Merger talk seen as potential game-changer for Malaysia's construction sector

By NST in November 10, 2025 – Reading time 3 minute

KUALA LUMPUR: Talk of a possible merger between IJM Corporation Bhd and Sunway Bhd, two of Malaysia’s biggest names in construction and property, has sparked excitement across the market, with experts calling it a move that could reshape the regional construction landscape if it comes to pass.

UniKL Business School economic analyst Associate Professor Dr Aimi Zulhazmi Abdul Rashid described the potential merger as transformational, creating a powerhouse with the scale, synergy, and financial strength to compete well beyond Malaysia’s borders.

The consolidation between these two giants could make the new entity one of the largest construction players in Malaysia and the entire Southeast Asian region, Aimi told Business Times.

The mere rumour has already sent ripples through the market, with investors and analysts weighing the potential impact – from mega infrastructure ventures to aggressive regional expansion.

However, both IJM and Sunway have moved swiftly to cool the speculation. In separate filings to Bursa Malaysia on Friday, both companies clarified that they are “not aware of any proposed merger.”

Aimi noted that if such a merger were to take place, it could streamline operations, enhance efficiency, and unlock significant economies of scale, boosting Malaysia’s construction competitiveness globally.

“The merger can also enhance operational efficiency and improve control over raw material costs, enabling Malaysian construction companies to compete more effectively on the international stage,” he said.

Meanwhile, Aimi said Malaysia’s construction sector remains on a steady growth trajectory, supported by robust government spending and rising private sector participation.

He noted that the sector continues to be a key pillar of Malaysia’s economy, serving as both a catalyst for national development and a barometer of the country’s overall economic performance.

“The sector’s contribution to the gross domestic product (GDP) is rebounding, with a growth rate of 17.5 per cent in 2024 and reaching 12.1 per cent in the first quarter of 2025, after a significant dip during the pandemic,” he told Business Times.

He added that the sector’s share of GDP has risen back above four per cent, driven by major infrastructure developments such as the Penang LRT and Sabah Pan Borneo Highway, alongside strong private sector activity in residential and special trades.

Aimi said the industry acts as an economic multiplier, creating spillover effects on labour demand, transportation, logistics, and the food and beverage segments.

“With the government allocating a substantial budget for 2026, this industry will continue to thrive,” he said.

The 2026 Budget allocates RM81 billion for development expenditure, a slight increase from the previous year, with a focus on public interest projects such as transport infrastructure, water infrastructure, and road maintenance.

The budget also supports the sector through public-private partnership models, the continuation of projects like the Pan Borneo Highway and Sarawak-Sabah Link Road, as well as targeted allocations for Bumiputera contractors and skills development initiatives.

“The budget is seen as positive for the construction sector, with expectations of increased activity driven by government spending and a continued focus on infrastructure development,” Dr Aimi said.

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