KUALA LUMPUR, Oct. 8 (Xinhua) -- Analysts have foreseen strong contract flows in Malaysia's construction sector ahead, driven by a robust pipeline of data center roll-outs and impending public infrastructure projects.
Kenanga Research said in a note on Wednesday that despite slower-than-expected roll-outs of public projects, it remained bullish on the construction sector given persistent demand from data centers, fueled by sustained capital expenditures from global tech firms.
"Nationwide, we also expect further public project roll-outs post-Budget 2026 in October," it added.
Meanwhile, MBSB Research said in its recent report that it expects a slight pickup in job flows in the second half, with the gradual rollout of major public-sector infrastructure projects such as the Penang Light Rail Transit as well as the potential award of up to six large-scale data center facilities worth approximately more than 1.5 billion ringgit (360 million U.S. dollars) each.
The research house has maintained its forecasted growth for Malaysia's construction sector in 2025 at 12.8 percent for now.
Data from the Department of Statistics Malaysia showed that for the 13th consecutive quarter, the construction sector remained on a positive trajectory, albeit growing at a slower pace compared to the first quarter, registering a 12.9 percent year-on-year growth in the second quarter versus 16.6 percent year on year in the first quarter.
"Overall, we see this as a positive development despite the headwinds suffered by the construction sector in the first half, attributed to delays in project rollouts within the pipeline and global trade tensions," MBSB noted.
Hong Leong Investment Research has also, in its recent note, anticipated sustained contract flows in the final quarter anchored by data centers and infrastructure rollout.
"In our view, contractors broadly can still add to order book from the data center segment as well as infrastructure projects," said the research house.
"We continue to anticipate more road contracts from East Malaysia in the coming months in addition to multiple renewable energy engineering, procurement, construction, and commissioning contracts," it said.
Malaysia's domestic contract awards in the third quarter came in at 10.7 billion ringgit (-5 percent year on year), bringing the first nine months sum to 39.7 billion ringgit, increasing by 24 percent. This marks the strongest nine-month figure since the high was achieved in 2016. (1 ringgit equals 0.24 U.S. dollar) ■
