Business

Monday June 18, 2012

Construction, renovation sector may not generate RM5bil worth of jobs in Penang

By DAVID TAN
davidtan@thestar.com.my


GEORGE TOWN: The construction and renovation industry in Penang may not be able to generate RM5bil worth of jobs this year as forecast by the Penang Master Builders' and Building Materials Dealers Association (PMBBMDA).

PMBBMDA president Lim Kai Seng said there had been a lower demand for construction materials from the residential housing segment since late last year.

“This is reflected in the jobs obtained for the first quarter of 2012.

Lim says there has been lower demand for construction materials from the residential housing segment.

“For the first three months, according to the latest CIDB report, the construction and renovation industry of Penang generated about RM543mil worth of jobs for PMBBMDA members.

“Usually the figures are about 10% higher,” he said in an interview.

Of the RM543mil worth of contracts, about RM133mil were government jobs, while the remaining RM409mil were from the private sector.

Last year, according to the latest Construction Industry Development Board (CIDB) report, about RM4.9bil worth of jobs were generated by residential, non-residential, social amenities, and infrastructure projects in Penang for PMBBMDA members.

Some RM1.1bil worth of contracts came from the government sector, while the remaining RM3.8bil were from the private sector.

About RM3.52bil worth of properties are expected to be launched in the second half 2012 by four Kuala Lumpur-based developers SP Setia Bhd, Mah Sing Group Bhd, IJM Land Bhd, and Sunway Group Bhd.

SP Setia plans to launch about RM2.5bil worth projects on the island, of which approximately RM638mil are scheduled for launching in the second half, and RM1.7bil in 2013.

In the second half 2012, the key projects included the RM250mil Setia Triangle, the RM335mil Setia Greens 2, and a RM53mil condominium project in Teluk Kumbar.

Siah says that in comparison, demand in the industrial construction sector is still okay.

In 2013, SP Setia plans to launch RM1.1bil mixed-development project in Tanjung Bungah, a RM175mil condominium project in Sungai Nibong, and the Wave and Breeze condominium projects for Setia Pearl Island, with a gross development value of RM350mil and RM300mil respectively.

Among Mah Sing's projects for 2013 are two residential suite towers in the RM329mil Southbay Plaza, which is part of the Southbay City project.

IJM Land's new launches for the second half of 2012 total about RM500mil, which included the RM300mil Light Collection 3 next to the Penang Bridge, while Sunway's projects for late 2012 comprised about RM200mil worth of residential projects in Sungai Ara in south-west district of the island.

“This would translate to about RM2.1bil worth of construction and renovation work for our members over the next three years.

“Actually, there should be no problem for the industry to generate RM5bil worth of jobs, as we are considering only the projects of four Kuala Lumpur-based developers.

“We have yet to consider projects from other developers in Penang and Kuala Lumpur.

“But because of the economic climate, we expect a slowdown in the launch of new projects or reduction in the size of projects for this year,” he said.

As the demand for construction materials for the residential sector has softened over the past 12 months, the pricing of cement has also not gone above RM15 per 50 kg bag, which has been maintained at this level since late last year.

At the peak two years ago, the pricing of cement was above RM18 per 50kg bag.

Meanwhile, Malaysia Hardware, Machinery and Building Materials Dealers' Association executive adviser Datuk Steven Siah Kok Poay said there was generally pessimism about the demand from the residential construction sector this year.

Lower sale: The Malaysia Hardware, Machinery and Building Materials Dealers’ Association figures show that the sale of building materials to the residential sector have declined by a double-digit percentage this year.

“In comparison, the industrial construction sector is still okay, as the private and international companies are still executing projects.

“As for government projects, there is delay in their implementation.

“So far, this year the sale of building materials to the residential sector have declined by a double-digit percentage,” Siah said.

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