Capex revival: How leaders are driving investment

AFTER years of caution following lockdown-induced uncertainties, Malaysian corporates appear to be dusting off their capital expenditure (capex) plans, signalling a potential turning point for the economy.

Early indicators point to renewed spending across key sectors, including manufacturing, telecommunications and oil and gas (O&G), as well as construction and property.

A growing number of Bursa Malaysia-listed companies are revisiting capex plans as earnings visibility improves, financing conditions stabilise and demand in selected sectors gathers pace.

It is, therefore, timely that Bursa Malaysia and the Securities Commission recently launched the MY Value Up initiative, which aims to encourage corporates to be more transparent in how they deploy their capex and operating expenditure (opex) plans.

While the recovery is still uneven, the renewed willingness to invest is being closely watched as a potential turning point in Corporate Malaysia’s next phase of growth.

Yet, questions remain: Is this capex comeback broad-based, or is it concentrated among a few large players with stronger balance sheets and access to financing?

As several industry leaders weigh in on their investment strategies, Malaysia’s corporate capex revival offers critical insights into the country’s growth trajectory and the breadth of its economic recovery.

CelcomDigi: Focusing on network modernisation

According to CelcomDigi Bhd, one of Malaysia’s leading telecommunications companies (telcos), its capex priorities over the next two to three years remain focused on enhancing network quality and customer experience, while positioning the group to support the nation’s growing digital economy.

This includes completing its network modernisation programme, expanding fibre infrastructure, strengthening its enterprise and digital capabilities, as well as making selective investments in artificial intelligence (AI) capabilities.

“For the financial year ending December 2026 (FY26), we are maintaining our capex intensity guidance of 12% to 13%, reflecting the final phase of our post-merger integration and network investments, which includes approximately 2% to 3% of direct revenue-related capex,” CelcomDigi chief financial officer Dennis Chia tells StarBiz 7.

For context, capex intensity is usually expressed as a percentage of a company’s revenue and measures how “capital-heavy” its growth strategy is.

Chia acknowledges that the rapid growth of Malaysia’s data centre (DC) ecosystem is an important demand driver for CelcomDigi’s network and enterprise businesses, adding that the group is focused on building the digital infrastructure that supports this growth, including high-capacity fibre backhaul and integrated connectivity solutions.

This approach, he says, will allow CelcomDigi to scale alongside the growing needs of hyperscalers, enterprises and DC operators while maintaining disciplined capital allocation.

“We build connectivity and provide solutions for both fibre and 5G for DC partners through commercial models and strategic partnerships,” he says.

Following the completion of the major phases of the group’s post-merger integration, Chia observes that CelcomDigi now has greater flexibility to optimise its capex and allocate capital to areas where demand is strongest and returns are most sustainable.

He says the telco continues to see healthy demand for its services, underpinned by sustained growth in its postpaid, home and fibre, and enterprise businesses, alongside rising data consumption, enterprise digitalisation, cloud adoption and AI-driven applications.

He elaborates: “These trends, coupled with Malaysia’s growing role as a regional digital infrastructure hub, reinforce our confidence in investing for long-term growth.

“Every investment is assessed against clear commercial and operational return metrics, with a focus on delivering sustainable long-term value.

“We also leverage our greater scale following the merger to drive procurement efficiencies, optimise asset utilisation and mitigate inflationary pressures, including higher equipment and energy costs.”

Chia, nevertheless, expects capital intensity to moderate as integration-related investments conclude, enabling CelcomDigi to balance disciplined capital allocation with continued investment in future growth.

He says the group is also shifting its focus to operational excellence (OE) as the next phase of value creation.

“With information technology (IT) systems integration as the principal remaining synergy workstream, we are targeting more than RM450mil in profit and loss cost savings in FY26, driven primarily by OE initiatives, including site opex optimisation and IT and network procurement efficiencies,” he says.

Looking at the broader picture, Chia says every expansion of CelcomDigi’s fibre and network infrastructure is delivered through a broad ecosystem of tower companies, fibre providers, technology vendors, systems integrators and local contractors, supporting jobs, innovation and capability development across the industry.

