Increased emphasis on improving human capital

KUCHING: The second half of the 11th Malaysia Plan (11MP) has an increased emphasis on improving the general state of the education system to further enhance Malaysia’s human capital, analysts observe following the mid-term review of the 11MP last week. According to the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research), this was […]

Cloudy outlook for construction

PETALING JAYA: The outlook for the construction sector remains cloudy, with muted impact from the 11th Malaysia Plan (11MP) mid-term review, said analysts.

“Given the government’s intention to consolidate its fiscal position, we are of the view that the sector outlook will remain cloudy in the interim owing to the lack of near term catalysts,” said PublicInvest Research in its report.

The construction sector reported an average growth of 7.1% annually in the first half of 2018, lower than the initial target of 10.3% per annum, and is projected to grow even slower in the remaining period at an annual average rate of 4.3%.

PublicInvest Research said it is not surprised with the revised projection as slower growth for the next two years is a reflection of the government’s re-prioritisation of major infrastructure projects.

“The mid-term review of the 11MP threw up no surprises with regard to the construction sector, with guidance of lower growth going forward and reduction in development expenditure among key highlights, though already largely anticipated,” it said.

A few years back, the construction sector was a notable contributor to national growth but this time round, a number of mega projects valued in excess of RM100 billion have been put on hold for further assessment and negotiation.

“Concentration will now be re-prioritised toward the building of affordable housing, public schools and hospitals, as well as improving infrastructure and road network in rural areas,” it added.

It noted that ongoing major highway projects such as the West Coast Expressway and Pan Borneo Highway will proceed as planned while rail projects namely MRT2 and LRT3 will proceed albeit with some delays.

“With negative news flows continuing to swirl around the sector, earnings visibilities are also coming into question now, in addition to inevitable margin squeezes. All said, we maintain our neutral rating on the sector but with a negative bias.

“Re-rating will come from the other big ticket projects getting back on the table, or from new ones not previously accounted for,” it said.

CGS-CIMB said the 11MP mid-term review barely touched on new large-scale projects but emphasised more on what is left on the table, following the review of almost all mega contracts.

However, a slight positive from the prime minister’s speech is that the public-private partnership model will be beefed up in contract procurement.

“We understand that this could take the form of pure cash contracts or land swap deals. This is most relevant to selected small/medium-sized contractors, but we believe the tender environment will be very competitive (oversupply of idle capacity players) and hence unlikely to appeal to all large contractors. Clear proxies for this new angle remains limited, sector wide,” it said in its report.

Outside of the Klang Valley, the 11MP will focus on rural roads, 400 schools to be built or refurbished, rural water infrastructure in Sabah and Sarawak, flood mitigation, airports and affordable housing.

Within the Klang Valley, only the ongoing progress of seven projects will be prioritised namely MRT2, LRT3, Sungai Besi-Ulu Kelang Expressway, Damansara-Shah Alam Highway, Putrajaya-KLIA Highway, Digital Free Trade Zone and River of Life.

“11MP mid-term review provided more clarity on Malaysia’s contract outlook and the government’s stance on contract rollout. We see muted impact on the overall sector, with no upside surprises in new contracts,” said CGS-CIMB.

It maintained its “underweight” rating on the sector, predicated on the sector’s job downturn in 2019, with revival of deferred or cancelled mega rail contracts being an upside risk.

Analysts maintained ‘neutral’ view on construction sector post 11MP mid-term review

KUCHING: Analysts have kept their ‘neutral’ view on the construction sector following the release of the mid-term review of the 11th Malaysia Plan 2016-20 (11MP) on Thursday. However, they believe that the slew of high impact projects announced should also signal the sector’s sustainability. According to the report, public investment is projected to contract at […]

Malaysia’s economy continues to expand at moderate rate

KUALA LUMPUR: Malaysia’s economy continued to expand, albeit at a moderate rate, during the review period of 2016-2017 as a result of slower world economic growth and modest global trade expansion in 2016. According to the Mid-Term Review of the Eleventh Malaysia Plan (2016-2020) released by the Ministry of Economic Affairs yesterday, as an open […]

Malaysia lets go of high income nation by 2020 dream

PETALING JAYA: Malaysia will drop its long time dream to hit US$15,000 (RM62,300) per capita income by 2020 to meet its high income nation aspirations, as it now looks to ensure high income levels commensurate with higher purchasing power.

The mid-term review of the 11th Malaysia Plan presented a two-prong approach to address the disparity of household income levels in the country, first by intensifying measures to uplift lower middle income households from the Bottom 40 (B40) group and increasing purchasing power for all; and secondly with comprehensive regional development strategies to focus on narrowing the economic gap for less developed regions, in particular six states.These states are Sabah, Sarawak, Kelantan, Terengganu, Kedah and Perlis.

According to the document, the government seeks to improve overall income inequality by uplifting the B40 to a middle class society, address the needs of specific target groups, enhance bumiputra economic community opportunities to increase wealth ownership and increase the purchasing power for all.

