KUALA LUMPUR (Feb 10) — The federal government has allocated approximately RM9.2 billion to fund Phase 1A of the Pan Borneo Highway in Sabah, covering 16 construction packages financed entirely through the national development budget.
Works Minister Datuk Seri Alexander Nanta Linggi reported that the 318km Phase 1A section has reached nearly 87% physical completion, with four work packages already finished and opened for public use. However, he noted that final project costs remain provisional, as construction is still ongoing and subject to variation orders to address technical and site requirements.
To date, 78 variation orders have been reviewed and approved by consultants, site teams and the Sabah Joint Committee, each assessed based on project needs and engineering considerations.
Phase 1B, which commenced in 2024, is still in its early stages, with progress slightly above 13%. Overall, the Pan Borneo Highway represents one of Malaysia’s largest infrastructure programmes, exceeding RM20 billion in total value and designed to improve connectivity across Sabah, Sarawak and Brunei. Construction of the broader network began in 2015 to stimulate economic growth in East Malaysia.
In Sarawak, the highway is almost fully completed, with progress reported at 99.98% as of December 2025 and full completion anticipated in 2026. Sabah’s progress has been slower, partly due to the project’s complexity. The 706km Sabah alignment is divided into 35 work packages, compared with 11 packages for a longer 786km stretch in Sarawak, creating additional coordination and procurement challenges.
The government is continuing to monitor implementation closely, with a target to complete both phases in Sabah by the fourth quarter of 2028.
East Coast Expressway 3 Moving to Next Stage
Separately, the Works Ministry has submitted a statement of need to the Public Private Partnership Unit (UKAS) to begin preparations for the request for proposal (RFP) for the proposed RM9.8 billion East Coast Expressway 3 (LPT3).
The 122km highway extension, planned to link Gemuroh in Terengganu to Tunjong in Kelantan, will be developed through a public-private partnership model using competitive bidding. According to the ministry, the procurement documents are expected to be finalised this year before being presented to the Cabinet. The project structure is designed so that it will not require direct government funding.
Implications for Property and Industrial Markets
Major infrastructure projects often have a long-term impact on logistics networks, land values and industrial expansion patterns. Improved highways and transport corridors typically enhance accessibility for manufacturers, distributors and regional supply chains.
In the Klang Valley, similar infrastructure-driven growth continues to support demand for industrial land in Selangor, factories in Puchong, and industrial property in the Subang area, where connectivity to highways, ports and airports remains a key consideration for occupiers. At the same time, infrastructure investment and corporate expansion help sustain leasing activity in commercial property in KL and office space in Bukit Jalil, particularly among engineering firms, contractors and regional headquarters involved in large-scale development projects.
As Malaysia advances its transport infrastructure pipeline, both domestic and international investors are expected to continue monitoring how new highways and logistics corridors influence industrial and commercial property demand nationwide.
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