Malaysia Infrastructure Report Q1 2013

BMI View: We believe we are seeing the peak of the current construction cycle in Malaysia, withconstruction real growth reaching 18.3% year-on-year (y-o-y) in Q312 (July-September), lower than the22.2% y-o-y in Q212. Therefore, even though we have revised up our full-year forecasts for 2012 toreflect the new Q312 data - construction real growth is forecast to reach 15.5% y-o-y in 2012 (previously11.5% y-o-y) - we expect Malaysia's construction sector to grow at a slower rate going forward, withconstruction real growth forecast to reach 7.2% in 2013. This outlook is primarily because we expectheadwinds from a weakening global economy to grow in severity and dampen demand for residential andnon-residential buildings.

Key developments that will impact growth:

In September 2012, Tan Sri Syed Hamid Albar, chairman of the Land Public TransportCommission, said that the feasibility studies for the second and third lines of the mass rapidtransit (MRT) system development in the Klang Valley, Malaysia are likely to be concluded byearly 2013. MRT Corporation will then require government's approval to beginimplementation, with all the three MRT lines scheduled to become operational by 2020.

In October 2012, Tenaga Nasional (TNB) secured a MYR3bn (US$978mn) contract fromMalaysia's Energy Commission to construct, own and operate a power plant in the northern stateof Penang, Malaysia. The company will build the 1,071MW combined-cycle gas turbine(CCGT) plant in Prai. The plant, which will become operational by March 2016, is aimed atfulfilling an increase in power requirements for peninsular Malaysia by 2016 and 2017.

In November 2012, we estimate 53 out of a total of 85 packages have been awarded, with all ofthe 19 key construction contracts (viaducts and stations) for the Blue line awarded. Other keycontracts awarded: Siemens for the electric trains, Siemens and Hisniaga for the depotequipment and maintenance equipment; Bombadier for signalling and train control system;Meidensha for power supply and distribution; Mitsubishi Heavy Industries for track work;Sumitomo for design, engineering, procurement and installation of track works.

In November 2012, Bintulu Port Holdings was given the task to build, own and operate theSamalaju port. The first phase of the project is expected to cost MYR1.8bn (US$590mn) andhave an annual handling capacity of 18mn tonnes of cargo for industries operating in SamalajuIndustrial Park (SIP), which is part of the Sarawak Corridor of Renewable Energy (Score). Theproject is expected to be completed in Q116.