Overview of Malaysian Construction Sector

8/13/2019 Overview of Malaysian Construction Sector

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CONTENTS PAGE

1. Overview of the Malaysian economy 3 - 4

2. Governments support for the economySetting up a Stimulus Package for the economy (2008/2009) 5Liberalisation of the economy (since 2009) 5 - 6

3. End of 9thMalaysia Plan Important era that helped construction 6 - 7sector to grow

3.1 10thMalaysia Plan 7

4. Development Trend In The construction sector, 2010-2011 8 - 94.1 Indicators of the construction sector 94.2 Number and value of projects awarded by different status 10 - 13

5. The 10thMalaysia Plan and the impact on the construction sector 14

6. Projects Highlight 14 16

7. Tourism 16 177.1 Langkawi Tourism Blueprint (2011-2015) 17

8. Development in growth corridors 18 208.1 Update On Growth Corridors 20 22

Conclusion 22

An Overview of the Malaysian Construction Sector (October 2012)Pg.2


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1. OVERVIEW OF THE MALAYSIAN ECONOMY

Despite the global economic crisis, the Malaysian economy continued to progresswell at a pace of 5.1% during the first half of 2012 (as compared to 4.7% in the sameperiod of 2011). Strong private consumption and robust private investment iscurrently sustaining the economy coupled with conducive financial market conditions,stable prices and a favourable labour market.

At the moment, the Malaysian economy is driven by domestic demand. Privateconsumption grew in tandem with stable employment, income and lower inflation.

In addition, supportive government policies such as the Tenth Malaysia Plan (2011-2015), Economic Transformation Programme (ETP) and the 2012 National Budgetalso played an important role in sustaining the strong growth. Project roll-outs fromthe Economic Transformation Programme are on-going and this will drive theeconomy further over the medium term.

In the first half of the year, growth can be seen in most economic sectors especiallythe manufacturing and services sectors with significant result in construction. Backedby the ongoing implementation of various Government large-scale projects, theconstruction sector is expected to improve significantly.

Meanwhile, the agriculture sector is showing moderate growth due to lower output of

crude palm oil due to the natural production down cycle and the mining sector isexpected to recover with improvement in crude oil output and supported by amoderate increase in output of natural gas.

The level of inflation is well retained and is expected to moderate between 2% to2.5% in 2012. Although the countrys continuous productivity improvement andcapacity expansion is able to stabilize the inflation, however the recent increase inglobal food prices pose a risk to the Inflation outlook.

Gross Domestic Product (GDP) by Sector : 2011 2013(at constant 2005 prices)

Change (%)2011 2012

1 2013

2Share of GDP (%)

2011 2012 2013

Agr icul ture 5.9 0.6 2.4 7.7 7.3 7.2Mining -5.7 1.5 2.7 8.8 8.5 8.3

Manufacturing 4.7 4.2 4.9 25.1 25.0 25.0

Construction 4.6 15.5 11.2 3.0 3.3 3.5+Services 7.0 5.5 5.6 54.2 54.5 54.8

GDP 5.1 4.5-5.0 4.5 5.5 100% 100% 100%

1 Estimate

2 ForecastNote : Total may not add up due to rounding

Source : Department of Statistics and Ministry of Finance, Malaysia / Economic Report 2012/2013



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Meanwhile, the services sector grew at 5.8% in the first half of 2012. Domesticdemand, increased travel activities, flourishing finance and insurance, good response

to private healthcare and education services, real estate demand as well asencouraging wholesale and retail trade were some of the factors that contributed tothis growth.

The services sector is anticipated to remain resilient for the rest of 2012 withexpansion of 5.5%.

Similarly, the manufacturing sector also progressed well. In the first seven months of2012, the output rose 5.2% and sales value of manufactured goods grew by 6.5%.The domestic-oriented industries expanded by 8.6% during the seven months ascompared to 6.5% of the same period of 2011, while the export-oriented industries

grew 4.1% (January-July 2011 : 2.8%). As for investments, both domestic and foreignapproved investments reached RM56.1 billion (Euro 14.02 billion) in 2011. Below aresome indicators of the performance of the major sectors :

Manufacturing Product ion Index (January July)

Change (%) Share (%)

2011 2012 2011 2012

Export-oriented industriesElectrical and elecronic productsChemicals and chemical products

Petroleum productsWood and wood productsOff-estate processingRubber productsPaper productsTextiles, apparel and footwear

Domestic-oriented industriesNon-metallic mineral and other related productsFabricated metal productsBasic metalsTransport equipment

Food productsBeveragesTobacco productsOthers

Total

Note : Total may not add up due to rounding.Source :Department of Statistics, MalaysiaEconomic Report 2012/2013 : Economic Performance and Prospects

2.8-4.85.5

9.3-6.96.3

15.414.814.8

6.527.126.12.5

-10.4

1.912.6-2.3

-14.8

3.6

4.11.69.9

7.14.6

-6.73.6

-7.8-7.1

8.66.6

11.2-6.913.7

12.50.0

24.910.0

5.2

75.926.419.0

15.93.13.63.72.71.5

24.13.85.12.54.6

4.91.70.31.2

100.0

75.125.519.8

16.13.13.23.62.41.3

24.93.95.32.25.0

5.21.60.31.2

100.0



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2. GOVERNMENTS SUPPORT FOR THE ECONOMY

Ever since the global economic crisis started in 1998, the Malaysian Government hadtaken drastic steps to curb the economy from spiraling down further by taking up the

following steps :

a) Setting up a Stimulus Package for the economy ( period 2008 / 2009)

During this period, the Government has taken immediate step to boost confidence inmarket place by implementing two stimulus packages of RM 7 billion (Euro 1.75billion) and RM 60 billion (Euro 15.00 billion).

