Domestic electricity tariffs are expected to rise in July, which may immediately impact domestic construction and development margins.
“While a 25% hike in US steel and aluminium imports is unlikely to trigger significant price changes in local building materials, the planned rise in electricity tariffs may still pressure construction margins in the near term. This is because the cost of key building materials, such as rebars, wire rods and aluminium extrusion products, is expected to spike in the second half of this year (2H25). Over the medium-to-longer term, we expect the local construction supply chain to pass on the additional input costs via repricing their contracts,” added CIDB Research.
CIDB Research attributed the construction sector’s profitability decline to delays in large-scale construction projects in 2H24, as project billings stalled.Â
On the bright side, the research house stated that tender activities and order flows have increased since early 2025, primarily to the Penang Light Rail Transit (LRT) and, more recently, LRT 3 phase two. These initiatives should contribute to a higher revenue cycle in fiscal years 2025 and 2026, respectively.Â
CIMB Research said it maintained its “overweight” outlook on the construction industry.Â
Source: The Star
