KUALA LUMPUR, June 19 (Bernama) -- Earnings in the construction sector are expected to remain on an upward quarter-on-quarter (q-o-q) trajectory in the second quarter of 2025 (2Q 2025), supported by increased construction site activities following 1Q 2025 festive breaks, according to CIMB Securities Sdn Bhd.
The research firm said order book visibility is also improving, supported by the gradual rollout of big-ticket public projects and the potential award of up to six large-scale data centre facilities, each estimated to be worth around RM2 billion, over the next two to three quarters.
“Nevertheless, the expanded sales and services tax (SST) scope could re-ignite near-term uncertainties concerning the margins of ongoing non-residential construction jobs of lower value,” it said in a note.
CIMB Securities added that the sector is likely to see minimal impact, as contractors are expected to pass on the new tax charges under newly awarded construction contracts.
To mitigate the issue of double taxation for existing construction projects, the research firm said business-to-business exemptions are expected to be provided, ensuring that SST levies are imposed only at a single stage in the construction process.
“For ongoing government-related contracts, we do not expect contractors to face any key issues in repricing their contracts to adjust for the SST levies.
“Nevertheless, we believe that the situation is less clear-cut for existing non-residential private sector contracts, for which we estimate that about 40–50 per cent of total project cost could be subject to SST levies,” it added.
-- BERNAMA
