Boosting connectivity and development via infrastructure upgrade investments in transportation, utilities and urban redevelopment.

The Penang Light Rail Transit (LRT), phase 1 of the Pan Borneo Highway, the Sarawak-Sabah Link Road (SSLR), the Green Line of the Kuching Urban Transportation System and MRT3 all share one commonality: they are included in Budget 2024’s RM90 billion allocation for infrastructure upgrades. With the rollout of contracts, the positive outlooks from research houses such as RHB Investment Bank, Hong Leong Investment Bank, Kenanga Research and Rakuten Trade in the construction sector are boosting market sentiment.

Beyond roads and rails, Miri Airport is set to be upgraded to international standards with at least RM150 million in federal funding, approved by Prime Minister Datuk Seri Anwar Ibrahim. Similarly, eight large clinics in districts such as Baram, Mulu, Marudi, Beleru and Kapit will receive upgrades. Community halls in northern and central Sarawak, along with several key bridges in isolated Kapit, will also benefit from this government funding.

In terms of technology infrastructure, the National Digital Network (Jendela) aims to upgrade Malaysia’s broadband capabilities by the end of 2025. Out of the planned 3,884 new telecom towers, 2,395 have already been built and activated, and upgrades have been made to nearly 40,000 transmitter stations. A government budget of RM206.98 million has been set aside to support infrastructure development by the Ministry of Finance, telecom companies and the Malaysian Communications and Multimedia Commission (MCMC), specifically to activate 600 towers in Sarawak. Of these, 44 towers are under construction, and telcos are prepared to operate 297 of the remaining 431 towers.

Prevailing problems and expert concerns

At the StarProperty Budget 2025 Roundtable, industry players discussed challenges that are holding back development in many regions. One of the main concerns raised was that ageing infrastructure in urban areas is failing to support growing populations. Meanwhile, emerging townships require essential amenities to become livable. Developers have been contributing to addressing these challenges by working closely with local governments and utility companies. However, participants emphasised that the government must take a more proactive role in ensuring infrastructure is developed or upgraded efficiently.

In Sabah and Sarawak, developers face significant hurdles due to underdeveloped infrastructure and poor connectivity. These issues limit the available land for development and increase the overall cost of projects. Without substantial improvements, developers argue that attracting businesses and residents to these areas will remain difficult.

Suggestions for urban and rural infrastructure improvements

To address these challenges, experts at the roundtable suggested allocating substantial funds to construct modern infrastructure, including smart city technologies and expanded train networks. By investing in such projects, both urban and rural areas could benefit from enhanced accessibility and improved quality of life.

They also called for increased government spending on public infrastructure to stimulate economic growth and job creation, particularly in emerging townships where new transportation and utility networks could attract residents and businesses. Additionally, upgrading existing infrastructure—such as expanding roads and improving flood mitigation systems—was recommended to enhance safety, reduce congestion and protect communities from natural disasters.

Urban redevelopment and incentives

During the discussion, urban redevelopment was highlighted as a key issue. It was suggested that developers could be incentivised to take on redevelopment projects through special tax incentives. These incentives could be implemented via amendments to the Urban Redevelopment Act, encouraging the redevelopment of existing housing stock and addressing the rising costs associated with brownfield projects.

Another suggestion to help speed up infrastructure development was leveraging the public-private partnership (PPP) model. By involving the private sector through build-operate-transfer (BOT) or land swap arrangements, the government could accelerate the construction of schools, clinics, police stations and other public amenities.

Rehda president Datuk Ho Hon Sang raised concerns about developers being required to contribute to infrastructure upgrades beyond the boundaries of their own projects. He argued that while developers can manage infrastructure within their own developments, they cannot be expected to tackle infrastructure that lies several kilometres away, such as bringing in water supply from distant locations. Ho suggested that local agencies should handle such external infrastructure issues instead.

Regional challenges in Sarawak and Sabah

Sarawak Housing and Real Estate Developers’ Association (Sheda) deputy president Louis Ting highlighted the unique constraints faced in Sarawak. The state’s size and lack of connectivity make infrastructure development difficult and slow. The Pan Borneo Highway, for instance, has taken over a decade to reach 98% completion. Without proper transport infrastructure, industries in the region struggle, limiting foreign investment opportunities.

Sabah Housing and Real Estate Developers Association (Shareda) president Datuk Chua Soon Ping pointed out that developers often bear the cost of pulling utilities from several kilometres away.

Similarly, developers in Sabah face significant challenges regarding electricity and water supply. Sabah Housing and Real Estate Developers Association (Shareda) president Datuk Chua Soon Ping pointed out that developers often bear the cost of pulling utilities from several kilometres away. This significantly raises development costs, leading Chua to call for clearer policies that place responsibility for external infrastructure on the relevant authorities.

UEM Sunrise Bhd CEO Sufian Abdullah emphasised that overspending on road systems has made road transport cheaper than rail, which undermines the economic potential of rail freight.

UEM Sunrise Bhd CEO Sufian Abdullah also shared his perspective, noting that the country has missed opportunities to invest strategically in rail systems. He emphasised that overspending on road systems has made road transport cheaper than rail, which undermines the economic potential of rail freight. Abdullah suggested that, had the government made different choices in the past, high-speed railways could now be more viable, helping open up economic gateways across Malaysia.

Land use and school provision

Another area for improvement is the government’s approach to land use for schools. The current requirements for land surrender should be revisited, with surplus land returned to developers after a period of disuse. As the population growth rate slows and more students enrol in private schools, the demand for special education schools has also grown. The government should adopt a more holistic approach to school provision, ensuring that the supply aligns with actual demand in various regions.

Sabah and Sarawak’s unique infrastructure needs

Improving infrastructure in Sabah and Sarawak should be a government priority, especially in areas like water and electricity supply, expanding public transport, upgrading ports, and increasing international flights. In particular, Sabah should transition away from its reliance on diesel and gas for electricity generation and invest in renewable energy sources like solar and hydropower. This would reduce the nation’s carbon footprint and improve energy security.

The Budget 2025 allocation for infrastructure upgrades reflects the government’s commitment to enhancing connectivity, promoting sustainable development and improving the quality of life for Malaysians. Significant progress has been made in various areas, such as transportation, healthcare and telecommunications. However, challenges remain, especially in regions like Sabah and Sarawak, where underdeveloped infrastructure and poor connectivity continue to limit growth.

To overcome these challenges, the government should actively support developers, invest in key infrastructure projects and implement effective land-use policies. By doing so, Malaysia can ensure that its infrastructure development meets the needs of its growing population and contributes to a more prosperous and sustainable future. The successful execution of these projects will be vital in supporting long-term economic growth and improving the overall standard of living across the nation.

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