What Investors Should Know About Johor’s Water Crisis

Malaysia’s Johor state is supposed to supply water to Singapore for many years. But, recent dry spells have forced Johor to ask Singapore for water on August 2015 and earlier this month.

Lessons from irony

The ironic situation where a smaller Singapore has to supply potable water to Johor shows the importance of proper planning and execution. For Singapore, the lack of water has been an existential issue since its founding in 1965.

Our country’s government has been consciously building up its sources of water with an eventual aim to reach self-sufficiency. Companies such as Hyflux Ltd (SGX: 600) have played important roles in this effort by helping to develop various types of water treatment plants here.

Malaysian water companies

Malaysia’s water issues bring into the spotlight its water companies as they may have a part to play in helping the country alleviate its water problems. Two such companies with exposure to the space are Salcon Bhd (KLSE: 8567.KL) and Ranhill Holdings Berhad (KLSE: 5272.KL).

The former had recently won contracts worth a total of RM232 million to construct a water treatment plant as well as to upgrade an existing water plant in Malaysia. The latter is the exclusive water operator for Johor.

Foolish Conclusion

While environmental issues are not to be trifled with, they may throw up interesting ideas for further research by investors.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Ong Kai Kiat doesn’t own shares in any companies mentioned.