Construction & Related Engineering Services

The WTO classification for this sector covers

  • General construction work for buildings ;                                             

  • General construction work for civil engineering ;                              

  • Installation and assembly work;                                                               

  • Building completion and finishing work; and                                       

  • Others                                

The Construction Industry Master Plan (CIMP) 2006 – 2015,  is a comprehensive plan charting the strategic position and future direction of the Malaysian construction industry over the next 10 years i.e. from 2006 – 2015. The focus is to make this sector more productive, more effective, more technologically pervasive, less labour intensive and more confident to venture beyond the local shores and thus become more resilient.

 

This sector has been targeted for greater development and promotion in the 10th Malaysia Plan (10MP – 2011 to 2015). The 10MP aims to propel the construction related sector and will provide support such as market intelligence, networks and government-to-government relations to enable firms to export construction related professional services to the ASEAN region, India and China as well as the member countries of the Organisation of Islamic Conference (OIC).

 

The construction sector is the foundation for other sectors to build their activities as it helps to generate huge economic linkages and create a multiplier effect on other economic sectors  and SMEs including the financial, banking, insurance, transportation and manufacturing services.

 

SMEs form the backbone of the economy therefore promoting domestic – led growth is essential in strengthening the resilience of the economy and in driving Malaysia toward its target of attaining developed nation status in 2020.

Potential growth areas identified for the development of SMEs are:

  • civil engineering (metal works, electrical works, plumbing, sewerage and sanitary works, refrigeration and air conditioning works, painting works, carpentry, tiling and flooring, and glass works). To adopt a clustering approach in bidding for projects by combining complementary skills and expertise, especially in civil engineering;

  • residential and non-residential construction; and

  • infrastructure.

The construction sector  is expected to undergo structural changes which include:

  • consolidation and integration of business to reap greater economies of scale;

  • extension of linkages along the value chain; and

  • promotion of new concepts in retailing and consumerism.

As a services provider, you will need to know the following:

  • The rules and regulations that govern the construction sector;

  • The Regulatory agency/agencies;

  • The specific service sector commitments that Malaysia has entered into.

The Acts

  • The Federal Roads Act 1959;

  • The Quantity Surveyors Act;

  • The Registration of Engineers Act;

  • The Architects Act;

  • The Malaysian Highway Authority Act;

  • The Construction Industry Development Board Act;

  • The Federal Roads Act 1984 ( private management);

  • The Road Transport Act; and

  • The Town Planners Act 1995.

The Regulatory Agencies and Related Associations

The Ministry of Works is responsible for the construction industry. The Construction Industry Development Board of Malaysia (CIDB), under the MOW, is tasked with promoting the construction services sector, as well as take on the role of coordinating and monitoring the overall progress of the implementation process of the CIMP.

All construction companies must be registered with the CIDB and they regulate and register contractors from 7 grades (G1 – G7).

Other related regulatory agencies and associations are :

  • The Board of Architects;

  • The Board of Engineers Malaysia (BEM);

  • The Board of Quantity Surveyors Malaysia (LJBM);

  • The Institution of Engineers Malaysia (IEM);

  • The Malaysian Institute of Architects (PAM);

  • The Institution of Surveyors Malaysia (ISM);

  • The Master Builders Association Malaysia (MBAM); and

  • The Association of Consulting Engineers Malaysia (ACEM).

Specific Service Commitments

Commitments in the construction sector are in the areas specified below with the following specific CPC codes, as in the WTO classification.

CPC 511 : Pre-erection Work at Construction Site

CPC 512 : Construction Work for Buildings

CPC513 : Construction Work for Civil Engineering

CPC 514 : Assembly and Erection of Prefabricated Constructions

CPC 515 : Special Trade Construction

CPC 516 : Installation Work

CPC 517 : Building Completion and Finishing Work

Under GATS, Malaysia' s  commitments are for   CPC code 511 – 517 in terms of market access and is limited to Mode Supply 3 ( Commercial presence) covering   a representative office, regional office, or locally incorporated joint-venture corporation with Malaysian individuals or Malaysian-controlled corporations or both with  foreign equity not exceeding 30 per cent.

Malaysia's commitment under 8th AFAS package is for  market access  only through a representative office, regional office or locally incorporated joint venture corporation with Malaysian individuals or Malaysian controlled corporations or both, with  foreign equity  not exceeding  51%. However, ASEAN leaders have given their commitment to liberalise this sector up to 70%  by 2015 in line with the formation of the ASEAN Economic Community (AEC) .

Regionally, there are commitments in the construction sector with dialogue partners :

  • ASEAN – Korea Free Trade Agreement (AKFTA)

Market access is only through a representative office, regional office or locally incorporated joint venture corporation with Malaysian individuals or Malaysian controlled corporations or both with the aggregated foreign shareholding in the joint venture corporation  not exceeding  30%.

  • ASEAN – Australia – New Zealand Free Trade Agreement  (AANZFTA)

Market access is under the following conditions :

- a representative office, regional office or locally incorporated joint venture corporation with Malaysian individuals or Malaysian controlled corporations or both. Aggregated foreign shareholding in the joint venture corporation shall not exceed 49%;

- Foreign construction companies that are not locally incorporated may carry out the following construction projects jointly with local contractors, on project-by-project basis:

  • Construction projects wholly financed by foreign investment and/or grants;

  • Construction projects financed by loans of international tendering according to the terms of loans;

  • Projects with foreign investment equal to or more than 50 per cent where local expertise is not available; and

  • 100% Malaysian funded construction projects where local expertise is not available.

All of the above are subject to compulsory subcontracting to local subcontractors.

Bilateral Free Trade Agreements (FTAs)

Malaysia has made the same commitments in the following bilateral FTAs under the construction section  in terms of market access:

  1. Malaysia – Pakistan Closer Economic Partnership Agreement (MPCEPA)

  2. Malaysia – New Zealand Free Trade Agreement (MNZFTA)

  3. Malaysia – Japan Economic Partnership Agreement (MJEPA)

  4. Malaysia – India Comprehensive Cooperation Agreement (MICECA)

 

For further information, please contact:

 

  • Mr. Eruan Abi
    International Relations and Professional Development Division
    Phone No : 03-2771 4804
    Fax No: 03-2711 0087
    Email : eruan@kkr.gov.my
  •  
  • Ms. Marian Baharin
    International Relations and Professional Development Division
    Phone No : 03-2771 4819
    Fax No : 03-2711 0087
    Email : marian@kkr.gov.my
  •  
  • Mr. Azhar Ahmad
    Agency Monitoring and Skills Division
    Phone No : 03-2771 5331
    Fax No: 03-2711 1024
    Email : azharmd@kkr.gov.my