73.3 billion in non-residential building jobs expected in 2022.
This would result in an annualised job value for the non-residential building industry of RM80.2bil in 2023.
The research claimed the significant portion was due to the demand for industrial facilities such as warehouses and data centres.
The MRT3 is essential because of the rising use of existing public transport systems like the LRT and MRT.
For instance, the MRT Kajang and Putrajaya Lines saw record-breaking monthly ridership of 5.9 million and 3.1 million, respectively.
Contract rollouts may happen by the end of 2023, unless there is another delay, according to the brokerage. The validity has been extended to end-2023 from September 2023 for MRT3 tenders.
