DATA from the Department of Statistics Malaysia showed the construction sector remained on a positive trajectory for the 12th consecutive quarter, registering an increase of +23.1% year-on-year (yoy) to RM42.9 bil of work done value in quarter one (Q1) of 2025.
Out of the work done, 36.6% or equivalent to RM15.7 bil was in civil engineering, primarily in the construction of roads and railways (RM7.9 bil) and construction of utility projects (RM6 bil ) activities.
The value of work done for nonresidential buildings and residential buildings amounted to RM12.3 bil (28.8%) and RM9.9 bil (23.0%), respectively.
Meanwhile, special trade activities contributed RM5.0 bil (11.6%), mainly in sites preparation (RM1.3 bil); electrical installation (RM1.2 bil); and plumbing, heat, and air-conditioning installation (RM1.1 bil).
Nearly 63.4% of completed works value was concentrated in Selangor, Johor, the Federal Territories and Sarawak, with Selangor recording the highest construction work done value at RM11.1 bil.
As of May-25, a total of 5,387 projects have been awarded in 2025, with a total value of RM76.3 bil.
This is slightly lower than the same period in 2024 where 7,822 projects were awarded, with a total value of RM91.6 bil.
“Overall, we see this as a positive development despite the headwinds suffered by the construction sector in 1Q25, attributed to delays in project rollouts within the pipeline and global trade tensions. We do not expect any surprises for 2Q25,” said MIDF Research.
Across the board, construction companies encountered subpar conditions in 1Q2025, with some benefiting from robust progress in infrastructure and property projects, while others faced challenges due to project completions and regulatory delays.
“Our economics team has maintained their forecasted growth for the construction sector in 2025 at +12.8%,” said MIDF.
With the lack or rather delayed rollout of mega pump-priming projects under Budget 2025, the construction sector is still expected to be supported by private sector jobs with a focus on industrial buildings such as logistics warehouses, data centres, and semiconductor foundries.
This will be further backed by previously awarded infrastructure projects such as the East Coast Rail Link (ECRL), RTS Link and the recently reinstated five LRT3 stations.
The government aims to generate RM78 bil worth of public-private partnership (PPP) investments across 17 key initiatives by CY30, according to the PPP Master Plan 2030.
Other upcoming projects that could boost the sector include, the Penang LRT (value estimated to be >RM10.3 bil), Penang International Airport expansion; the RM6.1 bil Northern Coastal Highway in Sarawak; the RM5.6 bil Sabah-Sarawak Link Road, the rollout of the MRT3 project, and the potential renewal of the KL-SG High Speed Rail project amongst others.
“We maintain our positive view on the construction sector, supported by a favourable cost environment and steady project momentum,” said MIDF.
Steel bar prices have continued to ease for the second consecutive month amid a decline in global production, while cement prices remain stable due to disciplined domestic production and raw material cost control.
These dynamics help cushion contractors from margin pressures. While recent geopolitical developments such as the Liberation Day tariffs and the conflicts in the Middle East have introduced some volatility, MIDF see limited impact on the sector given its domestic focus and low direct exposure to U.S. and Middle East markets.
Moreover, key inputs remain reasonably priced, and sector fundamentals are supported by healthy job flows, a strong pipeline of industrial and infrastructure projects, and strengthened data centre demand.
Looking ahead, the second half of 2025 is expected to show a recovery in construction sector performance, driven by improved project execution momentum despite more challenging market conditions. —June 17, 2025
Main image: National Action Plan On Business And Human Rights
