CIMB takes legal action to halt PLUS Malaysia’s RFID plans

This article first appeared in The Edge Financial Daily, on December 18, 2018.
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KUALA LUMPUR: CIMB Group Holdings Bhd has initiated legal action against PLUS Malaysia Bhd, claiming the latter has breached its obligations under a 1998 joint-venture agreement (JVA) in relation to Touch ’n Go Sdn Bhd, by launching its own toll collection system.

In a stock exchange filing, CIMB said it, together with its subsidiary CIMB SI 1 Sdn Bhd, filed and served a notice of arbitration against PLUS yesterday. “The company and CIMB SI 1 are seeking to invoke the arbitration agreement contained in the JVA in relation to disputes that have arisen with PLUS in connection with and/or under the JVA,” it said.

“The claim by the company and CIMB SI 1 is that, amongst others, PLUS had breached the obligations it owed to the company and CIMB SI 1 under the JVA by commencing and launching its own PLUS radio frequency identification (RFID) system,” CIMB added.

In the legal action, CIMB is seeking, among others, an injunction to restrain PLUS from engaging in further business of the PLUS RFID system, together with damages, interests and costs.

The move came after PLUS said last month it would commence operations of its RFID open payment system beginning Dec 15 at the Penang Bridge, Butterworth-Kulim Expressway and the Jitra toll plaza, in an effort to modernise the toll industry in Malaysia.

Last September, Touch ’n Go announced it would be launching its RFID for toll collection, which it was piloting at the time, in January next year. CIMB has a 52% stake in Touch ’n Go, while PLUS and MTD Equity Sdn Bhd hold 28% and 20% respectively.