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Construction players concern over delay in awarding mega projects contract

The govt has announced the revival of some mega projects, but no tenders have been given to local industry players yet, says analyst

THE delay in awarding projects is a concern for construction players, despite the seemingly positive outlook this year following the revival of several mega infrastructure projects.

The timing of the said revival is a market concern, AllianceDBS Research Sdn Bhd analyst Chong Tjen San said, noting that the federal government has made announcements to bring back the projects, but no tenders have been given to local industry players yet.

“There have been some delays because some of the contracts have to be restructured and some changes have to be made in the alignment which requires time for them to be approved, so the delays are understandable. However, I hope the government will be able to push out some tenders soon,” he told The Malaysian Reserve (TMR).

A lack of confirmation will result in a delay of job creation for locals, Chong added.

Among the mega projects that have been restarted is the East Coast Rail Link (ECRL), which connects Kota Baru to Port Klang in Selangor.

A series of negotiations took place before the rail was revived in April last year after a supplementary agreement was signed between project owner Malaysia Rail Link Sdn Bhd and contractor China Communications Construction Co Ltd.

The first two construction phases of the ECRL will now cost RM44 billion, 32.8% lower than the initial estimate of RM65.5 billion.

The rail line will be shortened to 648km from the previous 688km, while the cost per km is lower at RM68 million against RM98 million previously.

According to MIDF Amanah Investment Bank Bhd, the ECRL is expected to contribute 2.7% to national GDP.

The government also recently revived the RM140 billion Bandar Malaysia project, which was mooted by the previous government and shelved for two years under Pakatan Harapan until a new agreement was signed in December last year.

Under the new agreement, 10,000 units of subsidised affordable homes will be constructed versus 5,000 units previously, and an 85-acre (3.4ha) piece of land will be allocated as a park.

Prime Minister Tun Dr Mahathir Mohamad also said the Kuala Lumpur-Singapore High-Speed Rail will be reinstated, but at a reduced cost.

“Earnings for construction companies are expected to grow 13%. I expect to see an acceleration (in growth) this year and more creation of jobs,” Affin Hwang Investment Bank Bhd senior associate director Loong Chee Wei told TMR.

“The construction sector looks more positive mainly due to the potential revival of more large scale infrastructure projects.”

Putrajaya has also said a review is underway for the suspended Mass Rapid Transit Line 3 (MRT3), which was scrapped in May 2018 due to financial implications.

Transport Minister Anthony Loke was reported as saying that the project is vital as it completes the rail link network in the Klang Valley.

The 40km-long rail, of which 32km was set to run underground, was approved by the previous government in 2017.

Mass Rapid Transit Corp Sdn Bhd had commenced preparation works for the line.



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