AAR 4152 COURSEWORK 1 NUR ULFAH AWATIF UMAIRAH BT ALIAS 1015568 BACHELOR OF ARCHITECTURE AND ENVIRONMENTAL DESIGN

Construction industry can be catalyst towards Nations socio-economic growth and development due to its nature as a derived demand. In the 10th Malaysian plan, around RM230 billion is allocated for construction projects beginning 2011 till 2015.
Discuss how the industry can help to promote socio-economic growth and development especially during the time of current economic crisis.

Nur Ulfah Awatif Umairah bt Alias 1015568

AAR 4152 COURSEWORK 1 NUR ULFAH AWATIF UMAIRAH BT ALIAS 1015568 BACHELOR OF ARCHITECTURE AND ENVIRONMENTAL DESIGN

Introduction The construction industry in Malaysia is critical to national wealth creation as it acts as a catalyst for and has a multiplier effects to the economy. Construction industry works as the derive demand to Malaysians socio-economic development and have been the major contributor to the county economic growth. Literally, derived demand is a term in economics where demand for one good or service occurs as a result of demand for another. This may occur as the former is a part of production of the second. In the other hand, the term Socio economy defines as the studies looking at both social and economic conditions relevant to wellbeing.The economical condition of the construction industry would definitely affect other industries in Malaysia. Unfortunately, over the past five (5) years, the construction industry has endured lackluster financial performance ( construction industry development board, 2007) and has experience global financial crisis in 2008 and 2009 (Chong, 2010).The construction industry stagnated and the output of the construction slightly shrank .These factors have enables the growth of other industries through its role as a fundamental building block of Malaysians socioeconomic development. As the construction industry influences the growth of other industry, government begins to see this issue carefully to enhance the contribution value of the construction industry to Malaysian economy. Financial has always been the key issue. Therefore, in 10th Malaysian plan (2011 to 2015), government invested and allocate around RM 230 billion for construction projects to move towards inclusive socio-economic. The government targeted increment of 5.5 growths in growth domestic product (GDP) throughout the 10 MP to create a high income country. The ministry is also formulating the National Housing Policy. One of the objectives of the policy is to ensure that the property sector continues to be a prime mover of the countrys economy. It is expected that the overall building construction market would be elevated in growth with the expanding 10th Malaysia Plan (2011-2015) as the government expressed their interest in more involvements from the private sector and investors to engage in public projects ( construction and management of schools, hospitals, and other community infrastructures). More than 50 % of the projects by the private sectors are to be realized under the 10th Malaysia plan through privatization, private funding initiative (PFIs) and Public Private Partnership (PPP) programs as announced by the director of Economic Planning Unit.

AAR 4152 COURSEWORK 1 NUR ULFAH AWATIF UMAIRAH BT ALIAS 1015568 BACHELOR OF ARCHITECTURE AND ENVIRONMENTAL DESIGN

Content: The construction industry is a sector of the economy that transforms various resources into constructed physical economic and social infrastructure necessary for socio-economic development. It embraces the process by which the said physical infrastructure are planned, designed, procured, constructed or produced, altered, repaired, maintained, and demolished. Thus, the construction industry is a fundamental economic activity which permeates most of the sectors of the economy and it has a major role to play in achieving social economic development objectives of any country. (Tanzania Construction industry, 2009).

The unveiling of the 10th Malaysia Plan (10MP) on June 10, though a long-awaited event, did not have much impact on the local equity market. As UOB Kay Hian Research puts it, the country's latest five- year plan `is market-neutral in the short term, but positive for the longterm prospects of the construction and property sectors' (Chong, 2010). It is a part of the long term plan for Malaysian economy which is expected to help contribute in many ways. The construction sector is vital to the achievement of national socio-economic development goals by providing employment, shelter and infrastructure ( construction industry development board, 2007). As the result it leads to economic growth and effect the social expansion.

The construction industry would first promote socio economic growth and development in the current economic crisis by providing the employment opportunities. The construction industry has provided job opportunities for approximately 800,000 people ( construction industry development board, 2007). After the 10MP, there are more than RM4b worth of construction jobs were awarded to the local construction companies to undertake various infrastructure works in both Peninsular and Sarawak (midf research, 2010). Having outperformed the broader market, it is believe that the construction index will continue to display an upward trend as more projects are likely to be announced in the coming months. The 10MP is planned to strengthen the construction industry image through the enhancement of the professionalism of the construction industry, the procure-to-pay strategy and also raise the sophistication level of the construction community. These will open a wider opportunity for the citizen to strive for the highest standard of quality occupational safety and health, and environmental.

AAR 4152 COURSEWORK 1 NUR ULFAH AWATIF UMAIRAH BT ALIAS 1015568 BACHELOR OF ARCHITECTURE AND ENVIRONMENTAL DESIGN

Human resource capabilities could be enhanced to benefit the nation which will result a better skill level by master builders in the construction industry. Research and construction intellectual studies could be expend with more new innovation in the construction demand (new construction method and material etc). Besides a strategy to train and increase the building capability, it will promote employment and nurture desire of the locals work force in the construction industry. Indirectly it leads to the globalization with knowledge sharing throughout the world and the need to be updated with the world current construction system and technology which will require the use of communication industry. The opportunity given through the 10MP to construction industry opens a wider possibility for the entrance of new technologies which require experts and specialist in each new system. New technology such as the building automation system (BAS), lighting, and heating and ventilation system could be implemented in new building composition. The BAS smart buildings are becoming a representative of a huge potential growth in is market supported by the increasing numbers of local BAS suppliers which through construction industry, the factory could employ more locals and would give space for new researcher to prove their products and expertise. With the government's concerted effort to encourage both investors and the public to embrace green technology, the government had allocated RM20 million or $6.1 million in its 2010 budget to intensify green-awareness activities and to encourage the practice of environmentally-friendly lifestyle (Melvin Leong, 2010).

