Hong Seng acquires land in Kedah Rubber City for RM45.74m
28 Dec 2020
Hong Seng Consolidated Bhd’s unit, Hong Seng Industries Sdn Bhd (HS Industries) has acquired land in Kedah, measuring approximately 42.49 hectares, for RM45.74 million for the purpose of setting up a nitrile butadiene latex (NBL) manufacturing plant.
The company has secured a letter issued by the Northern Corridor Implementation Authority (NCIA) in relation to its acquisition in Kedah Rubber City.
In a statement today, executive chairman Datuk Teoh Hai Hin said HS Industries was incorporated with the intention to engage in the business of manufacturing and trading of NBL.
“The NBL which is also referred to as butadiene is the main and crucial raw material used for the production of nitrile gloves which accounted for 70 per cent of the total gloves exported from Malaysia according to Malaysian Rubber Glove Manufacturers Association.
“Therefore, due to the unprecedented demand and production of highly sought-after nitrile gloves caused by the pandemic, there is a shortage in NBL across the world leading to all-time high cost in securing NBL supply,” he said.
Teoh noted that many glove industry players have emerged in the market.
However, he said, not all of them have secured their NBL supply, which may cause serious operational risks and unexpected material costs in nitrile glove production.
He said the players may have to halt operations in the event of a supply cut, or procure their NBL supply at a premium cost thus affecting profit margin.
“Hence, by setting up our own NBL plant, it will provide a timely opportunity to secure constant internal supply for our subsidiary, Hong Seng Gloves Sdn Bhd’s plant in Kedah and at the same time, filling the vacuum in the NBL shortage to capture the market.
“Ideally, this will enable the firm to be an integrated glove and NBL manufacturer in Malaysia by having both upstream and downstream segments of the glove manufacturing supply chain,” he added.