The RM7 billion (Euro 1.75 billion) first Economic Stimulus Package announced on 4November 2008 was aimed at compensating the shortfall in private sector demandand encouraged private spending. The fund was being spent on small-scale

construction, maintenance of social infrastructure and public amenities anddevelopment projects that included the building of low and medium-cost houses aswell as measures to boost private consumption. The RM60 billion (Euro 15 billion)second Stimulus Package announced on 10 March 2009 included wide-rangingmeasures to support domestic economic activities and strengthened capacity forfuture growth. Of the total, RM15 billion (Euro 3.75 billion) was allocated for fiscalinjection, RM25 billion (Euro 6.25 billion) for Guarantee Funds, RM10 billion (Euro2.50 billion) for equity investments, RM7 billion (Euro 1.75 billion) for private financeinitiative and RM3 billion (Euro 0.75 billion) in the form of tax incentives.

With the stimulus plan, the Government had successfully generated and increased

construction projects in the country and inevitably kept the activities going.

Source : Master Builders Association of Malaysia Construction Industry Development Board of Malaysia Bank Negara Malaysia Quarterly Bulletin, First Quarter 2009

b) Liberalisation of the economy (since 2009)

Apart from the stimulus of RM67 billion (Euro 16.75 billion) injected into the economy,

the Malaysian government has also liberalized the economy since 2009 to attractforeign investment.

The liberalisation has been applied to the services sector with the aim of creating acondusive environment to attract investments, technology and create higher-valueemployment opportunities. The services sector is in fact an important component ofthe national economy, contributing 55% to the gross domestic product in 2008. Thegovernment then aimed to increase the target to 60%.



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Apart from that, *Bumiputera quota of 30% on equity ownership (which waspreviously imposed) in 27 services sub-sectors has been removed. Recognising thegrowth potential in the services sector, the government decided to immediatelyliberalise 27 services sub-sectors with no equity conditions imposed. Prior to this,companies in the services sector must offer 30% of its equity to bumiputeras.

The sub-sectors involved were health and social services, transport, business,computer industry and most importantly tourism services. The tourism servicesencompassed the development of theme parks, convention and exhibition centers aswell as hotels and resorts and became the driving force to boost the constructionsector.

Source :Prime Ministers DepartmentNew Straits Times news article 23rdApril 2009* Bumiputera refers to the indigenous people of Malaysia

3. END OF 9TH MALAYSIA PLAN IMPORTANT ERA THAT HELPEDCONSTRUCTION SECTOR TO GROW

The Malaysia Plan is a 5-year economic programme set by the Malaysiangovernment to run the country and improve the welfare status of its nation.

The 9thMalaysia Plan (9MP) was a five-year blueprint of the National Mission, whichwas a carefully constructed framework that comprised of policies and implementationplans for the nation during the period of 2006-2010. The 9MP outlined the policiesand key programmes that were designed to accomplish the following objectives :

To move the economy up the value chain

To raise the capacity for knowledge and innovation and nurture first classmentality

To address persistent socio-economic inequalities constructively and productively

To improve the standard and sustainability of quality of life

To strengthen the institutional and implementation capacity

During the period of 2006-2010, a total of RM220 billion (Euro 55.0 billion) wasallocated for the 9MP, an increase of 17.6% over the 8 thMalaysia Plan. Of this, a

development budget of RM200 billion (Euro 50 billion) was for Strategic Initiativesand RM20 billion (Euro 5.0 billion) for the Private Finance Initiatives (PFI) mechanismwhich supported the private sector-led growth strategy. Under the 9MP, theGovernment has further streamlined, adopted new approaches and mechanisms, toenhance the efficiency of the privatisation programmes.



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Technically, the funds for construction under 9MP should have been utilized and theperiod of 2011-2012 sees the execution and implementation of the projects.

Source : Construction Industry Development Board of Malaysia (Construction

Opportunities in the Ninth Malaysia Plan) Ninth Malaysia Plan 2006-2010 (Economic Planning Unit, Prime MinistersDepartment) The Star press article 10

thAugust 2009

3.1 10TH

MALAYSIA PLAN

The Tenth Malaysia Plan (10MP) which runs from 2011-2015 focuses on shifting theeconomy to a high value-added and high income economy through increase inproductivity. This will be achieved through higher levels of input from human capital,

adoption of new technologies and development of entrepreneurship to driveinnovation and creativity. To achieve this, a few initiatives have been put in placeincluding the Government Transformation Programme (GTP ;www.pemandu.gov.my/gtp/) and New Economic Model (NEM ; www.pmo.gov.my).

