Market Scenario for Consulting Engineers in Malaysia PART 1

After the establishment of the Registration of Engineers Act in 1967, the number of consulting engineering firms increased and reaches nearly 2,000 at present. Until September 2014, there were about 16,537 professional engineers and 77,223 graduate engineers.  The rapid economic boom has opened up many opportunities for local professional engineers to set up their own consulting firms.

Even so, most of the consulting engineering firms focused on the domestic market than global. The previous 1980s and 1990s recession has caused many firms to downsize their operation and their professional staff. Engineer’s salary also did not budge and stagnant until now. An average salary of fresh engineers (private) paid at RM2,000.00 while the government sector paid at RM3000.00 (including allowances). Wage increases in levels of government can be seen after the recent salary review. Meanwhile, the salaries of private engineers are still in the status quo.

In September 2014, the Minister of Works of Malaysia informed that the Registration of Engineers Act 1967 will be amended in Parliament that allows the local engineers to practice engineering services abroad. However, it also opens up opportunities for foreign engineers to sign up with Board of Engineers (BEM) and offer engineering services in Malaysia.

Here are the details of the research paper by Dr. Gue See Sew, entitled: Grooming of Malaysian Sustainable Engineering Consultancy Firms For Export of Services.

Some of the key facts to ponder with:

  

1. Top five (5) Consulting Firm in Malaysia (Sepakat Setia Perunding, MinConsult, Ranhil, Bersekutu, HSS Integrated and SHMB) remain stagnant for the last 25 years.
2. Fierce competition in professional fees results in low salary for engineers and lead to brain drain phenomena.
3. The largest consulting firm (Sepakat Setia Perunding) has about 503 staffs (2010, ACEM)
4. Due to major concentration to local market, the economic downturns may result to massive downsizing and retrenchment such as those in the late 1980s and 1990s. 

Key challenges for local Consultancy Firms:

1. Most of the local Consultant targeting for local market with less ambition / capacity to export their services overseas.
2. The clients tend to look up at the foreign consultant with most of the local consultant become only as sub-consultant to foreign consultants for mega and complex project.
3. Contracts awarded (sometimes) without full consideration of the consultant’s capability and capacity especially involving the Government project.
4. And yes, fierce competition. *(Only federal projects enjoy the Scale of Fees set by BEM)
5. Limited capital investment due to current Act that prevents non-professionals from owning share in a consultancy firm.
6. Problems to retain the key senior engineers.
7. Unable to grow in size with sufficient capacity and capability to compete in the international markets.
8. Some may have an impressive CV in their company but do not have the key senior engineers in the specialized field. This may affect the project quality and performance.
9. Difficulties in retaining knowledge and experience due to lack of long term planning frameworks.