While the proposed Economic Transformation Programme (ETP) is not an announcement of the government managing contracts it would support, analysts have stressed that it will mainly benefit the property and construction sectors.
Under the ETP, the private sector will be required to come up with the majority of the funding for the projects. However, it remains unclear if the Malaysian government will offer any guarantee to firms that have been awarded the contracts.
In any case, the ETP seems to have benefited MMC Corp Bhd and Gamuda Bhd – the two firms that had previously submitted a plan to develop an RM36bil-Mass Rapid Transit (MRT) project in Kuala Lumpur.
The MRT “has received a high level of commitment, increasing the project’s approval”, according to a report released by HwangDBS Vickers, adding that it may triple the order book of MMC and double that of Gamuda’s. Given the project’s size, the entire construction sector will be benefited, said the research house.
According to analysts, the property sector will also benefit since the construction of the MRT project may increase property values in central KL by enhancing underground connectivity and the shopping experience.
Greater KL also aims to increase its population to 10 million by 2020 from the current 6 million. Around 500,000 of the additional residents are likely to be Malaysians returning from abroad or expatriates.
“All in, it is estimated that a million homes will have to be constructed to meet the requirements of an enlarged population base,” said CIMB.
CIMB also singled out the High-Speed Rail project extending from Singapore to Penang, one of the developments with near or partial commitment from an identified investor.
“If the High-Speed Rail project materialises, it could boost property prices in Kuala Lumpur significantly, as values are far behind Singapore’s and travelling time between the two cities could be reduced to 2.4 hours. The rail project will also benefit property prices in Iskandar Malaysia as the proposed train will stop in Johor Baru before proceeding to Singapore.”
“What is surprising from the map of the proposed project is that phase two extends to Penang island, which is good news for the Penang property market too,” said CIMB in a report.