Malaysia's construction industry will among the fastest growing in the world in the next five years
Malaysia’s construction industry will be among the fastest growing in the world in 2016-2020, expected to expand by close to 7% a year, according to a report by Timetric's Construction Intelligence Center (CIC).
According to the report, the expansion in the Malaysian construction industry is expected to be supported by the government’s plan to improve the country’s transport network, tourism infrastructure and increase the volume of renewable projects. Moreover, government efforts to address the country’s housing shortage will help the industry to grow over the coming years. However, low oil prices are expected to impact the government’s capability to invest in major infrastructure projects.
During the review period (2011–2015), the value of the country’s construction industry was supported by the 10th Malaysia Plan 2011–2015. Under this, the government invested heavily in infrastructure, industrial parks and residential buildings. In 2010, the government relaxed policies for public-private partnerships (PPPs) with the aim to develop the country’s infrastructure. Consequently, total private investment in infrastructure projects increased from 52.0% of the total infrastructure spending in 2010 to 64.0% in 2014.
Residential construction was the largest market in the Malaysian construction industry during the review period, accounting for 31% of the industry’s total value in 2015. The market recorded a review-period CAGR of 19.7% in nominal terms, increasing from MYR17.3 billion (US$5.7 billion) in 2011 to value MYR35.5 billion (US$9.1 billion) in 2015. This growth was supported by the government’s plan to build affordable houses under the Tenth Malaysia Plan 2010–2015. Under this plan, the government established 78,000 affordable housing units. Moreover, in 2014, the government introduced the Private Affordable Ownership Housing Scheme, under which it mandated private builders’ portfolios to contain at least 20% affordable housing units.
In order to match the demand and supply of affordable houses, the government is focusing on the construction of affordable houses. In the 2016 budget, the government increased its total spending on affordable houses by 54.6%, increasing from MYR1.9 billion (US$486.5 million) in 2015 to MYR3.0 billion (US$729.4 million) in 2016. Timetric expects market output to record a forecast-period CAGR of 10.6% in nominal terms, to value MYR58.8 billion (US$16.6 billion) in 2020.
Accounting for 20.4% of the industry’s total value in 2015, infrastructure construction was the second-largest market in the Malaysian construction industry during the review period. The segment is expected to retain this position over the forecast period, supported by the government’s plan to develop the country’s infrastructure under the 11th Malaysia Plan 2016–2020. Moreover, with an aim to become a developed nation by 2020, the government is focusing on the development of high-speed railway corridors, sea ports and airports, which in turn increase investment in the infrastructure market.
About this report
This information is taken from the Timetric report: ‘Construction in Malaysia: Key Trends and Opportunities to 2020'.
For more information visit: https://www.timetricreports.com/search/construction/“
CIC clients can access the report here
About the Construction Intelligence Center
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Source: Company Press Release