Hike in Construction Activities Expected With Revival of Mega Projects
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Analysts expect construction activities in the country to pick up following the suspension of mega projects in the second half of 2018.
Kenanga Research, Kenanga Investment Bank Bhd’s research arm, forecast a six percent hike in total expenditure from this year’s RM275.8 billion (following adjustments for the RM37 billion tax refund) to RM292.8 billion next year during the 11th Malaysia Plan’s final year, reported Borneo Post.
“For as long as threats of further slowing in growth by prolonged trade tensions remain, the way ahead for policymakers is accommodation by way of fiscal support and keeping monetary conditions loose,” Kenanga Research said.
“We see a pick-up in construction activities after mega-project suspensions since 2H 2018.”
Aside from the resumption of Pan Borneo Highway, East Coast Rail Link (ECRL), Klang Valley Double Track (KVDT2) and light rail transit 3 (LRT3), the research house is closely watching the revival of the MRT3, the KL-SG High Speed Rail projects next year while looking out for further progress on the Penang Transport Masterplan.
“The Johor Bahru – Singapore Rail Transit Link (RTS) project will likely be revived next year as well.”
The revival of the ECRL project alone saw 331 local contractors being shortlisted to tender for RM10 billion worth of jobs.
“This and the resumption of the RM17 billion LRT3 bode well for many small and mid-sized contractors which forms a huge source of high margin lending opportunities for the banks,” it said.
SME loans accounted for around RM320 billion or almost 20 percent of the banking system loans as at 30 June 2019.