Facilities Management in Malaysia

Prior to Independence: Laying the foundation

The facilities management industry in Malaysia evolved in tandem with the construction industry. Prior to Independence in 1957, our colonial masters build some of the basic infra structures for the economy to strive. Their contribution to the construction of these basic infrastructures includes the Penang Port, Port Swettenham (now known as Pelabuhan Kelang), railway stations and the rail network, air strips in Taiping, Alor Star and Sungai Besi with the latter being turned into an international airport in 1956, road networks along Federal Route 1 and its extension to the east coast, the hydroelectric dams in Chenderoh and Temenggor, water treatment plants, telephone exchanges in the main towns and telegraph services, administrative buildings which includes the infamous Bangunan Sultan Abdul Samad, schools, hospitals, places of worship and prisons. Likewise similar infrastructures on a smaller scale were also constructed in Sabah and Sarawak by the British. All these facilities had to be operated and maintained upon its commissioning after construction.

1957 – 1980: Strengthing the foundation

Upon Independence, the Government continued to expand vigorously on the facilities build by the British. Starting with the completion of Stadium Merdeka just in time for the declaration of Merdeka on 31 Aug 1957, other major landmarks, to name a few, followed suit. Stadium Negara in 1962, relocation of University Malaya in 1962, The Parliament Building in 1963, Masjid Negara in 1963, Muzium Negara in 1963, Subang Airport in 1965, Angkasapuri in 1968 and Bank Negara in 1971. The Government continued its investment in facilities meant for public services like provision of water, electricity, sanitation, health, transportation, telecommunication, defences etc. The Government invested in expanding Port Klang and the Federal Highway was completed in 1967 to enhance connectivity to the Port. This period also witnessed the introduction of television network services. The Government invested in underwater cable connections between the Peninsula and Sabah & Sarawak. Investment was also made to build the earth satellite stations to widen the coverage of the television and radio services.

The private sector’s involvement in the construction of facilities was also notable. With the provision of the first electricity supply in the Rawang town by two contractors to the building of the Federal Hotel in Jalan Bukit Bintang just in time for the declaration of Merdeka in Aug 1957, the private sector’s contribution to construction were limited to commercial activities like shop lots and low-rise office space buildings in town centres. With the upswing of economic activities which required bigger working spaces, the banks, insurance companies and hotels led the construction of high-rise buildings in the 1970s. The mid-1970s also witnessed the construction and operations of shopping malls. With the Government’s efforts to attract foreign investment especially for manufacturing by providing incentives via free trade zones, there were factories being constructed and commissioned in satellite towns like Bayan Lepas and Petaling Jaya.

In the 1960s and 1970s, provision of hard services ie the mechanical and electrical maintenance were either carried out by in-house technicians or services of external technicians were provided on a need basis for more complex problems especially to the OEMs (Original Equipment Manufacturers). Soft services like cleaning, landscaping and pest control was either done by in-house staff or part timers were engaged on a contractual basis. The Government itself realised the need for all the facilities needing proper maintenance and starting providing allocations with effect from the Second Malaysian Plan 1971 – 1975.

The rapid development of infrastructures during this period warranted fast tracking of technical and vocational education to fulfil the demand for competent technicians and engineers.

1981 – 1990: Privatisation

The 1980 witnessed construction projects on bigger scales by both the public and private sector covering every sector. The Government embarked on the strategic North South Expressway. The expressway was opened by Sections with toll collection. The revenue generated was used to fund the completion of the remaining Sections. Kuala Lumpur and other major towns witnessed the completion of a few skyscrapers by both the public and private sector. The Government continued to invest in extending the coverage for the supply of clean water, electricity, sanitation, healthcare and education facilities. The Penang Bridge was completed and was opened to traffic in Aug 1985.

As there were high rise properties being developed for residential use for ownership, the Government introduced the Strata Titles Act 1985 that enable the issuance of strata titles to individual owners.

Investment in industries began expanding by both multinational corporations and local entrepreneurs. This gave rise to sprouting of new factories and expansion of existing production facilities. This was when the Government decided to manufacture its own national car with an assembly plant constructed in Shah Alam.

Facilities began to be fitted with the latest building technologies with lifts being operated with electronic components, building automation systems, comprehensive fire fighting systems etc. This period saw the introduction of the usage of computers to manage buildings.

