Construction Sector Growth 2019

The construction sector growth rate is expected to dip in 2018 before recovering slightly in 2019, according to the Economic Report 2019 by the Ministry of Finance (MoF).

SLOW BUT STEADY

The government estimated the sector growth to drop from 6.7 per cent in 2017 to 4.5 per cent in 2018. The slowdown is due to the soon-to-be-completed mega projects, coupled with the overhang in the non-residential property segment.

The forecast growth of the sector in 2019 is 4.9 per cent, up marginally “following an increase in new planned supply in the affordable homes and industrial segments,” said the Report.

The civil engineering subsector supported the growth in the first half of 2018, and is expected to remain as the driver of the construction sector in 2018 and 2019, thanks to ongoing infrastructure projects, the Edge Property reports.

These include the Pan Borneo Highway in Sabah and Sarawak; Central Spine Road in East Coast; Mass Rapid Transit (MRT) Sungai Buloh-Serdang-Putrajaya (SSP) Line; and Light Rail Transit Line 3 in Klang Valley.

Ongoing projects in the petrochemical and power plant segment, include the Deepwater Petroleum Terminal 2 at the Refinery and Petrochemical Integrated Development (RAPID) Complex in Pegerang, Johor, Floating LNG 2 in Sabah, and the Central Processing Platform in Bokor, Sarawak.

Major mixed-use development projects, such as the Tun Razak Exchange and Bukit Bintang City Centre in Kuala Lumpur, are also expected to support the growth of the subsector.

BUDGET 2019

The Master Builders Association Malaysia (MBAM) welcomes various announcements under Budget 2019, such as the government’s decision to continue various infrastructure projects, which include affordable housing, rural housing, upgrading of roads and government officers’ quarters, schools, masjid, surau and police stations. 

“The continuation of well spread out projects will benefit the construction industry and the rakyat. This will also ensure the sustainability of the industry,” said its president Foo Chek Lee, as reported in The Sun.  “Furthermore, by taxing professional imported services, the government is also encouraging the use of local resources.”

Foo also hopes that the government will reduce the levy for foreign workers in the construction industry, as it did for the agriculture sector. “There should be a realistic understanding that the construction industry needs workers to fill in the demand-supply gap for manpower in the construction industry,” he said.

“As such, MBAM hopes that the policy with regards to the employment of foreign workers can be looked at in a holistic manner so that the aspiration of both the public and the private sector can be satisfied and the cost of doing business reduced.”

The government also planned to implement a new tiered levy system, where the levies charged will be higher for employers with a higher percentage of foreign workers.

“We also fully support the government’s two-tiered system and hope that the levy can be reduced for the skilled workers to further improve construction productivity,” MBAM said in response.

The Federal Government’s budget, announced on 2 November 2018, has a total allocation of RM314.5 billion for 2019, the largest compared with the last two federal budgets, with RM54.7 billion allocated as development expenditure. The fiscal deficit will be reduced to 3.4 per cent in 2019, from 3.9 per cent this year. The GDP is expected to expand marginally to 4.9% in 2019, compared with 4.8% in 2018. — Construction+ Online

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