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Enquiry could be submitted to: General Manager Business & International Division, CIDB Level 34, Menara Dato’ Onn, PWTC No. 45, Jln Tun Ismail 50480 Kuala Lumpur, Malaysia Tel : +603 - 4047 7000 Fax : +603 - 4047 7070 E-mail : [email protected] 2016/2017 Edition is published on 18 December 2017 RM150.00 ALL RIGHTS RESERVED No part of this publication may be reproduced, used or transmitted in any form without prior permission and acknowledgment from CIDB. DISCLAIMER Information contained in this publication has been obtained from various sources and due care has been taken to ensure the information is accurate. CIDB holds no liability for the data, views and interpretation obtained in this publication due to the possibility of error that is not deliberate.

CONTENTS CHAPTER 1 MALAYSIAN ECONOMY AT A GLANCE Introduction Economic Sector Balance of Payment Other Economic Indicators CHAPTER 2 CONSTRUCTION PROJECTS, CONTRACTORS AND PERSONNEL Introduction Construction Projects Projects by the Government and Private Sector Projects by Category Projects by Location Projects by Grade of Contractors Projects by Type of Work Projects by Contract Size Projects Awarded to Foreign Contractors Contractors Construction Personnel 6 6 11 12 16 16 16 18 22 27 28 29 30 31 33

CHAPTER 3 PRICE, WAGE AND HIRE RATES Introduction Prices of Major Construction Materials Wage Rates of Construction Personnel CHAPTER 4 CONSTRUCTION INDUSTRY PROSPECTS 2017/ 2018 Introduction World Economy Malaysian Economy Prospects Malaysian Construction Demand Property Market Projected New Value of Construction Work Estimated Value of Work Done in 2017 – 2018 CHAPTER 5 COMPETENCY DEVELOPMENT IN THE MALAYSIAN CONSTRUCTION INDUSTRY Introduction Definition of Competency Development Plan Development of Competency Efforts on Competency Conclusion 36 36 55 68 68 72 76 78 85 90 94 94 94 97 102 107

CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 5 CHAPTER 1 MALAYSIAN ECONOMY AT A GLANCE Introduction CHAPTER 1 MALAYSIAN ECONOMY AT A GLANCE Introduction Economic Sector Balance of Payment Other Economic Indicators 6 6 11 12

6 CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 CHAPTER 1 MALAYSIAN ECONOMY AT A GLANCE Introduction/ Economic Sector Malaysia manage to overcome a trying 2016. However, the sluggish Malaysian economic environment continued with the drop in oil prices, the slipping exchange value of Ringgit against other major currencies, as well as, weak performance of the FBM KLCI bourses, low price of major commodities and a cautious domestic consumer spending. In June 2016, the European bloc was thrown into uncertainty on the aftermath of a 51.9% “leave” vote and 48.1% “stay” vote by more than half of the United Kingdom population. Later, the Americans voted their 45th president. Both events saw the world financial markets tumbled with uncertainty, further dampening the Malaysian economy. In midst of this, the Malaysian economy managed to grow at 4.2% in 2016. All economic sectors experienced a decline in growth except for the services sector which grew by 5.6% (2015: 5.1%). The services and manufacturing sector were the largest drivers of the economy, contributing at 54.3% and 23.0% respectively, supported by other economic sectors (mining and quarrying: 8.8%; agriculture: 8.1%; and construction: 4.5%). Agricultural Sector The agricultural sector plunged to -5.1% in 2016, after registered a growth of 1.3% in 2015. The palm oil and rubber subsectors slid to -12.7% and -6.3% respectively in 2016 (2015: 1.3% and 8.1%), owing to unfavourable weather conditions. However, this situation was mitigated by performances in the livestock (2016: 3.7%; 2015: 2.4%); other agriculture (2016: 5.1%; 2015: 2.3%); forestry and logging (2016: -3.0%; 2015: -7.9%); and fishing subsector (2016: 2.2%; 2015: 0.7%). The output of Crude Palm Oil (CPO) has been steadily deteriorating by 13.2% to 17,319,177 tonnes (2015: 19,961,581 tonnes). In terms of prices, CPO price improved by 23.5% to RM2,644.58 per tonne (2015: RM2,141.50 per tonne), against intense competition from substitute commodities of soybean, sunflower and corn oil. On a lesser degree, the Standard Malaysian Rubber (SMR20) price rose by 8.9% to 568.45 sen per kg (2015: 521.90 sen per kg). Mining and Quarrying Sector In 2016, the mining and quarrying sector fall slightly to 8.8% (2015: 9.0%). This was attributed to the significant decline in the crude oil and condensate subsector which fell to 0.7% (2015: 10.4%) following low oil prices, hindering supply. The highest and lowest Brent crude oil price were recorded at USD55.39 per barrel in December 2016 and USD33.99 per barrel in January 2016. On average, the oil price dropped by 15.7% to USD45.80 per barrel in 2016 (2015: USD54.32 per barrel). The fall in crude Introduction Economic Sector Table 1.1 | GDP by Economic Activity Note: e – Estimation; p - projection Source: Annual GDP Tables 2010 – 2016, Department of Statistics Malaysia

CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 7 CHAPTER 1 MALAYSIAN ECONOMY AT A GLANCE Economic Sector oil and condensate subsector was cushioned by the growth in natural gas subsector at 3.1% (2015: -1.0%), following operation of new production facilities in Sabah and Sarawak. Manufacturing Sector At 23.0% contribution to the economy, the manufacturing sector moderated to 4.4% growth in 2016 (2015: 4.9%). Major growth came from refined petroleum products (2016: 3.4%; 2015: 1.2%); chemical & chemical products and pharmaceutical products subsectors (2016: 5.9%; 2015: 5.4%); as opposed to reductions in electrical components & boards, communication equipment and consumer electronics (2016: 7.7%; 2015: 10.6%); and motor vehicles and transport equipment subsectors (2016: -3.6%; 2015: 5.0%). Other subsectors remained sustained. Overall, the manufacturing index fell to 4.3% (2015: 4.8%) following a drop in consumer-related cluster (2016: 1.7%; 2015: 4.8%) and the domestic-oriented industries (2016: 3.0%; 2015: 4.7%). The export-oriented industries declined slightly to 4.7% (2015: 4.8%), buoyed by primarily-related cluster (2016: 3.3%; 2015: 2.5%). Services Sector The driver of the economy, the services sector expanded by 5.6% (2015: 5.1%). All subsectors experienced positive growth, driven by finance and insurance (2016: 2.5%; 2015: -0.7%); utilities (2016: 5.4%; 2015: 3.5%); government services (2016: 4.9%; 2015: 4.0%); and food & beverages and accommodation (2016: 7.1%; 2015: 6.4%). Domestic consumption remained strong, and is expected to rejuvenate in 2017 within a better economic environment. The domestic tourism industry was boosted with various initiatives and promotions by the government. The low foreign exchange value of the Ringgit also attracts neighbouring ASEAN tourists and steering Malaysians to domestic holiday destinations. The hot weather and industry demand promoted growth in the utilities subsector, while the growth in insurance (2016: 6.5%; 2015: -1.7%) was attributed to the premium income in the insurance and pension funding. Construction Sector The construction sector grew moderately at 7.4% in 2016 (2015: 8.2%). Civil engineering subsector led with a double-digit growth of 15.7% (2013: 12.1%; 2012: 28.4%). This was in line with the government efforts to facilitate the access of public transportation. Implementation of railway projects, highways, road upgrading works and oil and gas projects were significantly seen in 2016. Residential subsector improved by 8.5% (2015: 7.2%), following government initiatives to provide more affordable housing for the people. Specialised construction subsector managed to grow at 6.1% (2015: 7.4%), while non-residential subsector declined by -1.1%. The drop in non-residential activities, which mainly affected industrial, shopping and shops segments could be attributed to the ‘wait-and-see attitude’ of investors. Construction Activity RM million 2014 2015 2014 2015 2016 2014 2015 2016 Q1 Q2 Q3 Q4 Annual 2016 Contribution (%) Change (%) Residential Non-Residential Civil Engineering Special Trade Total 30,516 34,314 32,689 5,026 102,546 33,846 39,080 36,587 5,430 114,943 9,615 9,964 11,495 1,486 32,560 9,579 9,801 11,133 1,397 31,910 9,283 9,615 10,075 1,453 30,427 9,331 10,382 10,615 1,613 31,941 37,807 39,762 43,318 5,950 126,838 29.8 33.5 31.9 4.9 100.0 29.4 34.0 31.8 4.7 100.0 29.8 31.3 34.2 4.7 100.0 22.2 17.1 1.2 16.7 12.8 10.9 13.9 11.9 8.0 12.1 11.7 1.7 18.4 9.6 10.3 Table 1.2 | Value of Construction Work Done by Activity Value of Construction Work Done by Activity Note: Numbers may not necessarily add up due to rounding. Source: Quarterly Construction Statistical Fourth Quarter 2016, Department of Statistics Malaysia

