Date:  26-Oct-2015

budget 2016 najib razakIt was reported that  the recently announced 2016 Budget is known as the “Robin Hood” budget, and is likely to see the construction sector as the main beneficiary on the stock market.

Continued investments in projects such as the Refinery and Petrochemicals Integrated Development (Rapid) in Pengerang, Johor, the Pan Borneo Highway, mass rapid transit 2 (MRT2), light rail transit 3 (LRT3) and flood mitigation will provide a further boost.

In construction, projects at Rapid are likely to benefit oil and gas maintenance sector; companies with existing projects such as Muhibbah as the main and not sub-contractor is likely to get more projects, Ho Hup with potentially more construction jobs and Dialog which already has Phase One projects at Pengerang, is likely to see more shipments for the uploading and downloading of oil for storage, said Danny Wong, chief executive officer at Areca Capital.

Increased investments at Pengerang are also likely to attract more operators to conduct business there.

More details are awaited on how construction contracts will be given out. Consortiums that are awarded contracts will usually give these contracts to project delivery partners, many of which are listed companies, said Wong.

“We are neutral but one thing for sure is the construction pie is increasing where big companies like Gamuda, IJM, WCT and Sunway Construction are the expected beneficiaries,’’ said Vincent Khoo, head of research at UOB Kayhian.

In east Malaysia, the construction of the Pan Borneo Highway is likely to benefit Hock Seng Lee and west Malaysian construction companies as there is not enough capacity among present players there, added Khoo.