Manufacturing expertise built over 40 years instilled confidence in GWM and BAIC to collaborate 

AUTOMOTIVE manufacturer, EP Manufacturing Bhd, was on the lookout for new business ventures when its attention turned to electric vehicles (EV) and energy-efficient vehicle (EEV) manufacturing business. In a short period, it became a key area for the company to diversify its operations. 

Group CEO Ahmad Razlan Mohamed said after conducting feasibility studies, it was determined that this area is a promising business venture for its car assembly business. 

How did this come about? Ahmad Razlan explained the journey in a recent interview with The Malaysian Reserve (TMR). 

Listed in 1997, EP Manufacturing is an industrial group that supplies modular assemblies, safety and critical components to major carmakers. The group aims to become a leading automotive player in Malaysia’s EV market but is also not shy to venture into other businesses such as tourism. 

The company recognised that automotive parts component manufacturing is a challenging industry, and it was not alone in facing this pressure. 

“We sought to diversify into areas closely related to our traditional business. This led us to enter the car assembly industry. During our business development efforts, Great Wall Motor Co Ltd (GWM) approached us with an interest in collaborating on car assembly. Together, we conducted feasibility studies and planning,” said Ahmad Razlan. 

GWM is a Chinese privately owned automobile manufacturer headquartered in Baoding, Hebei. Founded in 1984, it is currently the eighth-largest automobile manufacturer in China. 

“At the same time, during our visit to China, as we were exploring various business opportunities and researching the car assembly industry, Beijing Automotive Group Co Ltd (BAIC) approached us with a keen interest in collaboration,” he added. 

BAIC is one of China’s largest carmakers and a Fortune Global 500 company. 

“I believe our reputation in the market, built over 40 years of experience, instilled confidence in them (Great Wall Motor and BAIC) regarding our manufacturing expertise. We mutually agreed to pursue this business opportunity,” explained Ahmad Razlan, who assumed the role of EP Manufacturing group CEO on March 20, 2023. 

Previously, he spent almost seven years as a director for corporate advisory at Prokhas Sdn Bhd, a company owned by the Ministry of Finance (MOF). Prokhas was established to oversee the residual assets of Pengurusan Danaharta Nasional Bhd following its closure in December 2005. 

However, EP Manufacturing encountered some challenges, including the need for significant capital investment. The new business also demanded quality assurance of the machines and equipment as well as obtaining regulatory clearances from the government. 

On July 11, 2023, it managed to secure from the Ministry of Investment, Trade and Industry (MITI) a manufacturing license to manufacture and assemble four-wheeled EEVs, EVs and electric commercial vehicles. 

Then, on Oct 18, 2023, the group signed a memorandum of understanding (MoU) with BAIC International Development Co Ltd and Great Wall Motor Sales Malaysia Sdn Bhd (GWM Malaysia) to enable the local production of sport utility vehicles (SUV), internal combustion engine (ICE) vehicles and EVs. 

Partnerships 

In January, EP Manufacturing announced that its subsidiary, PEPS-JV (Melaka) Sdn Bhd (PJVM), will serve as the contract vehicle assembler for the Malaysian unit of China’s GWM for the next eight years. EP Manufacturing’s focus will be on assembling and producing GWM’s Haval H6 and Haval Jolion SUV models. 

The assembly activities will take place at the Melaka facility, aiming for an annual output of 20,000 units by 2028. Additionally, the facility will cater to the production of BAIC vehicles. 

In April, EP Manufacturing announced its partnership with BAIC to assemble and manufacture BAIC’s authorised model vehicles in Malaysia. Its wholly owned subsidiary, PJVM, had finalised an agreement with BAIC. 

Under the terms of the 10-year agreement, PJVM will be responsible for assembling and manufacturing the vehicles in Malaysia, with a targeted capacity of at least 5,000 vehicles per year by Sept 1, ramping up to 10,000 vehicles annually by March 1 of the following year. PJVM will also handle the procurement of all necessary devices, equipment, permits or approvals for vehicle assembly and manufacturing. 

In return, BAIC will authorise PJVM for assembly and manufacturing, provide technical support and training, and oversee the assembly process. 

The agreement superseded a MoU signed in August 2023, focusing on developing BAIC’s BJ40P and X55II SUVs and right-hand drive EVs for Malaysia and other Southeast Asian markets. 

“They (BAIC and GMW) are our clients. We have a vehicle assembly agreement with them, which stipulates what are our obligations and what are the forecasts of the cars and models that we are going to assemble for them in this country. 

