KUALA LUMPUR: Malaysia should focus on initiating large-scale infrastructure projects, which are crucial for the country's economic development as they generate spillover effects and employment opportunities.

This, in turn, would not only enhance productivity but also ensure that Malaysia maintained its global competitiveness, said KGV International Property Consultants executive director Samuel Tan.

He said notwithstanding the underwhelming performance in the fourth quarter of last year, there would be an upside lift for the economy this year, driven by Light Rail Transit, Mass Rapid Transit and Pan Borneo Sabah highway projects.

A spokesperson with a foreign fund management company, who spoke on condition of anonymity, said he anticipated a promising outlook for the construction sector, supported by ongoing government projects.

He said the landscape was bolstered by private-sector construction ventures, buoyed by substantial investments in new semiconductor foundries and data centres.

"Last year, the overall performance of the construction industry was below expectations, with most players recording low earnings.

"The industry remains plagued by rising construction costs, declining order books and a fierce competitive environment.

"However, we believe that industry revenue will show better performance in the coming quarters."

One of the significant infrastructure undertakings in Malaysia is the Pan Borneo Sabah highway.

Big contractors, particularly those with a proven track record in Sabah and robust financial standings, are expected to take the lead in bidding for the remaining contracts as the project's funding mechanism becomes clearer.

According to CIMB Securities, the tender activities for Phase 1B of Pan Borneo Sabah are gaining traction, evidenced by the recent awarding of multiple new contracts.

The research firm said Phase 1B of the highway, valued at RM15.7 billion, encompassed 20 work packages, each averaging about RM785 million.

"Four packages were awarded on March 22 and physical work is set to commence on April 1. 

"For the remaining 16 packages, the tender process is expected to conclude by the end of this month, with physical work scheduled to begin in May. So far, a total of 300 companies have participated in the Phase 1B tender and we believe that it would take a few months to shortlist the candidates," it said.

However, CIMB Securities cautioned that the project's margins might face pressure due to stiff competition.

Despite this, cost-competitive contractors still have the opportunity to secure multiple contracts when the tenders conclude.

CIMB Securities noted a distinct lack of public-listed construction companies involved in the Pan Borneo Sabah project.

It said most, if not all, of the contractors chosen for Phase 1A and the initial four packages of Phase 1B were privately held entities.

"However, we anticipate that public-listed contractors will take centre stage in the upcoming bidding processes as the project's funding mechanism becomes more transparent," it added.

https://www.nst.com.my/business/corporate/2024/03/1030975/large-scale-infrastructure-projects-can-further-spur-malaysias