Budget 2025: A Rakyat-Focused Approach and Its Impact on Local Players

The recently announced Budget 2025, to the surprise of many, steered away from the traditional mega infrastructure projects and instead focused more on people-friendly initiatives. Despite this shift, the third Madani Budget continues to break records with an allocation of RM421 billion, out of which RM335 billion is dedicated to operating expenses, while RM86 billion is earmarked for development expenditure.

Among the highlights of Budget 2025 is a substantial allocation of RM6.7 billion directed toward rural development in Sabah, including vital infrastructure such as roads, clean water, and electricity supply.

Additionally, the continuation of the Pan Borneo Highway Package 1B with 17 packages is expected to receive RM9.7 billion, covering important routes such as Kota Belud to Kudat and Telupid to Ranau. These projects are likely to benefit local contractors and material suppliers, particularly in cement, steel, and precast materials, as they take on infrastructure work in these regions.

In Sarawak, the focus will be on enhancing internet access and clean water supply in rural areas, with the Sabah-Sarawak Link Road (SSLR) valued at RM7.4 billion, scheduled for finalisation by the end of the year. This infrastructure boost could result in strong demand for construction materials and services, providing significant opportunities for players in these sectors.

One of the standout elements of Budget 2025 is the increased investment in the National Energy Transition Facility, which sees its fund grow to RM300 million from RM100 million in the previous year. This investment supports key initiatives such as e-Rebate programs, carbon tax incentives, and renewable energy projects like the Kenyir Floating Solar Hydro Hybrid Farm and the Terengganu Green Hydrogen Hub, which are expected to generate up to 1,000 MW.

Additionally, the Large Scale Solar (LSS) program is set to produce up to 2,000 MW, further enhancing the country’s push towards renewable energy.

While these large-scale infrastructure projects are good news for local contractors, there are considerations to bear in mind. The increase in minimum wage from RM1,500 to RM1,700 may put pressure on contractors, especially those with a large workforce. As a result, material suppliers could emerge as a safer bet for investors, as they are less likely to feel the direct impact of wage hikes while continuing to benefit from increased demand due to ongoing projects.

One company that stands to benefit from this is Meta Bright Group Berhad, which recently acquired Expogaya, a material supplier based in Sabah. With its foothold in the booming construction material sector and exposure in renewable energy-related infrastructure projects, Meta Bright is well-positioned to tap into the opportunities brought about by Budget 2025.

In summary, while the lack of new mega infrastructure projects may have surprised some, Budget 2025 lays out a promising landscape for companies involved in infrastructure, construction materials, and renewable energy, offering new growth opportunities, particularly in Sabah and Sarawak.