Infrastructure Projects to Dominate Malaysia's Construction Sector - RHB IB

KUALA LUMPUR, Oct 16 (Bernama) -- Infrastructure project flows will dominate Malaysia’s construction industry in the coming months as year-to-date (YTD) contract flows from the government have exceeded from last year, said RHB Investment Bank Bhd (RHB IB).

In a note today, it said that government projects awarded in the first nine months of 2024 (9M2024) stood at RM41 billion, surpassing RM36.7 billion in 2023. 

It said well-flagged projects include the Penang Light Rail Transit and the Pan Borneo Highway Sabah Phase 1B, which costs RM15 billion, with two final packages yet to be awarded.

RHB IB also believes that water-related infrastructure may bring additional opportunities for contractors, such as the Sungai Damansara flood mitigation project and the RM4 billion allocated for water management in Perak, which includes providing treated water to Penang.

Meanwhile, the value of contracts awarded to non-residential sub-sectors (comprising commercial buildings, factories, warehouses and data centres) stood at RM109 billion for 9M2024, exceeding 2023’s full-year value of RM83.5 billion.

“The data centre investment cycle is still ongoing with a new planned data centre in Delapan, Kedah,” it said.

Overall, the investment bank maintains its ‘overweight’ call on the construction and engineering sector.

At the same time, it noted that although the Bursa Malaysia Construction Index (BMCI) was up by 30 per cent YTD, the sector is not ripe for profit-taking as yet.

It said that the sector is anticipating more consistent news developments, including the water infrastructure and industrial opportunities, to emerge between now and the first half of 2025.

“These include the evaluation of feedback on Mass Rapid Transit (MRT) 3 alignment post-public inspection and the government’s decision on the viability of the Kuala Lumpur- Singapore High-Speed Rail by end-2024,” it added.

-- BERNAMA