Building And Property Sector: Navigating Oil Shocks
Malaysia’s building and property industry is facing a period of higher input costs and tighter public spending discipline as global oil price volatility reshapes the macroeconomic landscape, said Deputy Minister of Economy Dato’ Indera Mohd Shahar Abdullah.
Speaking at the Malaysia Building & Property Summit 2026 in Kuala Lumpur, he said Brent crude has climbed sharply from Budget 2026 assumptions of US$60 to US$65 per barrel to about US$87 recently due to geopolitical tensions in the Middle East, warning that “construction input costs are rising, steel, cement, transport fuel, and site equipment costs are all under upward pressure.”
He added that global commodity prices are expected to rise by around 16% in 2026 according to the World Bank, meaning “margins will be tested” across the construction value chain. However, he stressed this represents “a temporary deviation rather than a structural break,” noting Malaysia’s experience in managing oil shocks and global volatility.
“The government’s role is to maintain macroeconomic stability and protect the conditions for the private sector to do its work, and that commitment is firm,” he said, adding that Malaysia’s 5.2% growth in 2025 and projected 4% to 5% expansion in 2026 provide a resilient backdrop supported by domestic demand, infrastructure investment and tourism recovery.
He highlighted that the construction sector contributes around 3.5% to 4.5% of GDP but has a much wider economic impact through its linkages to steel, cement, glass and timber, stating that “when this industry moves, the economy moves with it.”
Looking ahead under the 13th Malaysia Plan (13MP), he said development will be guided by four pillars including inclusive growth, economic upgrading and sustainability, with major emphasis on affordable housing reform, catalytic regional projects such as the Johor-Singapore Special Economic Zone and continued rollouts of MRT3, ECRL and Pan Borneo Highway.
He also underscored a stronger role for public-private partnerships as fiscal space tightens, saying “PPP becomes essential, not optional” as private capital and execution capacity are needed to complement government-led catalytic projects.
