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Green shoots of construction revival


Getting back on track: The construction sector is still in a state of flummox, there will be a lot of re-tendering. It will take time to come back on track.

Getting back on track: The construction sector is still in a state of flummox, there will be a lot of re-tendering. It will take time to come back on track.

A slew of contracts is given out, but is it enough to spur the sector?

AFTER a roller-coaster year that saw many reviews and cancellations of major local infrastructure projects following a change in government control, some green shoots have started to sprout within the sector.

Just yesterday, a resolution to the multi-billion-ringgit light rail transit three (LRT3) project seems to have been secured with a new contract signed between government agency, Prasarana Malaysia Bhd, and the main contractors. Similarly, reports had emerged that the government had cancelled another mega-project, the East Coast Rail Link (ECRL), which was previously given to a Chinese party. It is said that this project now will be dished out to local players.

In addition, phase two of the Klang Valley double-track rail upgrade project is expected to start soon, while sub-contracts for the Gemas-Johor Baru electrified double-track rail project are increasingly being dished out.

But is this enough for industry players to believe that a revival is taking off?

Based on checks with industry players, the jury is still out on this, although the slew of contracts recently suggests that there is some hope.

New deal: The LRT3 project is back with a new contract signed between Prasarana and the main contractors.
New deal: The LRT3 project is back with a new contract signed between Prasarana and the main contractors.

“The industry is still in a state of flummox, there will be a lot of re-tendering. It will take time to come back on track, probably only in 2020,” a seasoned construction player tells StarBizweek.

“The new government must remember not to just chop, chop, chop the (construction) jobs to save money... it must remember that the construction industry is responsible for a huge portion of the economic multiplier effect in the country,” he adds.

Sunway University Business School economics professor Yeah Kim Leng says he expects the industry to perform only “about the same or marginally better” this year compared to the last.

There’s no outright revival and no construction boom, Yeah says.

Having said that, he sees an uptick in civil engineering activities as some of the big-sized infrastructure and transportation projects under review last year have received the go-ahead at a lower cost, while selective residential projects in high-demand locations will be implemented as planned by large developers with deep pockets.

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