8 CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 CHAPTER 1 MALAYSIAN ECONOMY AT A GLANCE Economic Sector The implementation of construction projects, most notably civil engineering projects gain the most pace in 2016. The value of work done was the highest registered since 2008 , and contribute towards the large growth in 2016. Infrastructure works formed the high value of work done on the back of the government’s focus on improving connectivity through the implementation of railways, highways and roads projects. The value of construction work done rose by 10.3% to RM126,838 million (2015: RM114,943 million). Civil engineering activities were the major contributor of the value of construction work done, at 34.2% or RM43,318 million, followed by non-residential (31.3%; RM39,762 million), residential (29.8%; RM37,807 million) and special construction activities (4.7%; RM5,950 million). Double-digit growth came from civil engineering and residential activities, each at 18.4% and 11.7%. Non-residential activities moderated to 1.6%, reflecting the slowdown in economic activities particularly during the second quarter of 2016. Whilst special trade activities grew slightly at 9.6% (2015: 8.0%). Non-Residential Projects Non-residential activities were the most affected by external developments, most notably by the business and political environment. Construction activities for non-residential projects were slightly higher at RM39,762 million (2015: RM39,080 million). Apart from the Train 9 project for Petronas LNG complex, the construction activities for the other four nonresidential projects were significantly lesser. Based on the weak performance during the second half of 2016, non-residential activities are expected to at least maintain its contribution for 2017 with potential support from the current progress of the already-awarded projects. Table 1.3 | Non-Residential Projects Under Construction Source : Department of Statistics Malaysia Note : Mixed Development is categorised under Non-Residential Projects, as the Residential portion is much lower or equals the Non-Residential portion. Table 1.4 | Residential Projects Under Construction Source: Department of Statistics Malaysia

CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 9 CHAPTER 1 MALAYSIAN ECONOMY AT A GLANCE Economic Sector Table 1.5 | Infrastructure Projects Under Construction Source: Department of Statistics Malaysia Table 1.6 | Special Trade Projects Under Construction Source: Department of Statistics Malaysia Residential Projects Despite the overhang in supply, construction activities for residential projects remains robust, and stands at RM37,807 million (2015: RM33,846 million). Residential projects in the right location and affordable prices will always be in demand. Based on trends, high-rise residentials will continue to be the construction of choice due to the scarcity of land and the demand from urbanites. Construction activities were the most active in Selangor and W.P. Kuala Lumpur, due to the proximity of its location. In fact, the five most active construction activities for residential projects in 2016 came from projects in Selangor and W.P. Kuala Lumpur. Civil Engineering Projects In 2016, four Oil and Gas (O&G) projects in Johor dominated the construction activities for civil engineering projects. As of January 2017, the Pengerang Integrated Complex (PIC) achieved 57% of overall progress. The MRT Sungai Buloh-Kajang (SBK), also registered the third most construction activities for civil engineering projects in 2016. Infrastructure projects are expected to support the construction activities in civil engineering as more and more O&G projects near completion. As envisaged under Strategic Thrust 5: Strengthening Infrastructure to Support Economic Expansion on the Eleventh Malaysian Plan (11MP), infrastructure works will be the main focus as Malaysia improves its transportation, logistics, digital connectivity, water services and sustainable energy. Special Trade Projects Special trade projects were varied in 2016. The five most active construction activities were in W.P. Kuala Lumpur, and one project each at Melaka, Johor and Sabah. Overall, special trade activities were consistent, contributing between 4.7% to 5.1% annually since 2012. It is expected that the special trade activities will remain unchanged in the upcoming years, with more social amenities works, and facility management contracts.

10 CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 CHAPTER 1 MALAYSIAN ECONOMY AT A GLANCE Economic Sector Table 1.7 | Value of Construction Work Done by State Table 1.8 | Loans by Commercial and Islamic Banks Note: Numbers may not necessarily add up due to rounding. Source: Quarterly Construction Statistical Fourth Quarter 2016, Department of Statistics Malaysia Source: Bank Negara Malaysia There is no significant changes in the share of construction activities between the states. The largest construction activities are centered in Selangor (21.9%; RM27,779 million), Johor (21.6%; RM27,549 million) and W.P. Kuala Lumpur (19.1%; RM24,223 million). Kelantan had the largest rise at 45.7%, followed by Pahang at 23.2%. This could be mainly due to the progress of the Bergading Complex and the New Deep Water Terminal at Kuantan Port, Pahang, which contributed to the overall jump of construction activities in Kelantan and Pahang. In contrast, Perlis registered a depreciation of 11.1%, while Sabah continues to slide from -4.7% to -5.0%. Sarawak registered a slump at -5.5%, while Terengganu managed to minimise the depreciation from -19.6% to -5.5%.

CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 11 CHAPTER 1 MALAYSIAN ECONOMY AT A GLANCE Balance of Payment Table 1.9 | Balance of Payment Loans to all construction subsectors rose by 7.9% to RM256,262 million in 2016 (2015: RM237,609 million). The greater portion of construction loans originates from Civil Engineering (33.8%), Residential (25.3%) and Others (20.1%). Despite the perceived slowdown in the housing market, the demand for Residential loans remained strong with 14.8% in growth. Civil Engineering moderated to 0.9%, while Industrial Buildings and Factories and Commercial Complexes dropped to -2.5% and -2.4% respectively. Both declines reflected weak business sentiment, most notably during the first of half of 2016. This drop is not expected to prolong into 2017 as there were signs of recovery during the fourth quarter of 2016. Balance of Payment Source: Bank Negara Malaysia In 2016, the balance of payment recorded a surplus of RM14,779 million (2015: RM3,750 million). Trade in goods had gradually narrowed over the years, while the services and income accounts were slightly improved. Travel (51.2%) and Other Business Services (16.2%) were the largest components to contribute for the higher services sector deficit. This could be attributed to more domestic tourists travelling abroad and the dependence on foreign professionals in certain industries. The deficit in the primary income account widened to 7.9% or outflows of RM34,640 million (2015: outflows of RM32,112 million). Meanwhile the secondary income account registered a lower deficit of RM18,629 million (2015: deficit of RM21,325 million). On a positive note, the Capital Account managed to post a surplus of RM108 million, after a deficit of RM1,136 million. The Financial Account managed to reduce the deficit to RM1,126 million (2015: RM55,350 million) from a higher net inflow of RM14,131 million and RM964 million from Direct Investment. On the other hand, both Portfolio Investment and Other Investment registered a net outflow of RM16,221 million.

12 CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 CHAPTER 1 MALAYSIAN ECONOMY AT A GLANCE Other Economic Indicators Figure 1.1 | External Trade by Country Figure 1.2 | Inflation Rate Other Economic Indicators External Trade Inflation Source: Ministry of International Trade and Industry Note: 2010 = 100 Source: Department of Statistics Malaysia In 2016, trade performance was resilient amid a challenging environment. Total exports rose moderately by 1.2% to RM787.0 billion (2015: RM777.4 billion), while total imports expanded by 1.9% to RM698.8 billion (2015: RM685.8 billion). Trade surplus declined by -3.8% to RM88.1 billion (2015: RM91.6 billion). Exports and imports peaked in December 2016 at RM75.6 billion, and RM66.8 billion respectively. The largest market for exports was Singapore (14.5%), China (12.5%) and USA (10.2%). In turn, the largest imports were from Singapore (10.4%), Japan (8.2%) and USA (8.0%). Electrical and electronic products remain the most important industry with 36.6% of exports and 30.0% of imports. Overall, trade performance was sustained by continuous demand for electronic devices, strong intra-trade between ASEAN regional countries, higher exports with Free Trade Agreements (FTA) partner countries and diversification of trade to emerging markets.

CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 13 CHAPTER 1 MALAYSIAN ECONOMY AT A GLANCE Other Economic Indicators Table 1.10 | Labour Market Labour Market Financial Market Source: Department of Statistics Malaysia Inflation rate remained unchanged at 2.1% in 2016, peaking at 3.1% in 2014. Prices remain stable due to the weak consumer sentiment. Inflation rate peaks at 4.2% in February 2016, and reached a low of 1.1% in July 2016. The weak Ringgit also makes food imports pricier and indirectly increase the prices of food products. The largest component of the Consumer Price Index (CPI), food and non-alcoholic beverages group index which accounts for 30.1 in weightage was notably higher during the first 3 months of 2016, but gradually eased towards the end of 2016. Alcoholic beverages and tobacco group index which accounted merely 2.9% in the overall CPI weight, rose double digit during the first 10 months of 2016. This could be due to the revision of the alcohol tax structure based on alcohol content and type of liquor by the Royal Malaysian Customs Department. All groups registered a decline in the respective group index except for food and non-alcoholic beverages (2016: 3.9%; 2015: 3.6%); alcoholic beverages and tobacco (2016: 17.2%; 2015: 13.5%); and recreation services and culture (2016: 2.5%; 2015: 1.7%). While inflation rate on housing, water, electricity, gas and other fuels remains the same at 2.4% in 2016. In 2016, the Malaysian population and labour force grew by 1.6% to 31.7 million (2015: 31.5 million) and 1.0% to 14.7 million (2015: 14.6 million) respectively. The labour participation rate declined to 67.7% (2015: 67.9%), while 14.2 million people (2015: 14.1 million) were employed in 2016. The construction industry employed approximately 1.3 million people (8.8%), of which 77.6% were local workers (0.97 million) and 22.4% were foreign workers (0.3 million). According to the Ministry of Home Affairs Malaysia, the construction sector has 20.8% or 387,934 foreign workers with Temporary Employment Visit Pass (PLKS) issued in 2016. Indonesian workers comprised more than half of this (53.3%), followed by Bangladeshi workers (26.2%). Unemployment rose to 3.4% (2015: 3.1%). Youth unemployment rate, or labour force aged between 15 to 24 years old was slightly down at 10.5% (2015: 10.7%). Interest Rates On 1 February 2016, the Statutory Reserve Requirement (SRR) was cut from 4.00% to 3.50%. The cut allowed more liquidity into the banking system, as the last changes on SRR was made in 2011. This was followed by the Overnight Policy Rates (OPR), which was reduced by 0.25 basis point to 3.00% following the Monetary Policy Committee (MPC) meeting on 13 July 2016. For commercial banks, the weighted Base Rate (BR) and Average Lending Rate (ALR) was 3.62% and 5.22% respectively in December 2016.

14 CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 CHAPTER 1 MALAYSIAN ECONOMY AT A GLANCE Other Economic Indicators Currency The expectation that the US Federal Reserve will raise its interest rate following better economic performance, also create jitters among investors. This pushes global investors into seeking safer financial markets. On the average, the Ringgit appreciated only against the British Pound (6.3%), but depreciated against the US Dollar (-5.9%), Euro (-5.5%), Japanese Yen (-15.6%), Chinese Yuan (-0.5%) and ASEAN regional currencies. Stock Market The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) closed the year at 1,641.73 points, reflecting a decline of 3.0% (2015: 1,692.51 points). The FBM KLCI reached a peak of 1,727.99 points on 15 April 2016, and a low of 1,600.92 points on 21 January 2016. Throughout 2016, the market underwent intermittent periods of volatility following heightened uncertainties post Brexit results and the outcome of the U.S. presidential election. Worried investors reduced their equities in the emerging markets, which affected the FBM KLCI. The Ringgit dropped against nearly all of major currencies in 2016, amid a persistent challenging economic environment (Table 1.11). The recalibration of 2016 Budget created positive vibes on the financial market and reflected the Malaysian government’s commitment to contain the fiscal deficit. The Ringgit was relatively stable during the first quarter 2016, but experienced volatility worsened by geopolitical developments towards the end of 2016. Table 1.11 | Ringgit Exchange Rate Against Major World Currencies Source: Bank Negara Malaysia

CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 15 CHAPTER 1 MALAYSIAN ECONOMY AT A GLANCE Introduction CHAPTER 2 CONSTRUCTION PROJECTS, CONTRACTORS AND PERSONNEL Introduction Construction Projects Contractors Construction Personnel 16 16 31 33

16 CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 CHAPTER 2 CONSTRUCTION PROJECTS, CONTRACTORS AND PERSONNEL Introduction/ Construction Projects Overall, construction activities expand well despite the moderate economic growth in 2016. The emphasis in strengthening the public infrastructure under the Eleventh Malaysian Plan (11MP) were seen in the large volumes of infrastructure projects being awarded during the second half of 2016. Non-residential and residential projects moderated following peaks experienced in 2014, while social amenities projects were stable. The statistics are based on data as of 31 March 2017, and is subject to changes on adjustments made after 31 March 2017. Apart from SHASSIC and QLASSIC, CIDB have launched the Malaysian Carbon Reduction and Environmental Sustainability Tool (MyCREST) on 12 May 2016. The tool is used to quantify and reduce the impact of carbon emissions to the built environment. In the Construction Industry Transformation Programme (CITP), MyCREST is monitored under Environmental Sustainability thrust, initiatives E2: Drive compliance towards environmental sustainability ratings and requirements. MyCREST covers three phases of the built environment, which entail the design assessment, construction assessment and operation and maintenance assessment. In total, there are 11 criterion in the assessment, which covers new and existing building. For existing buildings, MyCREST certification are renewable on a 3 yearly interval. Introduction Construction Projects A total of 6,547 projects to a value of RM176.3 billion were recorded in 2016. The value of projects jumped by 25.3% to RM176.3 billion (2015: RM140.7 billion). In contrast, the numbers of projects contracted by 12.4% to 6,547 projects (2015: 7,478 projects). Almost a third of construction projects awarded in 2016 are located in W.P. Kuala Lumpur. Selangor was the second state with the highest value of construction projects. Sarawak rose to the third position with its Pan-Borneo highway construction packages. For this analysis, construction projects refers to projects awarded to main contractors, with a value of more than RM500,00. Projects by the Government and Private Sector Government projects refers to projects awarded by government agencies, such as federal government, state government and statutory bodies which are incorporated under the Act of Parliament. On the other hand, private projects were projects originates from company, cooperation and organisation registered with the Companies Commission of Malaysia (SSM), Registry of Societies Malaysia (RoS) and Malaysia Co-Operative Societies Commission (SKM). In Sabah and Sarawak, the registration of sole proprietorship/ partnership of companies falls under the responsibility of the respective local authorities. The proportion of projects between the government and private sector stands at 28.0% against 72.0% in 2016. The government sector registered an almost 100% increase to RM48.6 billion (2015: RM24.7 billion), while the private sector increased by 10.1% to RM127.7 billion (RM116.0 billion). In contrast, the number of projects for both government and private sectors contracted by 8.9% and 13.6% to 1,720 and 4,827 projects respectively (2015: 1,888 and 5,590 projects). The private sector remains the main contributor of construction projects in 2016. However, the private sector portion was lower in comparison to the annual value from 2011 to 2015. During 2011 to 2015, at least 80% of the construction projects came from the private sector. The low share corresponds to the weak economic climate. This was more pronounced in the commercial and industrial segments under non-residential projects. In the meantime, the jump in the government sector share was attributed to the Pan-Borneo highway packages awarded in the second half of 2016. For projects worth more than RM100 million, a total of 269 projects with a value of RM122.7 billion were registered. Out of this, the private sector accounted for 202 projects worth RM85.4 billion and the government sector had 67 projects worth RM37.3 billion.

CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 17 CHAPTER 2 CONSTRUCTION PROJECTS, CONTRACTORS AND PERSONNEL Construction Projects Table 2.1 | Five Major Private Projects The five largest private projects were four infrastructure projects and a commercial project. The infrastructure projects were included in the private sector as it is being developed through the Private Public Partnership (PPP) initiative. This was evident in the Mass Rapid Transit (MRT) projects, as a measure of ensuring accountability and faster implementation. Unsurprisingly, the five largest government projects were dominated by infrastructure projects. The increase in the government projects was also due to the implementation of the electrified double tracking between Gemas and Johor Bahru project, which incidentally is the largest project in the government sector. Note : The 10 major private projects in 2016 are listed in Appendix 2.1.a Source : CIDB Figure 2.1 | Value of Projects by Sector Figure 2.2 | Numbers of Project by Sector Source: CIDB Source: CIDB

18 CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 CHAPTER 2 CONSTRUCTION PROJECTS, CONTRACTORS AND PERSONNEL Construction Projects Non-Residential Overall, non-residential projects had the second highest value of projects. Non-residential projects were affected by the economic slowdown in 2016. The commercial and industrial subcategory registered lower value of RM16.0 billion (38.9%) and RM16.5 billion (40.1%) respectively. On the other hand, the performance of administrative/ office space stood at RM6.7 billion (16.3%), travel and leisure at RM0.4 billion (1.0%) and others at RM1.5 billion (3.6%). Compared with the value registered in 2015, each subcategory posted a lower value and numbers of projects except for others. In 2016, the five major non-residential projects awarded comprise of 2 commercial complexes, 1 administrative/ office space and 2 in others category. Three of these projects were located in W.P. Kuala Lumpur, while the rest were in Johor and Sarawak. Projects by Category Apart from the private and government sectors, construction projects are also categorised into non-residential, residential, infrastructure, and social amenities. Almost half of the construction projects in 2016 came from infrastructure at RM87.2 billion (49.5%), against non-residential projects with RM41.1 billion (23.3%) residential projects at RM40.1 billion (22.7%), and social amenities’ projects at RM7.9 billion (4.5%). Table 2.2 | Five Major Government Projects Figure 2.4 | Numbers of Project by Category Source: CIDB Figure 2.3 | Value of Project by Category Source: CIDB Note : The 10 major government projects in 2016 are listed in Appendix 2.1.b Source : CIDB

CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 19 CHAPTER 2 CONSTRUCTION PROJECTS, CONTRACTORS AND PERSONNEL Construction Projects Residential The value of residential projects registered a moderate RM40.1 billion (2015: RM47.1 billion). The private sector still commands the larger portion at RM38.9 billion (97.0%), against RM1.2 billion (0.3%) by the government sector. The scarcity of land in urban areas resulted in apartment & condominium leading in this project category with RM24.2 billion (60.3%). This was followed by terraced houses at RM7.6 billion (19.0%); others at RM5.0 billion (12.5%); semi-detached houses at RM2.5 billion (6.2%); and bungalow at RM0.8 billion (2.0%). The largest residential project awarded was in Selangor, while W.P. Kuala Lumpur continues to be the coveted location with eight major residential projects. Table 2.3 | Five Major Non-Residential Projects Source: CIDB Note : The 10 major non-residential projects in 2016 are listed in Appendix 2.2.a. Source : CIDB Figure 2.5 | Non-Residential Projects by Subsector

20 CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 CHAPTER 2 CONSTRUCTION PROJECTS, CONTRACTORS AND PERSONNEL Construction Projects Source: CIDB Figure 2.6 | Residential Projects by Subsector Table 2.4 | Five Major Residential Projects Note : The 10 major residential projects in 2016 are listed in Appendix 2.2.b. Source : CIDB Infrastructure The value of infrastructure projects almost tripled in 2016. Unsurprisingly, transportation projects were in the lead with RM72.0 billion (82.5%) in this category. Next were the utility (RM12.1 billion; 13.9%), drainage and sewerage (RM2.5 biilion; 2.9%) and disaster prevention projects (RMRM0.6 billion; 0.7%). A total of 1,784 infrastructure projects were registered in 2016, with 901 projects (50.1%) from the transportation projects alone. This could be explained by the implementation of 12 MRT2 projects packages worth RM5.8 billion and 8 Pan Borneo projects’ packages worth almost RM13.0 billion. The largest infrastructure projects were the MRT2, followed by the electrified double tracking projects in Gemas and the power plant project in Alor Gajah.

CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 21 CHAPTER 2 CONSTRUCTION PROJECTS, CONTRACTORS AND PERSONNEL Construction Projects Source: CIDB Figure 2.7 | Infrastructure Projects by Subsector Table 2.5 | Five Major Infrastructure Projects Note : The 10 major infrastructure projects in 2016 are listed in Appendix 2.2.c. Source : CIDB Social Amenities The social amenities’ projects increased by 43.6% to RM7.9 billion (2015: RM5.5 billion). The category ranking saw little change, with education at the top with RM2.9 billion (36.7%), health at RM2.5 billion (31.6%), public amenities at 1.3 billion (16.5%) and other projects at RM1.2 billion (15.2%). The upgrading works on a Bukit Jalil complex charted the highest value for a social amenities project in 2016. Other social amenities projects were a composition of upgrading, extension, renovation, maintenance and other type of projects. In social amenities project category, the ratio of private to government sector contribution stands at 1 to 3.

22 CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 CHAPTER 2 CONSTRUCTION PROJECTS, CONTRACTORS AND PERSONNEL Construction Projects Source: CIDB Figure 2.8 | Social Amenities Projects by Subsector Table 2.6 | Five Major Social Amenities Projects Note : The 10 major infrastructure projects in 2016 are listed in Appendix 2.2.d. Source : CIDB Projects by Location Construction projects awarded in 2016 were mainly concentrated in W.P. Kuala Lumpur (30.1%; RM53.1 billion), Selangor (17.8%; RM31.4 billion) and Sarawak (13.0%; RM22.9 billion). It came as no surprise since W.P. Kuala Lumpur and Selangor remain preferred choices for construction projects. The higher value in Sarawak arose from the Pan Borneo highway which is aimed at developing the infrastructure and economy in the rural areas. Construction progress in the 5 upcoming years is expected to transform rural Sarawak, offering greater benefit for the people. In general, private sector projects continue to dominate most states. This is especially true for W.P. Kuala Lumpur (94.9%; RM50.4 biilion), Melaka (92.5%; RM7.1 billion), Selangor (89.3%; RM28.0 billion), Johor (89.2%; RM15.5 billion) and Kedah (81.9%; RM2.0 billion). In contrast, government sector was in the lead in Negeri Sembilan (83.3%; RM10.1 billion) and Sarawak (80.0%; RM18.3 billion). In terms of numbers, Selangor (21.2%; 1,392 projects), Johor (16.8%; 1,097 projects) and W.P. Kuala Lumpur (10.0%; 655 projects) had the most construction projects.

CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 23 CHAPTER 2 CONSTRUCTION PROJECTS, CONTRACTORS AND PERSONNEL Construction Projects Source: CIDB Source: CIDB Figure 2.9 | Value and Numbers of Project by States Figure 2.10 | Government and Private Projects by States

24 CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 CHAPTER 2 CONSTRUCTION PROJECTS, CONTRACTORS AND PERSONNEL Construction Projects Johor Johor ranks fourth, with a 9.9% share or RM17.4 billion worth of projects. Both non-residential and residential projects contribute to nearly 80% of the projects in Johor, at RM8.9 bilion and RM5.0 billion respectively. Infrastructure and social amenities projects led the rest at 20.3%. Approximately RM2.6 billion of projects awarded in Johor were related to the development of the Refinery and Petrochemical Integrated Development Project (RAPID). The top 4 largest projects were made up of various EPCC RAPID projects in Pengerang, while the rest were a mix of commercial and residential projects (Appendix 2.4.a). Kedah A total of RM2.5 billion or 1.4% construction projects were awarded in Kedah. Private sector projects dominated construction activities as reflected in the 7 out of 10 largest projects in Kedah. Non-residential made up more than half of the projects (57.5%; RM1.4 billion), followed by residential projects (22.3%; RM0.6 billion); infrastructure projects (10.8%; RM0.3 billion) and social amenities projects (9.3%; RM 0.2 billion). The largest project in Kedah was the proposed factory at Kulim Hi-Tech Industrial Park, with an estimated cost more than RM0.4 billion (Appendix 2.4.b). Kelantan With a value of RM1.6 billion for 2016, Kelantan contributes less than 1% towards construction projects awarded. The share of construction projects between the government and private sector stands at 53.6% and 46.4%. Whilst the portion between the four categories seems to be evenly distributed with non-residential (26.8%; RM0.43 billion); residential (26.6%; RM0.42 billion); infrastructure (26.8%; RM0.43 billion) and social amenities (19.8%; RM0.32 billion). A total of 3 projects from residential, commercial and social amenities projects, with 1 infrastructure project rounded up the top 10 largest projects in Kelantan (Appendix 2.4.c). Melaka At RM7.7 billion, and contributing 4.4% to the overall value were construction projects located in Melaka. Most of the construction projects were infrastructure (53.5%; RM4.1 billion); and nonSource: CIDB Figure 2.11 | Value of Projects by States

CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 25 CHAPTER 2 CONSTRUCTION PROJECTS, CONTRACTORS AND PERSONNEL Construction Projects residential (34.1%; RM2.6 billion). The rest were residential and social amenities projects (12.4%; RM1.0 billion). The jump in construction projects’ value could be attributed to the gas turbine project in Alor Gajah, which was also the largest construction project in Melaka. Aside from the largest project awarded in 2016, the rest of the projects in the top 10 hi-valued projects in Melaka were under RM1 billion. (Appendix 2.4.d). Negeri Sembilan In fifth position was Negeri Sembilan, with a share of 6.9% or RM12.2 billion of projects value. The large share of government projects in Negeri Sembilan (83.3%) was due to the electrified double track project from Gemas to Johor Bahru, which was also the largest project in Negeri Sembilan. This project also contributed to the large share in the infrastructure category (83.3%; RM10.1 billion) compared to the other categories (16.7%; RM2.2 billion). The other top 10 projects in Negeri Sembilan were comprised of smaller projects, each with a value of under RM0.3 billion (Appendix 2.4.e). Pahang On the basis of construction value, Pahang fell to eight position (4.0%; RM7.0 billion). The share of private and government projects stood at 75% and 25% respectively in 2016. This shows from the share of non-residential (59.1%; RM4.2 billion) and infrastructure (19.1%; RM1.3 billion) projects awarded. At the lower end were residential (17.1%; RM1.2 billion) and social amenities projects (4.5%; RM0.3 billion). The largest project awarded in 2016 was the steel mill plant in Kuantan (Appendix 2.4.f). Perak Perak had a share of 1.9% or RM3.3 billion of projects awarded in 2016. Unlike in 2015, the projects in Perak were driven by residential projects. More than a third of construction projects were residential (42.3%; RM1.4 billion), against non-residential (32.3%; RM1.1 billion), infrastructure (17.7%; RM0.5 billion) and social amenities (7.8%; RM0.3 billion). Among others, the rise in the number of residential projects was from PR1MA, people’s housing project, government housing quarters and private housing projects. Unsurprisingly, the largest project awarded in Perak was the PR1MA housing project in Manjung (Appendix 2.4.g). Perlis Corresponding to its small land size, Perlis offered the least contribution in construction projects at 0.2% valued at RM0.4 billion. Unlike most of the states in Malaysia, government sector was the main driver of construction projects awarded in Perlis with 74.6%. The largest portion of projects were non-residential projects (71.8%; RM0.3 billion), against the rest of categories (28.2%; RM0.1 billion). Except for the largest project, all of the construction projects awarded in Perlis were small-valued projects worth not more than RM50 million. The largest project in Perlis was the design and build of the Perlis police headquarter (Appendix 2.4.h). Pulau Pinang At sixth position, Pulau Pinang had RM7.9 billion or 4.5% of construction projects awarded in 2016. The private sector is still the major player, with a share of 63.2%, against the government sector’s 36.8%. The majority of construction projects were residential (35.4%; RM2.8 billion) and infrastructure (33.6%; RM2.7 billion), while the rest were non-residential (21.7%; RM1.7 billion) and social amenities projects (9.3%; RM0.7 billion). The largest project in Pulau Pinang was the road construction between Tanjung Bungah and Teluk Bahang, that includes a road bypass from Tun Dr. Lim Chong Eu highway to Ayer Hitam. The largest project was also the main contributor in the overall increase in infrastructure projects (Appendix 2.4.i). Sabah Sabah’s construction projects stood at 3.1% with a value of RM5.4 billion. The difference in the shares between the government and private projects were close, at 44.7% and 55.3% respectively. More than 60% of projects (RM3.4 billion) in Sabah were

26 CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 CHAPTER 2 CONSTRUCTION PROJECTS, CONTRACTORS AND PERSONNEL Construction Projects infrastructure projects, while the rest of the categories together contributed moderately (36.6%; RM2.0 billion). Most of the infrastructure projects comprised of the federal government’s road upgrading and expansion works, a package of Pan-Borneo highway, along with several electricity supply projects. The largest awarded project in Sabah was the expansion of roads from Donggongon to Simpang Jalan Papar (Appendix 2.4.j). Sarawak Sarawak elevates to third from fourth position in 2015, with RM22.9 billion or 13.0% share of construction projects. A large portion of the projects, were from the government sector (80.0%), compared with the private sector (20.0%). More than 80% of the projects (RM18.8 billion) were infrastructure projects, while the rest were non-residential (11.3%; RM2.6 billion), residential (4.1%; RM0.9 biilion) and social amenities (2.6%; RM0.6 billion). The increase in infrastructure projects was due to the award of several contract packages under Pan Borneo highways evident in the top 10 largest projects in 2016 (Appendix 2.4.k). Selangor At second position was Selangor with the value of RM31.4 billion or 17.8% of the overall construction projects in 2016. Of this value, a great portion was made up of residential (38.7%; RM12.1 billion), infrastructure (33.9%; RM10.6 billion), and nonresidential projects (21.3%; RM6.7 billion). Social amenities was the least contributor for construction projects in Selangor (6.1%; RM1.9 billion). The main mover of construction projects in Selangor was the private sector (89.3%), against the government sector (10.7%). Approximately RM2.8 billion of infrastructure projects comprised of the 8 MRT contract packages awarded in 2016. The largest projects awarded in Selangor was a housing project at Taman Bayuemas, Klang (Appendix 2.4.l). Terengganu The construction projects in Terengganu was highly reliant on the government sector (82.3%; RM2.9 billion), against the private sector (17.7%; RM0.6 billion). Nearly 60% of the projects awarded in Terengganu were infrastructure projects (RM2.1 billion), while approximately 20% of the projects were nonresidential projects (RM0.7 billion). A total of 15.7% or RM0.5 billion projects were social amenities projects. Residential projects (5.1%; RM0.2 billion) had the lowest portion amongst the four categories. The largest project awarded was the water treatment plant in Northern Terengganu, which was also the sole Terengganu located project valued at more than RM1 billion (Appendix 2.4.m). W.P. Kuala Lumpur Maintaining top position was W.P. Kuala Lumpur, with 30.1% or RM53.1 billion of projects awarded in 2016. Of this value, a total of 94.9% or RM50.4 billion were private sector projects, against a meagre 5.1% or RM2.7 billion government projects. Infrastructure projects were the main contributor with a share of 57.8% (RM30.7 billion), against the other categories (42.2%; RM22.4 billion). The increase in infrastructure projects was due to the award of MRT packages, which was developed under Public-Private Partnership (PPP). Of the top 10 largest projects, 7 were infrastructure projects and 3 were non-residential projects (Appendix 2.4.n).

CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 27 CHAPTER 2 CONSTRUCTION PROJECTS, CONTRACTORS AND PERSONNEL Construction Projects Figure 2.12 | Value of Projects by Grade of Contractors Figure 2.13 | Value of Projects by Grade of Contractors Projects by Grade of Contractors Source: CIDB Note : Contractors were only counted once for more than one awarded projects. Source : CIDB Local contractors from grade G1 to G7, managed to acquire a respectable RM140.9 billion (79.9%) worth of projects, against RM35.4 billion (20.1%) attained by foreign contractors. Among the grade of contractors, grade G7 contractors were again in the lead, with projects worth RM130.5 billion (74.0%). This amount was enormous compared with RM10.4 billion (5.9%) acquired by the rest of grades G1 to G6. In terms of projects numbers, local and foreign contractors each acquired 6,364 projects (97.2%) and 183 projects (2.8%) respectively in 2016. A total of 4,638 contractors were awarded construction projects in 2016. Out of this number, 4,498 were local contractors (97.0%). A detailed analysis revealed a total of 2,227 were G7 contractors (48.0%); 446 were G6 contractors (9.6%); 591 were G5 contractors (12.7%); 659 were G4 contractors (14.2%); 507 were G3 contractors (10.9%), while 68 contractors were G1 and G2 contractors (1.5%). The rest were composed of 140 foreign contractors (3.0%).

