Sarawak is the next place to be for construction, says HLIB Research


KUALA LUMPUR (Dec 28): As crude oil markets pulled back, sparking concerns of a federal budget recalibration, construction players who have shifted their focus to East Malaysia may find shelter there as state-funded projects are insulated from the risk of reduction of the federal government spending.

In a note this morning, Hong Leong Investment Bank Research (HLIB Research) pointed out that "Sarawak is the next place to be", since job flows for industry players have slowed down "significantly" in Peninsular Malaysia following the change in federal government.

"We understand that industry players are aiming for jobs in Sarawak as the state government has allocated circa RM9 billion for development expenditure under state budget 2019, which is the biggest in the history of the state.

"Funding for those projects is expected to come from Sarawak's state reserves (circa RM31 billion) which may insulate the projects from risk of reduction of federal government spending," the research firm wrote.

Among upcoming projects in the state are the RM11 billion Sarawak Coastal Road Project and Trunk Road Project.

So far, interested bidders include Hock Seng Lee Bhd, whose consortium has just been awarded a contract by Sarawak Energy Bhd for the Matang 275/132/33/kV substation project in Kuching, worth RM90.99 million.

Others are Cahaya Mata Sarawak Bhd, and Vertice Bhd, which has teamed up with Pembinaan RU Sdn Bhd and Image Façade Construction Sdn Bhd to submit the pre-qualification tender for the two infrastructure projects.

The benchmark Brent crude oil, which at the time of writing is up 2.4% to US$53.40 (RM222.06) per barrel, has dipped 38% from its high of US$86 at the start of October.

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