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Malaysian-German Chamber of Commerce, Market Watch 2010 – The Construction Sector

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Table (2): Number and Value of Projects Awarded by Category as of June 2009

Project Category Total Number of Projects

Total Project Value(RM mil)

2006 5,854 60,926.99ResidentialNon ResidentialMix DevelopmentSocial AmenitiesInfrastructureOthers

1,7781,968

11557

1,52416

16,554.5817,703.43

454.803,989.29

21,627.30597.59

2007 7,220 91,484.69ResidentialNon ResidentialMix DevelopmentSocial AmenitiesInfrastructureOthers

1,8052,245

111,3711,751

37

16,778.7425,140.07

115.3311,672.2737,588.58

189.702008 5,961 78,548.07ResidentialNon ResidentialMix DevelopmentSocial AmenitiesInfrastructureOthers

1,3421,954

171,1781,434

36

15,524.0221,646.721,196.21

19,604.8520,478.54

97.73June 2009 1,670 18,990.1

ResidentialNon ResidentialMix DevelopmentSocial AmenitiesInfrastructureOthers

3464510

49137012

2,923.296,527.600

5,070.334,440.50

28.38

Notes: Total may not necessarily add up due to rounding. Figures are subject to change due to late notification.Source: CIDB, Construction Industry development Board Malaysia

However, due to the escalating prices of construction materials and increased

inflationary pressures, developers were generally adopting a more cautious stance.

Consequently, units of new launches were lower at 9,442 units (January-June 2007:

35,492 units). With the contraction in housing starts during the same period, the

incoming supply of residential units under construction registered a total of 568,348

units (end-June 2007: 595,115 units). Completed units stood at 69,051, resulting in

total existing stock increasing 4.0% as at end-June 2008 (end June 2007: 5.3%), with

Selangor continuing to lead at 28.6% followed by Johor (15.6%), Kuala Lumpur (9.0%)

and Perak (8.8%).




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Construction starts for shops increased in 2008 to 5,594 units, compared to previous

year figures of 4,379 units in addition to 42,097 units of shops currently under

construction. Meanwhile, 17 shopping complexes, which started construction in 2007,

are expected to contribute additional 302,566 m ² of retail space once completed. In

addition, a total of 39,594 m ² of retail space starts were recorded during the first six

months of 2008. With the completion of new shopping complexes such as Pavilion and

The Gardens Galleria in Kuala Lumpur as well as The Spring and Boulevard Shopping

Complex in Sarawak, existing stock of retail space increased to 8,818,780 m ² by theend of June 2008, compared to 8,201.000 by the end of June 2007.. The overall

occupancy rate of retail space remained high at 80.9% (end-June 2007: 79.8%),

reflecting retailers’ confidence in consumer spending. The construction of industrial

property was also active with the increase in construction starts to 406 units (January

– June 2007: 303 units). Total industrial units currently under construction increased to

6,865 units compared to 6,013 units as at end of June 2007.

Construction activity of leisure property intensified, backed by the continuous efforts

taken by the Government to promote tourism. This was reflected in the ongoing

construction of 66 hotels with 18,714 rooms (end-June 2007: 58 hotels; 16,704 rooms).

As at end of June 2008, the existing stock totaled 2,204 hotels with 152,564 rooms

(end-June 2007: 2,220 hotels; 151,886 rooms).

In addition, some domestic construction companies were also augmented by overseas

projects, especially in the Middle East, India and Thailand. The projects include

construction of highways, airport terminals and hydropower plants. The turnaround in

the construction sector and the increase of construction companies led to a re-rating

of construction companies listed on the Bursa Malaysia.

Table (3): Number and Value of Projects Undertaken by Malaysian Contractors in GlobalMarket by Year of Project Awarded

Country2005 2006 2007 2008 2009

No. Value(RM m) No. Value

(RM m) No. Value(RM m) No. Value

(RM m) No. Value(RM m)

ASEAN 7 263.56 12 2,286.00 17 2,425.79 5 1,434.62 1 693.00Brunei - - - - 2 33.58 - - 1 693.00




9

IndonesiaLaosPhilippinesSingaporeThailandVietnam

2--122

12.2--179.4025.7046.26

111-11-

524.402,090.00631.86-1,155.04-

----121

----574.1811.12

1---22

7.20---113.201,314.22

------

------

India 10 1,420.70 8 876.61 7 4,042.45 0 0.00 0 0.00Middle East 18 4,915.68 28 23,241.89 21 10,349.46 20 5,768.29 14 2,959.3Kingdom BahrainLibyaQatarSaudi ArabiaUAE/DubaiIranOman

