Construction activities in Malaysia are expected to pick up after after mega-project suspensions since 2H18, analysts project in a market strategy report. — Bernama photo
KUCHING: Construction activities in Malaysia are expected to pick up after after mega-project suspensions since the second half of 2018 (2H18), analysts project in a market strategy report.
In its fourth quarter of 2019 (4Q19) Investment Strategy, the research arm of Kenanga Investment Bank Bhd (Kenanga Research) has projected over six per cent increase in total expenditure from RM275.8 billion in 2019 (after adjusting for the RM37 billion tax refund) to RM292.8 billion in 2020 during the final year of the 11th Malaysia Plan.
“For as long as threats of further slowing in growth by prolonged trade tensions remains, the way ahead for policymakers is accommodation by way of fiscal support and keeping monetary conditions loose,” Kenanga Research said.
“We see a pick-up in construction activities after mega-project suspensions since 2H18.”
According to Kenanga Research, besides the resumption of East Coast Rail Link (ECRL), LRT3, Pan Borneo Highway and KVDT2, three projects being closely watched for revival next year are the KL-SG High Speed Rail and the MRT3 while further progress is expected on the Penang Transport Masterplan.
The research arm noted that on the ECRL alone, 331 local contractors have been shortlisted to tender for RM10 billion worth of jobs in 4Q19.
“This and the resumption of the RM17 billion LRT3 bode well for many small and mid-sized contractors which forms a huge source of high margin lending opportunities for the banks.
“The Johor Bahru – Singapore Rail Transit Link (RTS) project will likely be revived next year as well. SME loans account for about RM320 billion or close to 20 per cent of the banking system loans as at June 30, 2019.