Malaysia Construction Equipment Market - Strategic Assessment & Forecast 2024-2029

MARKET OVERVIEW

The Malaysia construction equipment market by volume was valued at 9.1 thousand units in 2023 and is expected to reach 11.9 thousand units by 2029, growing at a CAGR of 4.67% during the forecast period. The Malaysian government is significantly investing in redeveloping infrastructure projects, including expanding ports, railway lines, roadways, and highways across the country. The New Industrial Master Plan 2030 (NIMP) aims to boost manufacturing value and meet growing industrial demand in Malaysia. It reflects the government's commitment to align with global advancements and societal changes in industrial production. Industrial parks near Senai garner significant interest from multinational companies (MNCs) and small and medium-sized enterprises (SMEs). Continuous investment under the ‘New Industrial Master Plan 2030 (NIMP 2030)’ and ‘National Energy Transition Roadmap (NETR)’ is expected to drive the Malaysia construction equipment market during the forecast period.

Increased Investment in Public Infrastructure Projects

• The Malaysian government has officially announced its commitment to constructing a USD 8.5 billion port on Carey Island. This strategic move aims to substantially enhance the capacity to handle container and conventional cargo at Port Klang, the primary shipping hub. The planned Carey Island port is positioned to support the anticipated growth in international trade, considering the ongoing expansions of rival ports in Singapore, Thailand, and Vietnam. The project also plays a significant role in the growth of the Malaysia construction equipment market.
• The Malaysian government is broadening Bus Rapid Transit (BRT) and local bus services in key cities such as Johor Baru and the Klang Valley. This expansion is intended to offer efficient and eco-friendly public transportation alternatives and decrease dependence on private vehicles. It also supports the growth of the Malaysia construction equipment market.
• These ongoing and planned road construction projects indicate Malaysia's commitment to improving its infrastructure and supporting its economic growth. The government's focus on enhancing connectivity and reducing traffic congestion will benefit businesses.
• In May 2024, the government discussed upcoming road projects in Sibu, Malaysia, which are set to commence in September 2024. These projects aim to improve infrastructure and connectivity in the area, addressing issues such as traffic congestion and road conditions. The initiatives are part of broader efforts to enhance transportation networks and support local development.
• In May 2024, the government announced the launch of a new infrastructure project by URDA (Unit for the Implementation and Coordination of Development Projects) in Belaga, Malaysia. This project aims to connect Long Wat and Long Malim through improved infrastructure, facilitating better accessibility and connectivity in the region. It emphasizes the government's commitment to rural development.
• In 2024, the government has assured residents of Ranau town of infrastructure development in the area, highlighting two key projects: the Terawas-Malinsau-Kaingaran Road Upgrading Project and the Road Construction Project to Sejahtera Mini Estate Mansalu Ranau, Phase II.
• The Malaysian government has announced 11 new transport and logistics projects in 2023 aimed at bolstering the nation's infrastructure sustainably and resiliently. These initiatives include major undertakings such as the Pan Borneo Highway Sabah Phase 1B, the Penang Light Rail Transit (LRT) Project, and the expansion of Penang International Airport. These projects are estimated to boost the Malaysia construction equipment market growth during the projection period.

