PRLog (Press Release) – Apr 19, 2011 – BMI View: The Malaysia Department of Statistics showed that Malaysia's construction industry had grown robustly in 2010, propelled by a two-year US$16bn stimulus plan initiated back in March 2009. The construction industry's value for t rc helicopter market place he first nine months of 2010 grew by a real 5.2% year-on-year (y-oy), pushing the nominal industry value to MYR18.2bn (US$5.0mn). As such, we are maintaining our fullyear real growth forecast of 6.7%, reaching a nominal construction industry value of MYR24.3bn (US$7.5bn) in 2010.
Key developments occurring the past quarter that will affect growth:
* In January 2011, Malaysian Prime Minister Najib Razak asked all of the country's highway concessionaires to freeze, cut or abolish toll rates without compensation. We believe that these moves by the incumbent party to reduce toll road prices highlight the significant political risks associated with Malaysia's toll road sector, while potentially having an adverse affect on the financial health for Malaysian toll road companies. * In January 2011, a new nuclear company, named the Malaysia Nuclear Power Corporation, was created to advance the planning of the development of an eventual nuclear power plant in the country. An official decision on whether to proceed with the nuclear option is expected in 2013, while current indications point to a nuclear plant possibly being commissioned in the early 2020s. * As part of the recently announced Economic Transformation Programme, the Mala garbage compactor review ysian government set out plans to expand the urban railway network in the Klang Valley. The proposed Mass Rapid Transit (MRT) system will span 141km (40kms underground) with three major routes serving a radius of 20km of the Kuala Lumpur city. The MYR36.6bn (US$12bn) project will be financed by the government and a special purpose vehicle (SPV) will be created to raise funds. The MRT project will commence construction in July 2011 and is expected to be completed in six years. In December 2010, Malaysia selected the MMCGamuda joint venture (JV) as its project development partner for the MRT project.
Beyond 2010, we remain cautious about the growth potential for Malaysia's construction sector due to the country's poor fiscal position, its exposure to the Chinese economy and the allure of other South East Asian markets. Therefore, BMI is pencilling in slower construction sector growth over the medium term. The construction sector is expected to average real growth of 5.6% per annum between 2011 and 2012. Looking further ahead, we expect sector growth to slow further, averaging 4.9% per annum between 2013 and 2015, with the nominal industry value expected to hit MYR35.4bn (US$10.9bn) by 2015.
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