China-owned BEWG eyes water jobs in Johor
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This article first appeared in The Edge Financial Daily on July 28, 2017 - August 3, 2017

KUALA LUMPUR: China-owned water treatment company BEWG (M) Sdn Bhd (BEWG Malaysia) is eyeing water resources solutions projects in Johor.

BEWG Malaysia chief executive officer (CEO) Datuk Vence Ong Kian Min shared that while the group has not bagged any jobs from the state yet, it has received a formal mandate from the Johor State Executive Council two weeks ago.

“We just received the mandate for us — together with our partner Loyal Engineering [(M) Sdn Bhd] — to do the detailed study on comprehensive solutions for water resources for the Johor state.

“We are forecasting to invest about RM2 billion, but it is still very new for us to elaborate more at this stage.

“We will take six months to do the studies, and then we will submit our proposal to the state government. If the state government likes our proposal, then we are ready to invest,” he told reporters at a news conference yesterday.

On whether the group is looking at projects in other states, Ong said it is talking to Sarawak and a “few others”, but declined to elaborate.

Beijing Enterprises Water Group Ltd (BEWGL) executive director and vice president Li Hai Feng said that the group will not rule out collaborating with other Malaysian corporations.

“We open our market, and welcome more companies to work together with us,” he said.

BEWG Malaysia is a wholly-owned indirect subsidiary of BEWGL, which is China’s largest water company, and was incorporated to undertake water treatment projects in Malaysia.

BEWGL is listed on the Hong Kong Stock Exchange and is 44% owned by China’s Beijing Enterprise Group, while Malaysian sovereign wealth fund Khazanah Nasional Bhd has a 4.95% stake in the company.

In Malaysia, the group has bagged two projects so far. Its maiden project being the Pantai 2 Sewerage Treatment Plant (Pantai 2 STP), a centralised waste water treatment facility which was completed in July last year at a total cost of about RM983.25 million.

The project was awarded to the group by the ministry of energy, green technology and water in July 2011.

Then in November 2015, BEGM Malaysia was awarded a design and build contract valued at approximately RM687 million to refurbish and upgrade water treatment and distribution facilities in Kemaman by the Terengganu state government.

The group is partly financing the Terengganu job via proceeds from a RM400 million Islamic medium term notes (Sukuk Wakalah) issuance, making it the first China-owned company to issue ringgit-denominated sukuk for water infrastructure funding.

The Sukuk Wakalah was fully subscribed at the point of its launch on July 19, 2017, and carries a rating of AAIS (stable) by Malaysian Rating Corp Bhd.

BEWG Malaysia chief financial officer Mustakim Mat Nun said that the issuance of sukuk provides a competitive advantage to the group.

“We are a water industry player [providing] A to Z [solutions], so by issuing sukuk we have added on to our expertise, as not only are we doing the project but we are also doing the fund raising through Islamic issuance.

“So basically if we are going to implement it in other projects, this has given us a very good advantage compared with other competitors in the industry,” he said.

BEWG Malaysia’s news conference yesterday was in conjunction with the signing ceremony with its investment banks for the sukuk issuance.

CIMB Investment Bank Bhd and Maybank Investment Bank Bhd are the joint principal advisers, joint lead arrangers and joint lead managers for the Sukuk Wakalah, while Affin Hwang Investment Bank Bhd, Industrial and Commercial Bank of China (Malaysia) Bhd and RHB Investment Bank Bhd are the joint lead managers.

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