Malaysia is moving ahead with efforts to restart the economy, having initially halted activity in mid-March under the Movement Control Order (MCO) to contain the spread of Covid-19. In order to restart the economic activities, on 1 May, the country’s Prime Minister, Muhyiddin Yassin, announced that most of the businesses in the country will be allowed to resume businesses from 4 May, while adhering to strict health standard operating procedures (SOP). Despite the MCO likely to remain in place until 9 June, some restrictions have been eased as a part of the Conditional Movement Control Order (CMCO). The MCO, which had initially been enforced on 18 March, has been extended four times, with the latest extension until 9 June.
The government has issued new SOPs for construction industry under the fourth phase of MCO. The companies are required to submit construction projects information to the Construction Industry Development Board (CIDB) to commence operations. The construction SOP delineates protocols that the companies must implement in order to operate, such as social distancing, maintaining high level of occupational safety and health, management of workforce, workers movement, transportation of workers, materials and supplies, company standard operation procedures, and implementation of Covid-19 preventive measures. In accordance with this, the construction activities under the CIDB Act allowed since 4 May include:
- Construction, repair, maintenance, extension, and demolition work related to building, edifice, wall, fence , erection and chimney
- Construction and maintenance work related to road, railway, airport, harbour works, canal and cableway
- Construction and maintenance work related to irrigation, drainage and river control works
- Construction and maintenance work related to water, gas, petrochemical, electrical, mechanical and telecommunication
- Construction and repair work related to bridge, dam, reservoir, pipeline, sewer, viaduct and tunnel
- All professional services related to the construction industry.
According to the Department of Statistics Malaysia, the country’s economy grew by 0.7% year-on-year in the first quarter of 2020, but the construction industry declined by 7.9%. This is because, even prior to the Covid-19 outbreak, the country’s construction industry was already struggling due to delays in several mega construction projects, and an increase in the country’s unsold housing stocks. As the MCO was enacted during the latter part of the first quarter and continued until the first week of May, the second quarter performance is expected to be dismal. Moreover, with the Malaysian economy forecasted to contract by 3.4% in 2020 according to market consensus in May, the embattled construction industry is expected to suffer further from the economic fallout of the coronavirus outbreak.
Even though the government has allowed construction sites in the country to resume operations, most of them remain closed. On 18 May, the Senior Minister for Security, Ismail Sabri Yaakob, reported that of the 4,183 construction sites inspected by the CIDB, 3,603 were not yet operational. He also mentioned that of the 580 construction sites that had resumed operations, 425 sites complied with the new SOP, while 150 sites were issued warnings for not adhering to the SOP for the CMCO and five sites were shut down.
GlobalData expects the construction industry to benefit from the government’s initiatives, as it is expected that work on construction sites will be ramped up quickly in the coming months, recovering some of the lost output since mid-March. Infrastructure will be a key area of support when the immediate Covid-19 crisis dissipates. The country’s biggest mega project – the MYR44bn ($14.3bn) East Coast Rail Link (ECRL) project resumed construction activities, following the government’s approval to resume construction.