KUALA LUMPUR (Nov 9): My E.G. Services Bhd (MyEG) is planning to add the provision of foreign workers accommodation to its core business, which it expects can potentially contribute 25% or more to its bottomline as a new source of recurring income.

The new venture, via what it termed its Foreign Worker Accommodations Programme (FWAP), entails the setting up and management of centralised and integrated living quarters or hostels for the purpose of housing foreign workers, it said in a Bursa Malaysia filing today.

"The FWAP venture is underpinned by the Human Resource Ministry's announcement in May 2017 that it will amend the Standard Minimum Housing and Amenities Act 446 (1990), making it mandatory for employers to provide basic minimum standard housing for foreign workers by 2018. The FWAP will provide accommodation services that can be rented by companies for their foreign workers or directly rented by foreign workers," it said.

MyEG had, via its wholly-owned unit MY EG Sdn Bhd, incorporated MY EG Lodging Sdn Bhd as a 55%-owned unit, to oversee the FWAP. The remainder in MY EG Lodging is under Quek Tee Kiam's Bright Brillion Co Ltd (30%), Datuk Tengku Zainuddin Tengku Zahid (10%) and Mohd Farhan Dziaudin Mohd Daud (5%).

At present, MY EG Lodging has leased three sites in Melaka to operate as hostels under FWAP. Two sites are in operation and the remaining one is expected to commence operation in the financial year ending June 30, 2018 (FY18). MYEG Lodging has also leased a piece of land in Johor Bahru and is currently in the planning stage to set up two blocks of hostels at a cost of about RM48 million — to be funded internally .

Moving forward, MyEG envisioned it will set up and manage more centralised and integrated living quarters or hostels to cater for its FWAP. "The group is negotiating for additional sites and has a long-term target of opening up to 200 sites in Peninsular Malaysia," it said, adding it intends to finance the cost of that via a combination of internal funds and debt financing.

"As the group has aggressive plans to seek and secure more opportunities for its FWAP, the board expects the FWAP to potentially contribute 25% or more of the net profits of the MYEG Group or cause a diversion of 25% or more of its net assets in the future," it added.

It said the proposed diversification will take immediate effect upon obtaining the approval from its shareholders at an extraordinary general meeting to be convened.