“We get the factory, machinery, and personnel ready. They supply us with their complete knocked-down (CKD) kits, we assemble them, and we charge certain fees for the service. We refer to it as assembly fees,” he added. 

Meeting Market Demands

As a Tier-1 automotive supplier, EP Manufacturing operates five plants and factories throughout Malaysia. It provides modular assemblies, safety components and critical parts to leading car manufacturers, including Proton Holdings Bhd, Perusahaan Otomobil Kedua Sdn Bhd (Perodua), Honda Malaysia Sdn Bhd and Mazda Malay- sia Sdn Bhd. Additionally, it also serves Kia Malaysia Sdn Bhd to some extent. 

In its core business, the auto parts manufacturer is anticipated to persist in delivering cost-saving advantages to industry players, particularly original equipment manufacturers (OEMs). This entails ongoing negotiation and collaboration with them. 

“We have to continue focusing on managing our costs. It’s a highly competitive landscape. We need to ensure that our processes are efficient, our manufacturing practices are up-to-date, and continuously improved so that we can effectively manage our costs. 

“And since industry players, especially the OEMs, expect us to provide ongoing cost reductions to them. 

“It is common in this industry that after a couple of years — typically in long-term contracts — such as those with Proton or Perodua spanning five years, they expect process improvements and efficiency, leading to cost reductions. So, that’s the challenge we have to address. 

“We aim to achieve revenue growth and improve our bottom line from 2024 onwards,” he said. 

For the year ended Dec 31, 2023 (FY23), EP manufacturing posted a net profit of RM18.6 million on a turnover of RM648 million compared to a net profit of RM399,000 on a turnover of RM516.3 million in FY22. 

Expanding Sungai Petani Plant

Concurrently, Ahmad Razlan stated that the group is exploring the expansion of its facility in Sungai Petani, Kedah, to better serve its Mazda clients. 

The plant was set up by the group’s 60%-owned subsidiary, Peps Y-Tec (M) Sdn Bhd, in partnership with Y-tec Corp (a Tier-1 supplier for Mazda Japan), to produce body panels and chassis assemblies for Mazda CX5 and Mazda 3 models. Operations began in August 2016. 

He believed that because the group’s main business was thriving and its clients were satisfied, there is a strong interest in expanding its factories. 

Apart from its Kedah plant, the group operates two factories in Selangor, located in Batang Kali and Shah Alam, and a new factory in Melaka. 

The group has also opened a two-wheeler assembly line in Shah Alam for the assembly of EV bikes under its wholly-owned subsidiary EP Blueshark Sdn Bhd. The facility boasts a production capacity of 12,000 units per year and was operational in April 2024. 

EP Manufacturing announced in a filing that it will start building a new vehicle assembly plant in Melaka. The plant, set to be constructed in phases at the Hicom Pegoh Industrial Park, will receive over RM100 million in investment. Upon completion, it will have the capacity to produce up to 30,000 EEV and EV vehicles annually in its initial phase. The plant will manufacture and assemble vehicle models for BAIC and GWM. 

It added that the initiatives implemented so far are part of the group’s efforts to navigate its businesses amid the global transition towards gradually phasing out internal combustion engine vehicles. These efforts are aimed at ensuring the sustainability of the group. 

It plans to strengthen its core business segments and explore new market opportunities. The new CKD plant is expected to enhance the existing business by creating more opportunities for manufacturing automotive components in the future. 

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Exploring Sabah property market, tourism 

IN 2022, EP Manufacturing had acquired property developer Kensington Development Sdn Bhd from Pacific Novel Ltd for RM45.6 million. 

The company has completed three major projects in Taman Seri Pelangi, Kota Kinabalu, Sabah, with a gross development value (GDV) of over RM40 million. 

These investments illustrate the group’s dedication to broadening its portfolio and strengthening its foothold in the property development sector. 

“Our primary focus has consistently been automotive manufacturing. However, we also engage 

in other ventures, including property development, boasting a land bank of over 13 acres (5.26ha),” said Ahmad Razlan. 

However, he said demand for property in Kota Kinabalu was mixed, with some viewing an oversupply. 

A report by Knight Frank Malaysia titled “Real Estate Highlights 2H23” suggested that Sabah’s housing market was predominantly buyer-oriented, with condominiums/apartments accounting for the majority of existing stock, totalling approximately 54,119 units. 

During the review period, mixed-use developments’ retail components in food and beverage offerings have gained popularity. 

Several notable retailers entered the Kota Kinabalu market, indicating a promising future for the state’s retail segment. 

“We are currently exploring partnerships with reputable firms to ensure that our land assets can realise their full potential in terms of GDV and increase in value. 