For the implementation of these programmes, the Government has increased thegross development expenditure in the 10thMalaysia Plan. Part of this expenditure willgo towards spending on construction jobs. During this Programme, it is estimatedthat there will be 52 high impact projects worth RM67.2 billion (Euro 16.8 billion) thatwill be implemented via privatization or public-private partnership agreements. Someof the projects to be considered in the pipeline are toll highways, coal fired power

plants, rail projects, airports expansion, public housing, development of theMalaysian Rubber Board land (3,300 acres), setting up of hospitals and universitycampuses, development of a Media City, development of integrated transportterminal and privatization of a sea port.

Source : Article : Economic Highlights : The Tenth Malaysia Plan 2011-2015 by RHBInvest, dated 10thJune 2010.



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4. DEVELOPMENT TREND IN THE CONSTRUCTION SECTOR

Generally, the Malaysian construction sector is divided into four subsectors ;residential, non-residential, civil engineering and special trade works. Special tradeworks refer to mainly maintenance activities such as electrical, tiling, plumbing,

painting and carpentry.

Since the 1990s, the construction sector has undergone a series of ups and downs :

In the period of 1989-1997, the construction sector registered a commendablegrowth of 14.3% vis--vis economic growth of 9.2%. The boom was caused by theimplementation of several large-scale projects such as the Kuala LumpurInternational Airport, Petronas Twin Towers, Sepang International Circuit and thedevelopment of Putrajaya and Cyberjaya which today stand as the countrys famousiconic buildings.

After this boom period, from 2000-2006, the number of construction projectsescalated down tremendously as most of the large-scale projects have beencompleted and contractors were going through a difficult time particularly after theAsian Financial Crisis. During this time, the construction sector grew marginally by0.7%.

However, construction of new infrastructure projects between 2007-2011 resultedin an average growth rate of 5.9%. During this period, the country saw manydevelopments in the rail, road and housing sectors. The Governments stimuluspackage implemented during 2008/2009 also played an important role in reviving the

construction industry and subsequently the economy as a whole.

2011 also saw recovery in the residential and non-residential sectors. The publiccivil engineering projects moderated as compared to the private projects. Privatesector construction activities have increased especially in the area of LNGregasification (oil & gas) and the development of oil terminal. Other activities thatsupported the growth of the construction sector included upgrading, repair andmaintenance works of public buildings, construction of rural roads and works onimproving the rural basic infrastructure. Due to favourable business activities andincreased consumer spending, there was also demand for retail spaces, thus thenumber of shopping complexes and hotels also increased during this period.

As for 2012, the sector expanded strongly by 18.9% in the first half of the yearsupported by strong activities in the residential and civil engineering subsectors. Thefuture of the sector is foreseen to be robust given many construction projects in thepipeline.

Some of these projects are such as :



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MY Rapid Transit (MRT) MRT is an integration of Light Rail Transit (LRT),Monorail and KTM Komuter (commuter train) and intra/inter-city buses that will helpalleviate traffic congestion. River of Life (aims to transform the Klang River into a vibrant and liveable

waterfront with high economic value) Tun Razak Exchange (formerly known as the Kuala Lumpur InternationalFinancial District) Bandar Malaysia (affordable housing concept) LRT (Light Rail Transit) extension, and the Rubber Research Institute of Malaysia land development.

Source : Economic Report 2012/2013 Economic Performance and Prospects,Ministry of Finance, Malaysia

4.1 Indicators of the construction sector :

Construct ion Indicators 2011 2012

2Q 1H 1Q 2Q 1H

Annual change (%)

Housing approvals

New housing sales andadvertising permits

Production

1

ofconstruction-relatedmaterials

Basic iron and steel

Structural non-refractoryclay and ceramicproducts

Ready mix concerete

Loans for construction

activityApprovalDisbursement1 Industrial Production Index

(2005=100)

Source : Ministry of Housing and Local

Government, Department of Statistics,

Malaysia and Bank Negara Malaysia

14.1

11.6

17.4

0.2

-11.1

41.0

31.9-3.6

22.1

17.7

19.6

6.1

-8.9

36.7

30.83.7

75.6

12.5

8.3

-10.9

3.3

18.2

38.216.0

126.9

13.9

4.4

1.0

9.1

23.7

-9.017.9

101.7

13.2

6.3

-4.9

6.1

21.1

12.316.9

Source : Bank Negara Malaysia Quarterly Bulletin, Second Quarter 2012



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4.2 Number and value of projects awarded by status of contractors andproject category as of June 2012

Top row refers to value in Ringgit Malaysia million and bottom line in Euro million

Exchange rate : Euro 1 = RM 4.00

Local Contractors Foreign Contractors

ProjectCategory

Numberof

projects

ProjectValue

GovernmentProjects

Private Projects GovernmentProjects

Private Projects

TotalTotal

(RM mil)Total Value

(RM mil)Total Value

(RM mil)Total Value

(RMmil)

Total Value(RM mil)

2010(Euro mil)

