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Overweight stance for construction sector stays, says AmResearch

KUALA LUMPUR: AmResearch Sdn Bhd has maintained the overweight stance on the construction sector as there is greater illumination on new contract visibility.

The Klang Valley Mass Rapid Transit (MRT) project is one of the anchor projects under the government's Economic Transformation Program (ETP) and 10th Malaysia Plan, that is likely to be fast-tracked and with more to come.

This comes on the heels of news reports over the weekend that the National Economic Action Council (NEAC) has approved the West Coast Expressway, AmResearch said in its sector report on Monday, Jan 17.

"Our channel checks indicate that some members of the business community want the MRT stations to be located close to the centre of commercial activities.

"This would include select developers who own shopping malls and commercial developments that are lobbying for the lines and stations to be located at/or at least within close proximity to their commercial properties," it added.

On the other hand, residents who live near or adjacent to the proposed lines, are against the MRT tracks being built above the ground, and prefer to have it underground to avoid congestion and noise pollution issues.

The entire MRT line is estimated to run a total length of 150km and costing RM36 billion.

Tenders for the 60km Sg Buloh-Kajang line will be out by April, with 9.5km of the system to run underground.

More importantly, an increasing shift towards having more underground portions for the MRT line, would naturally increase its overall budget.

According to the Land Public Transport Commission chief executive officer Mohd Nur Ismal Kamal, the cost of the MRT would be five to ten times higher on a per km basis, if the line was to go underground subject to geological conditions.

"More importantly, an expanded capital works programme for the MRT line would imply greater scope of works for the contractors.

"This would bode well for the Gamuda-MMC joint venture which is vying for the tunnelling portion, estimated at RM11 billion based on the original MRT proposal," AmResearch said.

Other likely beneficiaries would be steel players such as Ann Joo Resources Bhd and Lion Industries Bhd, as demand for construction steel would increase in tandem with more tunnelling works for the MRT line. — Bernama
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