It is during this period that the Government made a strategic move to privatise some of its services in line with the Malaysia Incorporated Policy. The first  major service that was privatised was telecommunication. Jabatan Telekom was privatised into Syarikat Telekom Malaysia on 1 Jan 1987. Lembaga Letrik Negara followed suit and was privatised as Tenaga Nasional Berhad on 1 September 1990. The Government liberalised television broadcasting and allowed a private entity to have it own TV channel, namely TV3 which became an instant hit.

This period also saw the introduction of the Valuers, Appraisers and Estate Agency Act 242 in 1981. The profession of managing built environment in Malaysia was formalized by the introduction of this Act. This gave recognition to the property managers as the legitimate practitioners to manage and control any land and building excluding property-based businesses.

With more facilities being built and commissioned, asset owners found having in-house full teams to provide the hard and soft services to maintain the facilities becoming inefficient cost wise. This gave rise to business opportunities for companies to provide M&E, cleaning, landscaping, pest control, physical security and parking services. Some asset owners began to outsource both their hard and soft services.

1991 – 2000: Mega Projects

With the confidence gained from constructing and operating all the basic infrastructures nationwide, the Government was emboldened to embark on mega projects namely the Kuala Lumpur City Centre with the iconic Twin Towers, Menara Kuala Lumpur, the shift of the Government administration to Putrajaya, the Bukit Jalil Sports Complex, Kuala Lumpur International Airport, the Express Rail Link to KLIA, the two Light Rail Transit systems and the KL Sentral Project. All these projects were being implemented concurrently. The private sector followed suit with the development of Mid Valley, Subang Jaya and Bandar Sunway. Another significant development was the launch of Port of Tanjung Pelepas in 2000. Similar developments in a smaller scale were also taking place in other major cities in Malaysia. KTM completed its double tracking electrification project in 1995 and commenced the KTM Komuter services in Klang Valley. While the construction industry was buzzing with all these mega projects, the Government continued with its expansion and upgrading of basic services in health education, water supply, sanitation, transportation and defense.

This decade saw the introduction of satellite broadcasting services in Malaysia by Astro. This decade also saw the rapid development of the mobile cellular services with Telekom introducing cellular services under the ATUR brand name in 1985. The provision of internet services to the public took off in 1992 via JARING. With the rapid pace of development taking place in the telecommunicate space, the Government introduced the Communications and Multimedia Act in 1998 and this provided for the formation of the Malaysian Communications and Multimedia Commission (MCMC) in 1999 which was made the regulatory body taking over from Jabatan Telekomunikasi Malaysia and MCMC was placed under the Ministry of Information. The Government recognized that telecommunication space is the next growth sector and introduced the granting of the Multimedia Super Corridors (MSC) with tax breaks given to fresh investments in commercial areas which were highly dependent on digital networks. Cyberjaya was developed as a Silicon Valley equivalent of Malaysia.

With the economy booming and the construction industry hitting an all-time high, the Government saw a need to regulate the industry with the introduction of the Construction Industry Development Board Act (Act 520). The objective of the Act was to build capacity and competencies amongst contractors to conform with set standards and raise the quality of construction with the ultimate aim of enabling local contractors to compete globally. The impact of the CIDB Act on the facilities management industry was that the interpretation of “construction” included the post construction of operating and maintaining facilities that were constructed and commissioned. This meant that the facilities management industry began to be regulated by CIDB.

To ensure sufficient supply of electricity to meet the demands of the fast-growing economy, the Government liberalized the production of electricity by introducing Independent Power Producers which lead to construction activities for this purpose. Construction of the Bakun Dam commenced in 1996. Supply of treated water was under thus jurisdiction of State Authorities. This period saw initiatives taken by a few State Authorities beginning to privatize the supply of treated water beginning with Johor. In 1994, the Government privatized the managing of sanitation to a privately owned company, Indah Water Consortium. The concession got cancelled and IWK became wholly owned by the Government since 2000.

The rapid urbanization also led to demands for proper housing in Klang Valley. With limited land available and prices having soared, led to the rapid construction of apartments and condominiums.