“At present, negotiations are ongoing. Our aim is to launch at least one project in Kota Kinabalu by 2024, utilising our existing land alongside a reputable partner. 

“We are cautious about venturing into areas where we lack expertise, to effectively manage risks in property development. Therefore, we are likely to seek a joint venture partner to develop our land and market the resulting products,” he concluded. 

While Ahmad Razlan under-represented the group’s dedication to its primary automotive manufacturing business, he also conveyed a willingness to explore opportunities for potential diversification. 

Tourism is among the sectors under focus. Sabah tourism authorities are targeting three million tourist arrivals this year, an increase from 2.8 million in 

2023. This revised goal stems from the state’s thriving tourism sector, which generated RM4.6 billion in receipts last year. 

“We noticed that the tourism industry in Sabah is booming and it’s continued to attract a lot of attention from players, not only from Sabah itself but also from Peninsular Malaysia,” he said. 

EP Manufacturing is cautious and planned to continue evaluating opportunities and conducting a proper feasibility study to ensure responsible investment. 

Currently, it has not finalised any venture in Kota Kinabalu, but remained open to possibilities. 

Source: The Malaysian Reserve

EP Manufacturing makes bold EV venture

Setting off on the road less taken is opening oneself to much trepidation and worry. But the adventure and learning from that journey are always well worth it. Negeri Sembilan-based developer Seri Pajam Development Sdn Bhd (Seri Pajam), a specialist in residential and commercial products, is developing a 523.23-acre industrial park called SPD Tech Valley.

Situated in Senawang, the RM3 billion SPD Tech Valley, which will hold its groundbreaking ceremony on May 20, is slated to be the first LEED for Cities and Communities Gold-certified industrial park in Southeast Asia and the first managed industrial park that adheres to ESG (environment, social and governance) standards in Negeri Sembilan.

The target market for the industrial park comprises global players in the tech industry, such as data centres and semiconductors, as well as similar or related companies looking for a place that adheres to their corporate ESG requirements.

Seri Pajam CEO Thomas Ten Wee Seong says: “Some industrial parks focus on investors [who buy and flip the property], but our industrial park focuses on the owners and tenants. We focus on global players and those in the surrounding Senawang area who want to expand their business.” Thomas adds that if the company sold only to investors, the initial bottom line would be good, but it would not be sustainable in the long term.

As SPD Tech Valley is an industrial park that adheres to ESG, Thomas says its master plan and facilities are “inspired and guided by ‘International Guidelines for Industrial Parks’ by UNIDO (United Nations Industrial Development Organisation). During the design stage, we also referred to the United Nations Sustainable Development Goals (SDG)”.

In addition, the Ministry of Housing and Local Government guidelines, along with all local authority directives and policies, were also adhered to.

Seri Pajam acquired the land by signing the sale and purchase agreement in 2022, and the deal was completed in the third quarter of 2023. Before considering the land to be used for an industrial park, Thomas and his team had planned to do something that involved their bread-and-butter business.

“We had an opportunity to acquire this land for residential development. Because Senawang is an industrial town in Negeri Sembilan, we thought why not diversify our operations for a new revenue stream so that we don’t have to rely on residential and commercial income,” he says.

“Also, the government announced two major plans — the NIMP20230 (New Industrial Master Plan 2030) and NETR (National Energy Transition Roadmap). We were already moving [in tandem] with these two plans, because our plan was to generate green energy and cater for more high-tech industries such as the semiconductor industry.”

Another reason, he adds, is the China Plus One strategy, which has resulted in companies’ setting up other manufacturing facilities or factories outside China to prevent over-reliance on Chinese manufacturing. Seri Pajam wants to offer its industrial park as an option for these companies.

At the right time

The company was founded by Datuk Ten Ah Man, Thomas’ father, in 1994. Prior to that, Ah Man co-founded construction outfit Bukit Maju Development Bhd and gained experience and expertise by being the main construction contractor for the 6,233-acre Putra Nilai (formerly Bandar Baru Nilai) by BBN Development Sdn Bhd, a subsidiary of public-listed Nilai Resources Group Bhd (formerly PK Resources Group Bhd).

Over the years, Seri Pajam has built up a competent and reliable senior management team as well as a host of young and vibrant professionals. Today, the developer has grown to more than 250 staff, with senior management comprising individuals with more than 20 to 30 years’ experience in fields such as quantity surveying, accounting and engineering in the construction industry. The younger employees come with a varied background in architecture, civil engineering and marketing, among others. It is this combination of experience and youthful energy that has put the company in a position to venture into the industrial sector.