7,248 88,627.1022,156.78

1,868 19,234.224,808.56

5,271 60,355.3715,088.84

1 316.2279.00

108 8,721.292,180.32

Residential(Euro mil)

NonResidential(Euro mil)

SocialAmeneties(Euro mil)

Infrastructure(Euro mil)

2,115

2,544

849

1,740

22,923.055,730.76

30,414.497,603.62

8,900.992,225.23

26,388.576,597.14

119

357

584

808

1,336.54334.13

3,027.15

756.79

5,834.43

1,458.61

9,036.102,259.02

1,988

2,106

264

913

20,748.155,187.03

22,765.005,691.25

3,065.90

766.48

13,776.323,444.08

-

-

-

1

-

-

-

316.2279.00

8

81

1

18

838.36209.59

4,622.34

1,155.59

0.66

0.16

3,259.93814.98

2011(Euro mil)

7,114 94,055.2323,513.81

1,831 19,922.434,980.61

5,169 56,730.7014,182.67

6 1,610.73402.68

108 15,791.373,947.84



SocialAmeneties(Euro mil)

Infrastructure(Euro mil)

2,063

2,428

798

1,825

23,480.355,870.09

34,032.31

8,508.08

6,348.40

1,587.10

30,194.177,548.54

135

266

540

890

865.33216.33

2,815.96

703.99

3,523.91

880.98

12,717.233,179.31

1,922

2,077

255

915

21,963.475,490.87

23,240.17

5,810.04

2,815.17

703.79

8,711.892,177.97

-

-

-

6

-

-

-

1,610.73402.68

6

85

3

14

651.55162,88

7,976.18

1,994.04

9.322.33

7,154.321,788.58

2012(Euro mil)

2,050 29,027.667,256.91

459 5,614.381,403.59

1,565 22,743.835,685.96

1 144.8636.21

25 524.59131.15



SocialAmeneties

(Euro mil)

Infrastructure

570

739

229

512

8,608.482,152.12

10,127.302,531.83

1,740.50

435.12

8,551.38

27

83

167

182

391.0297.76

815.64

203.91

761.64

190.41

3,646.08

542

638

62

323

8,216.632,054.16

8,810.33

2,202.58

978.86

244.72

4,378.01

-

1

-

-

-

144.86

36.21

-

1

17

-

7

0.830.21

356.47

89.12

-

167.29



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(Euro mil) 2,137.84 911.52 1,094.50 - 41.82

Total may not necessarily add up due to rounding

Source : CIDB Construction Industry Development Board, Malaysia

4.3 Number and value of projects awarded by status of contractors and workspecialisation as of June 2012




ProjectCategory

Numberof

projects

ProjectValue

GovernmentProjects


Private Projects

TotalTotal

(RM mil)Total Value

(RM mil)Total Value

(RM mil)Total Value

(RMmil)

Total Value(RM mil)

2010(Euro mil)

7,248 88,627.1022,156.77

1,868 19,2344,808.50

5,271 60,35515,088.75

1 316.2279.06

108 8,7212,180.25

Building(Euro mil)

CivilEngineering(Euro mil)

Electrical(Euro mil)

Mechanical(Euro mil)

4,649

1,911

330

358

60,650.2315,162.56

16,594.07

4,148.52

6,714.571,678.64

4,668.231,167.06

822

867

97

82

9,526.342,314.08

8,428.48

2,107.12

980.49245.12

298.9174.73

3,772

1,025

217

257

47,664.5811,916.14

7,703.18

1,925.79

2,534.75633.69

2,452.86613.21

-

1

-

-

-

316.2279.06

-

-

55

18

16

19

3,459.318,648.27

146.19

36.55

3,199.33799.83

1,916.46479.11

2011(Euro mil)

7,114 94,055.2223,513.81

1,831 19,922.424,908.60

5,169 56,730.7014,182.67

6 1,610.74402.68

108 15,791.363,947.84

Building(Euro mil)




4,494

2,032

285

303

57,821.7614,455.44

22,079.19

5,519.79

8,374.482,093.62

5,779.801,444.95

755

925

54

97

6,480.431,602.11

11,611.14

2,902.78

964.17241.04

866.68216.67

3,679

1,079

221

190

44,400.9311,100.23

7,656.38

1,914.09

1,239.75309.94

3,433.64858.41

-

2

4

-

-

1,590.25397.56

20.495.12

-

60

26

6

16

6,940.391,735.10

1,221.42305.36

6,150.071,537.52

1,479.48369.87

2012(Euro mil)

2,050 29,027.657,256.91

459 5,614.381,403.59

1,565 22,743.835,685.96

1 144.8636.21

25 524.58131.45

Building

(Euro mil)

1,347 19,641.57

4,910.39

230 2,265.32

566.33

1,099 16,863.52

4,215.88

1 144.86

36.21

17 367.87

91.97



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579

73

51

7,333.671,833.42

1,258.27314.57

794.14198.53

206

14

9

2,640.90660.23

653.09163.27

55.0713.77

368

56

42

4,539.23

1,134.81

620.01155.00

739.07184.77

-

-

-

-

-

-

5

3

-

153.54

38.38

3.170.79

-



4.4 Number and value of projects awarded by status of contractors and typeof contract as of June 2012




ProjectCategory

Numberof

projects

ProjectValue

GovernmentProjects


Private Projects

TotalTotal

(RM mil)Total Value

(RM mil)Total Value

(RM mil)Total Value

(RMmil)