“As Malaysia’s digital economy grows, we are also enabling the broader digital infrastructure ecosystem through high-capacity fibre connectivity for DCs, industrial parks and enterprise sites.

“Working alongside infrastructure and technology partners, we deliver integrated connectivity, cloud and 5G-enabled solutions that help businesses accelerate their digital transformation,” he notes.

Chia says CelcomDigi’s role extends beyond building networks to strengthening Malaysia’s digital ecosystem by enabling businesses, supporting local partners and creating a stronger foundation for long-term digital growth.

IJM: Building complex, mission-critical facilities

For IJM Corp Bhd, the opportunity to invest in its business extends well beyond data centres, even as one of Malaysia’s leading contractors and conglomerates secures multiple DC project packages across the country.

Group chief executive and managing director Datuk Lee Chun Fai reckons the country is emerging as a regional hub for digital infrastructure, semiconductor manufacturing, advanced electronics and high-value industrial investments.

As a result, he says these sectors increasingly require contractors capable of delivering complex, mission-critical facilities.

“We see these investments as part of the same industrial ecosystem rather than isolated growth sectors.

“While the end markets may differ, they increasingly demand higher levels of engineering, faster delivery, digital integration and stronger execution.

“Our strategy is, therefore, to strengthen expertise that is transferable across these sectors, rather than invest around any single asset class,” Lee tells StarBiz 7.

Rather than simply expanding construction capacity, Lee says IJM is investing in strengthening the engineering expertise, systems and delivery capabilities needed to serve this evolving market.

This includes specialist engineering talent, advanced building information modelling-enabled project controls, industrialised building systems, and stronger in-house mechanical and electrical (M&E) testing and commissioning capabilities to improve delivery certainty and project handovers.

Lee explains: “Over the past few years, IJM Construction Sdn Bhd has built a portfolio that spans DCs, semiconductor facilities, electrical and electronic (E&E) manufacturing plants, logistics hubs and other industrial developments.

“As these projects become more engineering-intensive and technology-enabled, we have progressively expanded from civil and structural works into more integrated delivery, including both core-and-shell and M&E packages, while strengthening the technical capabilities needed to support increasingly complex facilities.”

In addition, he says IJM is expanding the use of industrialised construction methods and off-site fabrication where appropriate to improve quality, enhance safety, reduce on-site complexity and accelerate project delivery.

At the moment, he says advanced industrial facilities, including DCs, semiconductor and E&E plants, logistics hubs and related developments, account for approximately 49% of IJM’s domestic outstanding order book, reflecting the structural shift taking place across Malaysia’s industrial landscape.

Expounding on Malaysia’s DC aspirations, Lee says the long-term success of this fledgling industry should not be measured solely by the number of facilities built, but also by how effectively those investments strengthen local engineering capabilities, specialist suppliers and a deeper industrial ecosystem.

“Every successful DC project creates opportunities for a broad network of Malaysian companies.

“As the main contractor, our role is to integrate these specialist trades and suppliers into a coordinated delivery model, ensuring every package meets the required technical, safety and quality standards,” he says.

Wherever possible, Lee reveals that IJM engages capable Malaysian subcontractors and suppliers. While certain highly specialised equipment and systems are still sourced internationally due to availability, much of the specialist trades, supporting services and construction materials are delivered through local contractors and suppliers.

As Malaysia’s industrial ecosystem continues to develop, he sees significant opportunities to deepen domestic participation across the value chain.

“For many local companies, participation in these projects provides exposure to international specifications, quality systems and project delivery standards, helping them build capabilities that can be applied to future industrial developments in Malaysia and beyond.

“The objective is not to lower the bar for participation, but to help more Malaysian companies reach it. That is how today’s investment cycle can create lasting value beyond any individual project,” Lee remarks.

He says IJM is positioning the group to participate in Malaysia’s next phase of industrial growth, where engineering expertise, execution certainty and technical capability will become increasingly important competitive differentiators.

