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PETALING JAYA: The last thing any construction company wants to hear is a change of powers, especially after it has happened twice in just three years.
And when there was an indication that a third change was taking place, the market reacted, drowning most of the construction counters in a red sea.
When yesterday it became known that opposition leader Datuk Seri Anwar Ibrahim was going to have a presser at noon linked to a majority in Parliament, the KL Construction Index, which opened at 162.66 points, began to decline.
The index recovered slightly after the midday break, but ended the day lower at 158.71 points after an avalanche of statements from both sides of the political divide.
One analyst noted that it has been a dull and stagnant three years since 2018 for the construction industry when the first shift occurred in Putrajaya with Pakatan Harapan beating Barisan Nasional in the general election.
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“This was pretty bad because the government tried to review everything and the whole country was paralyzed.
“The second round in February of this year would have given us more economic stability, but unfortunately we were hit by the Covid-19 pandemic and then the motion control order (MCO),” he said.
AllianceDBS Research said in a report yesterday that the propensity to prime has to happen regardless of the potential for early elections.
“The most ideal scenario would be a series of contract deployments that will lead to more job creation and higher GDP growth in the run-up to the general elections,” he said, adding that the contraction of gross domestic product (GDP) A second quarter of 17% would be a precursor to a more aggressive allocation for infrastructure spending in the 2021 Budget.
He drew similarities to what the country went through in 2008 during the global financial crisis and expected the government to release the 2008 playbook and launch high-multiplier infrastructure projects.
The research house said that the economic recovery plan scheduled for October 2020, the 2021 budget in early November, and Malaysia’s twelfth plan in January 2021 will be closely followed to gauge the government’s willingness to boost the economy and what projects are considered priority.
“In April 2020, Umno called for the reactivation of MRT 3 and the Kuala Lumpur-Singapore High Speed Rail (HSR) to help create jobs and revive the economy.
“We believe that these two projects will be included in the next November budget and possibly earlier in the Medium-Term Recovery Plan to be presented to Parliament in October,” he said.
Mudajaya Bhd Group
However, Managing Director and Chief Executive Officer James Wong said there may be some limitations to the projects the government can invest in.
He said this is due to a great air of uncertainty about three main factors: the political stability of the incumbent government, the pandemic and fluctuations in the price of raw materials, particularly oil, which affect the ringgit.
“The impact of Covid-19 has seriously undermined government coffers, therefore the implementation of projects under the 2021 or 12MP Budget will be limited,” he said.
On how industry players were dealing with the current economic climate, Wong said there have been many tenders but few awards.
“While we are busy with existing projects, the replenishment of our order book has been affected,” he said.
Crest Builder Holdings Bhd Eric Yong, managing director, said what construction players were looking at was the speed at which mega-projects can be implemented and how quickly they can get down to business to keep the economy going.
Yong also highlighted that many private tenders have been postponed as developers are being very cautious.
While the construction industry generally contributed up to 5% of GDP, which is a fairly small portion, AllianceDBS emphasized that its multiplier effect on the economy was huge.
It is considered crucial for the growth of other industries, such as construction and building materials, iron and steel, heavy machinery, and financial services.
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