This article first appeared in The Edge Malaysia Weekly on February 10, 2025 - February 16, 2025

THE development of the RM6.2 billion West Ipoh Span Expressway (WISE) appears to be facing hurdles almost five months after East Coast Road Sdn Bhd was awarded a 55-year concession to develop and operate the 60.88km highway between Gopeng and Kuala Kangsar in Perak. The highway is expected to ease congestion at the Menora Tunnel on the North-South Expressway when it is completed in 2028.

East Coast Road is being sued by land surveyor AJ Surveyors (M) Sdn Bhd after the parties failed to come to a settlement over claims by the latter for RM12.15 million in outstanding payments from the concessionaire. Failure to make payment will result in East Coast Road not being able to meet the conditions precedent (CPs) for the WISE concession agreement (CA) signed on Sept 5, 2024, with the Ministry of Works.

“East Coast Road will have to show that it has the required funding for the construction of WISE at the next quarterly meeting with UKAS (Public Private Partnership Unit) on March 5. Apart from the financial close, UKAS will also want to know about the construction progress, which will have to start with the land acquisitions,” says a source with knowledge of the matter.

“The land acquisition process cannot start until the land surveyor provides its reports to the Pejabat Tanah dan Galian (PTG) Perak and verifies them. Now that they are having problems with AJ Surveyors, until they resolve the issue, the consultants are not going to provide the reports.”

Asked to comment, AJ Surveyors principal Datuk Johari Wahab confirms that the firm is suing East Coast Road after the latter failed to enter into a settlement with the consultancy on the outstanding payments.

In February last year, AJ Surveyors, via its lawyer Noorzilan & Partners, issued a letter of demand (LOD) to East Coast Road for the outstanding sum of RM12.15 million. The sum is for land surveying, land acquisition and final surveying works for the expressway project.

The total contract sum was RM18.87 million, payable within 30 days from the date of receipt of the respective invoice and completion certificate for each job. AJ Surveyors was appointed to act as the consultant for the project on Nov 8, 2021.

After failing to get paid, AJ Surveyors took the matter to court on June 24, 2024. After several months of court proceedings, the firm, via its lawyer, offered East Coast Road a settlement in November last year.

However, in a letter dated Dec 5, 2024, in response to the settlement offer, East Coast Road, via its lawyer Rahmat, Wan and Rahmat, said the proposal could not be considered at that time. The matter then proceeded to trial.

The Edge reached out to East Coast Road for comments and insights on the matter. However, the company declined to comment, saying there would be no engagement with the media at this point.

The Edge also learnt that Mohd Asbi Associates Sdn Bhd, an engineering consultancy, had issued an LOD to Zurich Infrastructure Sdn Bhd, which has common shareholders with East Coast Road.

To recap, East Coast Road is 52.85% owned by Any Arope Zainal Abidin and 10.7% by Ahmad Sahill Zainal Abidin. Meanwhile, Zurich Headquarter Sdn Bhd, which is majority owned by Any Arope, holds 22.78% equity interest in East Coast Road. Another shareholder of East Coast Road is Zurich Capital Sdn Bhd, with a 13.76% stake.

Zurich Zainal Abidin is the largest shareholder of Zurich Capital with 40% equity interest, while the remaining 60% is held by Ahmad Sahill and Zulykha Zainal Abidin.

Meanwhile, Datuk Seri Siew Mun Chuang is a substantial shareholder of Zurich Infrastructure, with a 13% stake, according to a search with the Companies Commission of Malaysia (SSM). The company’s largest shareholder is Ahmad Sahill with 48% equity interest, followed by Any Arope with 28.6%.

The LOD dated Dec 17, 2024, issued by Cheah, Teh & Su demanded a sum of RM21.03 million from Zurich Infrastructure, being the amount due and owed to Mohd Asbi Associates for work done on conceptual and preliminary design. Mohd Asbi Associates was appointed by Zurich Infrastructure as the lead engineer to provide, undertake and complete the engineering consultancy services in connection with the design work for WISE, via a letter of award (LOA) dated July 19, 2022.

According to the LOA, Zurich Infrastructure and Mohd Asbi Associates had agreed that the consultancy would be paid RM68.9 million in consideration for the services performed and/or provided, and that the first payment be made within 60 days of signing the CA.

Mohd Asbi Associates had demanded payment but, according to the LOD, Zurich Infrastructure failed to do so. As a result, the consultancy issued the LOD to compel the company to pay up within 14 days of the date of the letter.

It is not clear whether Zurich Infrastructure and Mohd Asbi Associates have entered into any kind of settlement agreement with regards the LOD. The Edge did not manage to contact Mohd Asbi Associates while its lawyer Rachel See declined to provide any updates on the LOD.

According to SSM data, East Coast Road’s total issued and paid-up capital is RM8.8 million. As at Oct 30, 2023, the company had non-current assets worth RM1.46 million and current assets valued at RM5.5 million. It did not have any non-current liabilities, while its current liabilities stood at RM434,218.

In the upcoming quarterly meeting with UKAS, East Coast Road will have to demonstrate that it has the financial strength to undertake the project. According to the source The Edge spoke to, the company would have to increase its paid-up capital to RM85 million.

Based on the development cost of RM6.2 billion, as a rule of thumb, East Coast Road will have to put up equity equivalent to 20% of the cost. This amount will be used to fund land acquisitions as well as other pre-development costs, such as land surveying, design engineering and other consultancy services.

This means East Coast Road will have to put up RM1.24 billion as its equity in the development of the project. It is learnt that the company had lined up RM1 billion in term financing from a financial institution to fund its equity portion. It is said to have also appointed two financial institutions as principal adviser and lead arranger of a RM6 billion Islamic medium-term notes and syndicated Islamic term bridge facility.

Although the CA was awarded in September, negotiations for the project had been ongoing since 2021. It was given the green light by the cabinet in December 2023. The concession period for WISE is 55 years and the toll rate is set at 23 sen per kilometre.

On Dec 19, 2024, Minister of Works Datuk Seri Alexander Nanta Linggi, in response to a question from Senator Datuk Shamsuddin Abd Ghaffar in the Dewan Negara, said the concessionaire would have to meet all the CPs within 12 months of signing the CA. 

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