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Construction Sector Booming In East Malaysia

INFRASTRUCTURE - Malaysia
February 2019

While the construction industry is experiencing weaker sentiments in Peninsular Malaysia, the sector is booming in East Malaysia particularly in Sarawak. In its latest budget the largest state in Malaysia announced an allocation of MYR 9.1 billion (USD 2.23 billion) for infrastructure development. Notable projects to benefit from the allocation include Sarawak Coastal Road, Second Link Road and the State Water Grid project. The overall cost of the first two projects is MYR 6 billion (USD 1.47 billion), while the water grid project will cost MYR 2.8 billion (USD 0.69 billion). An allocation of MYR 2.3 billion (USD 0.56 billion) was also set aside for electricity supply expansion to rural areas, which as of end 2017 stands at 95% coverage rate.

Sarawak’s Chief Minister Abang Johari Abang Openg informed that investors notably from China and South Korea are coming in to take part in the state’s industrialization programs particularly at the Samalaju Industrial Park in Bintulu and the Samajaya High-Tech Park in Kuching. He was also confident that the increase in infrastructure budget allocation would help to stimulate the growth of the state’s economy to 5% compared to 4.6% last year. At the same time, the Sarawak Corridor of Renewable Energy (SCORE) development area has recorded around MYR 80 billion (USD 19.57 billion) worth of investment from public and private sectors. SCORE is expected to generate MYR 334 billion (USD 81.71 billion) worth of investments, and once fully realized in 2030, would generate 1.6 million jobs for the young locals.

Financers advised construction players to turn to East Malaysia, as opportunities are larger in the construction sector in the area, with tenders expected to roll out starting from the first quarter of 2019. Among prominent beneficiaries for the booming construction sector in Sarawak include Cahya Mata Sarawak Bhd (CMS) which is the main building materials supplier in the state, Hock Seng Lee Bhd (HSL) which has good reputation in wastewater management and sewerage projects, as well as a fleet of tunnel boring machines (TBMs) at its disposal, and KKB Engineering Berhad (KKB) which is one of the key water pipe manufacturers in Sarawak.  

 (Sources: Malay Mail; The Borneo Post; The Edge Markets)