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Building firms to benefit from RM30b projects | MALAYSIAN construction companies will benefit from RM30 billion worth of public works projects this year as the Government continues its pump-priming strategy, according to analysts’ estimates.
The estimate is higher than the RM13.3 billion worth of contracts awarded last year and RM16.7 billion in 2001.
Analysts said new projects, which will be commissioned this year, include the Padang Besar-Ipoh and Rawang-Johor Baru electrified double-track railroad, estimated to worth RM12 billion together, and a RM5.7 billion water pipeline between Pahang and Selangor.
Other projects that will come on line this year are the second bridge between Penang and the mainland, estimated to be worth RM2.3 billion, the upgrade of the Port of Tanjung Pelepas (RM 1.5 billion), and a RM1.5 billion southern Customs complex.
However, not all these projects are up for grabs.
Analysts said the double-track rail projects and the inter-state pipeline are already spoken-for.
“The largest portion of the railway projects will go to the Indian and Chinese contractors under the government’s palm oil barter scheme to pay for the foreign parties’ work,” one of them said.
“We understand that 70 per cent of the projects will go to the foreign contractors and the balance to locals.”
The analyst said the Japanese Government will extend a loan for the water project, which may mean that the bulk of the contract will benefit Japanese construction companies.
However, there is more than enough left over to sustain the construction sector’s growth over the next three to five years, the analyst said.
“Last year was a hectic year as builders went into full steam implementing the projects that were awarded in 2001.
“We estimate that about RM30 billion of both privatized and public sector projects will be awarded in 2003,” an analyst said.
Analysts at AmResearch estimate the current and future jobs would drive earnings of construction companies by 35 per cent in 2003 and 18 per cent in 2004.
“The construction sector’s share of gross domestic product (GDP) is projected to grow by 3.4 per cent in 2002 and 4.7 per cent this year on the back of the Government’s pump-priming efforts,” AmResearch said.
“The Government, continuing its efforts to pump-prime the economy, has allocated RM37 billion for development expenditure in 2003 Budget, a 10 per cent increase from 2002 Budget.”
AmResearch said up to September 2002, only 59 per cent of the RM33.5 billion set aside in 2002 Budget was spent.
“The carried forward amounts of past allocations are quickly being used up as the Government speeds up spending on identified projects.”
Major contracts in 2002 were highway projects like the Kajang-Seremban Highway, the KL-Putrajaya Highway, the West Coast Expressway and the KL North East Expressway.
Some of these projects were stalled during the 1997-1998 crisis.
RHB Research said the Government could not continue pump-priming the economy over the longer term.
“In 2003 Budget, the Government made clear that it would like the private sector to take over as the engine of growth in 2003.
The stockbroking firm said the budget deficit in 2003 is expected to narrow to RM14.9 billion or 3.9 per cent of GDP compared with RM16.8 billion, or 4.7 per cent, of GDP in 2002.
However, this is unlikely to hit the domestic construction industry soon as contracts awarded in 2002 and 2003 are likely to sustain the earnings of the sector well into 2005-2006.
“Most of the local builders have slowly diversified overseas to cushion the impact of potential reduced government spending over the longer term,” it said.
Source : NST 13/1/2003 |
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