Analysis: Upbeat on higher East Malaysian allocations

KUCHING (Oct 21): Analysts are upbeat on East Malaysia’s higher allocations from Budget 2025, with an allocated 14.7 per cent of development expenditure to Sabah with RM6.7 billion and Sarawak with RM5.9 billion.

This marks a marginal increase 1.6 per cent year on year (y-o-y) from 2024’s allocation of RM13.8 billion.

Additionally, the Sarawak and Sabah special grant has been doubled again to RM600 million each for Sabah and Sarawak.

The projects includes the Pan Borneo Highway Sabah whereby 17 work packages for Phase 1B have been issued letters of acceptance with a total contract value of RM9.7 billion, including the stretch from Kota Belud to Kudat, Tawau to Kampung Lot M and Telupid to Ranau.

For the Sabah-Sarawak Link Road (SSLR), four work packages worth RM7.4 billion have been finalised with two packages awarded with the remaining packages to be awarded before end-2024.

Others include the Tawau Airport expansion in Sabah and Miri Airport in Sarawak with a total cost of RM253 million, as well as the Sarawak Cancer Centre estimated at RM1 billion.

Analysts with Public Investment Bank Bhd (PublicInvest Research) believe that the higher autonomy and allocations given to Sabah and Sarawak would further cement and encourage economic partnership between Peninsular and East Malaysia contractors which, in return, could improve the profitability of East Malaysia projects.

“From our channel checks, heavyweight contractors from Peninsular Malaysia have indicated their interest to participate in Pan Borneo Sabah Phase 1B and SSLR Phase 2,” it said in an analysis today.

“Construction activities should remain robust going into 2025, spurred by the rollout of infrastructure projects such as Bayan Lepas LRT, Pan Borneo Sabah Phase 1B, SSLR Phase 2, Penang airport expansion.

“Additionally, flood mitigation projects and water related projects are anticipated to further boost the availability of public infrastructure jobs to contractors.”

In the second quarter of 2024, private sector accounted for 61 per cent of the total value of construction work done, continuing to be the primary growth driver in the construction sector.

With public projects set to launch soon, the sector is projected to achieve 9.4 per cent construction GDP growth in 2025.

Other allocations include RM15 billion to education and training, which will focus on ICT infrastructure to bridge the rural-urban divide, improve Malaysia’s standing in global educational assessments, and modernise educational institutions.

Plans include upgrading Local Area Network infrastructure in 1,528 institutions, implementing smart classrooms in 400 institutions, and constructing 46 new schools, primarily in Sabah and Sarawak, alongside refurbishing dilapidated schools.