We should be aware of what’s happening with the construction sector in Malaysia. Regardless of any type of economic activity, it usually has to start with construction. We cannot get more international students or medical tourists without more buildings being built in advance. This is true even for the electronics exports; no new factories meant the number of export numbers would remain limited or same as the year before. In brief, construction numbers must move up first before other numbers. There’s an article on construction numbers in thestar.com.my
The quoted number in the article is certainly big. Hopefully everything goes on as planned smoothly. According to Penang Master Builders and Building Materials Dealers’ Association (PMBBMDA) immediate past president Datuk Lim Kai Seng, the value of construction jobs in Malaysia should hit RM200bil and this would help create 7,000 jobs. In comparison, total for 2015 was RM135 billion and 6,885 jobs. He shared, “According to the Construction Industry Development Board (CIDB) report, the first six months of 2016 saw 2,179 jobs with a value of RM58.6bil being given out, compared to 2,183 jobs valued at RM38.6bil in 2015.”
Some of the mega-infrastructure projects include the light rail transit (LRT), mass rapid transit (MRT), West Coast Expressway, Central Spine Road linking Kuala Krai in Kelantan and Simpang Pelangai in Pahang, and the Pan-Borneo Highway in Sabah. Where Penang is concerned, the numbers are smaller for 2016 versus 2015. From an estimated RM6bil for 2016 compared with RM7.5bil in 2015. Major reason is because most of the housing construction jobs in Penang are for the affordable category.Due to this, it has a lower gross development value (GDV). Lim added that value of construction is typically 40 percent that of the GDV.
Now we know another sector to consider if we intend to buy some stocks. This is beyond just the property developer stock choices. I personally have no stock holdings of any construction companies as I have not been reading much about them. Perhaps I should read a bit more, especially those involved with mega-infrastructure projects. Anyone with some good stock investing knowledge for these construction companies, feel free to share yeah. Cheers.
written on 4 Oct 2016
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