KUALA LUMPUR, Feb 19 – RHB Research expects Sarawak to transition into an economic powerhouse as it views that catalytic infrastructure enhancement will take place in light of the higher development expenditure allocated for the state.
This is further backed by the state’s post-COVID-19 Development Strategy 2030 which aims to reach a gross domestic product (GDP) of RM282 billion by 2030.
The research house has identified a few key infrastructure components to look out for in Sarawak such as water projects, transportation projects such as the Kuching Autonomous Rapid Transit and highways, renewable energy (RE) projects like hydropower, and potential data centre setups.
“New oil well discoveries offshore Sarawak combined with its location to be a prime spot for carbon capture and storage may also drive the demand for related infrastructures,” it said in a note on Monday.
The research firm also said that Sarawak is in a sweet spot to gain from foreign investments as the state has the most competitive unsubsidised electricity tariffs in Asean and business-friendly policies, while abundant RE sources have enabled it to attract foreign investors.
“Sarawak recorded RM14.6 billion worth in terms of the value of construction work done in 2023, the fourth largest after Selangor, Federal Territory, and Johor, representing a five-year compound annual growth rate of 4.5 per cent, which is commendable in comparison to most other states, which saw a decline,” it said.
In 2022, Sarawak recorded the fifth largest value of construction projects among the states in Malaysia, at RM9.9 billion.
Meanwhile, RHB Research said KKB Engineering is its top pick for the Sarawak plays under its coverage given its diverse infrastructure exposure, followed by IJM Corp which is gradually regaining its footprint in the state.
It also takes note of Gamuda’s track record in Sarawak via the Pan Borneo Highway and Second Trunk Road projects, and Ibraco as a non-rated idea for Sarawak.
The key risks for its recommendation include unforeseen pandemic outbreaks and an unexpected downward revision in the development expenditure for the state.
