Malaysia market intelligence: sustaining construction momentum amid global pressures
Dr Ong See Lian
Director and Strategic Advisor
Our first Malaysia market intelligence report provides insight into the country’s construction sector, which is positioned for growth in 2024. The report focuses on how construction trends and resilience can strengthen productivity - bolstering Malaysia’s economy, despite both global and local headwinds.
Construction sector performance
Malaysia’s construction sector has seen a robust output, backed by a significant post-pandemic upturn with a market sentiment growth rate surpassing 25.0 percent compared to the previous year. Acting as an accelerator for development, growth has also been supported by an upsurge in tourism with 20.1 million arrivals in 2023, increasing the need for improved public infrastructure. This surge, combined with increasing demands for semiconductors, data centres and infrastructure projects like public transport and roads, has stimulated both investment and technological advancements.
With approved private investments reaching MYR330bn in 2023, the sector is predicted to see growth during the next year, reflecting the strengthening of investor confidence.
Additionally, Malaysia’s government has allocated a budget of MYR90bn for development, signaling confidence and an actionable vision to scale up national infrastructure.
Navigating headwinds
The Malaysian government has strategically responded to the rising inflation rates and currency fluctuations through proactive policy adjustments from the Central Bank of Malaysia. This has contributed towards maintaining economic stability, as the construction sector adjusts to pressures from both worldwide economic fluctuations and local factors. The government is also reducing subsidies as part of its economic reform, aiming for a more sustainable fiscal environment.
Strategic infrastructure initiatives to boost growth
Investment trends and budget allocations indicate a shift towards developing infrastructure with the government allocating 23.0 percent of the total budget for development expenditure, with 55.0 percent of that allocation going to infrastructure projects. This emphasises the strong commitment to increasing mega-infrastructure projects over the next 10 years under the Twelfth Malaysia Plan and Malaysia’s New Industrial Master Plan 2030.
With foreign direct investment on the rise, and domestic investment showing a positive growth trend, Malaysia is building a future that seeks to capitalise on its strategic Southeast Asian location and business environment.
Dr Ong See Lian, Director and Strategic Advisor, Malaysia, said:
The construction market is a critical factor for public and private sector clients as they look to maximise the economic opportunity across Malaysia. Prudent management of labour and material challenges will help ensure that the rising investment that we’re seeing across manufacturing, infrastructure and tourism can continue.
"To support both domestic and foreign appetite for growth, construction needs to move from a labour-intensive and traditional industry towards an innovative and technology-driven sector.”