THE SIZE OF OUR INDUSTRY

The construction industry makes up an important part of the Malaysian economy. Although relatively small, it is extensively linked with many other parts of the economy, in particular with related industries such as those for basic metal products and electrical machinery. So construction can be described as some kind of an economic engine for Malaysia. Construction Sector contributes 5% to GDP and employs 9, 3% of overall workforce.

While GDP grew at an average rate of 5.46% from 2000 to 2007, the construction industry stagnated, recording an average growth of 0.7% over the same period. Output for the construction sector hovered around the RM 7 billion mark, but steadily shrank as a share of GDP, from 3.3% in 2000 to 2.5% in 2007 (refer to Table 1).

Table 1: Malaysian Construction Industry and the Economy

Source: Economic Reports 2003/2004, 2004/05 and 2005/06, Ministry of Finance, Bank Negara Annual Report 2006

Note: The GDP figure is net of imputed bank services charges and import duties

Based on the historical statistics, the Malaysian construction industry has consistently been the smallest contributing sector to the economy, contributing on average 3% to the total GDP. Even when compared to neighboring countries, the contribution of the Malaysian construction industry to the nation’s GDP is much lower as shown in Table 2.

Table 2: Construction Contribution to GDP (By Country)

While most businesses are subject to the ups and downs of a business cycle, the magnitude of the construction industry’s fluctuation is atypical. A review of GDP and construction growth trend over a 30-year period (1974 to 2004) reveals that the business cycle swings endured by the construction industry noticeably exceed those of GDP movements as shown in the diagram below.

Figure 1: GDP Growth of the Malaysian Economy vs. Construction Industry: 1974 - 2004
Source: Construction Industry Review 1999 – 2000, CIDB, Ernst and Young Analysis

SECTOR THAT INCLUDING THE INDUSTRY

Figure 2: Relationship between construction, services, safety and tools.

The major sector in the industry is construction which is consisting of the build up of building as well as the way to prevent hazard during construction. However, a service is also under construction industry. Then, there is safety and tools which is under services.

Construction, services, safety and tools is connected to each other as shown in Figure 2. The major sector is construction, and then follows by services, safety and tools. If one sector collapses, it will affect other sector.

MAJOR PLAYERS

In order to achieve our vision and mission, our company has set up one of the biggest company in Malaysia as our benchmark. Dura Deck is one of the biggest Malaysian trading companies, involved in scaffolding, tools and steel supplies. This company involve in business which is similar to our company such as tools. Located in Kuala Lumpur, Dura Deck has established itself as a company that supplies quality products internationally and enforces strict quality management systems, not only to meet customer requirements but to exceed their expectations.

TARGET MARKETS AND CUSTOMERS

Market

The construction industry plays an important role in any country’s economic development. It establishes the infrastructure required for socioeconomic development while being a major contributor to overall economic growth. Construction output is referred to as growth-initiating and growth-dependent (Drewer, 1980).

Nowadays, the markets in this industry are increasing according to the development at Malaysia. In order to fulfill the markets demand, Construction Company in Malaysia is looking forward to the world market.

According to the market, they are many companies involved in this sector. It included the company that involved in supplying Personal Protective Equipment [PPE] products and tools for construction work products. They get many benefits from RMK-9 and other project from government and private sector. It’s shown that the construction sector in Malaysia are development expand.

As Malaysia moves from developing country status towards a developed and industrialized nation as envisaged in Vision 2020, there are many development will involved in construction industry. So, the market of this industry is wide in future.


Customers

Construction Company that involved in supplying Personal Protective Equipment [PPE] products and tools for construction work products usually supply their tools for public and private sector. The public sector is including Jabatan Kerja Raya (JKR), education institutions which focus to IPTA and Technical schools.

For private sector, this industry focusing on Construction Company that need for construction or a hardware shop that supply in a small quantity. The education institutions are including IPTS and Private schools.

This tool actually is very important for public and private sector and also education institutions that involved in construction in order to provide effective, safety and quality in workplace.

INDUSTRY ESTIMATION

The construction industry has endured lacklustre financial performance over the past five years. While GDP grew at an average rate of 5.45% from 2000 to 2007, the construction industry stagnated, recording an average growth of 0.7% over the same period. Output for the construction sector hovered around the RM 7 billion mark, but steadily shrank as a share of GDP1, from 3.3% in 2000 to 2.5% in 2007 (refer to Table 1.1).

