Market Trends of Malaysia Construction Industry
Residential Construction Driving the Market
Construction activity in Malaysia has increased for the fifth consecutive quarter, although the growth rate has slowed in the second quarter of 2023.
- According to data from the Department of Statistics Malaysia (DOSM), the value of work done in the construction sector rose by 8.1% year-on-year to MYR 32.4 billion (USD 7.05 billion) from April to June 2023.
- The growth in construction output was primarily driven by increased work in the residential sector, which saw a rebound and a 6.9% year-on-year expansion. Additionally, special trade activities experienced a faster rise of 9.8% year-on-year.
- However, civil engineering, which makes up the largest proportion of the sector's output, grew at a slower rate of 10.4% year-on-year.
- The growth was the slowest in four quarters, mainly because of the higher base due to the value of work done being more or less the same, hovering around MYR 12.1 billion (USD 2.59 billion) in the three quarters to Q2-2023.
- By project owners, private sector output, which accounted for 63.1% of total output, rose faster by 17.3% (Q1 2023: +10.6%), while the progress of construction project developments under the government recorded zero growth (1Q 2023: +6.1%) or unchanged from Q1 of 2023.
Increase in Infrastructure Construction Activities Driving Growth
The construction sector in Malaysia has seen a dramatic expansion, with 9,144 projects launched as of September 2023. The projects represent MYR 63 billion (USD 13.21 billion) of private investment and MYR 84 billion (USD 17.61 billion) of government investment. 91% of the projects were handled by local contractors, demonstrating their expertise in developing Malaysia's infrastructure.
According to budget-2024 Malaysia, the government plans to implement several large-scale projects such as Penang LRT, Sabah and Sarawak Link Road, and the reinstatement of LRT 3. These projects are part of Malaysia’s MYR 90 billion (USD 18.87 billion) development expenditure budget for 2024.
- The Penang Technology Park Lithium Battery Separator Plant project consists of the construction of a 4 billion square meter (4 billion sq. m) lithium battery separators plant in Penang. The plant will be located on 26.7 hectares of land and will have a production capacity of 4 billion square meters per annum of wet-process and coated separators. The construction of the plant began in the fourth quarter of 2023 and is planned to be completed in the third quarter of 2025. This project is intended to meet the increasing demand for polyimide batteries in the region. Once operational, the project will be one of the first in the region and will be the largest low-carbon separator plant in ASEAN.
- Sedenak JH1 Data Center Campus project consists of the development of a 150 MW data center campus located on a 12.5 ha plot of land in JB (Johor Bahru). The construction started in the 4th quarter of 2023 and will be finished in the 4th quarter of 2025. Once completed, the Data Center (DC) campus will become one of Southeast Asia's largest data center campuses to meet the infrastructure requirements of customers in the region.
- The China Communication Construction Company (CCCC) is spearheading Malaysia's largest infrastructure endeavor, the East Coast Rail Link. Leveraging cutting-edge Chinese technology, CCCC is setting a new pace, laying tracks at a rate three times faster than traditional methods.