“We had no knowledge about developing an industrial park. So, we got help from many parties, especially Invest NS (Negeri Sembilan). [Invest NS CEO] Datuk Najmuddin Sharif Sarimon and the team helped a lot with the planning and getting the clients, and were the source of guidance for me — from zero until we could launch our project,” says Thomas.

He says through the Malaysian Investment Development Authority (Mida), which provided much-needed assistance, Seri Pajam learnt that demand from industrial players was high.

“Mida has first-hand information [of industrial players]; there is a long list of foreign and direct investors that want to set up their business in Malaysia.”

While it took time to adapt in a field that was outside their expertise, Thomas and his team decided it was the right time to embark on an industrial park project despite naysayers who were questioning them about their decision.

“We never doubted our decision [to develop an industrial park] but we always look for a solution to problems. We always want to challenge ourselves, to step out of our comfort zone. We feel lucky to be at the right age and time to do this industrial park,” he says.

Serendipity at work

Having decided to develop an industrial park, Thomas and his team found that the Senawang land was best suited for one.

“This piece of land is well situated between many industrial parks and what industrial players need — water, electricity and gas,” says Thomas.

“In the east, we have the national grid line, which will provide ample electricity. In the west, we are adjacent to a river; so, we can extract the water from there and use it, which will be good for those [companies] that have high demand for water — for instance, data centres and glove manufacturers. In the north, there is the national gas line.”

Moreover, to help with energy needs, the park has its own solar power generation centre, which can provide energy to companies in case of a power failure. As for energy storage, Thomas says, “We are in discussion with two energy storage providers: One is traditional battery-type storage and the other is gravity battery, which is something new. When we have excess energy, that energy will lift up a heavy weight with a gear. When there is higher demand, the weight will slowly drop, moving a device and generating electricity.”

SPD Tech Valley will offer two types of factories — ready-built and built-to-suit. There will be 24 light industrial lots, 57 medium industrial lots — of which 33 lots will offer ready-built detached factories — and 21 heavy industrial lots.

SPD Tech Valley, which is expected to take 10 years to be completed, will be developed in phases. The first phase will cover an area of 285.25 acres and offer 13 medium industrial lots, 33 detached factories and 11 heavy industrial lots. The ready-built versions will be 33 detached factories and cater for medium industrial activities. There are three types — A, A1 and B — and they are selling from RM470 psf on the gross built-up.

Types A (eight units) and A1 (two units) have a minimum lot area of 1.3 acres, with the lot size measuring 72m (236ft) by 78m (256ft). The building measurement will be 52m (171ft) by 46m (151ft), with a gross built-up of 3,164 sq m (34,057 sq ft), and will comprise a 2-storey office and a 1-storey factory area. Type B (22 units) have a minimum lot area of 1.1 acres, with a lot size measuring 60m (197ft) by 78m (256ft). The building size is 40m (131 sq ft) by 46m (151 sq ft) with a gross built-up of 2,441m (26,274 sq ft). It will also have a 2-storey office component and a 1-storey factory area.

The ready-built factories will have solar panels installed, while the built-to-suit factories can lease their roofs to Seri Pajam to install the panels and manage it for them. 

The built-to-suit portions cater for medium and heavy industry players. There are 24 medium industry lots measuring between three and five acres, with the selling price from RM70 psf; the heavy industrial lots measure 2.5 to 14.2 acres with the selling price from RM80 psf.

The lots allocated for light industrial activity will involve SPD Tech Valley’s intelligent warehouse, which will not be sold but will be managed by the developer for recurring income.

Thomas says the intelligent warehouse will occupy 20.39 acres and act as extra storage space for customers that may not have enough space in their own warehouse and need a temporary storage facility.

“The intelligent warehouse will be equipped with a warehouse management system featuring automated picking tools and autonomous mobile robots,” Thomas says, adding that cameras will be able to estimate the capacity of the trucks coming in and out, and whether they are fully loaded, thus reducing manpower and costs.

The industrial park is individual-titled and, as such, owners/tenants must sign a Deed of Mutual Governance upon entering the park.

More holistic design

SPD Tech Valley also features other components such as a commercial hub, recreational park, training centre called Centre of Excellence, centralised labour quarters (CLQ) and business support and leisure centre. The last two components will be developed in Phase 1.

The business support and leisure centre will offer recreational facilities such as a swimming pool and gymnasium, as well as a restaurant and boutique hotel.

“We have the Centre of Excellence, a training centre where we will conduct vocational courses to upgrade the skills of workers,” Thomas says.

