Malaysia’s construction sector is expected to see an upturn in fortunes due to the revival of several major infrastructure projects. These projects had previously been put on hold due to the effects of the Covid-19 pandemic.
The revival of these projects is not only expected to boost the flagging construction sector; these projects are also expected to accelerate the country’s economic recovery and growth. Investor interest in the construction sector has also been forecast to increase.
Although many new public infrastructure projects have been shelved for the time being, one construction project which is currently in the works and is expected to have a major economic impact upon its completion is the Mass Rapid Transit Line 3 (MRT3). One analyst who has chosen to remain anonymous has claimed that updates and news about the MRT3 would be mentioned as part of the country’s 2021 budget to be released in November.
AllianceDBS Research Sdn Bhd, one of the country’s leading research firms, stated that the completion of the MRT3 would be likely to be given immediate priority. AllianceDBS also mentioned that the MRT3 is deemed to be important because it would not only increase connectivity in the surrounding areas; it would also ensure an increase in ridership and accessibility.
Another construction project which has been the focus of much attention is the KL-Singapore High Speed Rail (HSR). At present, the current progress of HSR’s completion is somewhat uncertain due to ongoing cross-border issues involving both Malaysia and Singapore.
However, some steps have already been taken in order to facilitate its completion. Malaysia’s Cabinet gave its approval to the project in late August; negotiations with key figures in Singapore are soon to follow. MyHSR Corporation, the government’s project delivery vehicle, has also launched two tenders for the purposes of appointing consultants for the HSR project.
Kenanga Research foresaw a sharp upturn in the financial condition of the construction sector as a whole. It claimed that there was a “window of opportunity for the sector to perform”.
Other than the MRT3 and HSR, Kenanga Research also cited the Pan Borneo Highway Sabah and the Sarawak-Sabah Link Road as examples of construction projects which would be likely to be major points of focus in the 2021 budget as well as the 12th Malaysia Plan.
As conditions return to normal and regulations related to Covid-19 begin to ease, most analysts expect the performance of the construction sector in coming quarters to continue to improve. However, the sector’s profit margin in the short-term might remain low because many construction sites are not yet able to operate at maximum efficiency due to the imposition of current regulatory procedures.
7th September 2020 16:29
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