Petaling Jaya (The Star/ANN) - The Malaysian economy is expected to grow faster in the second half of the year as investments start flowing into projects related to the Economic Transformation Programme.
Businesses contacted by The Star said they were ready to pump in capital and to hire people as the projects take off.
Affin Investment Bank Bhd chief economist Alan Tan estimated that up to 20 billion ringgit (US$6.62 billion) worth of ETP-related projects would be implemented this year. While only a ballpark figure, this would be around 20 per cent higher than the estimated 16 billion ringgit realised last year.
"As the global economic recovery gains momentum, we believe more businesses will go ahead with their investments and business expansion plans," he said. This would have a positive impact on gross domestic product, the most common measure of economic growth.
Already several projects have been awarded since the beginning of the year, with a majority of these contracts in the oil and gas industry.
The ATT Tanjung Bin oil storage terminal in Johor jointly developed by MISC Bhd and Rotterdam-based Vitol Group which already has investments of 1 billion ringgit, would see another 1 billion ringgit or so in investments starting this year for the second phase.
Malaysian Rating Corp Bhd chief economist Noor Zahidi Alias said private investments and private consumption propelled economic expansion last year and if investment-to-GDP ratios were sustained this year, growth would remain resilient.
Master Builders Association Malaysia president Matthew Tee said that for most civil infrastructure and construction projects, the average period to reach financial close (when all conditions precedent in a contract have been met and funds can be drawn down) would usually be around nine months.
"Most won't invest in machinery so soon but our association members are certainly gearing up for the boom in the second or third quarter of the year," he said.
Tee said the recent announcement of the award for the estimated 6 billion ringgit West Coast Expressway project to Kumpulan Europlus Bhd was a positive sign for the industry.
"It will be good for us. The spillover will be great. But of course, much of this will depend on the implementation. Also, the regulations must be in place," he added.
There would be more employment opportunities but in the construction sector, the need for foreign labour would be acute, Tee said.
"This is a perennial problem whenever we have large infrastructure projects."
Meanwhile, engineering and construction contracting company Apex Energy Sdn Bhd head of engineering Arman Alias said the company was bidding for a contract in the Petronas-initiated 60 billion ringgit ringgit Refinery and Petrochemical Integrated Development project in Pengerang.
"If we're awarded a contract, we're likely to hire people in Johor just as we have hired Sabahans for our current projects in their state," he said.
As a main contractor for the oil and gas services industry, Arman said the company's investment would be entirely in manpower.