SyriaJordan

--639--

--

--3,498.99572.19844.50--

--

626391-

-1

1,423.33118.13161.5218,017.502,371.41700.00-

-450.00

-23212--

2-

-1,513.61,750.9314.822,893.4--

259.70-

3-3212--

--

488.42-581.201,822.242,876.43--

--

--2-111-

--

--281.72-677.582,000.00-

--

Africa 4 960.57 2 839.00 0 0.00 1 854.00 0 0.00South AfricaSudanAlgeriaMorocco

-4--

-960.57--

-1-1

-39.00-800.00

----

----

--1-

--854.00-

----

----

Others 11 645.98 9 1396.96 11 484.6 14 420.95 1 14.47

BangladeshCambodiaChinaMaldivesMongoliaPakistanSri Lanka

Trinidad+TobagoTurkmenistanYemenUnited KingdomIreland

1-441--

1----

53.75-74.9427.4975.80--

414.00----

1-32-11

--1--

1.45 --33-12

-1-1-

--100.908.17-185.06136.47

-51.95-2.05-

-362-11

----1

-36.74222.8072.98-4.5077.93

----6

-----1-

-----

-----14.47-

-----

Grand Total 50 8 ,206.49 59 28,452.46 56 17,375.3 40 8,477.86 16 3,666.77

Note: Total may not necessarily add up due to rounding. Figures are subject to change due to late notification.Source: CIDB, Construction Industry Development Board Malaysia

Malaysia during the current Economic Recession

The worldwide reaching implication of the current economic downturn and financial

crisis does not easily leave Malaysia untouched. Indeed, as the economy had a set

back, the blooming construction industry had a sudden fall and a major drop in the

ever-highflying growth graph. Suddenly many projects delayed or stagnated in the

construction industry and no new work was done. The industry had excess capacity,

but not enough work for production, which caused a gap bringing the growth of the

industry down. The government made several efforts to evoke the construction

industry.




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Hence, Malaysia’s government takes stern measurements and introduces government-

driven stimulus packages to provide impetus for the construction industry and other

related industries. On 10 th of March 2009, the government introduced a second

economic package for the year 2009. Further to this, an additional budget amounting

to 60 billion RM (about 13 billion Euros) shall be disbursed between 2009 and 2010.

Malaysia's stimulus package is in the same league of some mega-programmes by the

United States, China or Singapore. Set in relation with the nominal economic

performance the subsidies amount to 740 billion RM in 2008. It contains aids to

accelerate implementation of infrastructure projects, a car-scrap bonus, and

guarantees working credits and funds for labor market. According to the president of

Master Builders Association Malaysia (MBAM), Mr. Lai Moo Chan, the fiscal stimulus

package would not only help contractors, but also building materials suppliers and

manufacturers, and services sectors comprising more than 140 linkages that are

directly connected to the construction industry.

In addition, the Certificate of Fitness for Occupation was replaced with the Certificateof Completion and Competence. With this, the project engineer, architect or

registered draftsman can certify the fitness of the building, thereby enabling faster

handling over of the completed properties.

The ministry is also formulating the National Housing Policy. One of the objectives of

the policy is to ensure that the property sector continues to be a prime mover of the

country’s economy. For the past 27 years, private developers have built 2.7 million

houses over 27 years, representing an average of 100,000 homes a year.

Outlook

The construction sector is expected to expand by 3% at the end of 2009, supported by

the civil engineering segment due to the implementation of projects under the

economic stimulus packages. The success of the construction industry is increasingly

predicated on technology driven investments in information technology (IT) and this is




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expected to be even more so in the future. Information Technology (IT) plays a vital

role in the sustained growth of a business and is the sine qua non of all businesses

today, including the construction industry. Hence, understanding its roles and

functions in construction firms is a requisite in assessing their performance. However,

little work in this has been done on Malaysian firms. So far, there have been regional

studies in over 200 business organizations, mainly in Malaysia, revealing that IT use

conferred a competitive advantage. A survey was conducted of construction companies

in Selangor and Kuala Lumpur registered with the Construction Industry Development

Board (CIDB) of Malaysia on the parameters which contributed to their IT use. The

response rate was 62%. The findings indicated that firm performance was related to

the level of investment in information technology. General and Technical Software Use

would have to increase greatly if the firm performance is to be substantially improved.



Important Malaysian Construction Trade Fairs 2010

Contact:

Mr. Thomas Brandt:

Mr. Thomas Brandt: [email protected]

Ms. Judih Yong: [email protected]

We hope the market report serves you with actual information on the Malaysian market. Our

core business is to establish contacts, finding distribution partners, project acquisitions, etc.

Our “Office-In-Office Konzept” and our “Firmenpool Malaysia” will give you a permanent

address to develop the market. Please contact us for further information.

MALBEX 2010The 26th International Building Exposition

Date: MALBEX 2009 has been postponed until further notice

Venue: Kuala Lumpur Convention Centre

ARCHIDEX 2010Malaysia Architecture, Interior Design & Building Exhibit

Date: 1-4 July 2010

Venue: Kuala Lumpur Convention Centre (KLCC)

HOMEDEC 2010Home Decoration Exhibition

Date: 29 Apr – 2 May 2010&

23 – 26 Sept 2010Venue: Kuala Lumpur Convention Centre (KLCC)

construction 2010 eng

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