Focus of catalytic developments will shift to M'sia-S'pore Second Link, says RHB Research

• RHB Research said the designation of Forest City, which is close to the Second Link, as a special financial zone should revitalise the township, which had received a lot of negative attention over the last few years.

KUALA LUMPUR (Aug 28): More catalytic developments will likely shift to the vicinity of the Malaysia-Singapore Second Link as there is more land and well-developed infrastructure and connectivity, said RHB Research in a note on Monday (Aug 28).

The Malaysian end of the Second Link is located at the Sultan Abu Bakar Complex in Tanjung Kupang, Iskandar Puteri in Johor.

“Moreover, it is close to a major sea port, namely the Port of Tanjung Pelepas, while the proposed Kuala Lumpur-Singapore High Speed Rail station may also be located at Gerbang Nusajaya once again [as it initially was under the previously planned project]. This should enable proper planning for future developments,” said the research house.

It added that the Johor and Singapore governments are also discussing the provision of more ferry services, and will assess the viability of a potential new service between Puteri Harbour and Tuas in Singapore.

RHB Research said the designation of Forest City, which is close to the Second Link, as a special financial zone should revitalise the township, which had received a lot of negative attention over the last few years.

“Located right next to the gateway of southern [Peninsular] Malaysia, this special financial zone aims to attract corporates experiencing high operating cost in Singapore, and at the same time, residents that were suffering expensive housing and education costs in Singapore.

“While details are still lacking, these incentives should help to encourage more business activities around areas near to the Second Link going forward,” said the research house.

According to the announcement by Prime Minister Datuk Seri Anwar Ibrahim last Friday, incentives for the special financial zone include multiple entry visas, fast track entry for those working in Singapore, and a flat income tax rate of 15% for knowledge workers.

The prime minister said these benefits should promote the development of the healthcare, education and tourism sectors.

“UEM Sunrise Bhd remains the best proxy for this Johor thematic play, followed by Sunway Bhd, given their sizeable exposure to the state’s property market,” said the research house, while noting that major landowners near Forest City include UEM Sunrise (2,419 acres [978.93 hectares] in Gerbang Nusajaya), Sunway (1,602 acres in Sunway Iskandar), and S P Setia Bhd (307 acres in Tanjung Kupang).

“Depending on the extent of the spillover, these few developers should benefit from greater commercial activities and population flows as more job opportunities are created in Forest City in future,” it said.

At the time of writing on Monday, UEM Sunrise was up four sen or 5.97% at 71 sen a share, valuing the group at RM3.59 billion, while Sunway was unchanged at RM1.90, giving it a market capitalisation of RM9.50 billion. Meanwhile, S P Setia was up 6.5 sen or 7.83% at 89.5 sen, with a market cap of RM3.67 billion.

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