Abstract
We have revised down our forecasts for this quarter in light of worse than
expected gross fixed capital
formation and real capital investment growth
figures. In 2008, real capital investment growth was just
1.1%, compared
with an earlier estimate of 5.4%. This exacerbates our earlier-expressed fears
that
promised government investment in infrastructure is often failing to
materialise (in part due to the
government' s funding constraints). We now
believe that the real value of Malaysia' s construction sector
will decline
by 3.6% in 2009, compared with our earlier 2009 forecast of a relatively
shallow decline of
-1.4%. Furthermore, we are now more bearish about the
prospects for 2010 than we were during our last
update. We now predict
that the sector will register real growth of just 0.4% next calendar year,
compared
with our earlier forecast of 2.1%. Thereafter, we anticipate only
very modest real sector growth in 2011
and 2012 of 1.2% and 1.8%
respectively.
The principal news in Malaysia’s infrastructure sector
in the last quarter is concerning Malaysia' s largest
power producer,
Tenaga Nasional Berhad (TNB), which is aiming to raise ringgit-denominated
loans
for funding its US$2bn undersea electricity transmission line (May
2009). The submarine transmission
line will transfer power from Sarawak on
Borneo to the peninsula. The project includes installation of a
730km
high-voltage direct current transmission network. It also includes laying of a
670km undersea
cable for the 2,400MW Bakun hydro-electric dam.
This
quarter we introduce a profile for IJM Corp. The company, which has interests
across a wide range
of infrastructure-related sectors and geographic
regions, maintained a profit in the last 12-month reporting
period.
Several factors offer support, including exposure to India’s market,
where we anticipate
moderately strong economic growth in 2009, in contrast
to recessions in many other countries (including
Malaysia).
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