28 CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 CHAPTER 2 CONSTRUCTION PROJECTS, CONTRACTORS AND PERSONNEL Construction Projects Construction projects were also categorised into 6 types of works. A major portion of construction works were new projects with a total value of RM162.0 billion (91.9%). In comparison, the others were smaller works made up of upgrading (RM6.5 billion; 3.7%); repair (RM2.3 billion; 1.3%); expansion (RM2.1 billion; 1.2%); maintenance (RM1.9 billion; 1.1%) and renovation works (RM1.5 billion; 0.8%). New projects also accounted for 4,950 construction projects (75.6%), supported by upgrading (547 projects; 8.4%); repair (394 projects; 6.0%), maintenance (300 projects; 4.6%), renovation (255 projects; 3.9%) and expansion works (101 projects; 1.5%). Figure 2.14 | Projects by Type of Work Projects by Type of Work Source: CIDB

CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 29 CHAPTER 2 CONSTRUCTION PROJECTS, CONTRACTORS AND PERSONNEL Construction Projects On a contract value scale, more than a third of contracts awarded in 2016 were projects worth more than RM1 billion. This uniquely reflected the large infrastructure projects awarded in 2016 (RM61.0 billion; 34.6%). In a normal environment, contracts awarded were commonly within value range of exceeding RM100 million to RM300 million and exceeding RM10 million to RM50 million. Both contract value range categories form a share of RM30.8 billion (17.5%) and RM23.2 billion (13.2%) each. Contractors and projects’ numbers were geared towards contract value worth exceeding RM10 million to RM50 million and below. This highlights the importance of small construction contracts, which supports the construction industry. Based on the statistics, contractors were offered more construction projects with values exceeding RM1 million to RM5 million (1,894 contractors and 2,944 projects; 40.8% and 45.0%) and exceeding RM0.5 million to RM1 million (894 contractors and 1,233 projects; 19.3% and 18.8%). Contracts with the value range of exceeding RM50 million and RM100 million saw lower concentration of contractors and projects’ numbers, which suggested specialised contractors participation. Figure 2.15 | Projects by Value Range Projects by Contract Size Source: CIDB

30 CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 CHAPTER 2 CONSTRUCTION PROJECTS, CONTRACTORS AND PERSONNEL Construction Projects Figure 2.16 | Projects Awarded to Foreign Contractors by Country Projects Awarded to Foreign Contractors Source: CIDB Overall, 107 foreign contractors from 14 countries were awarded 183 projects worth RM35.4 billion. China and Korea each had RM18.2 billion (51.4%), and RM7.5 billion (21.2%) worth of contracts. The other countries each managed to capture smaller valued contracts, cumulatively at RM9.7 billion (27.4%). More than half of contracts awarded to foreign contractors were projects worth exceeding RM1 billion (53.6%). The most number of projects were awarded to Singapore (53 projects; 29.0%), China (51 projects; 27.9%) and Japan (37 projects; 20.2%). Similarly, most foreign contractors with projects originated from these 3 countries, with China (36 contractors; 33.6%), Singapore (23 contractors; 21.5%) and Japan (22 contractors; 20.6%). The other contractors were from Hong Kong, Italy, France, India, Spain, Sri Lanka and United Kingdom. Table 2.7 | Five Major Construction Projects by Foreign Contractors Source : CIDB

CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 31 CHAPTER 2 CONSTRUCTION PROJECTS, CONTRACTORS AND PERSONNEL Contractors Figure 2.17 | Contractors Figure 2.18 | Contractors by Classification Source: CIDB Note: 1 Active – Local contractor with projects awarded during their registration period. 2 Semi-Active – Contractor who were not awarded any project during their registration period but were active in tender bidding. 3 Dormant – Contractor who were not awarded any project during their registration period and did not bid for any tender 4 New – Newly registered contractor in the first year. Source: CIDB Total contractor registrations grew by 11.3% to 79,883 contractors (2015: 71,799 contractors). This was also the highest growth since 2012. Among the contractors, the highest increase was observed on grade G2 (30.0%), G3 (14.4%); G4 (12.2%) and G7 contractors (10.7%). As with previous years, the largest portion of the market consisted of grade G1, G2 and G3 contractors with 62,408 contractors (78.1%). The other grade contractors were minuscule in comparison. Contractors

32 CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 CHAPTER 2 CONSTRUCTION PROJECTS, CONTRACTORS AND PERSONNEL Contractors Contractors were classified into four categories that correspond to their current status. A total of 56,330 contractors (70.5%) were classified as active compared with semi-active (484 contractors; 0.6%), dormant (11,877 contractors, 14.9%) and new contractors (11,192 contractors; 14.0%). Contractor registration increased across all grades in the active classification, except for grade G1 contractors which saw a decline to -4.0% to 26,061 contractors (2015: 27,144 contractors), while grade G3 contractors increased marginally by 0.1% to 6,833 contractors (2015: 6,823 contractors). The highest increase in the active classification was the grade G2 contractors, which rose by 11.2% to 9,699 contractors (2015: 8,719 contractors). Semi-active contractors fell by -42.4% to 101 contractors (2015: 163 contractors). All grade of contractors registered a drop in the semi-active classification. Dormant contractors had the largest increase at 54.3% to 11,877 contractors (2015: 7,698 contractors). The increase in dormant contractors has been steadily on the rise, since 2014. Among the contractors, grade G1, G2 and G3 contractors made up the bulk of the dormant contractors in 2016 (10,064 contractors; 84.7%). With the jump in numbers, new contractors grew by 46.6% to 11,192 contractors (2015: 7,636 contractors). In 2016, more than 30% of contractors were based in Selangor (13,351 contractors; 16.7%), Sabah (11,249 contractors; 14.1%) and W.P. Kuala Lumpur (8,862 contractors; 11.1%). Half of the states registered a double-digit growth of contractors (Sarawak: 33.1%; Kelantan: 15.0%; W.P. Kuala Lumpur: 13.6%; Selangor: 12.9%; Johor: 11.7%; Pulau Pinang: 11.4%; and Melaka: 10.8%). On a closer observation, grade G1, G2 and G3 contractors were mostly found in Sabah (10,206 contractors), Johor (6,288 contractors) and Selangor (8,975 contractors). Whilst Selangor and W.P. Kuala Lumpur had the most numbers of grade G4, G5, G6 and G7 contractors. More than 90% of grade G1, G2 and G3 contractors make up the composition in Perlis (1,107 contractors; 93.5%) and Sabah (10,206 contractors; 90.7%). Figure 2.19 | Contractors by State Source : CIDB

CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 33 CHAPTER 2 CONSTRUCTION PROJECTS, CONTRACTORS AND PERSONNEL Construction Personnel Construction personnel grew by 7.1% to 767,583 personnel (2015: 716,542 personnel). Out of this, general construction worker formed the largest share of workers at 452,054 personnel (58.9%). This indicates a large number of construction personnel were workers without any type of skill or other certifications. Construction site supervisor and skilled construction worker each had a share of 118,145 (15.4%) and 94,576 personnel (12.3%). Year-on-year basis, both construction site supervisor and skilled construction worker also saw the most increases at 130.7% and 80.0% respectively. At the same time, administration personnel contracted by 66.5% to 42,952 personnel (2015: 128,378 personnel). Figure 2.20 | Construction Personnel by Trade Source : CIDB Construction Personnel

CHAPTER 3 PRICE, WAGE AND HIRE RATES Introduction Prices of Major Construction Materials Wage Rates of Construction Personnel 36 36 55

36 CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 CHAPTER 3 PRICE, WAGE AND HIRE RATES Introduction/ Prices of Major Construction Materials Prices of Major Construction Materials The prices of construction materials were based on actual transactions between contractors and suppliers, which include any reduced rates or discounted prices, taxes, shipping and handling costs. There are 19 construction materials with 150 prices compiled. The exercise involves gathering information from a minimum of three quotations at selected states. Feedback forms were distributed to affiliated members, where the data were compiled every month. Transacted price data is collated together with relevant invoices, and information from manufacturers or suppliers to determine accuracy. All of the data were verified on the validity. The data are categorised according to locations as listed below: • Peninsular Malaysia: - Central Region: Selangor - Northern Region: Perak and Pulau Pinang - East Coast Region: Kelantan and Pahang - Southern Region: Johor • Sabah: Kota Kinabalu, Tawau and Sandakan • Sarawak: Kuching, Miri and to Sibu. All major construction materials, except for aggregate and readymixed concrete had gradual price hikes. The most significant changes were observed in aggregate and steel reinforcement which fell by -7.0% and increased by 16.6% respectively. Steel reinforcement had the most increase in 2016, rising double-digit after consecutive drop in prices (2016: RM2,437.19 per tonne; 2015: RM2,089.64 per tonne; 2014: RM2,363.44 per tonne; 2013: RM 2,548.76 per tonne). The price of steel reinforcement increased substantially in Q2 and Q4 2016. This could be possibly due to the enforcement of safeguard measures for the steel industry by the government. Meanwhile, the contraction in the aggregate prices could be attributed to correction measures within the industry after a substantial rise in 2014. For this edition, a review has been made to update the content on the major construction materials. While bricks, aggregate, sand, cement, and ready-mixed concrete have been retained, four major construction materials are introduced, which indicate the capacity and importance of the materials to the industry. The four new materials are paint, glass, steel & metal section and timber. Steel bars has been renamed as steel reinforcement, in order to avoid confusion with similar items published at CIDB. All data in this chapter are from CIDB’s own database and were collected with the assistance of construction organisations, distributors and suppliers, including hardware shops and manufacturers. Introduction Table 3.1 | Average Price of Major Construction Materials in Malaysia Source : CIDB

CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 37 CHAPTER 3 PRICE, WAGE AND HIRE RATES Prices of Major Construction Materials Figure 3.1a | Average Price for Major Construction Materials in Malaysia Figure 3.1b | Average Price for Major Construction Materials in Malaysia Aggregate Aggregate price fell by -7.0% to RM42.79 per tonne (2015: RM45.97 per tonne). All three regions experienced a drop in the respective aggregate prices, the largest drop in Sabah (-10.1%), Sarawak (-7.6%) and Peninsular Malaysia (-1.5%). There was minimal variance occurrence between the quarters, with the three regions showing similar price trends in 2016. There is negligible price differential for aggregate within Peninsular Malaysia, with Northern Region at RM39.61 per tonne; Central Region at RM37.69 per tonne; Southern Region at RM37.43 per tonne; and East Coast at RM35.79 per tonne. All areas in Peninsular Malaysia recorded minimal price increase, except for Central Region which declined by -9.2%. Northern Region also surpassed Central Region, for the priciest aggregate in 2016. Conventionally, aggregate is more expensive in Sabah than in Peninsular Malaysia and Sarawak. In comparison with 2015, aggregate price dropped by 10.1% to RM52.00 per tonne (2015: RM57.84 per tonne). All districts registered a drop in prices, most notably Tawau (-13.2%) and Kota Kinabalu (-13.0%), against Sandakan (-4.0%). The highest and lowest aggregate price were registered in Sandakan at RM56.67 per tonne (June 2016) and Kota Kinabalu at RM44.83 per tonne (May 2016). Sarawak showed similar aggregate price with Peninsular Malaysia, at RM38.69 per tonne. Kuching, Sibu and Miri each recorded aggregate prices of RM37.72, RM38.33 and RM40.03 per tonne, respectively in 2016. Year-on-year, each district showed a decrease in aggregate price on a quarterly basis. The most interesting price movement, was in Sibu, whose prolonged price decrease is seen from Q4 2015 to Q3 2016. Source : CIDB Source : CIDB

38 CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 CHAPTER 3 PRICE, WAGE AND HIRE RATES Prices of Major Construction Materials Figure 3.1.1.a | Price of Aggregate in Malaysia Source : CIDB Figure 3.1.1.b | Price of Aggregate in Peninsular Malaysia Source : CIDB Figure 3.1.1.c | Price of Aggregate in Sabah Source : CIDB

CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 39 CHAPTER 3 PRICE, WAGE AND HIRE RATES Prices of Major Construction Materials Bricks The price of bricks climbed by 4.2% to RM0.44 per piece (2015: RM0.42 per piece). The trend indicated higher prices in the first half of 2016 (RM0.45 per piece), that stabilised in the second half of 2016 (RM0.43 per piece). In 2016, bricks was priced at RM0.42 per piece in Peninsular Malaysia, against RM0.44 and RM0.46 each in Sabah and Sarawak. A decline in brick price was observed in Peninsular Malaysia and Sabah, contrary to Sarawak’s ascending brick prices especially in Q2 2016. All regions in Peninsular Malaysia registered a decline in bricks price, particularly the East Coast where prices fell by -5.4% to RM0.44 per piece (2015: RM0.46 per piece). Nevertheless, East Coast had also the priciest bricks in Peninsular Malaysia. The cheapest bricks were found in Northern Region with an average price of RM0.40 per piece, while Central and Southern Region registered the same average price of RM0.41 per piece. April 2016 had the distinguished month of having the highest brick price at an average of RM0.48 per piece. In Sabah, bricks were more expensive in Tawau at RM0.45 per piece against RM0.44 per piece in Kota Kinabalu and Sandakan. Between the districts, Kota Kinabalu registered had the highest growth of bricks’ prices at 13.6% (2015: RM0.39 per piece). In contrast, Sandakan saw the price of bricks fall by -1.7% (2015: RM0.45 per piece). The price of bricks jumped the most, by 11.8% to RM0.46 per piece (2015: RM0.42 per piece) in Sarawak. Both Kuching and Sibu each registered an increase of 13.3% to RM0.47 per piece (2015: RM0.42 per piece), while Sibu registered an increase of 9.0% to RM0.45 per piece (2015: RM0.42 per piece). The price of bricks hovered between RM0.44 and RM0.50 per piece in Sarawak. Figure 3.1.1.d | Price of Aggregate in Sarawak Source : CIDB Figure 3.1.2.a | Price of Bricks in Malaysia Source : CIDB

40 CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 CHAPTER 3 PRICE, WAGE AND HIRE RATES Prices of Major Construction Materials Figure 3.1.2.c | Price of Bricks in Sabah Source : CIDB Figure 3.1.2.d | Price of Bricks in Sarawak Source : CIDB Figure 3.1.2.b | Price of Bricks in Peninsular Malaysia Source : CIDB

CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 41 CHAPTER 3 PRICE, WAGE AND HIRE RATES Prices of Major Construction Materials Cement Among the major construction materials, cement prices were most stable with only a slight increase of 2.4% to RM19.34 per bag (RM18.89 per bag). Relatively, there were little differences in the price of cement between the three regions. The price of cement seemed to increase most in Q1 to Q2 2016. All regions show little price changes except for Sarawak, which also had the steepest increase of cement prices between quarter Q2 to Q3 2016. In Peninsular Malaysia and Sabah, the price of cement moderated towards the end of 2016. After experiencing low prices in 2015, the price of cement rose by 2.3% to RM18.29 per bag (2015: RM17.89 per bag) in Peninsular Malaysia. East Coast and Central Region had the most price increase at 3.6% and 2.5% each. This was followed by Southern and Northern Region at 1.7% and 1.2% respectively. The monthly prices were mixed throughout 2016, but showed an upward trend towards the end of 2016. In retrospective, the price of cement in Peninsular Malaysia were priced between RM16.73 to RM19.55 per bag in 2016. Cement prices in Sabah increase dropped marginally by -0.9% to RM19.36 per bag (2015: RM19.53 per bag). Between the districts, cement prices in Kota Kinabalu fell by -4.8% to RM17.92 per bag (2015: RM18.82 per bag). Tawau and Sandakan each saw minimal changes in cement price with an increase of 0.4% to RM20.09 per bag (2015: RM20.02 per bag) and 1.6% to RM20.07 per bag (2015: RM19.75 per bag). The price of cement in the second half were constant and remained unchanged. At RM20.37 per bag, Sarawak had the highest price of cement. Miri had the cheapest cement at RM19.97 per bag, against RM20.12 and RM21.01 per bag respectively in Kuching and Sibu. Between the districts, Sibu had the highest price of cement while Miri outstripped Kuching as the place with the lowest cement prices in Q2 2016. Cement prices showed an upward trend throughout 2016, after peaking in Q3 2016 and remained firm to Q4 2016. Source : CIDB Figure 3.1.3.a | Price of Cement in Malaysia Source : CIDB Figure 3.1.3.b | Price of Cement in Peninsular Malaysia

42 CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 CHAPTER 3 PRICE, WAGE AND HIRE RATES Prices of Major Construction Materials Figure 3.1.3.c | Price of Cement in Sabah Figure 3.1.3.d | Price of Cement in Sarawak Source : CIDB Source : CIDB Glass In this section, glass refers to the commonly used clear float glass with 5 metre square thickness. Glass prices registered an increase of 6.5% to RM54.44 per metre square (2015: RM51.10 per metre square). The price of glass rose by 8.6% to RM49.69 per square metre (2015: RM45.74 per square metre) in Peninsular Malaysia, compared to an increase of 6.9% to RM59.61 per square metre (2016: RM55.78 per square metre) in Sabah; and 4.3% to RM54.01 per square metre (2015: RM51.77 per square metre). On a comprehensive analysis, the prices of glass were varied in Peninsular Malaysia. Unlike other construction materials, Central Region registered the steepest glass price at RM61.13 per square metre. That was more than RM20 in price difference to the cheapest glass price of RM38.92 per square metre in the Northern Region. On the other hand, East Coast and Southern Region had a closer range of glass prices at RM48.48 and RM50.22 per square metre, respectively. Even though Kota Kinabalu had a relatively cheaper glass price, the city also saw a notable price increase. Glass price rose by 14.2% to RM57.87 per square metre (2015: RM50.67 per square metre) in Kota Kinabalu, against an increase of 6.0% and 1.4% in Sandakan (2016: RM61.71 per square metre; 2015: RM58.21 per square metre) and Tawau (2016: RM59.25 per square metre; 2015: RM58.45 per square metre). In Sarawak, the pricier glass was in Sibu at RM58.61 per square metre. Miri and Kuching had relatively cheaper prices, each at RM51.33 and RM52.09 per square metre. Prices of glass continued to rise in Q1 2016. Based on trend, it is possible that glass prices in the three districts could moves more closely for 2017.

CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 43 CHAPTER 3 PRICE, WAGE AND HIRE RATES Prices of Major Construction Materials Figure 3.1.4.a | Price of Glass in Malaysia Source : CIDB Figure 3.1.4.b | Price of Glass in Peninsular Malaysia Source : CIDB Figure 3.1.4.c | Price of Glass in Sabah Source : CIDB

44 CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 CHAPTER 3 PRICE, WAGE AND HIRE RATES Prices of Major Construction Materials Figure 3.1.4.d | Price of Glass in Sarawak Figure 3.1.5.a | Price of Paint in Malaysia Source : CIDB Source : CIDB Paint Paint refers to the standard colour-external acrylic emulsion weathershield paint, priced in 5 litres packaging. Paint was the only exception, of which Sarawak registered a lower price than in Peninsular Malaysia and Sabah. The most affordable paint could be found in Sarawak at RM128.11 per 5 litres, against RM133.73 and RM140.19 per 5 litres each found in Peninsular Malaysia and Sabah. After constant increase from Q2 2015, paint prices stabilised in 2016, a trend that may continue towards 2017. Southern Region is the only region in Peninsular Malaysia, where paint price fell by -3.1% to RM137.49 per 5 litres (2015: RM141.82 per 5 litres). Central Region and East Coast had lower paint price at RM129.39 and RM131.31 per 5 litres, respectively. In between was Northern Region, which had on average recorded RM136.71 per 5 litres. Paint prices in the East Coast, Southern and Central Regions moved in tandem, against the Northern Region. Prices were higher at the beginning of 2016 and moderated towards Q4 2016. Paint registered the most price increase at 6.8% in Sabah. Among the districts, paint was much cheaper in Kota Kinabalu and Tawau at RM136.47 and RM138.55 per 5 litres each. Paint price was markedly higher in Sandakan, averaging RM145.55 per 5 litres. The highest paint price was recorded at RM150.00 per 5 litres beginning June 2016 in Sandakan, which continued towards December 2016. In the meantime, the cheapest price was registered at RM129.67 per 5 litres on May 2016, in Kota Kinabalu. In general, Sarawak had reasonable paint prices. Miri and Sibu had basically the same price of paint at RM129.62 per 5 litres. Paint price was cheaper in Kuching, at RM125.09 per 5 litres. Paint price looks to be on the mend in Q2 2016, after increasing continuously since Q1 2015.

CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 45 CHAPTER 3 PRICE, WAGE AND HIRE RATES Prices of Major Construction Materials Figure 3.1.5.b | Price of Paint in Peninsular Malaysia Source : CIDB Figure 3.1.5.c | Price of Paint in Sabah Source : CIDB Figure 3.1.5.d | Price of Paint in Sarawak Source : CIDB

46 CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 CHAPTER 3 PRICE, WAGE AND HIRE RATES Prices of Major Construction Materials Ready-Mixed Concrete Ready-mixed concrete price dropped by -0.3% to RM263.39 per cubic metre (2015: RM264.15 per cubic metre). Readymixed concrete prices in Sabah and Sarawak experienced a decline throughout Q1 to Q3 2016, despite the price increases in Peninsular Malaysia. Nevertheless, ready-mixed concrete was still cheaper in Peninsular Malaysia and Sarawak at RM211.56 and RM265.55 per cubic metre each, against RM312.77 per cubic metre each in Sabah. All four regions in Peninsular Malaysia registered an increase in ready-mixed concrete price during Q2 2016, but remained unchanged from Q3 to Q4 2016. There were little difference between the ready-mixed concrete prices in between the four regions. Ready-mixed concrete prices were almost similar from Q2 to Q4 2016 in the East Coast and Central Region, compared to Southern and Northern Region. On average, ready-mixed concrete registered RM212.67 and RM213.96 per cubic metre each in Central Region and East Coast, and RM208.90 and RM210.71 per cubic metre registered in Northern and Southern Regions. Kota Kinabalu, Sandakan and Tawau each recorded readymixed concrete prices of RM297.07, RM313.34 and RM327.91 per cubic metre respectively in 2016. The lowest and highest monthly prices were recorded in Kota Kinabalu and Tawau, each at RM285.33 (June to December 2016) and RM357.20 per cubic metre (March to April 2016). Sandakan reflects the average price in Sabah, moving in between the high and low prices in Tawau and Kota Kinabalu. In Sarawak, Kuching had the cheapest mixed-ready concrete at RM258.30 per cubic metre, followed with Miri and Sibu, each at RM264.02 and RM274.31 per cubic metre. There were moderates price changes in Sarawak, and reflects the stability of readymixed concrete supply in the state. Figure 3.1.6.a | Price of Ready-Mixed Concrete in Malaysia Source : CIDB

CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 47 CHAPTER 3 PRICE, WAGE AND HIRE RATES Prices of Major Construction Materials Figure 3.1.6.b | Price of Ready-Mixed Concrete in Peninsular Malaysia Source : CIDB Figure 3.1.6.c | Price of Ready-Mixed Concrete in Sabah Source : CIDB Figure 3.1.6.d | Price of Ready-Mixed Concrete in Sarawak Source : CIDB

48 CONSTRUCTION INDUSTRY REVIEW & PROSPECT 2016/2017 CHAPTER 3 PRICE, WAGE AND HIRE RATES Prices of Major Construction Materials Sand In 2016, the prices of sand increased by 4.1% to RM42.59 per tonne (2015: RM40.91 per tonne). Among the regions, Sabah had the costliest sand, compared with Peninsular Malaysia and Sarawak. There were not much regional price movement, except in Sarawak. On average, the prices of sand were RM37.90, RM49.52 and RM40.36 per tonne in Peninsular Malaysia, Sabah and Sarawak respectively. All four regions in Peninsular Malaysia had fewer changes in sand prices. On average, Southern and Central Regions had the most expensive sand at RM41.61 and RM40.88 per tonne respectively. The least expensive sand were in Northern Region and East Coast at RM36.82 and RM32.29 per tonne. On a monthly basis, East Coast registered the lowest sand price at RM31.17 per tonne (June 2016), while the highest price was in Southern Region at RM41.93 per tonne (January 2016). Even though Sabah had the highest price of sand at RM49.52 per tonne, the increase was minimal at 3.1% (2015: RM48.04 per tonne). Between the districts, Sandakan and Kota Kinabalu had the highest and lowest price of sand of RM54.00 and RM43.04 per tonne. The highest price in Sandakan was also the highest price registered since 2013. Tawau registered moderate price of sand at RM51.52 per tonne. In terms of growth, the price of sands in Kota Kinabalu declined by -1.0%, while Sandakan rose by 5.5%. Based on trends, the sand prices in Sarawak showed an upward trend during the first half of 2016, but moderated towards Q4 2016. The price of sand in Kuching and Miri each rose by 11.5% to RM38.24 per tonne (2015: RM34.31 per tonne) and by 8.4% to RM40.94 per tonne (2015: RM37.79 per tonne). Sibu had the least price movement, after an increase of 0.9% to RM41.90 in 2016 (2015: RM41.52 per tonne). It was interesting to note that the sand prices in Sibu and Miri seemed to converge in Q3 and Q4 2016. Figure 3.1.7.a | Price of Sand in Malaysia Source : CIDB Figure 3.1.7.b | Price of Sand in Peninsular Malaysia Source : CIDB