Increasing purchasing power for all will be executed by addressing market distortion with promotion of greater competition, provide more avenues offering affordable and competitive prices of goods and services, enhancing enforcement of price control regulations, and advocating consumerism.

Under its plan for the bumiputra economic community, the government wants to ensure at least 60% participation of bumiputras in skilled occupation category, at least 75% of bumiputra has a residential unit and at least 11% annual growth of bumiputra corporate equity ownership.

The mid-term review found that the economic disparity between states, despite the increasing trend of gross domestic product (GDP) per capita in the states, was a result of the different economic activities in the state.

Therefore besides enhancing the role of state economic development corporations, the government is encouraging investments for high impact programmes and projects in identified niche cluster activities in the states.

Regions will be encouraged to modernise and diversify the economic base to boost high value added activities and spur higher growth in particular regions which are highly dependent on agriculture.

The states of Kelantan, Kedah, Perlis and Sabah, which were dominated by traditional sectors, recorded substantial gap in GDP per capita as compared to the national average of RM42,228 in 2017. Kelantan recorded the lowest GDP per capita, with a gap of 67.8% below the national average.

Disparity of GDP per capita between Kelantan and Kuala Lumpur, the state with the highest GDP per capita, widened by 8.2 times in 2017 as compared to 7.9 times in 2015.

Income disparity between the regions remain a concern despite the continuous increase in the national median monthly household income at RM5,228 in 2016. The central and southern regions continued to record notable achievement of RM6,616 and RM5,652 respectively. The Eastern region recorded the smallest median monthly household income at RM3,917, where Kelantan registered the lowest among states at RM3,079. Kedah in the Northern region was the second lowest, at RM3,811.

ABB: Global energy industry moving towards

KUCHING: The global power industry is moving towards digitalisation in order to meet the growing energy supply needs of the world’s population in a sustainable manner. According to ABB senior group vice president of the ABB power grids division for South Asia, Middle East and Africa, Venu Nuguri, Malaysia’s energy landscape will likely undergo an […]

Nextgreen to receive RM400m capital injection for green technology projects

PETALING JAYA: Nextgreen Global Bhd has sought a RM400 million funding from Asia Capital Investment Fund (ACIF) for investment in green technology projects.

This comes after the group terminated its memorandum of understanding with China Nuclear Industry Huaxing Construction Co Ltd for the cooperation to develop and manage Phase 2 and 3 of the Green Technology Park (GTP) Pekan Project.

Nextgreen told Bursa Malaysia that it had on October 16 entered into an investment agreement with ACIF, where the RM400 million will be injected into several special purpose vehicle (SPV) companies to be incorporated and 100% owned by Nextgreen.

The SPV companies are assigned to manage the GTP Pekan project and two other green technology projects in Johor and Sarawak which are currently in the pipeline.

Nextgreen said the investment will be in the form of share capital injection (RM280 million) through the subscription of 280 million new cumulative redeemable preference shares at an issue price of RM1.00 each as well as loan (RM120 million).

The development of the GTP Pekan Project is divided into five phases and it is currently entering into Phase 2 which entails the construction and development of pulp and paper mill with a production capacity of 100,000 metric tonnes of box liner paper and 120,000 metric tonnes of corrugated paper.

The fund from the investment will mainly be utilised for working capital requirements of the projects and to cover other operational costs.

The principles activities of ACIF is to raise funds for investment and the management and investment of funds particularly in listed securities of companies producing green (eco-friendly) products.

At 2.35pm, Nextgreen's share price was trading 2.5 sen or 6% higher at 44 sen on 4.59 million shares done.



KUALA LUMPUR: Nextgreen Global Bhd has secured an investment of RM400mil from Asia Capital Investment Fund for the funding of working capital and costs in its Green Technology Park (GTP) projects. The investment comprises RM280mil in share capital injection in the SPVs managing the projects and a RM120mil loan. In July, Nextgreen had cancelled a memorandum of understanding with China Nuclear Industry Huaxing Construction Co Ltd for its partnership in developing Phase 2 and 3 of the GTP Pekan Project. Nextgreen Gobal has entered Phase 2 of GTP Pekan development,Read More

One Medicare sets up 24-hour call centre

KUCHING: One Medicare Sdn Bhd (OMSB), one of five concessionaire companies in Malaysia providing healthcare facilities management, recently launched One Medicare Call Centre (Call Centre) to further boost its support services to all 23 government hospitals in Sarawak. The 24 hours Call Centre was officiated by Ministry of Health’s (MOH) Deputy Secretary General TKSU (K); […]

Sarawak-Indonesia trade sees 87 pct rise in 2017

KUCHING: Sarawak and Indonesia recorded an increase of 87 per cent in its total trade value to US$606 million last year compared with US$323 million in 2016. Between Sarawak and West Kalimantan Indonesia specifically, a total of US$120 million of trade value had been recorded in 2017 with Indonesia exporting US$83 million and importing US$36 […]