Further, the construction industry creates a multiplier effect to other industries including manufacturing, financial services and professional services. It contributes in its role as a large user of local manufactured goods (building and contraction material), specialized tooling and heavy machinery. Most buildings in Malaysia the institutional, government offices, commercial complex, and tourist attraction are the entire essential element to a functioning economy which are maintained by the construction industry. According to the 10th Malaysian plan (10MP), road design and construction will be upgraded to improve quality and reduce maintenance costs through new technologies and methods such as utilizing soil stabilizers and concrete paving. The new design will increase road strength to support commercial and heavy vehicles and will enhance connectivity between rural areas and urban economic centers to expedite development of economic sectors in rural areas. By the end of the Plan period, a total of 6,312 kilometers of paved roads will be constructed in Peninsular Malaysia, 2,540 kilometers in Sabah and 2,819 kilometers in Sarawak, benefitting 3.3 million people nationwide.

AAR 4152 COURSEWORK 1 NUR ULFAH AWATIF UMAIRAH BT ALIAS 1015568 BACHELOR OF ARCHITECTURE AND ENVIRONMENTAL DESIGN

Generally, the construction industry could be partial into two split category, the general construction and the special trade works. The first category is the general construction which would include the residential construction, non-residential construction and civil engineering construction. In Malaysia, construction of non-residential and residential buildings contributed between 40 to 55 percent of the total construction market between 2006 and 2009. The nonresidential building construction segments are expected to drive the growth of the market in 2010, catalyzed by socio-economic growths such as tourism, education, and healthcare (Melvin Leong, 2010).Melvin Leong, 2010 later continue explaining that:

The growth of non-residential building construction seemed to be able to traverse better than the residential building segment during the economy downtime. Frost & Sullivan finds that the revenue growth of non-residential building construction is higher than residential building construction by 3 to 5 percent annually until 2015. Additionally, the growth trend of the former segment in recent years of economic volatility suggested that it performed better than the residential building segment. According to the 10th Malaysian plan (10MP), road design and construction will be upgraded to improve quality and reduce maintenance costs through new technologies and methods such as utilizing soil stabilizers and concrete paving. The new design will increase road strength to support commercial and heavy vehicles and will enhance connectivity between rural areas and urban economic centers to expedite development of economic sectors in rural areas. By the end of the Plan period, a total of 6,312 kilometers of paved roads will be constructed in Peninsular Malaysia, 2,540 kilometers in Sabah and 2,819 kilometers in Sarawak, benefitting 3.3 million people nationwide. The second area is special trade works, which comprises activities of metal works, electrical works, plumbing, sewerage and sanitary works, refrigeration and airconditioning works, painting works, carpentry, tiling and flooring works and glass works. There are the expending economic infrastructures (such as the airports,highways and commercial centers) as well as the social infrastructure such as the schools, housing and public spaces.

AAR 4152 COURSEWORK 1 NUR ULFAH AWATIF UMAIRAH BT ALIAS 1015568 BACHELOR OF ARCHITECTURE AND ENVIRONMENTAL DESIGN

The rise of construction industry in a long term could also benefit the tourism industry. Malaysia experiences rapid growth in tourism industry. Under the 10MP, it is expected to grow approximately 5 percent. Government is encouraged to invest on the new construction for tourism facilities such as resorts, hotels, shopping areas, holiday camps, and recreational projects. A step further is taken by the government to the growth of countrys healthcare tourism industry through the provision of tax exemption equivalent to 100 percent qualifying capital expenditure incurred for the first 5 years for the construction of new hospitals or expansion, modernization, or refurbishment of existing centers. The tax exemption will take part along the 10MP period from 2010 to 2014.

Conclusion: building construction market expansion have simply resulted increasement in Malaysian socioeconomic growth as the demographics increases demand for new buildings and refurbishment of existing ones. Throughout economic turndown in 2008 and 2009, the building construction market has gone through a very challenging years. However, demand for new commercial and industrial buildings remain sturdy, while new constructions of institutional buildings such as schools and hospitals are almost consistent with the government's commitment in its education and healthcare policies. The building construction market is expected to improve in 2010 with positive growth, before gaining full momentum in 2011 with the aid of the new 10MP.Construction works in the industry throws open several opportunities to market participants. Currently, such expertise in service integration is sorely lacking.Government have definitely take action for nations future as in 10MP. It is very convincible that the rise of construction industry is essential to the betterment of the nations socio economy as it works well as the derived demand to other industries.

AAR 4152 COURSEWORK 1 NUR ULFAH AWATIF UMAIRAH BT ALIAS 1015568 BACHELOR OF ARCHITECTURE AND ENVIRONMENTAL DESIGN

References:

construction industry development board. (2007). construction industry master plan. Kuala Lumpur. Chong, Y. (2010). Beneficiaries of the 10MP. 3. midf research. (2010, february 22). Construction Update. Retrieved August 28, 2010, from A midf web site: http://www.midf.com.my/project/midf/media/2010/02/22/092131-177.pdf Tanzania Construction industry. (2009, january). Retrieved august friday, 2010, from construction sector transparencyinitiative: http://www.constructiontransparency.org/CountriesSupporters/Countries/Tanzania/