Productivity is the primary engine of growth towards Malaysia’s high-income target. As a vital sector to the nation’s advancement, the construction industry will lead with high productivity levels through efficient adoption of new technologies and modern practices coupled with high-skilled, highly paid workforce.

Case for Change

  1. Largely low-skilled workforce and inadequate or mismatch in training and development
    • Employers unwillingness to invest into upskilling of workforce
    • Gaps in training modules
    • Poor manpower planning, where skill requirements go undiagnosed
  2. Over-reliance on low-skilled foreign labour
    • Misconception of locals perceiving the industry as challenging work with limited career progression
    • Low cost of hiring foreign workers make it more attractive for industry players3. Limited adoption of modern practices, mechanisation and IBS
  3. Limited adoption of modern practices, mechanisation and IBS
    • Vague definition of components qualifying as IBS and lacking in standard
    • Lack of training for design consultants on ways to incorporate IBS into their designs and forced to redesign for manufacturing and assembly, leading to delays
    • Issues in cash flow for contractors who are awarded IBS contracts during procurement of IBS components. Upfront large deposits are required before component delivery as well as delayed client payments
    • Imposition of high import duties on IBS manufacturing equipment and installation machinery, impeding IBS adoption for manufacturers and contractors
  4. Limited adoption of information technology such as BIM
    • Lack of skilled talent pool able to prepare plans in BIM and effectively utilise it to liaise with stakeholders across the value chain
    • High cost of adoption of BIM software and upgrade of hardware to be compatible with the BIM software
    • Resistance in BIM adoption as it requires changing current ways of working
    • Lack of a standard object library hinders design consultants from accessing information needed
    • Limited availability of usage guidelines customised to Malaysian landscape impedes the simplification process of complex implementation
    • Lack of knowledge amongst local authorities and regulators on BIM-ready hardware and software, delaying process permits and approvals effectively
    • Lack of awareness and training amongst local authorities staff on BIM’s benefits
    • Lack of collaboration and coordination among various disciplines, including integration with the operations of a building, such as facility management for successful BIM implementation
  5. Lack of data and information-driven decision-making in the industry
    • Lack of awareness on the benefits of data sources
    • Lack of frequently updated data and only a few reliable sources that provide comprehensive and consistent information
    • Lack of comprehensive data set that includes all upcoming construction projects, price and cost and other important construction metrics
    • Lack of detailed and optimised analyses on data set that could be used to generate robust products and guide decision-making
  6. High proportion of sub-scale SMEs, including Bumiputra SMEs and entrepreneurs
    • High proportion of sub-scale SMEs, including Bumiputra SMEs and entrepreneurs
    • Limitation in reaching industry players as the industry is highly fragmented – SMEs make up 90% of contractors and majority of professional firms are sole proprietors
    • Low entry requirement driven by non-stringent registration criteria makes it easy for small contractors to fulfill
    • Low specialization among Bumiputra contractors who may not offer high quality services
    • Restriction on the ability to invest in technology and the building up of a high-calibre workforce due to the subscale nature of the majority of industry

2020 Aspirations

The productivity in the construction industry must be underpinned by the drivers of workforce, technology and processes

2020 Key Outcomes

  1. Increase productivity by 2.5 times which amounts to a target value-add of USD 16,500
  2. Pay out higher wages based on increased efficiency leading to reduced costs

The focus on productivity is aligned with the High Income goal of the 11th Malaysia Plan, as it works towards enabling higher output from the same inputs or the same or lesser input


Initiative P1
Continue investment in human capital development in construction
P1a: Streamline construction-related training programmes in Malaysia
P1b: Strengthen reach, effectiveness and comprehensiveness of training

Initiative P2
Enhance control and balance of workforce supply
P2a: Implement regular industry manpower planning
P2b: Introduce mechanisms to raise skills mix for intake of foreign workers

Initiative P3
Accelerate adoption of IBS, mechanization and modern practices
P3a: Drive scale of IBS adoption via public sector projects
P3b: Drive scale of IBS adoption via private sector projects
P3c: Propel IBS supply chain via economic mechanisms

Initiative P4
Roll out technology advantage across project life-cycle
P4a: Facilitate BIM adoption in construction industry via regulations
P4b: Establish reference centre to support the development and adoption of BIM and modern methods

P4c: Implement competency and learning management
Initiative P5
Enhance availability of strategic information via National Construction Industry Information (NCIIC)
P5a: Enhance price and cost information on industry resources

P5b: Enhance awareness and certainty on upcoming construction demand

P5c: Integrate construction related data into National Construction Industry Information Centre (NCIIC)
Initiative P6
Advance SME/Bumiputera capacity and capacity building
23 May 2017