MALAYSIA CONSTRUCTION INDUSTRY - CURRENT CHALLENGES

Over the years, Malaysia construction industry has been an engine growth of Malaysia economy. Although, this industry recorded an average growth rate of 0.7% over the period of 2000 to 2007 (CIMP, 2007)[i] compared to GDP growth of 5.46% but this industry continues to be an essential element of the Malaysian economy. It is extensively linked with many other parts of the economy, in particular with related industries such as metal products, electrical machineries and building materials.
Global economic turmoil in early 2008 has affected almost all countries. Non-exceptional, Malaysia economy was contracted by 6.2% in the first quarter of 2009 (4Q 08: 0.1%). In line with the economic uncertainties, all economic sectors experienced contraction except for construction. The GDP growth of the construction sector has recorded a growth of 0.6% in the first quarter of 2009 (4Q 08: -1.6%) (BNM Quarterly Bulletin, 1/ 2009)[ii] and this indicator shows that the construction sector has shown sign of recovery.
In concern with the unfavourable economic situation, Government is injecting two stimulus packages amounting RM 67 billion to rejuvenate the Malaysia economy (The Supplementary Supply (2009) Bill, 2009)[iii]. The first economic stimulus package announced on 4th November 2008 is aimed at compensating the shortfall in private sector demand and encourages private spending. The fund is being spent on small-scale construction, maintenance of social infrastructure and public amenities and development projects that included the building of low-cost houses as well as measures to boost private consumption. The RM 60 billion second stimulus package announced on 10th March 2009 include the wide –ranging measures to support domestic economic activities and strengthened capacity for future growth.
A quick analysis of budget 2010 announced on 23rd October 2009 extends the Government support to construction industry by promoting the Public Private Partnership (PPP). This strategy is to boost the construction industry and this sector is envisaged to expand by 3.2% in 2010 (MBAM Bulletin, 10/09)[iv].


[i] CIMP (2007), Construction Industry Master Plan 2006-2015, CIDB

[ii] BNM Quarterly Bulletin (2009), issue 1/09

[iii] The Supplementary Supply (2009) Bill 2009, 10th March 2009

[iv] MBAM Bulletin (2009), issue 10/09