The CLQ will have 5,000 beds. “It is not just a bed for the workers; it is like a community for them. After work, the have a place to return to that has green spaces, a food court, retail area and prayer area, just like in a residential environment. We provide a free electric shuttle service within the park for workers to be ferried to their workplace, whoever subscribes to the CLQ,” says Thomas.

The commercial hub occupies 39.26 acres and will have 28 commercial lots and 84 shop offices. The commercial lots will house petrol and EV charging stations and a sales gallery. Thomas says some of the shopoffices will be put up for sale with a tentative selling price starting from RM1.2 million; the rest will be retained for recurring income.

“The shopoffices will accommodate a variety of businesses, catering for the everyday needs of the industry worker. Permitted operations will include laundromats, medical clinics, daycare, eateries and cafes, ensuring a comprehensive range of services and amenities are readily accessible to the community.”

In terms of security, artificial intelligence (AI) will be used in and around the park. There will be face and car plate recognition systems; perimeter fencing with AI cameras that can detect trespassers and inform the security personnel; smart visitor management system; and RFID sticker access. Cameras will be installed throughout the park to track any intruders. All this will reduce predictable patrol times as well as ensure action can be taken quickly.

There will also be a recreational park with a jogging track, outdoor gymnasium, multipurpose court, compose area and meditation zones. A rainwater harvesting system will be used for irrigation and solar-powered lights will be used to illuminate the park.

Future endeavours

Thomas hopes that SPD Tech Valley will be a benchmark for other industrial parks in the state, as there are currently no guidelines for such parks. He and his team are working closely with the state government to come up with guidelines.

He says, in terms of talent pool, the population in Negeri Sembilan, particularly Seremban, which is about one million, provides enough talent for the industrial park. “There is no workforce issue,” he says.

The SPD Tech Valley is only 15 minutes’ drive from Seremban town, and accessibility is provided from the Kajang-Seremban Highway (Lekas) and the North-South Highway. In terms of distance to major ports and airport, SPD Tech Valley will be 35km from Nilai Inland Port, 55km from the Kuala Lumpur International Airport, 80km to KLCC, 100km to Port Klang and 280km from Kuantan Port.  

Thomas says Seri Pajam wants to shift the company contribution from 100% residential and commercial to 50% residential and commercial and 50% industrial.

“We also want to venture into other states because, all this while, we have stayed in Negeri Sembilan. So, we are looking at other states, like Johor, Penang and Selangor,” he says, adding that the timeline for the expansion is five years.

The product type that the company would like to develop in other states will depend on the land and location. “We are also trying to diversify from the buy-land-develop-and-sell model; we are looking for recurring income,” he says.

At present, Seri Pajam has an undeveloped land bank of 800 acres, including the more than 500 acres of SPD Tech Valley land, which has a total gross development value of RM4.5 billion.

Source: The Edge Malaysia

Developing an ESG-compliant industrial park in Negeri Sembilan

US-based manufacturer of electrical and network infrastructure Panduit Corporation announced the opening of its new state-of-the-art manufacturing facility in Johor Bahru on Wednesday.

Spanning 25,083 square meters, the facility, which began operations in October 2023, manufactures cable tie products, according to a statement from Malaysian Investment Development Authority (Mida). The facility is expected to create 184 new jobs by the end of 2024, the agency said.

“The decision of building a new plant in Johor Bahru will help us remain competitive while maintaining our strategic presence in the area and ensuring ongoing service to our customers,” said Panduit senior vice-president and managing director for Asia-Pacific Harry Woo.

The new facility features advanced robotics and automation to maximise productivity, along with energy-efficient design practices to enhance efficiency and sustainability, said Panduit senior vice-president of operations David Tallentire.

Mida CEO Sikh Shamsul Ibrahim Sikh Abdul Majid said Panduit’s presence enhances Malaysia’s high-tech talent pool while aiding small and medium enterprises to adopt advanced manufacturing technologies and contribute to the development of the plastics industry ecosystem.

Panduit’s decision to establish operations in Johor underscores the state’s strategic advantages, including its location, infrastructure, talent pool, and role as an Asean market hub, said Johor State executive member and chairman of Investment, Trade, Consumer Affairs, and Human Resources Committee Lee Ting Han.

“We trust that this investment will further boost Malaysia and Johor’s reputation as the top investment destination for high technology and precision manufacturing industries,” Lee said.

Source: The Edge Malaysia

US firm Panduit unveils manufacturing facility in Johor Bahru

Sarawak’s Oil and Gas sector, bolstered by Carbon Capture, Utilisation and Storage (CCUS), is projected to surpass RM60 billion in gross domestic product (GDP) by 2030, says Sarawak Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg.

