The water sector’s long-awaited upcycle

AFTER years of underinvestment, the local water sector may finally be entering a long-awaited investment cycle.

The push is no longer just about replacing ageing pipes and treatment plants. It is also about ensuring there is enough water to support the country’s energy transition, industrial growth and expanding data centre industry.

Malaysia has spent the past few years planning for the energy transition.

Increasingly, however, policymakers are recognising that power and water infrastructure must be developed in tandem.

Reliable electricity may attract investors, but without sufficient treated water capacity, many industrial projects simply cannot proceed.

For example, Selangor’s development plans explicitly treat water as an enabler of investment into data centres, semiconductors and advanced manufacturing, Maybank Research noted in a report this week.

It estimates that more than RM20bil worth of water infrastructure projects are planned or under development, including the RM6bil Ulu Padas Water Supply Scheme in Sabah, the RM5bil Northern Perak Water Supply Scheme and the RM3.7bil Langat 2 Phase 2 Water Supply Scheme.

The report expects this pipeline to create sizeable opportunities for contractors and water infrastructure suppliers.

Recent tariff revisions have improved the financial position of water operators, allowing long-delayed projects to move ahead.

However, will higher tariffs translate into meaningful reinvestment in replacing ageing pipes and reducing leakages, or will consumers simply end up paying more without seeing better services?

Execution will be just as important as funding. Water projects often involve multiple agencies, state governments and lengthy approval processes.

Can these projects be delivered on time to keep pace with growing demand from data centres, industrial parks and advanced manufacturing?

The government must also ensure that efforts to attract new investments do not come at the expense of long-term water security. Without reliable water supply, even the best-laid economic plans could run dry.

Lastly, as more than RM20bil worth of projects move from planning to execution, it is equally important that contract awards must be carried out in a transparent and merit-based manner, given governance concerns that have surfaced in the sector over the years.