Construction around the World: Malaysia

Jakarta, Indonesia – Axis Capital Group, a construction company based in Singapore has been delivering heavy equipment all throughout Asia and Europe. With the expansion of construction and the increasing growth of industrialization all over the world, the nation’s economy has been one of the factors that help each nation’s boom and development. Let us review how developing countries have been coping with the competition in the construction industry.

According to Malaysian-German Chamber of Commerce 2010, between 2004 and 2006, Malaysia experienced a slow growth in its construction industry with average output value of RM50.9 billion. In 2007 the construction output value began to increase, up to RM 60.7 billion, and the industry recorded stronger growth in 2008 and 2009 rising to RM77.5 billion. The Central Bank of Malaysia in 2009 added that the strong growth of construction industry in 2007 to 2009 was mainly due to the implementation of construction related activities under the 9th Malaysia Plan and the high value of the fiscal stimulus package projects.

In 2010 the value added of Malaysian construction industry continues to strengthen further by 6.3% (Malaysia-German Chamber of Commerce 2012). The expansion of the industry was largely led by increased infrastructure project under civil engineering sub-sector. In 2011 the Malaysian construction recorded a moderate growth at 3.5% due to slow activity in civil engineering and non-residential sub-sector (Central Bank of Malaysia 2011). The civil engineering and special trade sub-sector register slower growth following the completion of major highway projects and maintenance and upgrading work under the Stimulus Package (Central Bank of Malaysia 2011).

In global terms and compared to other Asian countries such as China, Korea and Singapore, the size of Malaysia’s annual construction output is relatively small. With an average of 3% contribution to the total national GDP, construction industry is critical to Malaysian wealth creation and it plays an important role in the development of the country (CIDB 2006). The industry provides jobs for approximately 1.02 million people and creates a multiplier effect to other industries, including manufacturing, financial services and professional services (CIDB 2006).

Public and private sectors are important components in the Malaysian construction industry, playing a role as the clients in the industry. Due to the high value of economic stimulus package by the government, year 2007 record a high demand for construction from public sector which contributed 52% (RM48.36 billion) of the total value of projects awarded (CIDB 2009). The situation is in contrast in 2008, in which private sectors project contributed 56.4% of the total value of the project awarded. Year 2009 showed a decrease of 29.5% of total value of project awarded compared to year 2008. The decrease in the value of projects secured was due to the decline in private sectors investments, which was affected by the global economic crisis. Despite the fluctuating rate of construction in the country, few records show fraudulent acts in the industry compared to that of Singapore, India and Indonesia.