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Malaysia Infrastructure Report Q3 2011
Business Monitor International, June 2011, Pages: 67
Business Monitor International's Malaysia Infrastructure Report provides industry professionals and strategists, corporate analysts, infrastructure associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Malaysia's infrastructure industry.
Current Outlook:
The launch of the US$444bn Economic Transformation Programme (ETP) in September 2010 has boosted the number of greenfield opportunities available to infrastructure companies in Malaysia, as well presenting significant potential for upside to the report’s construction forecasts. However, BMI remains cautious about the growth potential for Malaysia’s construction sector due to the country’s poor fiscal position, its exposure to the Chinese economy and the allure of other South East Asian markets. The report anticipates that a slowdown will kick in during H211, in line with a renewed slowdown in the broader economy. Therefore, BMI is pencilling construction sector growth of 5.6% in 2011.
Key developments occurring the past quarter that will affect growth:
- In April 2011, Malaysian state-owned electricity producer Tenaga Nasional Berhad (TNB) has announced plans for the construction of a gas-fired power plant to replace the scrapped Lahad Batu coal-based power plant. The company is currently evaluating the best option for piping in the gas for the plant – the construction of a liquefied natural gas (LNG) regasification terminal to feed the power station or a pipeline from the country's gas-producing Sarawak State. The LNG terminal project is significant as it is the first time that Malaysia has considered building LNG regasification facilities on Borneo, which is its major gas liquefaction and export hub.
- In April 2011, The Malaysian government has announced plans to issue up to MYR30bn (US$9.9bn) of Islamic bonds (sukuk) to help fund a mass rapid transit project (MRT) in Kuala Lumpur. A special financing vehicle will be established by the government to raise the required funds for the project and the bonds will be issued in Malaysian ringgit. Subscription for the sukuk issuance will be open to both domestic and foreign sources, but the government has stated a preference for borrowing domestically, particularly from the Malaysian state-linked fund Employees Provident Fund (EPF).
- In April 2011, TNB's wholly-owned subsidiary TNB Janamanjung Sdn Bhd (TNBJ) has awarded a contract to a consortium led by French-based Alstom. Under the terms of the contract, Alstom will engineer, procure, construct and commission a 1,000MW steam turbine, a generator, a supercritical boiler, auxiliaries and environmental control systems to cut emissions. The Manjung plant project is estimated to be worth around EUR1.0bn (US$1.4bn) in total and is expected to begin operations in 2015.
Looking further ahead, the report expects sector growth to slow further, averaging 4.6% per annum between 2012 and 2015, with the nominal industry value expected to hit MYR35.4bn (US$13.9bn) by 2015.
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