The completion of the above stated mega projects contributed to a sudden increase in demand for services mainly in the operation and maintenance of physical assets. This demand was for massive engineering and non-technical service maintenance which had created a lot of activities for the maintenance contractors. Although engaged on a short to medium term service contracts by various government departments, local authorities and private companies, these maintenance contractors have been able to sustain themselves by the maintenance contracts available.

The evolution of maintenance management through in-house service providers for the property market has taken a new form of engagement in early 1996 by outsourcing contracts awarded to local and international service companies. This further developed into an Integrated Facility Management service contracting. The Privatization of the Malaysian Healthcare Support Services with an objective to increase efficiency marked the starting point of outsourcing of Facility Management services by the Government.

2001 – 2010: Asset Management

During this decade, the construction industry took a breather after the economic downturn due to the 1997 financial crises. The focus turned to proper maintenance of the newly commissioned mega projects. Activity in the construction industry was demand based especially for housing. The demand for residential properties in urban areas especially in Klang Valley and Penang was being met by high rise apartments, condominiums and public housing flats. Infrastructure projects mooted by the Government continued for new highway projects, drainage, irrigation and flood mitigation projects, construction of schools, colleges and universities, hospitals and clinics. Work on the Penang second bridge commenced in 2008. Work on the SMART Tunnel commenced and was opened to traffic in 2007 which helped ease the frequent flooding in the city center and also to ease traffic flow into and out of town center. KTM’s double tracking electrification projects continued and some sections were opened for KTM Komuter services. With the double tracking electrification being completed from Gemas to Padang Besar, KTM launched the ETS in 2010. The Government also announced the extension of both the existing LRT Lines in Kuala Lumpur in 2006 and construction started soon after.

With an increased concern for sufficient electricity cost at a reasonable price for the consumer added with a global concern to reduce reliance on fossil fuels and to harness renewable energy, the Government introduced the Energy Commission Act 2001 and with it the Suruhanjaya Tenaga was established in 1 Jan 2002 replacing the Department of Electricity and Gas Supply. Likewise, the Government became concerned with debts totaling RM 8 billion raked up by the State Authorities in supplying treated water with quality often not meeting standards, the Government moved to amend the Federal Constitution to make supply of treated water to be a joint responsibility of the Federal and State Governments. This was followed by the introduction of the Water Services Industry Act 2006 which led to the establishment of the Suruhanjaya Perkhidmatan Air Negara which is a technical and economic regulatory body for the water supply and sewerage services for the Peninsula Malaysia and the Federal Territories. With the increasing demand for cellular and internet services, the Telcos were making heavy investments in upgrading their networks and base stations.

In 2007, maintenance had taken the spot light of events when multiple failures of government-owned building hit by a series of unprecedented failures which caused an alarming situation for the construction and maintenance industry. These events prompted the Government to relook on the practices in managing the development and maintenance of public buildings which seemed to be ineffective and poor in supervision. A more robust, systemic and cost-effective approach was required to stop this from occurring in the future.

Subsequent to these catastrophic events, the Public Works Department in collaboration with a private company in facility management services had jointly organized a convention known as National Asset and Facility Management Convention (NAFAM) 2007 with the theme ‘Asset and Facility Management: Coping with Future Challenges’ to address this pressing issue.

The objectives of NAFAM 2007 were:

• Create awareness on current issues and challenges in managing government
• Assess strength and weaknesses of current system, its effectiveness and
• Explore ways to maximize and improve the quality of government assets.
• Formulate a blueprint/master plan for centralised national asset and facility

The NAFAM 2007 which had promoted the asset management concept has consequently brought the government to formulate a new policy for managing public assets. A committee chaired by the Chief Secretary to the Government of Malaysia introduced a comprehensive ‘Polisi Pengurusan Aset Kerajaan’ (Government Asset Management Policy) and a manual ‘Manual Pengurusan Aset Menyeluruh’ (Total Asset Management Manual) that set a new direction for the government ministries, department and this new approach covers the entire life-cycle of the physical assets from planning to construction during the project development and operational phase right up to disposal of the asset. The new policy was launched by the former Prime Minister Y.A.B. Tun Abdullah Hj. Ahmad Badawi on 31^st  March 2009.

The newly launched Government Asset Management Policy (GAMP) would spur growth in the asset management field, making Malaysia a regional leader and the pioneer in asset management in this region. At this stage, other countries were already referring to Malaysia’s practices in asset management.

