This article first appeared in The Edge Malaysia Weekly on January 9, 2023 - January 15, 2023

THE RM2 billion rail link connecting Bukit Chagar in Johor Baru to Woodlands in Singapore, dubbed the Rapid Transit System (RTS) Link, is on track for completion by end-2026.

In an emailed response to The Edge, Mass Rapid Transit Corp Sdn Bhd (MRT Corp), developer and owner of the civil infrastructure for the section of the track in Malaysia, said: “As at Dec 31, 2022, the rail infrastructure has progressed at 26.11%. Construction of the depot at Wadi Hana and the Bukit Chagar RTS station is progressing well, and expected to be completed as scheduled.”

In May last year, the link was 15% completed.

RTS Link, which will be the third land bridge to Singapore when ready, falls under the purview of MRT Corp, a unit of the Minister of Finance Inc. MRT Corp was appointed as the infrastructure company for the RTS Link, and tasked to develop and own the 2.7km Malaysian portion of the rail link and the requisite structures, while the operations were slated to be undertaken jointly by Prasarana Malaysia Bhd and its Singaporean counterpart SMRT Corp Ltd.

The RTS Link is also to include the construction of a new immigration, customs and quarantine complex facility next to the station at Bukit Chagar, Johor Baru, Malaysia, and will house both Malaysian and Singaporean immigration, customs and quarantine facilities within the same building. The link is expected to cater to an estimated 10,000 commuters per hour per direction via Johor Baru to Singapore, and to ease the congestion at the Malaysia-Singapore Causeway.

Its completion is likely to spur further development of Johor Baru and to unlock property values in southern Johor and the CBD areas in the city.

Initially, there were concerns that delays in the construction of the RTS would result in Malaysia having to pay compensation to Singapore, as the former was obliged to do for the Kuala Lumpur-Singapore High Speed Rail (HSR) project. In March 2021, Malaysia forked out more than RM320.27 million in compensation to Singapore for the termination of the HSR project, having paid earlier in February 2019 about RM45 million in abortive costs for suspending the project when the commencement of work was postponed until May 2020. The total compensation works out to about RM365.27 million.

In July last year, Ekovest Bhd was brought in as a collaborative partner for privately held Adil Permata Sdn Bhd — the main contractor for the RTS Link project — to speed up the construction of the railway line. Since then, it is understood that Ekovest and Adil Permata have portioned the RM2 billion worth of construction jobs into six packages of between RM300 million and RM400 million each, with restricted tenders being called. This hastened the development.

When announcing the acceptance of the award by MRT Corp, Ekovest had said, “The participation of Ekovest as the collaborative partner of Adil Permata and the engineering, procurement and construction contractor to undertake the construction of the RTS Link project will replenish the construction order book and is expected to contribute positively to the financial performance of Ekovest and its group of companies.

For its three months ended September 2022, Ekovest chalked up a small net profit of RM182,000 from RM322.9 million in revenue. For the corresponding period a year ago, Ekovest suffered a net loss of RM6.11 million from RM178.11 million in turnover.

Ekovest attributed the better performance to its construction arm, which benefited from the RTS project.

“The construction sector reported a higher revenue of RM156.932 million for the first quarter of 2023 (1Q2023) as compared to RM95.638 million in 1Q2022. The increase in revenue for 1Q2023 as compared to 1Q2022 is mainly attributable to the commencement of our new RTS Link project.”

However, Ekovest added that the new RTS Link project has higher operating costs compared to its current construction projects.

Other than a construction arm, Ekovest has a 34.29% stake in developer Iskandar Waterfront City Bhd held in partnership with Kumpulan Prasarana Rakyat Johor Sdn Bhd. It also owns 73.08% in publicly traded plantation outfit PLS Plantations Bhd, and 30.11% (jointly with Sultan Ibrahim Ismail of Johor) in building materials and machinery company Knusford Bhd.

As at end-September last year, Ekovest had short-term deposits of RM177.52 million, and cash and bank balances of RM69.99 million. On the other side of the balance sheet, the company had short-term debt commitments of RM554.72 million and long-term bank loans of RM370.31 million.

Ekovest stock hit a 52-week low of 30 sen on Oct 17 last year. Since then, it has gained about 16% and closed last Friday at 33.5 sen.

Tan Sri Lim Kang Hoo, the company’s executive chairman with 30.8% equity interest, is Ekovest’s largest shareholder.

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