Building Investment (July-August 2021)

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Malaysia’s construction industry to grow by 14.6% in
2021, driven by investments in transportation and
energy projects, says GlobalData
Malaysia’s construction industry is set to recover in 2021 and
expand by 14.6% after construction activity was brought to a
standstill due to the impact of COVID-19 containment measures.
However, the recovery is more a reflection of the depths to which
activity fell in 2020 amid the COVID-19 lockdown, rather than a
sign of resurgence, says GlobalData, a leading data and analytics
company.
According to GlobalData’s report, ‘Construction in Malaysia
– Key trends and opportunities to 2025 (Q2 2021)’, Malaysia’s
construction activity had slowed considerably in 2019 due to
delays in several mega construction projects and an increase in
unsold housing stock. This weakness was further exacerbated
with the pandemic in 2020 and as a result, construction valueadd
declined by 19.4% in real terms. The recovery in 2021 will be
driven by investments in transportation and energy projects as
well as affordable housing.
The construction industry is expected to post an annual
average growth rate of 6.5% in real terms between 2022 – 2025,
driven by a recovery in economic conditions, coupled with
investments in transport infrastructure, renewable energy,
residential, telecommunications and water infrastructure
projects. In mid-December 2020, the government approved a
2021 budget worth RM322.5 billion where 73.3% is allocated
towards operational expenditure, 21.4% towards development
expenditure and the remaining 5.3% towards dealing with the
COVID-19 pandemic.
Willis Rooney, Economist at GlobalData, commented:
“Recovery over the forecast period will be supported by the
government’s aim to increase the share of renewable energy in
the total energy mix from 2% in 2019 to 20% by 2025; to achieve
this, an investment of RM33 billion will be required over the next
six years. Forecast period growth will also be supported by the
development of telecommunication infrastructure to improve
(Source: mbbusinessjoint.com)
the quality and coverage of 4G broadband services and set the
foundation for 5G in the country. To support this, the government
launched the Jendela Plan with an investment of RM21 billion, to
be implemented between 2020 and 2025.”
Both residential and commercial construction struggled over
the course of 2020, with the recovery in both sectors expected
to be gradual. The residential sector’s output over the short term
is expected to remain weak due to the disruption to residential
construction activity, coupled with weak demand for housing.
Rooney added: “As part of the 2021 budget, the government
announced further measures to support the housing sector,
which includes collaboration with financial institutions to roll
out a rent-to-own program, which will benefit first-time home
buyers until 2022. The government also allocated funds for the
construction of houses for low-income home buyers, which
will be used to build housing units under the People’s Housing
Programme, as well as the Rumah Mesra Rakyat and Perumahan
Penjawat Awam housing programmes.”
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