The GAMP is in line with the government’s emphasis on public service as the pillar of long-term economic growth for the country. The government assets encompassed in the policy are intellectual property, live assets, movable assets/ intangible assets (non-physical) such as inventory and goods as well as non-movable / tangible (physical) assets such as land, infrastructure and buildings.

The GAMP serves as a guideline on the management and maintenance of facilities, evaluations of risk and value, project and contract management as well as ensuring the safety and quality of facilities. The GAMP would guide effective asset management in each government agency from ministry to district levels.

Following the success of NAFAM 2007, NAFAM 2009 was held in October 2009 bringing forward the theme of “Enhancing Values through Total Asset Management in the Tenth Malaysia Plan”. The objectives of NAFAM 2009 were :

• To explore innovative ideas for an effective engagement of Total Asset Management in the Tenth Malaysia Plan.
• To create a platform for sharing of experience in achieving high value return on asset
• To formulate sustainable integration of asset planning, life-cycle costing, monetization, performance monitoring, good governance and best- practices in managing the Malaysian built-environment.

The convention was successful at achieving the objectives. Major issues that have been brought forward by the participants include:

• No integration of physical planning among government agencies on asset development which causes major losses of various government resources.
• Return of investment uncertainty to the industry in the provision and management of government assets.
• Negative public perception towards the transparency in government asset acquisition.
• Ad-hoc and reactive nature of asset management practices that causes shortening of life- span and decreased level of reliability of asset functions, as well as the increase of management cost borne by the government.
• The lack of ability in asset management skills, budget and technology.
• The increase of failures in development projects and asset management.

Resolutions were formulated by the NAFAM 2009 committee to address these issues. For effective maintenance of public assets, it is important that the Government policy on asset management is complemented with a strategy. Towards this, the Government reviewed its current practices in managing the development and maintenance of public buildings in achieving a more robust, systematic and cost-effective approach. The launching of the “Manual Pengurusan Aset Menyeluruh” is part of its strategy to realize the desired approach. With this launching, all Government assets are to be managed and maintained in accordance to the Manual Pengurusan Aset Menyeluruh.

In short, even though the construction industry was slightly muted compared to the previous decade, the construction industry continued to thrive but it was a period of consolidation and paying attention to asset management. It was during this period that the facilities management practitioners began interacting actively on the need to be professionally networked to dictate standards and public policies. This led to the formation of Malaysian Association of Facilities Management (MAFM) in 2005. One of the outcome of NAFAM 2007 was to re-energize MAFM and make it an active Association to assist the Government to develop the FM industry. Hence MAFM’s constitution was amended and was led by a mixed group of experienced FM practitioners, asset owners, service providers and academicians that paved the way for MAFM to play a prominent role in the following decade.

2011 – 2020: Mega Projects 2.0

The start of this decade saw a slew of projects taking off with the commencement of the KLIA Terminal 2 Project to meet the demands of the fast-growing budget airline industry. The KLIA Terminal 2 was completed and opened for operation in 2014. This was followed by the announcements of the TRX Project with the work on the infrastructure starting in 2015 with the  Exchange 106 being completed in 2019 exceeding the height of the KLCC Twin Towers. The Government soon committed to the start of the Mass Rapid Transit Projects (MRT) which involved two lines. The construction of the Kajang – Kwasa Damansara Line started in 2012 and was fully operational in 2017. The construction of the second MRT Line from Putrajaya to Kwasa Damansara started in 2016.  The extension of both the LRT lines was completed and open to public in stages between 2015 – 2016.

PNB then announced the start of the Warisan 118 Project in 2014 and when completed will be the second tallest building in the world. To complement the electrical train services (ETS) plying from Padang Besar to Gemas and then eventually to Johor Bahru in 2025, the Government announced the start of the East Coast Rail Link Project in 2017 that would provide ETS to connect the east coast to the west coast. As traffic congestions in Klang Valley started to get unbearable, the Government got into a BOT agreements with concessionaires for the Sri Petaling Ulu Klang Expressway (SUKE) in 2012, Damasara Shah Alam Expressway (DASH)  in 2015 and Setiawangsa Pantai Expressway (SPE) in 2016 with all the projects to be completed between 2022 – 2023. PLUS expanded the south bound portion of the North South Highway between 2012 – 2015 from 2 to 3 lanes and 3 to 4 lanes for certain stretches to ease congestion. The Pan Borneo Highway Projects were announced in 2015 and 2016 respectively for Sarawak and Sabah. With almost all the citizens getting supply of treated water, the Government took action to replace the old pipes with newer ones.

