Construction output
Order books are set to grow in value this year due to the expected return of major infrastructure projects and investments in data centres, high-tech and manufacturing projects.
The government’s Madani economy framework delineates strategic objectives for the nation over the next decade, with a focus on securing a position among the world's 30 largest economies and attaining a top-12 ranking on the global competitiveness index.
This forward-looking vision is poised to positively influence the construction sector, anticipating heightened engagement in infrastructure projects, urban development and real estate initiatives to attract both domestic and foreign investments.
According to the latest data from the Malaysian Investment Development Authority (MIDA), approved private investments have demonstrated a notable 25.0 percent increase, as of 2023, compared to the corresponding period last year, coupled with a remarkable 13.0 percent surge in the number of projects.
Source: Malaysian Investment Development Authority
Investments in the manufacturing sector constitute more than 46.0 percent of the total approved investments as of 2023. This figure surpasses the approved investments in the manufacturing sector from 2019-2022, except for 2021, which was influenced by the backlog of projects post-pandemic.
The strategic location of Malaysia in Southeast Asia, amidst some of the world's fastest-growing economies, coupled with its cost-effective and business-friendly environment, is anticipated to further attract investors in 2024.
The semiconductor industry experienced a decline towards the end of 2023. However, it is expected to grow in 2024 due to the increased global demand for smartphones and artificial intelligence (AI) products. This growth is expected to drive increased investments in the manufacturing sector, benefiting Malaysia which is among the top 10 largest exporters in the world. Furthermore, the growth in data centre investments will further contribute to the overall expansion of the semiconductor industry.
Source: Malaysian Investment Development Authority
The services sector has demonstrated consistent growth over the years, constituting over 51.0 percent of the total approved investments in 2023.
It is noteworthy too that the real estate and Information and Communication Technology (ICT) sub-sectors collectively contribute about 74.0 percent of the total investments in this sector.
This sub-sector, which includes the housing industry, is poised for expansion, particularly through the National Housing Policy 2.0, which prioritises the development of affordable housing for Malaysia. Data centre projects will continue to drive the value of approved private investments in the ICT sub sector, leveraging the country's robust infrastructure and cost-effectiveness in terms of land and power supply.
Source: Malaysian Investment Development Authority
In 2023, the tourism sector experienced a notable rebound post 2021. Responding to this positive trend, the government adjusted the targeted tourist arrivals for Malaysia from 16 million to 19 million. As of December 2023, the total tourist arrivals reached 20.1 million, exceeding the target set by the government.
Anticipating sustained growth, initiatives such as Visit Malaysia 2026 and visa exemptions for tourists from China and India can bolster the increase in tourist numbers. The ambition is to restore the tourism sector to its pre-pandemic level, reaching 36 million visitors by 2026, with an expected 71.0 percent increase in receipts compared to the year 2019.
Source: Tourism Malaysia
The projected increase in tourism activity is expected to have a positive knock-on effect on the construction sector creating the business case for better infrastructure, hospitality facilities and commercial spaces. Prominent hospitality companies and new market entrants have announced plans to expand their operations in Malaysia in 2024.
Overall, the sector is on an upward trajectory for 2024 capitalising on strong domestic demand, government policies and the recovery of major sectors from setbacks post-pandemic.
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