Liquidity Eases, Costs Chill: Malaysia’s Construction Market Pulse (12 – 19 May 2025)
A deep dive into Bank Negara’s RM 19 billion liquidity boost, softening material prices, Gamuda’s data-centre pivot, a new federal tender, and the global climate-compliance trend reshaping contractors
Economic Snapshot
Malaysia’s construction economy stayed resilient this week despite gathering global headwinds. Headline GDP growth for 1Q 2025 came in at +4.4 % y-o-y, underpinned by a double-digit surge in construction value-add (+14.2 %) but tempered by softer external demand.
Meanwhile, Bank Negara Malaysia held the Overnight Policy Rate at 3 % and sliced the Statutory Reserve Requirement to 1 % (effective 16 May), injecting roughly RM 19 billion of system liquidity that should ease project-financing costs in the months ahead.
On costs, DOSM’s March bulletin (released 10 Apr) showed the Building-Material Cost Index slipping 0.2 – 1.7 % m-o-m, with structural steel down 0.1 % and cement up 0.9 %. Early April price quotes suggest the easing trend is continuing into May, offering relief to contractors still locked into 2023-era lump-sum contracts.
Key Market Trend – Liquidity vs. Input Costs
The twin tailwinds of cheaper credit (via the SRR cut) and gentler material inflation are converging just as public-sector work ramps up under Budget 2025. Contractors with lean balance sheets can now refinance at slightly lower effective rates while locking in steel re-bar below last quarter’s peak. Expect margin guidance to improve in upcoming 2Q earnings calls—especially for high-steel packages such as viaducts and industrial warehouses.
Business Strategy Highlight – Gamuda’s “Data-Centre-as-a-Service” Pivot
On 5 May, Google’s Malaysian affiliate awarded Gamuda Bhd a >RM 1 billion contract to build a hyperscale data-centre campus in Port Dickson—its second such win in 12 months.
The clincher: Gamuda will fabricate the white-space shells with its Next-Generation Digital IBS platform—robotic, cloud-linked precast factories able to cut site labour by 55 % and embodied carbon by 40 %.
By pairing recurring DC infrastructure work with proprietary off-site manufacturing, Gamuda is morphing from traditional EPC contractor to capacity-leasing partner for Big Tech—a model that diversifies revenue and shields margins from commodity swings. Watch for peers (IJM, Sunway Con) to chase similar tech clients before year-end.
Opportunity Alert – New Tender to Watch
JKR/CKUB/23027/2025 — “Pembinaan Pejabat Meteorologi Kedah yang Baharu”
Scope: 7-storey headquarters, M&E works, green façade
Class: G7 (B01 & B04) | Tender documents on sale: 16 May 2025 | Close: 23 May 2025
The RM 150-200 m package is one of the first federal buildings to mandate BIM Level 2 deliverables and a 20 % renewable-energy target—an attractive sandbox for firms already investing in digital site coordination.
International Insight – Climate-Compliance Premiums Rising
Across ASEAN, regulators are tightening carbon-reporting and pricing. Thailand’s draft Climate Change Act (14 May) combines mandatory GHG inventories with a future CBAM-style import levy, while Vietnam formalised carbon-market milestones in January. Regional harmonisation talks are accelerating, and Sarawak has signalled support for a unified ASEAN carbon market. Malaysian contractors bidding abroad—or supplying EU-bound precast modules—must prepare for embedded-carbon disclosures as early as 2026.
Next Week’s Focus (20 – 26 May)
22 May – DOSM to release April Consumer-Price Index; cement and steel sub-indices will confirm whether March’s softening persisted.
23 May – Deadline for the Kedah Meteorology HQ tender (see above).
MRT 3: Package C (underground works) pre-qualification shortlist expected; any foreign JV entry could jolt share prices of local tunnel specialists.
Policy watch – Parliament resumes 27 May; eyes on potential fast-tracking of the Construction 4.0 tax incentive bill, which could spur capex on robotics and modular yards.
Stay ahead with UBBIM Construction Digest – Market & Business Insight.