Market & Business Insight • 19 – 25 May 2025
Ringgit Firms, Costs Stabilise, Data-Centre Deals Multiply
Economic Snapshot – What moved the numbers?
Consumer prices stay tame: April CPI held at +1.4 % y-o-y (index 134.3), marking a third straight month of subdued inflation.
Materials mixed, steel still soft: DOSM’s April bulletin shows ordinary Portland cement up 0.2 % m-o-m, while the unit-price index for rebar continued a modest slide, and sand ticked +0.1 – 3.8 % across regions.
Ringgit rebound: The KL USD/MYR reference rate firmed to RM 4.2065 / US$ on 26 May, its strongest level since early March.
Cheaper long-term money: The 10-year Malaysian Government Securities (MGS) yield eased to 3.59 % on 23 May, extending a 14-bp drop since late April.
Liquidity boost: Bank Negara’s 100 bp SRR cut to 1 % (effective 16 May) is releasing about RM 19 billion of banking-system liquidity—cash that can migrate into working-capital lines and performance bonds.
Key Market Trend – The “Goldilocks” Cost Window
Falling imported steel quotes (sub-US$445/t FOB, according to SEAISI billet offers) combine with a stronger ringgit and cheaper bond yields to create the most contractor-friendly margin environment since 2022.
A back-of-envelope calc: on a RM 200 m viaduct where steel is 35 % of cost, a RM 50/t drop in rebar plus a 15 bp fall in funding costs can lift gross margins by roughly 70–120 bps. Firms bidding Q3 tenders should lock-in current steel and FX rates, then signal margin upside in 2Q earnings guidance.
Business Strategy Highlight – SunCon’s “Build-Operate-Service” Pivot
On 20 May, Sunway Construction secured a RM 260 m Stage 3 contract to finish a hyperscale data-centre campus in Johor, lifting its total campus take to nearly RM 400 m. More importantly, the Bursa filing includes:
Modular white-space fit-out under a cost-plus model, insulating SunCon from commodity swings.
A five-year facilities-management option that could add RM 12–20 m EBIT per site at industry FM fee norms.
By bundling build, fit-out and FM, SunCon converts lumpy EPC revenue into annuity-style cash flow—setting a template other listed builders (Gamuda, IJM) are now studying.
Opportunity Alert – Digital-first rural upgrade in Sarawak
JKR Tender T/216/05/2025 – “Projek Menaiktaraf Jalan Kebun Beradek Semilang”
Scope: 18 km widening, two RC bridges, compulsory BIM Level 2 coordination and drone-based progress surveys.
Classification: G7 (CE01/CE21/CE36).
Briefing/Site visit: 11 Jun 2025, Kuching (mandatory).
Closing date: 7 Jul 2025.
Digital delivery accounts for up to 15 % of technical scoring, handing an edge to bidders already running common-data environments on federal jobs.
International Insight – Cheap Chinese Steel vs. Costly Carbon Paperwork
Chinese mills accelerated exports to 16.97 Mt in Jan-Feb 2025 (+6.7 % y-o-y), forcing billet offers into ASEAN below US$450/t and dragging rebar prices to four-year lows.
Yet from 2026, Malaysian precast and steel exported to Europe must still file quarterly carbon-footprint reports under the EU Carbon Border Adjustment Mechanism (CBAM)—even though importers of ≤50 t a year will be fee-exempt.
Bottom line: contractors enjoy lower input costs today but must budget for carbon bookkeeping and potential CBAM levies on larger shipments within 18 months.
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