Board expects buoyant building sector as 10MP projects roll out

The Construction Industry Development Board (CIDB) expects the construction sector to be buoyant next year as projects under the 10th Malaysia Plan (10MP) start to roll out from January.

But the government will be cautious in awarding contracts to mitigate the risk of being exposed to a second wave of global economic crises, said CIDB chief executive officer Datuk Hamzah Hasan.

Hamzah said the European debt crises and the slow US economic recovery was worrying and many countries are taking steps to reduce their expenditure in order to improve their budget deficit.

"Malaysia is taking similar steps in view of the expected crises. The impact will be felt in 2011 as what was experienced in 2009," he said.

He, however, said the impact will not be as great as last year due to continuation of projects from the Ninth Malaysia Plan (9MP), new jobs under the 10MP and more public-private partnership (PPP) projects coming up.

Under the 10MP, an amount of RM230 billion has been allocated for development, whereby 60 per cent, or RM138 billion, is for infrastructure.

Hamzah is bullish the industry will replicate this year's expected growth of 3.7 per cent in 2011. To achieve the target, it would need RM80.3 billion new projects next year, up from RM77.4 billion in this year.

He said projects like Matrade Centre, Warisan Merdeka, mass rapid transit and the Malaysian Rubber Board's land development in Sungai Buloh, worth RM70 billion, will contribute to growth next year.

This year, the government has announced projects to the tune of RM72 billion such as the LRT extension, the New LCCT terminal, power plants and luxury housing projects in Iskandar Malaysia.

"These are high-impact projects which will improve the business environment and private investment," he said.

In 2009, when the global economy hit the height of recession, Malaysia's construction sector was able to grow by 5.8 per cent because of completed jobs worth RM309 billion within four years of the 9MP.

"We expect by 2015, the sector will contribute 5 per cent to the country's gross domestic product, from the current 3 per cent," he said.

By Business Times