Malaysia likely to spend RM70bil on rail infrastructure

Rail network: An exhibit at the MRT training centre. Malaysia has spent more than RM30bil on rail infrastructure development over the past four to five years.

Malaysia has spent more than RM30bil on rail infrastructure development over the past four to five years and will likely spend another RM40bil to enhance its connectivity in the foreseeable future.

The amount of money being committed to rail makes it a thriving sector in an otherwise drab economy.

Throughout this rail infrastructure development period, most construction companies have got a portion of the pie.

Obviously, the big companies, such as MMC Corp Bhd, Gamuda Bhd, IJM Corp, Malaysian Resources Corp Bhd (MRCB), Sunway Construction, amongst other heavyweights, have boosted their orderbook by leaps and bounds due to the contracts bagged from rail infrastructure jobs.

Other main winners are Gadang Holdings Bhd, Mudajaya Corp Bhd, IJM Corp Bhd, Ahmad Zaki Resources Bhd, Naim Engineering Sdn Bhd, UEM Construction Sdn Bhd and Apex Communication Sdn Bhd.

AmResearch believes the awards for the RM9bil LRT 3 project will begin in the second half of this year.

Currently there are 96 companies already shortlisted and pre-qualified to bid.

Companies qualified for the open category of the LRT infrastructure jobs include Gamuda, WCT, IJM, Ikhmas Jaya, Kimlun, Sunway Construction, Bina Puri, and Mudajaya.

Naim, Zecon, MTD Group and TSR Capital are also included.

“Meanwhile, familiar names eyeing tunnelling works include Gamuda, IJM, Sunway Construction, WCT and Muhibbah Engineering,” says AmResearch.

According to Prasarana, the first set of awards comprised of staff quarters, advance works, and the Johan Setia depot.

The entire tender process will end with the final award of the last scheduled tender by year-end. Prasarana has confirmed the alignment and location of all 26 stations, and has begun land acquisitions.

Besides that, AmResearch also expects more MRT line 2 tenders and awards in the second half of this year.

Upcoming tenders include the remaining six viaduct packages and four elevated station packages.

“Based on an average price of RM320mil per km, the viaduct packages could be worth RM1.2bil to RM1.4bil,” says AmResearch.

Apart from the familiar big boys, AmResearch says other companies likely to be beneficiaries of MRT line 2 jobs include Kimlun, Econpile and Ikhmas Jaya for piling works.

In the first half of this year alone, it is estimated that MRT Corp has awarded around RM22bil worth of major MRT line 2 packages out of the total RM32bil value.

Major packages awarded include the underground works worth RM15bil to MMC-Gamuda joint venture, four viaduct packages, and three system packages.

Four main packages for Pan Borneo were also awarded.

Meanwhile, MRCB and George Kent Bhd were also appointed the project delivery partner for LRT 3, which will earn a management fee of 6% or RM540mil of the total project cost.

Looking back, the extension of the existing light rail transit (LRT) of Kelana Jaya and Ampang Lines, that was mooted in 2010 and has just started their operation recently this year, has seen some RM7bil contracts dished out.

Next, the mass rapid transit line 1 of the 51km Sungai Buloh-Kajang line which was launched in July 2011, which is nearing its completion, has dished out some RM23bil worth of contracts.

Following that, a new RM9bil LRT Line 3 project from Bandar Utama to Johan Setia, Klang has just kicked off this month in June this year.

Also, the MRT Sungai Buloh-Serdang-Putrajaya (SSP) Line that could carry a price tag more than RM32bil has kicked off this year.

More recently, the high speed rail (HSR) plan between Kuala Lumpur and Singapore has just been formalised with a bilateral agreement inked between the two neighbouring countries.

Although there is no official figure on how much this HSR would cost, industry experts have estimated it could be in the range between RM40bil and RM45bil.

All these rail developments in recent years are a boon for the construction sector in Malaysia, which is hungry to boost its orderbook as the prospects and jobs in property sector start to dim as a result of a slowing economy and weak consumer sentiment.