He highlighted that the state’s oil and gas sector has yielded significant achievements in recent years, RM10 billion last year from Petronas comprising of sales tax, dividends, and royalty.

“Sarawak has also kickstarted a promising CCUS industry,” he said in his winding-up speech during the State Legislative Assembly (DUN) sitting today.

Apart from that, he said Sarawak will have three landmark Carbon Capture and Storage (CCS) projects signed this year, namely the Kasawari-M1 project, the Lang Lebah-Golok project, and the storage of industrial CO2 emissions M3 project.

With that, he assured that the state government has developed the necessary legal and regulatory framework for the CCS sector to safeguard the rights and environmental safety of Sarawak.

“All companies wanting to develop and operate CCS in Sarawak must comply with our legal and regulatory framework, including the requirement of Environmental Impact Assessments (EIA),” he said.

He said according to the CCUS Market Global Opportunity Analysis and Industry Forecast 2023-2032, the global CCS market presents a compelling opportunity, with a projected Compound Annual Growth Rate of 13.3 per cent.

He said Sarawakian companies are uniquely positioned to capitalise on this nascent market as the region’s early movers and he hence urged them to develop their expertise in this field, establishing themselves as leaders in upcoming regional CCS projects.

“With our oil and gas, and CCUS industry activities accelerating, Sarawak Oil & Gas, Services and Equipment (OGSE) players play an important role in the success and attainment of this ambition.

“Malaysia’s OGSE sector is projected to reach RM40 billion to RM50 billion by 2030. By leveraging Sarawak’s growing oil and gas activity, local OGSE companies can partner and learn from industry leaders, propelling them to regional prominence and, ultimately, global success.

“We envision a future with Sarawak OGSE companies listed on the stock exchange, with substantial valuations comparable to international OGSE players,” he said.

Meanwhile, Abang Johari revealed that since March 2024, Petros has commenced engagements with Petronas, Upstream Gas Producers and Downstream Gas Buyers on the Distribution of Gas Ordinance (DGO) Amendment 2023, which states that Petros is the only party mandated to buy, distribute, and sell gas as the single buyer and single seller in Sarawak.

He said the appointment of Petros as state’s Gas Aggregator marked a significant step forward towards managing Sarawak’s gas resources to ensure availability of gas domestically for power generation as well as new and existing industries required to spur growth and development across the state.

“Petros and Petronas are working together to ensure a seamless transition for the Gas Aggregator role which we expect to be completed by the third quarter of 2024.

“The Gas Aggregator role will enable Petros to invest in gas infrastructure to accelerate the development of the four strategic hubs under the Sarawak Gas Roadmap which will attract more than RM100 billion of Foreign Direct Investment and Domestic Direct Investment opportunities,” he said.

Source: Borneo Post

Sarawak O&G projected to surpass RM60 bln in GDP by 2030, says Premier

The US plans to raise tariffs on a wide range of Chinese imports, including semiconductors, batteries, solar cells and critical minerals will benefit Malaysia further as multinational companies look to alternative investment destinations.

In particular, the tariff rate on semiconductor imports from China will double from 25% to 50% by 2025, targeting strategic sectors such as electric vehicles (EVs), batteries, semiconductors, solar cells, medical products, steel, aluminium, critical minerals, and ship-to-shore cranes.

“This move to increase levies on targeted China products will result in Chinese companies, which are already supplying to the United States, looking at putting orders through other companies in the South-East Asia region currently serving the United States market,” Malaysia Semiconductor Industry Association president Datuk Seri Wong Siew Hai told Starbiz.

He said Malaysia stood to benefit from the business diversion given the country’s stronghold in the semiconductor industry.

Malaysia has 13% of the global market for chip packaging, assembly and testing services, according to the Malaysian Investment Development Authority in a Feb 18 report.

It is the world’s sixth-largest exporter of semiconductors.

The semiconductor industry contributes to about 25% of Malaysia’s gross domestic product.

“For the United States, imports of these products from China will become more expensive and they will look for alternative suppliers to support the manufacturing of their products in order to be more competitive.

“Essentially, the higher tariffs imposed on China will open up opportunities for South-East Asian companies which are already supplying similar products to the United States,” he added.

Among the top gainers on Bursa Malaysia at 3.30pm yesterday were semiconductor counters including Unisem (M) Bhd, which rose 2.56% to RM4 and Aurelius Technologies Bhd which was up 1.97% to RM3.11. Meanwhile, Inari Amertron Bhd gained 1.29% to RM3.13 while Vitrox rose 1.21% to RM7.54.

Similarly, AmInvestment Bank Bhd (AmResearch) said in its report yesterday that there will be more intense trade diversions to Malaysia, especially Chinese players that have US customers.

