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Malaysia Infrastructure Report Q4 2009Product Type: Market Research ReportPublished by: Business Monitor International Published: August 2009 Product Code: R302-7635 Description Despite Malaysia faring particularly badly during the current global economic downturn, the recessionhas done little to dent the bottom lines of the country’s key infrastructure companies, if results from thefirst quarter of the year are anything to go by. Indeed, Gamuda registered a profit of US$13mn in thethree months to the end of April 2009, WCT Engineering posted a profit of US$19.5mn in the threemonths to the end of March 2009, and IJM Corp posted a profit of US$113.2mn in the 12 months to theend of March 2009. Geographic and sector diversification have helped to underpin these companies’performances. Going forward, the bounce in oil prices in the first half of 2009 should underpin workflowfrom the Middle East, a key arena of operations.Much has been made by the local press - and financial markets, with construction firms surging in valuein the first half of 2009 - of Malaysia’s fiscal stimulus plans. However, we remain dubious about theimpact of these spending plans, particularly for the current calendar year. Prime Minister Najib Razakannounced on June 16 that in the six and a half months since the first fiscal stimulus package was firstannounced in November 2008, only MYR4.0bn (US$1.1bn) of the planned MYR7.0bn in additionalspending has been offered to successful contractors, and as of June 5, only MYR1.4bn has actually beenspent. Moreover, although the government announced a second fiscal stimulus package to the tune ofMYR60bn - equivalent to approximately 9% of GDP - as of March, only MYR10bn of this is slated to bespent this year. While MYR4.2bn of this has already been allocated, only MYR1.2bn has been spent. Thefiscal stimulus measures should have a more pronounced impact on the economy, particularly theconstruction sector, in 2010, but even then, fiscal constraints generate concern about the government’sability to carry forward its spending plans fully. Meanwhile, the economy remains mired in recession, with GDP growth in the first quarter of 2009registering a contraction of 6.2% y-o-y in real terms. For the full calendar year, we anticipate that theeconomy will contract by 3.4% in real terms. With all this in mind, we now predict that Malaysia’sconstruction sector will contract by 4.29% in real terms in 2009, and 1.21% in 2010. Furthermore, 2011 islikely to witness near zero real growth in sector output. These forecasts represent a significant negativerevision from the first quarter of the year, when we had been predicting that the construction sector wouldcontract by a relatively modest 1.4% in 2009 before returning to real growth of 2.1% in 2010. Table of Contents
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