Budget 2015: Boon for construction


  • Business
  • Saturday, 11 Oct 2014

THE Government has announced the rollout of the much-anticipated 56km second mass rapid transit line (MRT Line 2) from Selayang to Putrajaya at an estimated cost of RM23bil in Budget 2015, which will further boost the construction sector from next year onwards.

Prime Minister Datuk Seri Najib Tun Razak in his budget speech also announced another urban rail project, the light rail transit line three (LRT Line 3) from Bandar Utama to Shah Alam and Klang at an estimated cost of RM9bil, confirming a StarBiz report that was published on May 14.

Prasarana Malaysia Bhd group managing director Datuk Seri Shahril Mokhtar says the allocation for the proposed LRT Line 3 and MRT Line 2 will help enhance the connectivity and mobility of the rakyat in addition to enhancing their economic activities, productivity and quality of life.

“The proposed projects will bring the people in Greater Kuala Lumpur closer,” he says in a statement.

He adds that the allocation for the proposed projects also demonstrates the thoughtfulness of the Government to channel funds from the subsidy rationalisation exercise to enhance the public transport system and service, among others.

“Although the Government had recently announced the reduction in fuel subsidies, we are pleased to note that it is allocating more funds to further improve the public transport system and service.

“The LRT Line 3 and MRT Line 2 projects would certainly enhance the connectivity and mobility of the rakyat and contribute to the aspirations of the Government Transformation Programme, and the Urban Public Transport’s National Key Result Area initiative to achieve a 40% public transport modal share by 2030,” Shahril says.

These two major urban rail projects are in line with construction analysts expectations, as they are much needed to sustain the sector’s robust activities contributed by the MRT Line 1 in the Klang Valley, which is 50% complete now. The latest numbers in the construction sector indicate that the sector had experienced a sluggish pace of awards in the third quarter of this year.

MIDF Research says that the pace of contract awards was relatively sluggish in the third quarter of this year, with only RM2.9bil in total value of contracts being awarded to listed construction companies.

This was comparatively lower than the RM3bil and RM7bil worth of jobs given out in the third quarter of last year and the second quarter of this year, respectively.

“We opine that investors should look at this as a strategic opportunity to accumulate construction stocks before the sector cycle resumes its upward momentum,” says MIDF Research in a recent report that maintained a “positive” call on the sector.

Meanwhile, Master Builders Association Malaysia hopes that the tender and awards of these projects will be implemented in a timely manner, as a lot of the highway concessions had been announced in the previous budget.

“Projects allocated should be transparently announced to award companies that are competent, credible and financially sound,” it says in a statement.

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