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Sat 7 Oct 2006 04:00 AM

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The Malaysian building invasion

Malaysian contractors are taking the Middle East by storm after establishing a bridge head in the booming UAE market. Angela Giuffrida reports on the South East Asian tigers on the local construction scene.

The capacity-starved construction industry of the Middle East has struggled to cope with the sheer numbers of contracts being put out to tender.

As contractors are forced to pick and choose the opportunities they want to pursue, clients are finding it increasingly difficult to find enough companies interested in answering their tender invitations. And nowhere is this shortage more acute than in the UAE. But that could be about to change as some of the largest names in the Malaysian construction sector descend on the region.

In the last month alone, a consortium of Malaysian contractors led by IJM and including Zelan Holdings, Sunway Construction and LFE Engineering, picked up a US $354 million (AED1.3 billion) contract to design and build five residential towers and seven villas on Al Reem Island in Abu Dhabi; while Malaysian Resources Corporation joint venture company, Al Fattan MRBC, last week won two contracts worth $106.2 million to build the ‘six-star’ Palm Island Hotel and luxury accommodation on the Palm Jumeirah, along with an office tower in Dubai Marina.

According to MRBC’s group managing director, Shahril Ridza Ridzuan, the projects mark the start of the company’s operations in the Middle East. “After starting in Dubai, MRBC aims to gradually expand our market reach across other countries in the region,” he said.

Earlier this year, IJM was also awarded a $35 million contract from Fortune Group to build the 35-storey Fortune Executive Tower at Jumeirah Lake Towers, while Zelan Holdings signed a sponsorship agreement with Ali and Sons in an effort to make inroads into the region’s engineering, construction and manufacturing sectors.

Elsewhere in the GCC, Gamuda is gaining momentum with contract wins on the Sitra Causeway Project in Bahrain, along with the Dukhan Highway and New Doha International Airport projects in Qatar, and in July this year, a joint venture between Malaysia’s WCT Engineering and Bahrain’s Cebarco secured the $353.4 million (BD 128 million) contract to build Bahrain City Centre, which is set to become the largest mall in the kingdom.

The UAE’s drive to attract international contractors has resulted in 30 Malaysian companies now operating in the region, including construction companies such as PECD and Ranhill.

According to Malaysian ambassador to the UAE, Datuk Abdul Mubin Razali, the progress shows that the UAE is recognising Malaysia for its human resource capabilities and quality. “Although the number of Malaysian companies in this country is rather small – only 30 – they have succeeded in drawing a substantial number of professional groups comprising engineers from various disciplines, architects, consultants, contractors, developers, technical project managers and accountants.”

Over the next four years, $108 billion is expected to be spent on the development of infrastructure in the UAE, including the building of factories, roads and housing. “Indeed, there are plenty of opportunities for our companies to take part in the development of the UAE, especially in Abu Dhabi, which has been left quite far behind compared to Dubai,” added Razali.

Apart from the amount and variety of work attracting Malaysian contractors to the region, a slowdown in their own construction market is also prompting ventures elsewhere.Overseas projects involving Malaysian contractors were valued at $885 million in 2005, of which $352 million went in the direction of the Middle East, according to a report by the Malaysian Chamber of Commerce and Industry. And out of the countries in the region, the UAE, Qatar and Bahrain are perceived as being the most important and promising from a Malaysian perspective.

The report also found that, until recently, construction in Malaysia has generally been dependent on government projects, while private sector developments have increased at a slower pace. Middle East clients may be hoping that this slowdown in Malaysia’s domestic construction sector continues.

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