KEY HIGHLIGHTS

• Earthmoving equipment accounted for the largest market share in the Malaysia construction equipment market in 2023. Excavators in the earthmoving segment accounted for the largest share in 2023. Rising investment in housing, port expansion, and public infrastructure projects is expected to drive the demand for excavators in the Malaysia construction equipment market.
• By rapidly expanding into Southeast Asia, Chinese construction machinery brands are shifting from only product exports to localized operations. Prominent vendors like Zoomlion and SANY have recently inaugurated subsidiaries in Malaysia, Vietnam, and the Philippines, emphasizing their commitment to local development.
• A fleet of 10 EC550EL excavators from Volvo Construction Equipment (Volvo CE) is constructing a significant new dairy farm for Fraser & Neave Holdings (F&N) in Gemas, Negeri Sembilan, Malaysia. The F&N Agrivalley project, which began in August 2023 and is scheduled for completion in 2027, will span over 2,726 hectares and cost USD 200 million.
• Malaysia has become a key country for growth in the Southeast Asian market, with the number of mobile elevated work platforms (MEWPs) in recent years beginning to compete with those in Singapore, its nearby and well-established access market.
• A distinguishing feature of the Malaysian access equipment sector is its longstanding reliance on truck-mounted platforms. Truck mounts have been prevalent in the Malaysia construction equipment market for a considerable period, preceding the widespread adoption of scissor lifts and boom lifts, and are utilized across various applications.
• Zoomlion Malaysia has introduced a 3D digital twin platform tailored for the ready-mix concrete industry. This platform allows users to create digital replicas of concrete plants, enabling remote monitoring, predictive maintenance, and optimization of operations. The launch underscores Zoomlion's commitment to leveraging digital technologies to enhance efficiency and productivity in the concrete industry.

MARKET TRENDS & DRIVERS

Investments Under the National Energy Transition Roadmap (NETR) to Boost the Renewable Energy Sector

• The National Energy Transition Roadmap (NETR) targets a significant rise in Malaysia's renewable energy capacity, aiming for 40% by 2035 and 70% by 2050. However, there's a need for advancement. According to the International Renewable Energy Agency (IRENA), as of 2022, Malaysia's renewable energy constituted 23% of the total installed capacity.
• The National Energy Transition Roadmap (NETR) has outlined ten flagship projects to drive Malaysia's energy transition, showcasing necessary technologies and solutions.

Rising Focus on Compact and Electric Construction Equipment in the Malaysia Construction Equipment Market

• The electric equipment market is anticipated to be driven by government initiatives, growing demand for eco-friendly construction projects, and the trend toward industrialization. However, a significant challenge is the substantial cost linked to electric construction machinery, which might impede market growth.
• To align with the global net zero emission target, companies are focusing on capitalizing on lithium-ion battery technology in electric excavators and other products to reduce their carbon footprint.

Environmental Policies and Initiatives to Boost the Malaysia Construction Equipment Market in the Waste Management Industry

• Malaysia generates over 39,000 tons of municipal solid waste daily, averaging about 1.17 kg per person. Food waste constitutes a significant part of this total, accounting for more than 30%, with an estimated 8.3 million metric tons of food discarded annually. This concerning level of waste is driven by factors such as population growth, changing lifestyles, and rapid urbanization.
• Malaysia's existing waste management system predominantly depends on landfills, with more than 165 currently in operation. However, this approach is increasingly becoming unsustainable due to limited land availability and the high expenses associated with maintaining these landfills.

The New Industrial Master Plan 2030 (NIMP 2030) Will Boost Infrastructure Investments Across the Region

• Malaysia plans to allocate approximately USD 1.8 billion to fund its NIMP 2030. This initiative aims to transform the country's manufacturing sector into a high-tech, competitive, and digitally advanced industry. The initiative is also projected to support the growth of the Malaysia construction equipment market.
• The plan includes four key missions: advancing economic complexity, embracing digital technologies, achieving net-zero carbon emissions, and ensuring economic security and inclusivity. Additionally, the government expects the total investment for NIMP 2030 to reach USD 20.1 billion, primarily from private sector contributions.

High Expenditure in Green Hydrogen Projects to Encourage the Malaysia Construction Equipment Market Growth

• Malaysia announced agreements worth USD 4.2 billion for green hydrogen projects for 2024. These projects, led by SEDC Energy, include the H2biscus and H2ornbill initiatives to produce large quantities of green hydrogen for export to South Korea and Japan. Both projects will utilize hydropower and are expected to begin production in 2027. Additionally, a partnership with Gentari, a subsidiary of Petronas, will develop a common infrastructure for these projects.
• Malaysia aims to become a green hydrogen export hub by 2027 through its Hydrogen Economy and Technology Roadmap. This initiative seeks to attract investments and leverage the country's natural gas and hydroelectric capabilities.

