Builders, developers first beneficiaries of Johor-Singapore Special Economic Zone, analysts say

• To support the JS-SEZ, the government has announced incentives, including a special corporate tax rate, to lure investors to set up shop in the zone that stretches from Kulai and part of Pontian to Pengerang.

KUALA LUMPUR (Jan 8): Construction and property firms would be the first beneficiaries of the Johor-Singapore Special Economic Zone (JS-SEZ) that will require everything from utilities to warehouses, and from houses to offices.

Unlike Forest City that was largely built by the Chinese, Malaysian and Johor-based contractors now stand to benefit from a major development boost, analysts said. A focus on public transportation and renewable energy will also boost some contractors building railways and installing solar panels.

There would be opportunities for road infrastructure jobs, said RHB Investment Bank, with the JS-SEZ covering 3,500 sq km. Foreign direct investments into the JS-SEZ would also create demand for industrial buildings and offices, the research house said.

For exposure to the JS-SEZ, RHB’s top stock ideas include UEM Sunrise Bhd (KL:UEMS) and Sunway Bhd (KL:SUNWAY).

Malaysia and Singapore formally signed the agreement on Tuesday to create the zone that aims to attract 100 projects within its first decade, and create some 100,000 new jobs in high-value economic sectors.

To support the JS-SEZ, the government has announced incentives, including a special corporate tax rate, to lure investors to set up shop in the zone that stretches from Kulai and part of Pontian to Pengerang.

“We envision a significant enhancement of people mobility between Johor and Singapore,” which would be a boon to Johor’s property market, said Hong Leong Investment Bank. Apart from Sunway, IOI Properties Group Bhd (KL:IOIPG) also has a vast swath of land in Johor, it flagged.

For early exposure to public transportation, CIMB Securities said IJM Corporation Bhd (KL:IJM) as well as Sunway may emerge as strong contenders for works under the Light Rail Transit or Autonomous Rapid Transit projects being considered by the state.

Given the stiff competition for public infrastructure projects, CIMB recommended Malayan Cement Bhd (KL:MCEMENT) and Ann Joo Resources Bhd (KL:ANNJOO) as alternatives for potential multi-year building materials order flows from the JS-SEZ.

The renewable energy sector also stands to gain from the JS-SEZ, Phillip Capital said, noting Singapore’s plan to import 30% of its energy from renewable sources by 2035. The region's growing need for renewable energy is expected to benefit companies like BM Greentech Bhd (KL:BMGREEN), it said.

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