The Malaysian government expects construction material prices and supply to remain stable following the moderation of diesel prices after geopolitical tensions in West Asia eased.
Works Minister Datuk Seri Alexander Nanta Linggi said weekly monitoring showed that price increases for the country's seven major construction materials peaked at 13.3% during March and April 2026, but overall price movements have since remained relatively stable without any significant surge.
He noted that the recent decline in diesel prices is expected to help stabilise both construction material prices and market supply in the coming months.
Cement Supply Remains Sufficient
The Ministry of Domestic Trade and Cost of Living has been monitoring retail cement and diesel prices since May 2026.
According to the latest data:
No cement supply shortages were reported nationwide up to June 2026.
The highest retail cement price recorded was RM28 per bag in Labuan and Sarawak.
Wholesale cement prices remained stable at RM24 per bag.
The government observed that cement prices across different states are closely influenced by local diesel prices, as transportation forms a significant portion of construction material costs.
Higher Fuel Costs Increased Construction Expenses
Despite improving fuel prices, the construction industry has already experienced higher operating costs due to earlier increases in diesel prices linked to the conflict in West Asia.
According to the Works Ministry, higher fuel costs have increased:
Manufacturing and factory production costs.
Material processing expenses.
Logistics and transportation costs.
Overall project implementation costs.
As a result, the total cost of construction projects has increased by an estimated 5% to 10% compared with original contract estimates.
Government Strengthens Project Monitoring
To minimise the impact on contractors and ensure timely project delivery, the Ministry of Works, together with the Public Works Department (JKR) and the Construction Industry Development Board (CIDB), continues to closely monitor project implementation and strengthen on-site supervision.
The government's priority is to ensure that road maintenance works and major public infrastructure projects continue without significant disruption despite fluctuations in global fuel and material prices.
The minister also acknowledged concerns regarding projects under the 12th Malaysia Plan (12MP), particularly in Sarawak. While the government remains committed to completing critical infrastructure projects, all developments must continue to operate within their approved budget allocations.
What I Learned
The easing of diesel prices is a positive development for Malaysia's construction industry, as fuel costs have a direct impact on manufacturing, transportation and overall project expenses. Stable construction material prices help developers, contractors and suppliers plan projects more effectively while reducing the risk of further cost escalation.
Although construction costs have already risen by 5% to 10%, the government's ongoing monitoring of material prices and project implementation should help minimise further disruptions. For the property sector, greater cost stability supports better project planning, protects development margins and reduces the likelihood of delays, benefiting developers, contractors, homebuyers and infrastructure investors alike.
Yao Mu Realty, based in Kuala Lumpur, Malaysia, specializes in industrial real estate for factories and land, delivering professional and efficient solutions.
Posted by Yao Mu Realty Sdn Bhd on 9 Jul 26
Malaysia