This upgraded assessment underscores the investment bank’s confidence in the sector’s growth potential and signals a positive trajectory for construction-related companies.

The investment bank said the projection will be driven by freeing public project pipeline bottlenecks, incremental fiscal space from subsidy reforms, and calmer politics.

“We see a potential for higher contract awards beyond the current levels of about RM20 billion.

“Based on Budget 2024, the government intends to rollout several big-ticket projects like Pan Borneo Sabah Phase 1B (RM15.7 billion), flood mitigation packages worth RM11.8 billion, Penang LRT (RM10 billion), Sabah-Sarawak Link Road (RM7.4 billion) and LRT3 reinstatement (RM4.7 billion),” it said.

In a statement, HLIB noted that 2023 infrastructure project rollouts were largely below expectations as some failed to materialise, in part to the budget being re-tabled and mid-year state elections.

However, the investment bank noted that the appointment of finance minister II should start debottlenecking the project pipeline while the ongoing subsidy rationalisation will incrementally lift fiscal space with potential savings being repurposed for infrastructure projects over the longer term.

HLIB also anticipated further developments on civil packages for the MRT3 with tender validity extended to March 2024.

Moreover, there is a potential for more news flow from other prospective projects like the KL-Singapore High-Speed Rail and the RM20 billion Johor LRT.

“Tangible developments for Johor’s Special Economic Zone (SEZ) and Special Financial Zone could also generate more construction opportunities, in particular, the SEZ given its greenfield status,” it added.

“We see 2024 as an opportune time to start building – factoring in implementation time lags – with the full scale of economic multiplier effects to be felt before the next general election,” HLIB said.