A Penny for Your Thoughts on Opportunities related to Singapore-Kuala Lumpur High Speed Rail Project ~ Triple Huat!

Singapore-Kuala Lumpur High Speed Rail Project

Last week, the Prime Ministers of Singapore and Malaysia announced one news that caught my attention: Construction of the High Speed Rail (HSR).

The HSR project will have 2 terminal stations in Jurong East and Bandar Malaysia; as well as stations in Iskandar Puteri, Batu Pahat, Muar, Ayer Keroh, Seremban, Putrajaya. It is slated for completion in 2026. The project would have at least 3 joint tenders by both countries. The HSR is expected to cut travel time between Singapore and Kuala Lumpur to 90 minutes. The Customs, Immigration and Quarantine facilities will be co-located at Singapore, Bandar Malaysia and Iskandar Puteri.

During the project HSR annoucement, I took note of 2 key lines from the Prime Ministers’ speeches:

“HSR line will transform the way the two countries interact, socialise and do business, for the better.”

“With hundreds of thousands of people crossing the causeway each day, security was one of the major issues that the two countries discussed before they proceeded with the HSR project.”

Master Plan for Jurong Lake District

Another important information is that URA has already started stage 2 of their request for proposal in Sep 2016, to develop a master plan for the Jurong Lake District. URA also announced their vision for the district to be a ‘District of the Future’ and our second Central Business District (CBD).

So.. How do the Above Points Add Up?

Bringing the above points together, there are many business considerations that are directly or indirectly affected by the projects; and these are what we, as investors, should think about.

Potential Outcome in the Short-Term

In the short-term, the HSR should generate more infrastructure and construction work for both countries. My current view is that 5 main industrial sectors might benefit from the project: (i) Engineering (Rail operator) is likely involved in the construction as they can share their operator experiences to enhance the rail design; (ii) Engineering (Civil/Electrical Engineers) should be involved in the infrastructure such as electrical cables, physical tunnelling etc; (iii) Engineering (Network Providers) is likely to be involved in setting network equipment and laying of network cables; (iv) Engineering (Security) – a major issue for both countries, will require security equipment to be installed; (v) Banks would need to provide loans to all companies involved in the development.

Some food for thought:
Are there other industrial sectors that you think might benefit from the project?

Which companies within these mentioned sectors would have the capability to take part in the tenders?

Which aspects of these companies should you pay attention to for you to make an investment decision?

Potential Outcome after post-HSR completion

After the HSR is ready for operation, I felt that the social trends in both countries would change too. For discussion, my post will focus on 2 aspects: Lifestyle and Properties.

Lifestyle: Currently, both countries are largely connected via Johor Bahru, through the 2 causeways at Woodlands and Tuas. I believed that the HSR would greatly increase the flow of traffic between the two countries. More Malaysians from other parts of Malaysia could travel to Singapore to work. Singaporeans might visit Malaysia more often for shopping, if the prices in Malaysia are indeed much cheaper than in Singapore.

Some food for thought:
Amidst all these changes in lifestyle, are there any companies/businesses that would be well-positioned to leverage on the increase in spending on living necessities, shopping, weekend getaways, etc in both countries?

Properties: I believed that Jurong CBD would focus on the development of industrial and commercial properties. Residential properties that are near the HSR train stations should experience greater buying demands. More Singaporeans might consider buying a residential property in Malaysia for investment; or for stay as the cost of living is still lower there. In Singapore, more Malaysians might consider renting houses in the Jurong area to minimise their travel to the Jurong CBD.

Some food for thought:
How will Jurong’s property landscape be transformed by the Jurong Lake District and HSR?

What will be the potential impact to existing industrial, commercial and residential properties in the region?

Which companies/business would benefit from all the constructions and developments in Jurong?

My next step..

As the HSR project is still in the preliminary phase with no contracts signed yet, I am likely to monitor its developments closely first instead of buying into any rumoured companies.

I hope that after reading this post, it has helped to spur up some thoughts in you. Feel free to share your thoughts with us!

Together, let us all Go & Huat ah!

GoHuat

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Information Sources

[1] Singapore, Malaysia sign bilateral agreement for High-Speed Rail project

http://www.channelnewsasia.com/news/singapore/singapore-malaysia-sign-bilateral-agreement-for-high-speed-rail/3363164.html

[2] Singapore-KL high-speed rail deadline ‘ambitious but achievable’

http://www.straitstimes.com/singapore/transport/singapore-kl-high-speed-rail-deadline-ambitious-but-achievable

[3] Singapore, Malaysia sign historic high-speed rail deal

http://www.todayonline.com/singapore/singapore-malaysia-inks-agreement-high-speed-rail