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Malaysian construction industry set for double-digit growth

Malaysia’s construction industry is set for significant growth in 2014 and beyond, due to rising levels of state and private sector investment.

In 2014, this will contribute to double-digit growth, and also drive momentum into 2015 as new projects get off the ground and interest continues to rise.

That is the key finding of a new report by the Master Builders Association Malaysia (MBAM) and the Construction Industry Development Board (CIDB), which predicts that the industry will expand by at least ten per cent this year.

Continued growth

Not only does this represent the third consecutive year of double-digit expansion, but it also excludes several major projects set to start in the near future, including the Tun Razak Exchange financial centre.

MBAM president Matthew Tee noted that although these major projects are yet to start, he does not expect a reduction in the number of projects being greenlit in the coming years, with "consistent growth" in the industry moving forward.

His comments were reiterated by Tan Sri Dr Ahmad Tajuddin Ali, chairman of CIDB Malaysia, who expects the industry to benefit from increased investments involving both local and foreign companies, which will have the added benefit of providing jobs to people, either directly or indirectly.

Major expenditure

The expansion of the Malaysian construction industry has been catalysed by major capital expenditure projects, with the sector growth even outpacing GDP expansion in recent years.

A key factor has been the government’s Economic Transformation Programme (ETP) and public-private partnership (PPP) projects, which have had a domino effect across the industry between 2010 to 2014.

Supporting data

The anticipated expansion has been supported by a recent report from RAM Ratings, which believes the construction sector will likely be the best performer in terms of expansion for the rest of 2014.

The growth is expected to be so great that GDP growth projection was boosted from initial economic forecasts, rising to 5.6 per cent, from the initially estimated 5.1 per cent.

The report stated: "Construction, manufacturing and services are expected to perform better than initially expected, underscored by the continued strengthening of domestic and external demand drivers.

"In particular, construction activities are expected to lead this growth, which is projected to come in at 11.6 per cent this year."

With multiple reports signalling growth for 2014 and beyond, the construction sector is positioned as a hotbed of activity and confidence, with further major investments and developments on the horizon.

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