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The construction industry and the private sector are an important role in generating wealth and improving the quality of life for Malaysians through the translation of Governments socioeconomic policies into social and economic infrastructures and buildings. The construction industry also provides job opportunities to approximately 800,000 people. Further, the construction industry creates a multiplier effect to other industries, including manufacturing, financial services, and professional services.


Figure 1 defines the construction industry value chain, where it involves multiple stakeholders at different stages of the value chain and key sectors that could leverage on the construction industry: opportunities include building and construction materials, tooling, heavy equipment and machinery, and financial services.
Figure 1: Construction industry value chain

Construction Industry Current Performance

The construction industry has endured lackluster financial performance over the past five years. While GDP grew at an average rate of 5.2% from 2000 to 2005, the construction manage Facilities, Building and Construction Materials, Tooling, Heavy Equipment and Machinery. Industry stagnated, recording an average growth of 0.6% over the same period. Output for the construction sector hovered around the RM 7 billion mark, but steadily shrank as a share of GDP1, from 3.3% in 2000 to 2.9% in 2005 (refer to Table below).
Year In RM millions -1987 prices GDP 2000 2001 2002 2003 2004e 2005f e estimate 209,959 211,227 220,422 232,359 248,954 261,395 f forecast Construction sector output 6,964 7,108 7,251 7,359 7,248 7,168 Average 8.9 0.6 4.4 5.4 7.1 5.0 5.2 GDP growth (%) Construction sector contribution to GDP 3.3 3.4 3.3 3.2 2.9 2.9 3.2 Construction sector growth (%)

0.6 2.1 2.0 1.5 (1.5) (1.1) (0.6)

GDP Growth of the Malaysian Economy vs. Construction Industry: 1974-2008

7 6 5 4 3 2 1 0 -1 -2 2005 2006 2007 2008

Construction Industry Current Performance

Based on the historical statistics, the Malaysian construction industry has consistently been the smallest contributing sector to the economy, contributing on average 3% to the total GDP. Even when compared to neighbouring countries, the contribution of the Malaysian construction industry to the nations GDP is much lower as shown in Table 2.
Table 2: Construction Contribution to GDP (By Country) At constant 1990 prices 2000 Malaysia Singapore China Korea India Australia New Zealand 3.6 7.0 5.2 7.2 4.9 5.3 3.7 2001 3.7 7.0 5.1 7.3 4.8 5.7 3.7 In Percentage (%) 2002 3.6 6.0 5.2 7.0 4.9 6.4 3.9 2003 3.5 5.3 5.3 7.4 5.3 6.5 4.1 2004 2.9 4.6 5.4 7.2 N/A 6.0 4.3

Construction Industry Current Performance

The Malaysian construction industry has largely been spurred by Government spending to build the nations infrastructure. From 1981 to 2005, total development expenditure incurred by the Federal Government was in excess of RM 300 billion, mainly in the economic sector i.e. agriculture and rural development, transport and commerce and industry. A decline in the number of large scale infrastructure projects is one of the major, immediate causes for the construction industry slowdown of recent years. Since the completion of these major projects approximately five years ago, there have been no new large scale projects announced by the government.

Importance of the construction industry


The construction industry enables the growth of other industries through its role as a fundamental building block of the nations socio-economic development. Educational institutions, Government offices, tourist attractions, transportation infrastructure (airports, seaports, roads), housing, commercial property - all the essential elements of a healthy, functioning economy, need to be built and maintained by the construction industry.

Importance of the construction industry


Apart from expanding economic infrastructure (e.g. highways, dams, airports, commercial centres), opportunities abound in constructing social infrastructure (such as schools, housing, public space) and in the neglected area of building and public works maintenance. Additional opportunities can be derived from the activities of other major sectors of the Malaysian economy (specifically manufacturing and agriculture). Besides enabling socio-economic development, the construction activities generate tremendous spill-over opportunities. It contributes to the growth of other industries in its role as a large user of manufactured goods (building and construction materials, iron and steel, etc.), specialised tooling and heavy machinery (such as cranes), and financial services.