Building Overseas


Economic News

22 Jul 2010
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Trade and investment between Malaysia and countries in the Gulf Co-operation Council (GCC) region have been growing in recent months. Major Gulf-based investors are entering into Malaysia's Iskandar Development Region, while major construction projects in the GCC are attracting Malaysian companies.

There are currently 40 Malaysian construction and engineering firms actively operating in the GCC. Malaysian companies are playing a significant role in a number of the region's large-scale development projects.

Mahathir Mohammed, Malaysia's prime minister between 1981 and 2003, is credited with spearheading Malaysia's modernisation through ambitious spending on major construction and infrastructure projects. In addition to the role these developments played in placing Malaysia on the world map, the country gained a local supply of experienced and capable contractors and engineers.

IJM is the leading company behind a Malaysian consortium that has been awarded a contract for the development of five towers in Abu Dhabi's Al Reem Island project estimated at $300m. CEO Krishnan Tan told OBG, "Over the last 20 years, we have been fortunate to be exposed to enormous projects in the country that are substantial and that have called for new and modern standards. This has given us a combination of confidence and know-how. With the simultaneous growth in the capital markets, we have been growing in the size and balance sheet required to venture abroad."

The Construction Industry Development Board (CIDB) is an organisation established under the ministry of works to develop the country's construction industry to international standards and help Malaysian companies to secure work overseas. Hamza Hasan, chief executive of the CIDB, told OBG, "While spending on infrastructure in Malaysia has slowed down in recent years, many Malaysian firms have used the experience gained to win projects overseas, in particular in the Middle East."

One such company is WCT Engineering, the Malaysian firm behind the Sepang International Circuit for motorsports. The company has since completed a Formula 1 track in Bahrain, and is currently constructing one in Abu Dhabi. Additionally, WCT was involved in the construction of Malaysia's Kuala Lumpur International Airport. It is working with another Malaysian construction firm Gamudah as the lead engineers in the construction of the New Doha International Airport in Qatar.

"This is a model others can follow. Do something great in Malaysia, get recognised for it, then win a similar contract overseas," said Hasan.

The Malaysian Resources Corporation Berhad (MRCB), which was recently awarded contracts worth $106m to build luxury residences in Dubai, appears to be following this path. Recognised for the development of Kuala Lumpur Sentral, a 290,000 square metre development housing the capital's new train station, hotels, office towers, condominiums and shopping malls, the company is now in talks to build a similar $2bn transportation and housing development in Saudi Arabia. Shahril Ridza Ridzuan, group managing director of MRCB, told OBG, "We have an established niche and it makes sense that our international expansion should first focus on urban transport."

While to date Malaysian companies' involvement in the rapid development of the GCC region is mostly taking the form of oil and gas and infrastructure-related projects, the hope is they will branch out to secure work in other fields.

The Malaysian External Trade Development Corporation (MATRADE), established under the ministry of international trade and investment, is responsible for promoting Malaysian goods and services abroad. The organisation's CEO Noharuddin Nordin told OBG, "There are a few service sectors that can serve as the flagship for Malaysia, mainly construction, engineering, oil and gas and ICT (internet communications technology). From there, we can bring in others like healthcare and education."

One Malaysian company making strong inroads into the region in a niche activity is LCL Corporation, an Interior Fit-Out specialist. The group has been selected to provide services worth $64m for the high-end Burj Dubai Mall Hotel and Atlantis developments in Dubai. Low Chin Meng, LCL's group managing director, told OBG, "When we started in the GCC, it was tough as there were not many companies from South-east Asia offering this type of service. It is quite unique for a small Malaysian company to go worldwide in such a specialised an up-market industry."

With intense local competition and a slowdown in domestic projects, it makes sense that Malaysian companies are increasingly looking to this region. Malaysian firms have the experience and expertise to win projects, and can come in at competitive bidding prices. In addition, the fact that they are also an Islamic country adds an additional level of comfort for operating in the region.

As the GCC countries continue to re-invest their petro-dollars into major infrastructure projects, Malaysian firms will work to capture their share of the pie.

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