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Construction in Malaysia - Key Trends and Opportunities to 2023

Construction in Malaysia - Key Trends and Opportunities to 2023

Summary

In real terms, the Malaysian construction industry's output grew at a compound annual growth rate (CAGR) of 6.69% during the review period (2014-2018). Although output growth slowed in 2018, the general upward trend can be attributed to public and private sector investment in infrastructure, residential and energy construction projects.

Over the forecast period (2019-2023), the government's efforts to enhance transport and residential infrastructure will support the growth of the industry. In addition, the government's aim to improve local energy resources is expected to support investments in energy infrastructure projects, which will in turn fuel growth in the industry. The industry growth will also be driven by the 11th Malaysia Plan (11MP) 2016-2020, under which the government plans to develop the transport infrastructure, manufacturing, mining and agriculture sectors with an aim to achieve the status of a developed economy by 2020.

However, the construction industry is expected to face some challenges, mainly stemming from the new government's policy to reduce the country's debt by cutting investment on major infrastructure projects. In October 2018, the Mahathir government announced plans to cut 15.0% of the total development expenditure annually, in order to reduce the country's debt. Accordingly, in October 2018, after reviewing MP2016-2020 program, the government announced a plan to reduce its program budget from MYR260.0 billion (US$52.6 billion) to MYR220.0 billion (US$55.1 billion). Furthermore, the government is reviewing Chinese-funded infrastructure projects due to concerns over a lack of transparency and economic viability. In August 2018, the government announced the suspension of the construction on the East Coast Rail Link project and natural gas pipeline project in Sabah, due to overpricing and graft accusations.

GlobalData's "Construction in Malaysia - Key Trends and Opportunities to 2023", report provides detailed market analysis, information and insights into the Malaysian construction industry, including -

- The Malaysian construction industry's growth prospects by market, project type and construction activity

- Critical insight into the impact of industry trends and issues, as well as an analysis of key risks and opportunities in the Malaysian construction industry

- Analysis of the mega-project pipeline, focusing on development stages and participants, in addition to listings of major projects in the pipeline.

Key Highlights

- GlobalData expects the residential construction market to register a forecast-period CAGR of 7.07% in nominal terms driven by the government's plans to provide affordable houses to the low- and middle-income citizens of the country. In October 2018, the government announced a plan to construct 200,000 affordable houses across the country by 2020. The country's growing population and an increased pace of urbanization is also expected to create fresh demand for new residential units.

- Forecast-period growth in the commercial construction industry will be supported by the government's efforts to develop the country's tourism infrastructure. The government aims to attract 30.0 million tourists and MYR100.0 billion (US$23.3 billion) tourist receipts by 2020. Consequently, the tourism sector will attract public and private sector investments to meet this target, In the 2018 budget, the government allocated MYR500.0 million (US$116.3 million) to develop the country's tourism infrastructure.

- GlobalData expects the infrastructure construction market to register a forecast-period CAGR of 10.65% in nominal terms supported by the government's focus on developing the country's transport infrastructure. The government plans to build the Pan-Borneo highway with an investment of MYR29.0 billion (US$7.3 billion) by 2023. The government aims to construct 3,000.0km of new paved roads across the country by 2020, under the 11MP 2016-2020. Moreover, in October 2018, the government announced plans to build 1,500km of rural roads across the country by 2020.

- The Malaysian energy and utilities construction market's growth will be supported by the government's focus on developing a high speed broadband network in the country. In January 2018, Telekom Malaysia Berhad (TM) and Tenaga Nasional Berhad (TNB) signed a memorandum of understanding to develop the fiber network in the country under the Nationwide Fiberization Plan. Moreover, in the 2019 budget, the government allocated MYR1.0 billion (US$250.3 million) to develop the country's broadband network.

- The total construction project pipeline in Malaysia - as tracked by GlobalData, and including all mega projects with a value above US$25 million - stands at MYR2.1 trillion (US$520.9 billion). The pipeline, which includes all projects from pre-planning to execution, is skewed to late-stage projects, with 60.2% of the pipeline value being in projects in the pre-execution and execution stages as of January 2019.

Scope

This report provides a comprehensive analysis of the construction industry in Malaysia. It provides -

- Historical (2014-2018) and forecast (2019-2023) valuations of the construction industry in Malaysia, featuring details of key growth drivers.

- Segmentation by sector (commercial, industrial, infrastructure, energy and utilities, institutional and residential) and by sub-sector

- Analysis of the mega-project pipeline, including breakdowns by development stage across all sectors, and projected spending on projects in the existing pipeline.

- Listings of major projects, in addition to details of leading contractors and consultants.

Reasons to buy

- Identify and evaluate market opportunities using GlobalData's standardized valuation and forecasting methodologies.

- Assess market growth potential at a micro-level with over 600 time-series data forecasts.

- Understand the latest industry and market trends.

- Formulate and validate strategy using GlobalData's critical and actionable insight.

- Assess business risks, including cost, regulatory and competitive pressures.

- Evaluate competitive risk and success factors.
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Construction in Malaysia - Key Trends and Opportunities to 2023
Published By :GlobalData
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