He points out that the group is maintaining tight discipline in pursuing opportunities where risks are appropriately allocated and where its engineering expertise and delivery experience can make a meaningful difference.

Top Glove: Upgrading for competitiveness

As global glove demand continues to recover, Top Glove Corp Bhd, the world’s largest rubber glove producer, says it is progressively reactivating production lines that were temporarily paused during the industry’s post-lockdown capacity adjustment period.

As part of the reactivation process, these lines are being upgraded with the latest available technologies, including automation and process improvements, to enhance productivity, improve product quality and strengthen cost efficiency.

“Our capex remains focused on ensuring that our manufacturing facilities remain competitive and future-ready. By continuously modernising our operations and adopting new technologies, we are reinforcing our long-term competitiveness and our ability to serve customers efficiently in an increasingly dynamic global market,” the group’s joint managing directors Ng Yong Lin and Lim Jin Feng tell StarBiz 7.

Ng and Lim say Top Glove’s capex programme continues to create opportunities for a broad ecosystem of suppliers and business partners, and that the producer remains committed to fostering long-term partnerships with both established and smaller local suppliers across various aspects of its operations.

From an industry perspective, they believe continued government support in expanding bilateral and regional free trade agreements will help Malaysian manufacturers remain globally competitive by improving market access and facilitating international trade.

“We continue to see healthy demand growth across our key markets, with particularly encouraging momentum in the United States. As such, we remain committed to investing in research and development, and automation as well as operational improvements that enhance efficiency and reduce production costs over the long term.”

Ng and Lim opine that these investments enable Top Glove to remain resilient despite fluctuations in raw material prices, energy costs and other operating expenses. While temporary challenges such as cost pressures are an inherent part of doing business, gloves remain an essential healthcare product. As standard industry practice, movements in input costs are shared with the group’s customers.

“When production costs rise, corresponding pricing adjustments may be necessary.

“Conversely, when costs decline, we also pass those savings on to our customers. This balanced approach supports long term sustainability for both manufacturers and customers,” say Ng and Lim.

Hibiscus: Targeting production growth

Hibiscus Petroleum Bhd managing director Datuk Dr Kenneth Pereira says development plans for the O&G explorer and producer remain unchanged.

He tells StarBiz 7 that with the group operating 97% of its production directly, it is able to determine the development and capex plans for the assets under its control.

“This control allows us to manage oil price downturns through prudent management of our assets,” he says.

Through its current asset base, Pereira says Hibiscus is confident of reaching 50,000 barrels of oil equivalent per day (boe/day), with growth underpinned by two major developments: the PKNB Cluster production sharing contract (PSC) in Malaysia and the Greater Marigold Area Development in the United Kingdom. First oil/gas is expected in 2028 and 2030, respectively.

To achieve its target of 70,000 boe/day by 2030, he says the group will require new licences or acquisitions, potentially through the entry of strategic investors into the company.

“We are always cognisant of the need to balance our growth with returns. Our capital allocation framework identifies the minimum dividend as the highest-priority spend after debt servicing and before capex,” Pereira says.

He says Hibiscus generally considers investments with an internal rate of return (IRR) of 15% and above, as well as payback periods of five years or less for production projects. Development projects require an IRR of 20% or higher and a payback of seven years or less.

For the current capex cycle, he highlights that the main execution risks centre on Hibiscus’ supply chain, but these are mitigated through proper forward planning to ensure long lead items do not affect timelines.

“The regulatory framework in Malaysia is stable, unlike the United Kingdom, and we have had no issues with joint-venture partners in our assets. Our differentiator lies with our ability to manage mid-life assets acquired from oil majors,” he notes.

Pereira says prudent financial management and lower overheads have allowed the group to remain cash-flow positive during periods of weaker oil prices, while continuing to provide returns to shareholders.

Despite energy transition tailwinds, he foresees continued long-term demand for O&G.

Hibiscus has increased its gas production mix to about 50% of total production, with gas demand expected to remain elevated for longer due to its role as a transition or cleaner fuel in areas such as power generation and petrochemicals.