Total Value(RM mil)

2010

(Euro mil)

7,248 88,627.10

22,156.78

1,868 19,234.00

4,808.50

5,271 60,355.36

15,088.84

1 316.22

79.05

108 8,721.29

2,180.32

Conventional(Euro mil)

Design & Bu ild(Euro mil)

Turnkey(Euro mil)

Built, Operate& Transfer

(Euro mil)

Engineering,Procurement,Construction &Commissioning(EPCC)(Euro mil)

6,975

180

85

6

2

81,785.4720,446.37

4,619.861,154.96

2,057.25514.31

39.27

9.82

125.26

31.31

1,785

67

13

3

-

18,217.124,554.28

851.25212.81

145.8436.46

20.03

5.00

-

5,089

110

67

3

2

55,060.2213,765.06

3,444.79861.20

1,705.85426.46

19.24

4.81

125.26

31.31

1

-

-

-

-

316.2279.05

-

-

-

-

100

3

5

-

-

8,191.912,047.98

323.8280.96

205.5651.39

-

-

2011(Euro mil)

7,114 94,055.2223,513.80

1,831 19,922.424,980.60

5,169 56,730.7014,182.67

6 1,610.74402.68

108 15,791.363,947.84


Design & Bu ild

6,867

146

87,009.6621,752.41

4,109.00

1,746

63

18,394.934,598.73

1,290.34

5,022

76

55,313.1413,828.28

777.68

5

1

627.49156.87

983.25

94

6

12,674.103,168.52

1,057.73



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(Euro mil)

Turnkey(Euro mil)

Built, Operate& Transfer

(Euro mil)

Engineering,Procurement,Construction &Commissioning(EPCC)(Euro mil)

78

4

19

1,027.25

2,684.40671.10

26.03

6.50

226.14

56.53

20

-

2

322.58

230.5657.64

-

6.60

1.65

52

4

15

194.42

397.8999.47

26.03

6.51

215.96

53.99

-

-

-

245.81

-

-

-

6

-

2

264.43

2,055.95513.99

-

3.58

0.89

2012(Euro mil)

2,050 29,027.657,256.91

459 5,614.381,403.60

1,565 22,743.835,685.96

1 144.8636.21

25 524.58131.14


Design & Bu ild(Euro mil)

Turnkey(Euro mil)

Built, Operate& Transfer(Euro mil)

Engineering,

Procurement,Construction &Commissioning(EPCC)(Euro mil)

1,936

66

26

12

10

26,673.126,668.28

1,531.25382.81

722.91180.73

63.84

15.96

36.53

9.13

421

34

2

2

-

4,496.581,124.14

1,092.17273.04

17.344.33

8.29

2.07

-

1,492

30

23

10

10

21,622.735,405.68

394.6098.65

634.42158.61

55.55

13.89

36.53

9.13

1

-

-

-

-

144.8636.21

-

-

-

-

22

2

1

-

-

408.95102.24

44.4811.12

71.1517.79

-

-





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5. The 10TH MALAYSIA PLAN AND THE IMPACT ON THE CONSTRUCTIONSECTOR

Recently, the Malaysian Government has come up with several programmes such asthe 1Malaysia concept, New Economic Model, Government Transformation

Programme (GTP) and Economic Transformation Programme (ETP) aimed atimproving the countrys social status, integration, higher income status and economictransformation.

The end of 2010 marked the end of 9thMalaysia Plan and now the country is run bythe 10th Malaysia Plan which lasts from 2011 until 2015 (5-year plan). Theimplementation of the development programmes and projects spill-over (from the 9thMalaysia Plan) will be realized through the Tenth and Eleventh Malaysia Plans(10MP and 11MP).

Briefly, the Economic Transformation Programme (ETP) is a detailed programme on

what needs to be done with Malaysian economy over the next ten years, to achievehigh-income nation status target. It is anchored on a clear implementation roadmapwith strong performance management and transparency.

The Economic Transformation Programme (ETP) is anchored on 12 National KeyEconomic Areas (NKEAs), which are drivers of economic activities that have thepotential to contribute to the growth of Malaysia. The 12 NKEAs are : oil, gas andenergy ; communications content and infrastructure ; tourism ; palm oil ; businessservices ; financial services ; healthcare ; wholesale and retail ; education ;agriculture ; electrical and electronics ; and greater KL (dynamic city).