It expected higher foreign direct investment (FDI) inflows to Malaysia for relocation and supply chain divergence.

According to RHB Research, there was an evident growth of FDI and spillover effect to local companies stemming from supply chain divergence and relocation.

“As companies around the world look for an alternative to China to mitigate geopolitical risks – a strategy dubbed as “China Plus One” has benefitted Malaysia given its robust semiconductor ecosystem, supportive infrastructure and wide array of talent pools.

“Chinese suppliers serving major US multinational corporations have also begun partnering with local Malaysian companies to establish plants in Malaysia to continue supplying their US-based customers,” the research house added.

RHB Research pointed out that the tariffs were initially imposed in 2019 on US$300bil worth of goods during the Donald Trump administration and this escalation was not entirely unexpected.

Since the onset of the US-China trade war five years ago, significant supply chain relocations and divergences have occurred, making the semiconductor supply chain more resilient in addressing such challenges.

It said this situation will also open doors for Malaysia-based companies, particularly in the automatic test equipment sub-segment, as Chinese companies shift away from US-based suppliers.

Three outsourced semiconductor assembly and test vendors – Inari Amertron, Malaysian Pacific Industries, and Unisem have exposures through their plants in Kunshan and Yiwu, Suzhou and Chengdu.

“However, we expect the impact to be minimal (if any) as their customers are mainly catering for the non-US market and various programme transfers have taken place since the trade war started five years ago.

“In fact, this development could accelerate and intensify the project and programme transfer or relocation, benefitting the companies in the mid-term,” RHB Research added.

Meanwhile, AmResearch believed that Vitrox Corp Bhd, Greatech Technology Bhd, Pentamaster Corp Bhd and TT Vision Holdings Bhd could be the beneficiaries being involved in the EV, solar, medical and semiconductor sectors.

“However, we expect some negative situation in the end-market which is likely to impact some of our local players.

“We believe end-products such as legacy chips, EV and solar panels could flood the market with oversupply as inventories eventually pile up.

“Hence, we are cautious on the oversupply of end-products that can cause a slower rate of replenishment in orders by Chinese customers,” it added.

The research house also expected intensified competition among Chinese players that could lead to years of market consolidation.

“This will also affect our local players that are tapping into the Chinese market as they face more challenges such as declining market share and prices.

“Overall, we are positive on this development given the increased sourcing of components from Malaysia and longer term FDI flows which will further upgrade the entire supply chain and ecosystem development in the country,” AmResearch added.

Source: The Star

United States tariff hike will benefit Malaysia

Sarawak recorded RM22.8 billion of approved investments in services, manufacturing and primary sectors last, Deputy Premier Datuk Awang Tengah Ali Hasan told the state legislative assembly today.

He said domestic direct investment (DDI) was the main contributor at 65.8 per cent or RM15 billion while foreign direct investment (FDI) contributed 34.2 per cent or RM7.8 billion of the total approved investments.

“These approved investments involved 339 projects, which potentially create 4,500 jobs,” Awang Tengah, who is also the state minister of international trade, industry and investment, said in his winding-up speech.

He said the manufacturing sector contributed the most at 40.3 per cent or RM9.2 billion of the total approved investments, followed by the services sector at 38.6 per cent or RM8.8 billion and the primary sector at 21.1 per cent or RM4.8 billion.

He said the manufacturing sector contributed 27.7 per cent to the state’s total Gross Domestic Products (GDP), creating 4,200 employment opportunities.

He said the approved investments in manufacturing were mainly in the electrical and electronics (E&E) sector that produces mainly semiconductors wafers, testing and probing (RM3.4 billion); basic metal (copper foil & building materials) (RM2.6 billion) and chemical products (fertiliser) (RM1.3 billion).

He said it is worth noting that nearly 50 per cent of the approved projects in 2023 have been materialised in various stages of development, including the were E&E, basic metal, chemical and food products projects.

He said for the first quarter of this year, the manufacturing sector recorded RM2.4 billion worth of investment for 30 projects.

He said these investments are expected to create more than 2,000 employment opportunities and were mainly in chemical products (urea and melamine) (RM1.7 billion), basic metal products (metallic silicon and molten aluminium) (RM436 million) and non-metallic mineral products (cement and concrete) (RM143 million).

The minister said Sarawak continues to attract new investment interests and expansion from both FDI and DDI, including the solar glass project and mining of silica sand worth RM6.5 billion; data centre worth RM18.6 billion; and expansion to manufacture components for batteries worth RM1 billion.

