Budget 2010 and the Construction Sector, Part 1

Salam and dear all, The Finance Minister who is also the Prime Minister of Malaysia presented his budget to Parliament on 23rd October 2009. In relation to the construction sector, the following are the highlights of the budget; Generally Total allocation for 2010 RM191.5 billion, some 11.2% lower than the revised allocation of RM215.7 billion for 2009. RM138.3 billion or 72.2% is for operating and 53.2 billion or 27.8% for development. As for the development allocation, RM25.4 billion is for the economic sector, RM20.3 billion social, RM3.7 billion for security, RM1.8 billion for general administration and RM2 billion contingencies. The budget for 2010 is the last budget under RMK9, its approach is moving from an industrial based economy to one that is based on innovation, creativity and high valued activities. Malaysia is a trading nation. Its total trade is valued at 200% of GDP and is vulnerable to various uncertainties related to international capital flows and external trade. GDP contracts at a slower pace i.e. at 3.9% during the 2nd quarter (-6.2% in the 1st quarter); construction grew at 2.8% in the 2nd quarter due to the implementation of the 2 stimulus packages totaling RM67 billion). As of 16th October 2009 more than 48,000 projects under the stimulus packages were completed; about 40,000 are being implemented. Malaysia’s GDP in 2009 is projected at -3.0%, in 2010 expected to expand 2% to 3% and construction expected to grow at 3.2%.