As for the Six Government Transformation Programme (GTPs), they are :o Reducing crimeo Fighting corruptiono Improving student outcomeso Raising living standards of low-income householdso Improving rural basic infrastructureo Improving urban public transport

6. PROJECTS HIGHLIGHT

Overall, in the 10th MP, there is an allocation of RM230 billion (Euro 57.5 billion)development fund and RM20 billion (Euro 5.0 billion) facilitation fund where out of theRM230 billion (Euro 57.5 billion), 60% or RM138 billion (Euro 34.5 billion) will bespent on physical development to be undertaken directly by the construction sector.On the other hand, the RM20 billion (Euro 5.0 billion) facilitation fund will open doorsto the private sector and investments worth RM200 billion (Euro 50.0 billion) isestimated to roll in which will involve the construction sector.



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In 10MP commencing 2011, the private sector will resume the role as the engine ofgrowth. In 2011, private investment is estimated to expand 12.5% to RM86 billion(Euro 21.5 billion).

The implementation of the 12 National Key Economic Areas (NKEA) is expected to

generate investment exceeding RM1.3 trillion or Euro 0.3 trillion and create 3.3million job opportunities. The private sector will finance 92% of the NKEA and theremaining by the Government.

Government will intensify the Public-Private Partnership (PPP) and several PPPprojects identified under the 10MP will be implemented in 2011 through privateinvestment.

Some of the projects are as follow :

Mass Rapid Transit (MRT) system will be implemented beginning July 2011.

Involves estimated investment of RM36 billion (Euro 9.0 billion) and will be thelargest infrastructure project ever undertaken by the country. Covers 60 km and 35stations and is expected to be completed by 2020. The MRT will generate 130,000jobs during its construction. It is also expected to generate a gross national income ofbetween RM3-4 billion (Euro 0.7 1.0 billion) per annum from 2011 to 2020 fromdirect construction and operations and another RM8 billion (Euro 2.0 billion) andRM12 billion (Euro 3.0 billion) as a result of its multiplier impact.

Mixed development comprising residential properties, commercial properties,industrial and infrastructure facilities at the Malaysian Rubber Boards land

measuring 2,680 acres. Estimated at RM10 billion (Euro 2.5 billion) and expectedcompletion in 2025.

Public projects involving upgrading and maintenance of schools, construction ofnew blocks, upgrading hospitals, flood mitigation programme, upgrading of ruralinfrastructure as well as construction of public houses for low income group. Thisproject will come to a total of RM6 billion (Euro 1.5 billion) and it will be implementedthrough the Special Stimulus Package.

RP2 (Second Rolling Plan) will be implemented starting 2012. The main initiativesunder RP2 include the double tracking rail project, highway and road projects and the

redevelopment of an old air base. RP2 will be allocated RM98.4 billion (Euro 24.6billion) with RM49.2 billion (Euro 12.3 billion) each in 2012 and 2013.

In 2012, the existing five regional corridors will also be further developed. Amongthe projects to be implemented are the construction of Johor Bahru-Nusa Jayacoastal highway in Iskandar, Johor ; heritage tourism development in NorthernCorridor ; agropolitan scheme in the East Coast Economic Region ; palm oilindustrial cluster project in Sabah Development Corridor (East Malaysia)



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and Samalaju water supply in the Sarawak Corridor of Renewable Energy (EastMalaysia).

To develop Kuala Lumpur International Financial District (KLIFD) valued at RM26billion (Euro 6.5 billion). The project which is aimed at strengthening the countrys

position in the financial services sector, will be developed in phases on a 30.35 hapiece of land using green technology to promote sustainable development. Majorinternational banks and professional financial services firms will be located at KLIFD.To accelerate this development, the Government has proposed several incentivesincluding income tax exemption as well as industrial building and accelerated capitalallowance.

Source :National 2012 Budget10thMalaysia Plan

7. TOURISM

The tourism industry is one of the key economic growth sectors, contributing almost12% to GDP. Total revenue generated from the tourism sector is estimated toincrease to RM62 billion (Euro 15.5 billion) in 2012. In conjunction with Visit MalaysiaYear 2013/2014, the Government has allocated RM358 million (Euro 89.5 million)under development expenditure, an increase of 42%, to target 26.8 million touristarrivals.

To cater to the expected influx of tourists to Malaysia in the next few years, there aremany hotel projects in the pipeline. Particularly for hot tourists spots such as PulauLangkawi, the island will be re-developed. The Langkawi Five Year TourismDevelopment Master Plan will be launched with an allocation of RM420 million (Euro105.0 million). The re-development includes restructuring the Langkawi DevelopmentAuthority, setting up a park rangers unit, upgrading museums, beaches and smallbusinesses as well as providing a more efficient transportation system.

In addition, foreign investors are also targeting Malaysia as a suitable destination toexpand their groups operations.

Among the interested groups are Frances Accor, the leading operator of hotels in theAsia Pacific which plans to expand its hotel fleet by opening 10 new hotels inMalaysia by end-2014. Some of it will be ready as early as 2012. The range of hotelswill include Pullman, Novotel and Ibis-Style. With this development, it is expected thatanother 2,500 additional jobs will be created.



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Apart from that, Bulgari Hotel is also in talk with some interested parties on thepossibility of opening up resort hotels in tourist attractions area such as Penang,Langkawi and Kota Kinabalu in East Malaysia.

Source : News article from The Star (28thSeptember 2012) Budget 2013 : Tax breaks,

affordable housing and cash for the needy .

