Budget 2015: Contractors stand to benefit from Pan-Borneo Highway

  • Business
  • Saturday, 11 Oct 2014

THE RM27bil Pan-Borneo Highway that stretches 1,633km across Sarawak and Sabah is expected to benefit the local construction players there.

More importantly, the highway that will enhance the connectivity of the country’s largest states will boost the economic and social development there.

Prime Minister Datuk Seri Najib Razak announced in Budget 2015:

“As the North-South Highway project has transformed the development from Perlis to Johor, the Government intends to start construction of the 1,663-km Pan-Borneo Highway comprising 936 km in Sarawak and 727 km in Sabah at a total construction cost of RM27bil.”

In Budget 2014, RM500mil was allocated for the highway, which was part of Barisan Nasional’s 13th general election manifesto to improve basic amenities in the rural areas.

Construction analysts expected Cahya Mata Sarawak Bhd (CMS), Hock Seng Lee Bhd, Naim Holdings Bhd and Zecon Bhd to be potential beneficiaries. An analyst said local players from Sarawak would have the privilege to win jobs from the project.

That said, he did not rule out players from the Peninsula to win some contracts because a lot of resources were required to build a highway of such a scale. For instance, he pointed out that TRC Synergy Bhd could bid for jobs as it had a license to operate there and has established itself in Sarawak for some time.

An industry player noted that there were hurdles to enter the market.

“For example, firms from Sarawak will have an upper hand because they know the regulatory matters of the state better,” he said, adding that additional costs like transportation of equipments might eat into their margins.

Previously, it was reported that UEM Group Bhd might partner MMC Corp Bhd for the upgrading works of the highway.

UEM Group managing director and CEO Datuk Izzaddin Idris was quoted as saying that the group had proposed to the government to be allowed to head the project.

According to sources, the partnership might be focusing on the works in Sabah while works in Sarawak might be spearheaded by the local firms there.

CMS group managing director Datuk Richard Curtis told StarBizWeek that the conglomerate was well-positioned to bid for the infrastructure works as it had planned for resources to ensure efficiency and cost effectiveness in the execution for such jobs.

Among others, it had invested in RM190mil cement plant that will increase its cement production capacity by one million tonnes per annum and about RM12mil in four mobile premix plants.

The cement plant is slated for commissioning in early 2016 and will increase the company’s cement production capacity by 60%.

“In terms of man power, we have gotten our teams in place,” he said.

Master Builders Association Malaysia president Matthew Tee said the allocation would add vibrancy in the construction scene.

“We welcome the Government’s announcements of the various construction projects in the country that include Mass Rapid Transit line two and LRT 3. Timely implementation of the projects will be crucial,” he said.

For instance, the Pan-Borneo highway might take between 10 and 15 years to be ready.

On the bigger picture, Curtis said the allocation for the Pan-Borneo Highway is very much appreciated and needed to improve the infrastructure in Sarawak and Sabah.

“Not only will the highway support the industrial activities in the Sarawak Corridor of Renewable Energy, it is badly needed for the rural development,” he said.

With the highway, the spillover effect is vast as other necessities such as electricity and clean water will be accessible by the rural dwellers.

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