Abstract
Despite Malaysia' s construction industry having only just come out of a
recession in 2007, a slowdown
occurred in 2008. We estimate that the
construction industry grew by 2.1% in real terms in 2008. The
slowdown is
due to the government cutting back on its investment programme in public
infrastructure (a
number of projects were shelved in April). In light of
the intensification of the US financial crisis and its
spread to other
markets in H208, the prospects for 2009 are not bright. With major world
economies
moving into what could be a prolonged recession, we predict that
the Malaysian construction sector will
contract by 1.4% in real terms in
2009. We forecast a return to (very modest) real growth in Malaysia' s
construction sector in 2010, in the order of 2.1% y-o-y in real terms, thanks
in part to our expectation that
the global economy will receive support
from the US economy moving back onto a positive growth path.
Risks to our
forecasts are largely to the downside, particularly in 2010. The external
threat generated by
the global economic downturn is the main risk factor.
In the worst-case scenario, a prolonged recession in
the US and elsewhere
would severely crimp Malaysia' s export growth, GDP growth and government
revenues, with attendant implications not only for commercial construction in
the country, but also public
investment and infrastructure tenders. In a
context where the Malaysian government' s investment in
infrastructure was
already being scaled back even before the US-centred crisis began to translate
into a
worldwide economic downturn, this is a disconcerting scenario.
In December 2008, the government approved a new US$443mn low cost carrier
terminal to be built in
Labu. The new terminal would be called KLIA East @
Labu and be built with financing from Sime
Darby Bhd. Darby said that it
would only be the developer on the project, and not own or operate any of
the facilities. The price tag does not include the cost of land, but only for
the construction of the terminal
and runway facilities. The airport would
have parking places for 70 planes and a terminal capacity of 30
million
passengers per year. It is expected to be completed by March 2011.
In
December plans were announced for a US$831.2mn mixed golf course and
residential development
called Mines Golf City. The development, located
near Bukit Beruntung would eventually feature a 63-
hole golf course, the
largest in the country. In addition to the residential bungalows and property
lots
being offered for sale, the site would also include a golf academy, a
health clinic and spa, an international
school, an equestrian academy, a
diving academy, a country retail mall and a world-class entertainment
centre. Construction is expected to be completed sometime in 2015.
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