With the introduction of smartphones, the demand for bandwidth grew manifold and the telcos were playing catch up in upgrading its infrastructures to meet the demand. Telekom Malaysia had to also invest in replacing their cables to fibre optics as the demand for bandwidth from commercial and residential clients increased exponentially.

As the number of high rise residential and commercial properties with strata title becoming prevalent, issues related to construction defects and upkeep of common areas was on the increase and becoming contentious. To address these problems, the Government introduced the Strata Management Act (SMA) in 2013. With the SMA requiring the collection of the management fees and sinking fund to be properly handled, the Board of Valuers, Appraisers and Estate Agents amended its Act to provide for a clear role for Property Managers and the Act was amended and renamed as Board of Valuers, Appraisers, Estate Agents and Property Managers and this was enforced beginning Jan 2018.

ISO 41001: 2018 Facility Management was published in Apr 2018. MAFM through Jabatan Standard Malaysia was represented in the Technical Committee that started work on the drafting of the ISO 41001 since 2012.

CIDB introduced the registration of Facilities Management contractors under the code F01 and F02 in 2018 after a series of consultations with MAFM and other related stakeholders. One of the stringent requirements for the registration of the FM contractors was to have at least one representative from their management and one representative from the executive to attend the FMM and FME course and obtain a pass in the examination set during the course. MAFM was involved in the formulation of the FMM and FME modules. This is to ensure FM practitioners are competent and capable of delivering services to meet the expectations of their clients.

The concept of Industrial Relations 4.0 was first introduced at the 2015 World Economic Forum. It is meant to explain the joining of technologies like artificial intelligence and gene editing to advanced robotics that blur the lines between physical, digital and biological worlds. Fundamental shifts are taking place in how the global workplaces operate though ongoing automation of traditional practices using modern smart technologies, large scale machine to machine communication, self-monitoring and the use of smart machines that can analyze and diagnose issues without the need for human intervention. In the build environment, usage of IT began in the mid-1980s through Building Automation Systems and building equipment that operated with electronic chips. Autocad was used to design building plans since the 1980s. Applications were then used in the 1990’s to ease the day-to-day management of facilities. Sensors were then introduced to interact with building equipment and the workspace environment to alert building managers of hotspots and for energy management. Building Information Modelling (BIM), the 3D version of Autocad began to be used in the early 2000s. From its early stages where BIM was primarily used for the design and construction stage, it has now been developed to manage assets through its entire life cycle. This is of immense assistance to Asset and Facilities Managers. Asset Managers have begun to use robots to manage their facilities especially for janitorial services. Separate building equipment has evolved over time and has incorporated advance features of digital components and this includes the HVAC, Fire Fighting, Security and other systems. In the IR 4.0 era, digital platforms are created to pool data from these systems and sensors installed. Using data analytics, the facilities managers will be able to make timely decisions to manage assets in a more efficient manner.

In light of all these latest trends and developments, the Works Ministry organized the third NAFAM in 2018 with “High Performance Asset – Forging Ahead” as the theme. The objectives of NAFAM 2018 were to:

• Establish a knowledge and experience sharing platform to drive the direction of the National Asset Management development.
• Formulate a strategic plan for the development of a more sustainable and high-performance National Asset Management and Facilities industry.
• Exploring innovative technologies and asset management sophistication in the Industrial Revolution Era 4.0.
• Pioneering new opportunities in the Asset and Facility Management Industry globally.

With global leaders in the asset and facilities management presenting papers, NAFAM 2018 was successful in creating a knowledge and experience sharing platform that had a significant positive impact on the direction and improvement in  asset and facilities management policies towards a more sustainable and high-performance one. NAFAM 2018 was concluded with the adoption of the following resolutions:

• To establish a center of excellence for the industry’s management of assets &facilities at the national level.
• Provide a strategic model of acquisition based on the principle of Total Life Cycle Asset Management to ensure high-performance assets towards sustainable development.
• Establish a strategic framework of Asset & Facility Management practices in accordance with IR4.0
• Improving planning methods and preparation of specific budgets for Government Asset Management based on Asset Life Cycle.
• Strengthening the Asset Monetization Policy for the purpose of generating income from existing Government assets.

