Date : 17 August 2000

Joint Venture Agreement with United Engineers (Malaysia) Berhad, Ho Hup Construction Company Berhad, Road Builder (M) Holdings Berhad, Muhibbah Engineering (M) Berhad and Optixlab Sdn Bhd


TypeReply to query
Reply to Query Letter by KLSE reference IDKM-000803-69378
SubjectJoint Venture Agreement with United Engineers (Malaysia) Berhad, Ho Hup Construction Company Berhad, Road Builder (M) Holdings Berhad, Muhibbah Engineering (M) Berhad and Optixlab Sdn Bhd

Contents :

Further to the announcements of 11 August 2000 and 31 July 2000 in relation to the signing of the Joint Venture Agreement, we are pleased to provide the further information in relation to the joint venture (“the Venture”) as follows:-

1. The internal feasibility study carried out by Teras Teknologi Sdn Bhd has revealed the following:-

    • The Economy - With growth forecasted at 5.8% in the year 2000 (source: Ministry of Finance), Malaysia’s economic recovery, driven by the manufacturing industry’s exports, will raise domestic consumption. This augurs well for the hotel and hospitality industry, and consequently the construction industry;
    • The Construction Industry - The findings of Bank Negara Malaysia’s Survey of the Construction Sector in 1999 has shown that, despite the performances of the companies surveyed being more favourable, the majority of the respondents were still plagued with problems like excess stocks, declining margins and unfavourable business conditions. With the overall construction activities achieved in 1999 at only 75% compared to 1997, the excess capacity would undoubtedly lead to lower margins. Hence, Industry players need to find ways to do business in a more efficient and cost-effective manner; and
    • The Internet Market in Malaysia - The Singapore Times cited an IDC Report, which states that by 2001, Malaysia would have 2.2 million Internet users and expected revenue from e-commerce would be USD1 billion. The Internet has been shown to provide both greater business opportunities and solutions to the problems of inefficiency, rising costs and untimely data.
    The was conceptualized with the above factors in mind - a portal that will enable the construction industry to not only do business, but to do business in an efficient and effective manner which will benefit all the parties involved.

2. The business risk associated with the Venture will be the risk relating to the Internet, security breaches, increase in competition with the increasing number of companies involved and venturing into e-business and also the fast and constant technological changes.

3. The Venture has positive future prospects and potential growth based on the following assumptions:-
    • The number of members is based on the population of developers, contractors, consultants, professionals and suppliers extracted from the Master Builders Directory 1999. The total population extracted is 6,172. It is assumed that in Year 1 of operation, 20% of the population will register with the Venture, with an increase of 10% each subsequent year;
    • The forecast contract values, which are computed at 30% of the forecast turnover of the joint venture partners is RM72.0 million in 2000, with 8% growth annually. It is assumed that in the first three months of operation in Year 1, there will be no transaction income. In the subsequent 9 months, 25% of forecast contract values will be awarded online. This proportion is expected to increase by 25% each subsequent year and reach 100% by Year 4 of operation; and
    • It is assumed that 16.7% of forecast tender transactions will be procured or conducted online in the first 3 months of implementation. Thereafter, 50% of forecast tender transactions.

Thank you.
The above announcement is also available for access at IJM website at

Query Letter Contents :

We refer to your announcement on 31 July 2000 in respect of the above mentioned
In this connection, kindly furnish the Exchange for public release the
information required for disclosure in relation to internet-related businesses
or e-commerce activities as per the Exchange's Practice Note No. 1/2000.
Please furnish the Exchange with your reply within two (2) market days from the
date hereof.

Yours faithfully

Senior Manager, Listing Operations

Announcement Info

Stock Name IJM    
Date Announced17 Aug 2000  
CategoryGeneral Announcement
Reference NoIC-000817-CDD7D