MANAGEMENT DISCUSSION AND ANALYSIS PROSPECTS AND OUTLOOK The pace of economic recovery in Malaysia is projected to gather further momentum amid the reopening of the economy and international borders. With better COVID-19 management and higher vaccination rates, BNM expects less disruption to domestic economic activity and spending in the event of resurgences. Malaysia will also continue to benefit from the expansion in global demand. For 2022 as a whole, the economy is expected to grow between 5.3% and 6.3%. (Source: Media release of the Bank Negara Malaysia on 30 March 2022) For the whole of 2021, the Singapore economy expanded by 7.6 per cent, rebounding from the 4.1 per cent contraction in 2020. The Singapore economy is expected to continue to expand this year, although the outlook for the various sectors remains uneven. Activities in the construction and marine & offshore engineering sectors are projected to continue to recover on the back of the progressive easing of border restrictions on the entry of migrant workers from South Asia. Nonetheless, as it will take time to fully address the shortfall in labour required to meet business needs, labour shortages are likely to persist and weigh on the recovery of the sectors. In particular, the output of the construction sector is expected to remain below prepandemic levels throughout 2022. Taking into account the global and domestic economic environment, and barring the materialisation of downside risks in the global economy, the Singapore economy is projected to expand by “3.0 to 5.0 per cent” in 2022. (Source: Media release of The Ministry of Trade and Industry of Singapore on 17 February 2022) The Group has an estimated construction and manufacturing balance order book of approximately RM1.69 billion and RM0.40 billion respectively as at 31 December 2021, contributed by numerous construction contracts and supply contracts. The Board is positive of the performance of the Group in 2022 as the balance order book is expected to support the Group’s performance for about 2 years. Nevertheless, with the economy reopening during the FY2021, the pandemic-inflicted supply chain disruptions and supply constrictions, rising cost of raw materials, higher energy costs and commodity prices and shortage of workers will continue to weigh on our operation and profitability. The supply chain constrictions and commodity price escalation are further compounded by the Russia–Ukraine war. In response to these challenges, the Group has taken measures such as placement of advance bulk purchase orders to lock in raw materials supply at a better bulk purchase price, adoption of IBS construction whenever possible to reduce reliance on labour, and negotiate with suppliers for early payment discount. Other than the aforesaid challenges, other key challenges and risks include operational, credit, liquidity, human resources and market risks. Please refer to pages 55 to 56 of this Annual Report for nature of the key risks and the Group’s control measures to mitigate the risks. Annual Repor t 2021 22
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