By Chan Tien Hin/ Bloomberg
Kuala Lumpur: YTL Corp., owner of Wessex Water Plc, won a $300 million (Malaysian government contract to clean up the nation’s rivers, the first step to expand its water-treatment business in Asia, chief executive officer Francis Yeoh said.
“There’s so much pollution it’s a growth area, especially China,” said Jason Chong, who helps manage $600 million at UOB- OSK Management Sdn. in Kuala Lumpur. “There’s lots of potential and the contract gives YTL a launching pad into Asia.”
YTL wants to use the technology of U.K.-based Wessex to tap demand for quality water in Asia, where one-fifth of the population doesn’t have access to safe water, according to the Asian Development Bank. In Malaysia, the government is spending $2.4 billion from 2006 to 2010 to improve the water supply, doubling the outlay of the previous period.
Malaysia has 150 river systems with a combined length of 38,000 kilometers (23,560 miles), according to Malaysia’s Department of Irrigation and Drainage Web site. Of 116 rivers monitored, 42 are rated clean, 61 slightly polluted and 13 polluted, it said.
“Suddenly, Asia is moving like Europe,” Yeoh said. “We can transfer this technology inexpensively to this country, and the government is listening to us now.”
YTL’s water contract reflects its focus on Asia and the Middle East, where Malaysia’s biggest builder is seeking water, power and other infrastructure and utility contracts, Yeoh said.
Cleaning Malaysian Rivers
YTL, based in Kuala Lumpur and controlled by the Yeoh Tiong Lay family, has interests in property development, cement manufacturing, hotels, power generation and information technology. Almost half of group sales of 5.5 billion ringgit last year were derived from the U.K., according to data compiled by Bloomberg.
The stock has risen 15% this year, slower than the benchmark stock index’s 24% gain. Wessex Water, which YTL acquired in 2002 for $1.77 billion from Enron Corp., will implement the Malaysia project, which will be done in three phases, with the first part worth $100 million and focusing on the 4.4 mile Klang River, he said.
Wessex will “convert the water from grade four to grade two,” meaning the water will become drinkable, he said.
“The rivers will be audited and the technology is so pervasive that it will be able to help the Ministry of Environment monitor upstream pollution,” Yeoh said. “So if anybody pollutes, no more blame game, we know exactly who pollutes where and we give you the proof.”
Cleaning up the country’s rivers may also help boost home prices near them, Yeoh said. “It changes the real estate value, then there can be a Canary Wharf,” he said. “Lifestyle and real estate around the river is suddenly worth a lot. Look at San Antonio, the river Rhine.”
YTL’s contract reinforces its bid to expand in Asia, the Middle East and China where Yeoh said he sees more potential than any other region.