Increasing Investments in Semiconductor Industry

• This initiative includes developing advanced packaging and integrated circuit design facilities, fostering local talent, and offering incentives to international companies. Malaysia seeks to become a key player in the global semiconductor supply chain, providing a stable alternative to the U.S. and China.
• Moreover, Siliconware Precision Industries Co., Ltd. (SPIL), a global leader in semiconductor packaging and testing, has commenced construction of its Malaysia P1 plant at Bandar Cassia Technology Park in Penang. The 8-hectare facility, with an investment of USD 1.2 billion, is anticipated to generate nearly 3,000 skilled jobs over the next 15 years.

INDUSTRY RESTRAINTS

Increased Pressure on the Ringgit Will Hamper Foreign Investment Opportunities

• In 2023, the Malaysian ringgit experienced a notable drop of 9.6% against the U.S. dollar, influenced by the increasing differences between domestic and U.S. bonds. Additionally, the ringgit depreciated by 3.9% nominally and 4.7% in real effective terms relative to the currencies of its major trading partners. This decline was caused by a decrease in the current account surplus, largely due to a decreasing trade surplus and significant net capital outflows.
• Net capital inflows experienced a sharp decline, with domestic investments abroad rising while foreign investments in the country, including both FDI and portfolio investments, decreased.

Skilled Labour Shortage in the Country Hampers the Pace of Construction Equipment Manufacturing

• Despite a recent agreement to resume hiring Bangladeshi workers, bureaucratic delays have exacerbated the problem, threatening Malaysia's economic recovery. Manufacturers, particularly in sectors such as oil and semiconductors, are losing sales and customers due to the lack of workforce.
• Although Malaysia’s semiconductor market is booming, the government reports a severe talent shortage and needs 50,000 skilled engineers. Also, Malaysian universities produce only about 5,000 engineers annually, leaving a considerable shortage of local engineers.

Rising Raw Material and Construction Costs in the Country

• Construction costs are projected to increase by an average of 15% in the first half of 2024, exacerbating the affordability issue and potentially negatively impacting the housing market. 
• The rising Producer Price Index (PPI) inflation of 1.9% year-on-year in April 2024 indicates increased cost pressures for local businesses, driven by fluctuations in global commodity prices, subsidy rationalization, and rising fuel prices.
• In April 2024, the manufacturing sector experienced a faster rise in input costs at 0.8% year-on-year (y-o-y), compared to 0.6% y-o-y in March. The mining sector saw a significant inflation increase to 10.0% y-o-y, the highest in 22 months, up from 8.3% y-o-y in March. Electric, gas, and water supply costs also expanded by 1.0%, the highest in 10 months, following a modest 0.1% y-o-y rise in the previous two months.

VENDOR LANDSCAPE

• Caterpillar, Volvo CE, SANY, Komatsu, Kobelco, XCMG, Hitachi Construction Machinery, and Zoomlion are leaders in the Malaysia construction equipment market. These companies have a strong market share and offer diverse sets of equipment.
• JLG, Bomag, Sunward, LiuGong, SDLG, Shantui, Terex, HELI, Takeuchi, Toyota Material Handling, and CNH Industrial are niche players in the Malaysia construction equipment market. These companies offer limited product diversification and have a strong presence in the country's local market.
• Liebherr, JCB, DEVELON, Bobcat, Manitou, HD Hyundai Construction Equipment, Kubota, and Sumitomo are emerging in the Malaysia construction equipment market. These companies are introducing new technologically advanced products to challenge the market share of the country’s market leaders. 
• Lonking, GEHL, AUSA, Yanmar, Ammann, SAKAI, Tadano, Wacker Neuson, Bell Equipment, Kato Works, Manitowoc, and Favelle Favco have low product diversification in the Malaysia construction equipment market; these companies are lagging in adopting new technologies.