7.1 LANGKAWI TOURISM BLUEPRINT 2011-2015

To boost tourism in Malaysia, the Government has set to develop the island ofLangkawi to become one of the worlds top eco-tourism destination.

The Langkawi Tourism Blueprint 2011-2015 was launched on 8th December 2011with an action plan of RM5 billion (Euro 1.25 billion). For this amount, 52% will be

generated by the private sector. The plan aims to develop the island into a top-notchvacation destinations such as Bali, Mauritius, Hawaii and Maldives. With theimplementation of the blueprint, it is expected that tourists arrivals in Langkawi willreach 3 million and boost the islands tourism income to RM3.8 billion (Euro 0.95billion) in 2015.

The blueprint will look into three areas for the plan to materialize, that is to offer thebasic needs to the tourists including setting up hotels, restaurants, entertainment andattractive destinations while the second is to put in place good infrastructure to givetourists the feel good experience and thirdly to invest in community developmentand marketing.

Source :National 2012 BudgetArticle Accor to add 10 hotels in Malaysia New Straits Times, 1stNov 2011Article New Bulgari Hotel could be coming to Malaysia, www.homeguru.com.my, 27thApril2011Article Langkawi Action Plan The Sun, 9thDecember 2011

http://www.homeguru.com.my/http://www.homeguru.com.my/


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8. DEVELOPMENT IN GROWTH CORRIDORS

In the previous 9th Plan Period, the Government has successfully developed andpromoted growth in 5 designated economic corridors such as the ones stated below :

Northern Corridor Economic Region (NCER)Development period : 2007 - 2025Area : 17,816 sq kmStrengths : agriculture, electrical & electronic, oil& gas, biotechnology, automotive, logisticsinfrastructureWeb : www.ncer.com.my

Iskandar MalaysiaDevelopment period : 2006 2025Area : 2,217 sq kmStrengths : urban development, educationalfacilities and R&D centers, logistic infrastructure,international resorts and theme parks, healthcareWeb : www.iskandarinvestment.com ;www.iskandarmalaysia.com.my

Sarawak Corridor of Renewable Energy(SCORE)Development period : 2008 2030Area : 70,708 sqmStrengths : oil-based industry, aluminium, steel,glass, palm oil, tourism, timber-based, livestock,acquaculture and marine engineeringWeb : www.sarawakscore.com.my

Sabah Development Corridor (SDC)Development period : 2008 2025Area : 73,997 sqmStrengths : agriculture, furniture, biotechnology,oil & gas, sustainable materials, logisticsWeb : www.sdc.net.my

East Coast Economic Region (ECER)Development period : 2007 2020Area :66,736 sq kmStrengths : agriculture & acquaculture base, bioresources (oil palm, tobacco), oil, gas and

petrochemical, automotive/transport equipment, boat buildingWeb : www.ecerdc.com

As for the 10thMalaysia Plan, the aim is to :

Accelerate growth through collaboration with private sector to develop priorityindustries ;

Focusing on selected sectors and clusters with definite competitive advantage tomaximize impact and focus execution ;

Creating more employment opportunities through encouraging more privateinvestments and facilitating coordination between agencies and supportingecosystems ;

Identify major investors to spearhead development of the corridors ; and

In view of this, RM978 million (Euro 244.5 million) has been allocated in the Budget2012 for this purpose.

http://www.ncer.com.my/http://www.iskandarinvestment.com/http://www.iskandarmalaysia.com.my/http://www.sarawakscore.com.my/http://www.sdc.net.my/http://www.ecerdc.com/http://www.ecerdc.com/http://www.sdc.net.my/http://www.sarawakscore.com.my/http://www.iskandarmalaysia.com.my/http://www.iskandarinvestment.com/http://www.ncer.com.my/


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Thus, the Malaysias 5 Regional Economic Growth Corridors present greatopportunities to the construction sector through the development of infrastructure. Forthe period of 2011-2015, the focus of each corridor are as follows :

Iskandar Malaysia

This corridor is located in Johor, a southern state in Peninsula Malaysia which hasattracted investment worth RM59 billion (Euro 14.75 billion) as at February 2010 with38% actualized in the area of manufacturing, properties, utilities, tourism andlogistics. For the whole development period of 10thMalaysia Plan, more investmentswill be channeled into the areas of education, healthcare, finance, creative industry,logistics and tourism. Among the projects now are the Johor Premium Outlet andMSC Cyberport City. The mentioned development will create economic spin-offs andthus boost the infrastructure projects including road construction in the city center,improvement in the public transport system and City Transformation Project.

Northern Corr idor Economic Region (NCER)

As mentioned in the name itself, the area covers mainly 4 states in the northernregion of Peninsula Malaysia. The states are Kedah, Pulau Pinang, Perlis and fournorthern districts in Perak. The nature of activities in this area are agriculture,manufacturing and services.

The key targeted projects include :

Transforming the area into technology driven and efficient food production hub.

To move up the manufacturing value chain with high-value added activities. To be a premier tourist destination.

Leveraging on its modern and equipped logistics system to become a majortrading center in this region.

