Big Money in land reclamation

BOOM TIME: Local industry has grown by 68 per cent since 2006 despite high project cost


MALAYSIA'S land reclamation industry is booming with a steady flow of construction jobs from the private and public sectors.

"There are many drivers that can help push the industry, such as contracts from construction companies, port operators or even the government," said Mercury Securities head of research Edmund Tham.

Land reclamation is a complex engineering activity that requires extensive knowledge and study in hydrology, geotechnical and structural engineering.

The technology involved and materials used depend largely on the environmental and geological factors at the site.

The cost for land reclamation projects is high due to the large amount of raw materials needed, use of expensive and sophisticated heavy machineries, labour force, time to complete and most importantly, the feasibility studies and engineering designs that are unique to each site.

Analysts said since 2006, the sector had grown by a resounding 68 per cent, largely due to the funds provided by the government under the 9th Malaysia plan.

Tham said having various drivers to push the industry was crucial as this meant the industry was not dependent on any one particular sector.

"The land reclamation industry can be a beneficiary of the oil and gas sector, port and logistics sector, construction sector, property sector and so forth," he added.

Among the major players in land reclamation locally are Benalec Holdings Bhd, Muhibbah Engineering Bhd and Galactic Maritime (M) Sdn Bhd.

"The good thing about this industry is that it is a very niche business and not many companies have that specialty," said Pong Teng Siew, head of research of Inter-Pacific Securities.

Another reason why the prospects of land reclaimation companies will remain bright over the long-term is that some of them receive land parcels as partial payment of the reclamation job.

Benalec, for example, owns several parcels of land in Malacca in return for the reclamation works it did there.

"Having land in return can be beneficial, especially so if the value increases," said an analyst.

The order book of privately-held Galactic Maritime currently stands at about RM220 million, comprising of reclamation projects around the Iskandar economic region, including the Nusajaya waterfront development.

The company is also involved in the upgrading of ports, harbour and navigational waterways along the Tebrau Strait, Port Dickson, Klebang in Malacca, Pulau Indah near Klang and Jambatan PIAI in Johor.

Since 2003, Galactic Maritime has been involved in marine construction works in China's southeast coastal areas, with the successful completion of projects in Zhejiang, Fujian and Guangdong

Among the major players in land reclamation locally are

Benalec Holdings Bhd (5190) @ 1.16
Muhibbah Engineering Bhd (5703) @ 0.99
Galactic Maritime (M) Sdn Bhd