My Take on #Budget2011.

Was following pretty closely on our PM Dato Seri Najib Tun Razak's Budget 2011 speech. So far, based on what I read, it sounds pretty encouraging and interesting indeed. Our PM has his own blog - and he has taken plenty of consideration of the views of the 'rakyat' from the comments. On top of that, I'm sure certain that PEMANDU (led by Idris Jala) has plenty to contribute to this as well.

Najib expects a 7% growth for the country, exceeding the previous estimates of 6% for this year. Next year is expected to hover about the same too. The income per capita is to increase 6.1% to RM28,000 while income in terms of purchasing power parity to USD16,000 (RM49,440).

Okay these would be the more general ones. How about those somewhat more related to me then? I shall summarize it a bit ok...

• NEW 300MW GAS-POWERED PLANT IN SABAH
• 6 NEW HIGHWAYS NEAR CAPITAL
• MRT PRIVATE INVESTMENT MAY REACH RM40 BLN,TO START CONSTRUCTION IN EARLY 2011
• RRIM 2,680 ACRE DEVELOPMENT IN SUNGAI BULOH, EPF TO UNDERTAKE DEVELOPMENT OF SUNGAI BULOH PROJECT, RRIM SUNGAI BULOH PROJECT TO COST RM10 BILLION
• MALAYSIA TO ALLOCATE RM1 BLN TO PUBLIC/PRIVATE PROJECTS
• MALAYSIA PPP PROJECTS TO LURE RM12.5 BLN OF PRIVATE FUNDING
• MALAYSIA PLANS 100-STORY BUILDING, TOWER TO BE TALLEST IN COUNTRY, TO COST RM5 BILLION AND TO BE COMPLETED IN 2015
• ACADEMIC MEDICAL CENTRE, A JV BETWEEN ACADEMIC MEDICAL CENTRE AND JOHN HOPKINS MEDICAL INTERNATIONAL AS WELL AS ROYAL COLLEGE OF SURGEONS, IRELAND - WITH RM2BIL PRIVATE INVESTMENT
• Infrastructure facilities to be allocated RM85 million to facilitate construction of hotels and resorts in remote areas
• Corridor and regional development will be accelerated. The Government allocates RM850m for infrastructure support
• For Iskandar Malaysia, a sum of RM339 million is allocated.
• The Northern Corridor Economic Region is allocated RM133 million.
• East Coast Economic Region is allocated RM178 million for projects
• For Sarawak Corridor of Renewable Energy, RM93 million is allocated for facilities
• Build and upgrade rural roads in Sabah and Sarawak with an allocation of RM2.1 billion and RM696 million in Peninsular Malaysia
• RM6.9bn allocated to implement basic infrastructure such as water and electricity supply as well as rural roads
• RM2.1bn allocated to build and upgrade rural roads in Sabah and Sarawak
• RM15.2bn allocated to build new hospitals, increase the number of doctors + nurses + obtain supplies of medicines and equipment.

Whats my take on the #Budget2011???

It does seem like it is very encouraging for the country's economy. With the region's outlook looking sluggish, Malaysia would be pretty ambitious to be announcing quite a massive budget, but this is quite an achievable target as well. On the construction sector - I believe this is a very good sign for the industry; there are plenty of budget available for new infrastructure works. I see the RM40b MRT project, as well as the 6 new highways to be amongst the main projects to be fought over by the industry big boys. The new 100-storey landmark, Warisan Merdeka as well as the 2,680 acre development on the ex-RRIM land in Sg Buloh would be the key drivers to the property development industry.

There are plenty of projects and opportunities for the construction industry. The main concern would be on the timely rollout of these projects. Do bear in mind that most of these projects would take time to be completed - the Warisan Merdeka, MRT, as well as the highways and the RRIM development etc would all be looking at 2020 completion dates. Hence, for these projects to benefit our 2011 figures, it would all need to be awarded and rolled out within the 1st quarter of 2011.

It does look to me that a lot depends on the private sector to be the key driver of these large scale developments. What would be interesting to see is how the private sector raises these funds to do the projects. I would think that the local capital and debt markets can only raise up to certain amounts, which may not be enough. We would need to look beyond our shores - into other large economies to raise this fund - I would put my money on the Japanese and Chinese funds.

One thing good though - Toll rates in four highways owned by PLUS Expressway Berhad will not be raised for the next five years, effective immediately. Thats a *wooots* factor!!!