The effect of economic situation on construction business in Malaysia

Abstract

Malaysian construction industry is one of the economic sector that contribute to Malaysian gross domestic product (GDP). Despite the contribution percentage of Malaysian construction industry to GDP averagely 3 to 5 percent of GDP, and the importance of construction industry is undeniable. In order to extend the knowledge of this economic sector, this research has been done in order to study the effect of economic situation on construction business in Malaysia. Selangor state was selected as a case study. This study used the construction value and changing behavior of construction participants that cause by challenges that exist in current economic situation as dependent variable. Multiple regression analysis has been used along with the Pearson correlation test in order to identify the correlation between variables gathered in this study. The overall result indicated that, the GDP per capita and domestic credit to private sector is significant in explaining Malaysian construction value with the correlation value at 0.828 and 0.006 accordingly. On the other hand, only material issue challenge is significant in explaining changing behavior of construction participants with correlation value is 0.441. Main contribution of this study is that in order to understand construction business, GDP per capita and domestic credit to private sector along material issue is the main factor that need to understand in order to integrate the knowledge of construction business with economic and construction participant’s behavior.