Market Trends of Malaysia Construction Industry
Investments in Infrastructure Sector to Boost Construction Activity
The Malaysian construction sector has experienced a significant boost due to the revival of several large-scale infrastructure projects. This has led to a 20.74% year-to-date increase in the construction stocks index on Bursa Malaysia, reaching a two-year high as of November 27, 2023.
The construction index on the exchange rose to 184.19 from 152.51 in January 2023, marking the highest level since April 14, 2021.
The government's acceleration of mega projects, particularly in rail and road network infrastructure, has been the driving force behind this growth, enhancing mobility and stimulating economic activities.
Key infrastructure projects in the country include the 5G rollout, East Coast Highway 3, flood-mitigation projects, West Coast Expressway, East Coast Rail Link, Central Spine Road, Mass Rapid Transit 3 (MRT3), Bayan Lepas Light Rapid Transit (BLLRT) in Penang, the remaining Pan Borneo Highway, and the Johor-Singapore Rapid Transit System.
Increase in Residential Constructions To Drive the Construction Market
Construction activity in Malaysia has increased for the fifth consecutive quarter, although the growth rate has slowed in the second quarter of 2023.
According to data from the Department of Statistics Malaysia (DOSM), the value of work done in the construction sector rose by 8.1 percent year-on-year to MYR 32.4 billion (USD 7.05 billion) from April to June 2023.
The growth in construction output was primarily driven by increased work in the residential sector, which saw a rebound and a 6.9 percent year-on-year expansion. Additionally, special trade activities experienced a faster rise of 9.8 percent year-on-year.
However, civil engineering, which makes up the largest proportion of the sector's output, grew at a slower rate of 10.4 percent year-on-year.
The growth was the slowest in four quarters mainly because of the higher base due to the value of work done was more or less the same, hovering around MYR 12.1 billion (USD 2.59 billion) in the three quarters to Q2-2023.
By project owners, private sector output, which accounted for 63.1% of total output, rose faster by 17.3 percent y-o-y (Q1 2023: +10.6 percent yoy), while the progress of construction project developments under the government recorded zero yoy growth (1Q2023: +6.1 percent y-o-y) or unchanged from Q1 of 2023.