East Coast Economic Region (ECER)

Covers the state of Kelantan, Pahang, Terengganu and a part of Johor. Rich with itsnatural resources, the ECER development plan during the 10 thMalaysia Plan wouldbe to develop the sector of tourism, oil, gas and petrochemical manufacturing,agriculture and education. Specific focus is given to special gazetted area namely

ECER Special Economic Zone (ECER SEZ).

Sarawak Corridor Renewable Energy (SCORE)

SCORE is known for its abundant resources for renewable energy especiallyhydropower. Located in the central region of Sarawak, the state boasts of manyrivers that can be used to generate hydropower and thus is a target for investmentsin power generation. Among the projects to be developed are the development of



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Port City and Halal Hub, development of new heavy industry center, marineengineering and tourism. Greater private industries participation is likely to promotegrowth in these sectors.

Sabah Development Corridor

The Strategic Development Area (SDAs) has been targeted for the development ofSabah Corridor. Sectors involved are mainly Agro-related including better productionof food crops, livestocks, fisheries and aquaculture, halal products as well as utilizingbiotechnology in the process. Apart from that, Sabah is also similar to Sarawak inhaving rich supply of oil and gas. Thus, one of the aim is also to develop its oil andgas cluster which involves setting up petrochemical complex, creating oil and gassupport services, oil refineries and tank farms as well as power plants.

Source : 2012 Budget Report

10th

Malaysia Plan

8.1 UPDATE ON GROWTH CORRIDORS

Cumulative Investments in Five Economic Growth Corridors (RM billion) Exchange rate : Euro 1 = RM 4.00

CorridorEnd - June 20121

Committed RealisedJan June 2012

Committed Realised

SDC

(Euro bil)

IskandarMalaysia(Euro bil)

ECER(Euro bil)

NCER(Euro bil)

SCORE(Euro bi l)

112.0

28.0

95.523.75

32.78.17

25.96.47

24.6

6.15

12.0

3.0

41.410.35

22.05.5

25.96.47

9.4

2.35

36.0

9.0

10.72.67

11.92.97

8.52.12

3.4

0.85

9.5

2.38

3.60.9

1.00.25

8.52.12

1.7

0.42

1From launching date of respective corridors until end-June 2012.

Source : Unit Kerjasama Awam Swasta (UKAS) and respective corridors

Source : Economic Report 2012 / 2013 Economic Performance and Prospects* UKAS Public Private Partnership Unit (Prime Ministers Department)

The economic corridors have attracted substantial investments ever since they werelaunched. Many development projects have taken place during the 9 thMalaysia Plan



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and the current 10thMalaysia Plan. These projects have provided growth opportunityto the construction sector due to their multiplier effects.

In the first six months of 2012, the corridors have received investments for thefollowing projects :

Sabah Development Corridor (SDC)- POIC (Palm Oil Industrial Cluster) in Lahad Datu and Sandakan- Keningau Integrated Livestock Centre- Sabah Agro-Industrial Precint at Kimanis

Iskandar Malaysia- ATT Tanjung Bin Terminal Phase 2- Dato Onn International Specialist Hospital

At Iskandar, apart from the recently received projects, several other key projects

have been progressing at various phases of development which include :

- Johor Premium Outlets (JPO)It was officially opened in December 2011 with over 80 designers and brandedstores.

- LEGOLAND Malaysia Theme Park

Opened in September 2012, it is the first LEGOLAND in Asia with seven uniquethemed areas.

- Pinewood Iskandar Malaysia StudiosExpected to be operational by end-2013. It aims to spur the development of IskandarMalaysia as a regional and international film production hub.

- EducityIt is a fully integrated knowledge-based hub comprising renowned universities andinternational schools. These include Newcastle Medical University, NetherlandsMaritime Institute of Technology, Raffles University Iskandar, University ofSouthampton, University of Reading as well as international schools such as RafflesAmerican School and Malborough College Malaysia.

East Coast Economic Region (ECER)- worlds first bioisobutanol factory in Kertih BioPolymer Park, Terengganu- tourism projects in Mersing, Johor

Northern Corr idor Economic Region (NCER)

- manufacturing in the Electrical &Electronics subsector



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Sarawak Corridor of Renewable Energy (SCORE)- manufacturing in Samalaju Industrial Park

Source : Economic Report 2012 / 2013 Economic Performance and Prospects, Ministry ofFinance Malaysia

CONCLUSION

The Malaysian construction scene is set for great development with the ongoingimplementation of the 10th Malaysia Plan. Given the development allocations andfacilitation funds, the industry is set to benefit from the abundant opportunities thatwill arise from the plan. These opportunities including high impact projects will createmultiplier effects that will enhance the demand and domestic growth for the entireeconomy especially the construction sector. Niche sectors such as the development

of green townships and sustainable living are also areas which Malaysia is pursuing.Apart from technology, human expertise is also needed to propagate theachievement of an high income economy. The industry needs to transform itsresources in the area of knowledge, entrepreneurial, competency and innovation. Assuch, the opportunities for foreign collaboration and partnership is great.

Overview of Malaysian Construction Sector

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