Various Government agencies have been roped in to take the lead to take necessary actions to implement the above resolutions. MAFM has been involved in providing industry inputs for two of the above resolutions.

In 2020, the Covid 19 pandemic set upon the whole world and all economic sectors had to be agile to pivot to the new work norms. Facilities Managers were the hidden first responders to ensure the front-line service providers were able to perform their work as expected. Facilities Managers had to deliver what was being demanded by asset owners to enable the front liners were provided a safe work environment as per daily instructions that were being issued by WHO and local authorities. It was a very challenging time for facilities managers just like what was faced by practitioners in other sectors but the experience provided a playbook for Facilities Managers to improvise and to be used to manage any future disruptions.

Another interesting development in the local facilities management industry was the Government’s Private Finance Initiative where the construction of a few local university campuses were awarded to contractors under the Build, Lease, Maintain and Transfer model based on a concession agreement. Under this model, the contractor is  responsible to ensure that the construction meets the quality standards so that there will not be any issues during the maintenance period which could pose financial implications to manage the asset. The contractor was made to be responsible for managing the facility efficiently during a crucial part of the asset life cycle. It encompassed implementation of total facilities management framework. This is a game changer for facilities management contractors to upgrade their competencies and skill sets to venture into this business model as it comes with its own financial risks.

As a whole it was a very interesting decade for the facilities management industry as the regulatory agencies were slowly but surely putting in place controls and setting standards for the healthy growth of the industry.

2021 and beyond

The beginning of this decade witnessed all economic sectors grappling with the impact of the total shutdowns during the peak of the Covid 19 pandemic. Some capital intensive committed mega projects had to be reviewed by the Government and slightly down scaled to reallocate funding for capex projects. The decisions for new capex projects were held back. The approved 12^th Malaysian had to be reviewed and re-tabled to the Parliament.

Some of the mega projects where construction was at the tail end during the last decade were completed and commissioned to be used by the public in 2022 and 2023, namely the MRT 2 Project, SUKE, DASH and DUKE lll. Interestingly substantial allocations were made in the revised 2022 Budget and the 2023 Budget to upgrade dilapidated clinics and schools. The owners of these Government assets should be taking this matter seriously to ensure all government facilities are properly maintained and not to allow these facilities to be run down in future. Lessons on asset management need to also be learnt from the shutdown of the train services between the main and satellite terminal in KLIA and also the lengthy shutdown of faulty escalators in some LRT and MRT stations.

The roll out of the 5G bandwidth which as planned in 2020 with the formation of Digital Nasional Berhad resulted in all th telcos to sign up and was rolled out in stages beginning mid-2023. Warisan 118 is expected to be operational in 2024. Both packages of the Pan Borneo Highway is in full construction mode and will be opened in stages in 2025. ECRL is expected to be completed and will open for public use in 2027. The Government has made allocations for mitigation projects for flood prone areas. Investments will also be made for treated water supply in Kelantan.

This decade will be challenging for the construction industry as the Government will be extra careful in committing to mega projects whilst managing its funds to service its huge national debts. It is expected that allocations for CAPEX will be restricted to mitigate existing problems and to cater for natural growth in demand for basic services. As for the private sector, investments in commercial developments will definitely see a slow down as the property market is facing an oversupply of vacant spaces. However, construction for residential properties will continue to go on as there will always be a demand.

Whilst there are opportunities to explore digital technologies to enhance service delivery in the facilities management industry, the investment for such technologies can be substantial. With both the public and private sector facing the financial crunch, the FM practitioners need to be cautious in committing to initiatives that require huge capital outlay. Perhaps it is time for the FM Practitioners to build their capabilities and competencies with smart investments in digital technologies to step up their quality of service delivery.

It is in this decade too where there will be a demand from asset owners for FM service providers to comply with ESG frameworks. FM service providers need to incorporate the compliance with the ESG requirements in their business plans.

There are opportunities to be explored by the regulatory agencies and the FM stakeholders for the FM Industry to operate more efficiently. There are on going discussions between the stakeholders to this effect. Watch out for this space, to keep the FM Industry updated on future developments.