Table 1.1: Malaysian Construction Industry and the Economy

Source: Economic Reports 2003/04, 2004/05 and 2005/06, Ministry of Finance, Bank Negara Annual Report 2006

Note: The GDP figure is net of imputed bank services charges and import duties



Figure 1.2: Construction output and GDP, 1965 – 2003 (Data for 1965 – 1991 in 1978 constant price; data for 1992 onwards in 1987 constant prices)
Data source: Economic Reports-various issues

Figure 1.2 shows that construction output grew from RM801 million in 1965 to RM 7.58 billion in 2003. The GDP grew from RM17,582 million in 1965 to RM238.4 billion in 2003. This reflects the industry’s important role in providing the infrastructure to satisfy development needs and facilitate investment in other economic sectors.

NATIONAL OR ECONOMIC TRENDS HAVE AFFECTED THIS INDUSTRY

The Increasing Of Accident in Construction Industry
• Based on SOCSO statistics, the number of industrial accident had increased from 51,340 in 1980 to 95,006 in 2000.
• The OSHA (Occupations Safety and Heath Administration) assumes that there will be over 1,000 construction workers that will suffer a work-related fatality this year while many others will undergo substantial physical injuries which could have been avoided.

SOCSO is the abbreviation for Social Security Organization. It is commonly known in the Malay term as PERKESO or Pertubuhan Keselamatan Sosial.

SOCSO statistic which comprises all the active and registered workers are by far the most used source of data for occupational diseases and accidents in Malaysia. Based on SOCSO statistics, the number of industrial accident had increased from 51,340 in 1980 to 95,006 in 2000. Similarly, the number of industrial fatalities had also increased from 143 in 1980 to 1004 in 2000 (Table 1). This is mainly an evidence of the increased number of people covered under SOCSO.

Table 1: Distribution of Accidents and Fatality Frequency

The OSHA (Occupations Safety and Heath Administration) assumes that there will be over 1,000 construction workers that will suffer a work-related fatality this year while many others will undergo substantial physical injuries which could have been avoided. Even though construction workers are skilled laborers who are trained in basic safety, accidents will still occur on job sites. Just a few of the reasons some of these accidents will occur may be due to working with faulty materials, inferior tools and equipment, malfunctioning machinery and negligence.

When accidents in the construction injury occur, many of the hard working laborers can feel betrayed, frustrated and often times overwhelmed by the lack of legal options they are presented with. Many of these workers can become injured beyond the ability to work, and the loss of income acts as motivation for them to return to work even before their injuries are properly healed. This can further endanger the worker’s physical safety and health conditions. It is very important to realize that construction site accident injuries are not just ‘part of the job’. Construction site accidents should be seen as a threat to the safety for all workers as well as a threat to the project as a whole.

NATIONAL OR ECONOMIC TRENDS MIGHT AFFECT IT IN THE FUTURE

The growth of construction industry in Malaysia
• Many gigantic projects in 2008 will build.
• The construction industry exceeds those of GDP movements over a 30-year period (1974 to 2004).

The Construction industry has been declining between 2004-2006 but came back with a bang in the year 2007. 2008 promises to be better yet with many gigantic projects, including the ECER (East Corridor Economic Region), NCER (North Corridor Economic Region), IDC (Iskandar Development Corridor), SER (Sabah Economic Corridor) and SCORE (Sarawak Corridor of Renewable Energy) developments set to take places.

A review of GDP and construction growth trend over a 30-year period (1974 to 2004) reveals that the business cycle swings endured by the construction industry noticeably exceed those of GDP movements as shown in the diagram below.


It is also anticipated that the 9th Malaysia Plan, a five-year economic development plan for Malaysia (2006 - 2010), will announce projects of significant size to rejuvenate the industry.

LONG-TERM OUTLOOK

The construction sector with its strong linkages was further boosted, following the announcement of several infrastructure projects under the 9MP. As of 30 June 2007, 26.0% of the RM44.5 billion allocation was spent with 29,913 projects in various stages of implementation. These include the Rawang-Ipoh Double Tracking Project, Integrated Transport Terminal in Bandar Tasik Selatan, widening of Penang Bridge and projects under the economic corridors. In addition, the sector was aided by more than 34,000 projects for building and maintenance of public infrastructure and small development projects in rural areas. Several Government initiatives enhanced the sector further. These include the exemption on Real Property Gains Tax, waiver of FIC guidelines on foreign ownership of properties above RM250, 000, incentives for build-then-sell concept as well as the establishment of OSCs for building and development planning approvals. Given these initiatives, the construction sector is expected to expand by 5.2% in 2007.

Source: Economic Management and Outlook, Economic Report 2007/2008.