He said the manufacturing will shift to more advanced and technology-driven production, move up the value chain and diversify towards sustainable green growth in line with the Post-Covid-19 Development Strategy 2030.

Awang Tengah said his ministry will continue to improve the ease of doing business to attract quality investments, enhancing the position of Sarawak as a preferred investment destination.

He added that the state holds huge potential in the resource-based sector, stating that there is a need to further unlock the opportunities and potential of this sector for the participation of foreign and domestic investors.

“The Sarawak Gas Roadmap comprising four strategic hubs in Miri, Samalaju, Bintulu and Kuching is expected to attract more than RM100 billion worth of FDI and DDI over the next ten years.

“The investment in oil and gas sector will further accelerate the economic growth, create jobs and stimulate infrastructure development,” he said, adding that the state-owned oil company Petroleum Sarawak Berhad (Petros) is investing RM4 billion in Bintulu, Samalaju and Miri hubs in the next three years.

He said these include the RM100 million to deliver gas to Bintulu town by expanding the trunkline and gas network for the benefit of more than 28,000 households, as well as commercial and industrial customers.

He said Petros is also involved in the RM1 billion 65km long Samalaju Pipeline development project to transport natural gas from Bintulu to the Samalaju Industrial Park by 2025.

He said Petros is also involved in the development of the RM2.5 billion 500 megawatts (MW) Miri Combined Cycle Gas Turbine Power Plant which is expected to be commissioned by the fourth quarter of 2027.

He said Petros continues to be actively involved in upstream activities especially in rejuvenating onshore exploration and commercialisation, adding that as of now it is already participating in 18 Sarawak blocks.

Source: Malay Mail

Sarawak records RM22.8b in 2023 approved investments

Malaysian rubber glove manufacturers, which have suffered from lower average selling prices caused by intensive competition, may be able to export more to the US as its president Joe Biden raises the tariffs on Chinese rubber medical and surgical gloves from 7.5% to 25% in 2026, among others. 

With the tariff hike, Chinese gloves will be more expensive in about two years compared to now. 

While Malaysia has some of the world’s largest glovemakers, their pricing power has been diminishing due to competition from Chinese players who make cheaper gloves, hurting the margins of Malaysian glove manufacturers.

Consequently the Malaysian glove industry has been operating at a low utilisation rate below 50% due to an enduring oversupply of gloves, while the overall sales volume has declined year-on-year. In contrast, Chinese glove players are still running at near full capacity, according to a note by PublicInvest Research in February.

Based on the research firm’s channel checks, Chinese players are currently selling about US$2 (RM9.47) per 1,000 pieces cheaper than their Malaysian counterparts, pricing their products at US$16-US$18 per 1,000 pieces.

In September 2021, the US lifted a year-long ban imposed on imports from Top Glove Corp Bhd (KL:TOPGLOV) for alleged forced labour, after a thorough review of evidence that showed the company had addressed all indicators of forced labour. 

The US is a major export market for Top Glove, accounting for 17% of its sales volume. Pre-pandemic, the US accounted for around 25% of its total sales. 

Supermax Corp Bhd (KL:SUPERMX) was also hit with a similar import ban in the US in 2021 but was later lifted in 2023, following the “successful remediation of forced labour indicators”.

The US historically contributes around 20% to 30% of its earnings.

Supermax has set aside a budget of US$350 million (RM1.7 billion) for the first phase of its expansion to set up a plant in the US. Installation of machinery is expected to start this year when civil and structural works are completed.

Supermax’s US expansion is on the grounds that there would be increasing barriers to entry and higher import duties imposed in the future. Hence, domestic manufacturers would have an edge in the US against Chinese competitors. 

With the announcement on the tariff hikes on Chinese imports, the big investment by Supermax may well be worth it after all. 

Meanwhile, Hartalega Holdings Bhd (KL:HARTA) commands about 18% of the market share in the US for their nitrile glove industry, according to the Malaysia External Trade Development Corp (Matrade). The company exports 100% of its products internationally, including the Americas, Europe, the Asia-Pacific, Africa, and the Middle East.

Source: The Edge Malaysia

US tariff hike on Chinese products may augur well for Malaysian glovemakers

Swedish multinational engineering company Sandvik has launched its new production facility in Malaysia dedicated to manufacturing underground load and haul equipment.

Sandvik Mining and Rock Solutions president Mats Eriksson said the factory aims to support the assembly production of all Sandvik load and haul underground loaders and trucks, including battery electric vehicles (BEV), and establish a robust supplier network in the region.

“The Seremban facility is important to ensure flexible manufacturing of both conventional diesel and battery-electric loaders and trucks while adhering to Sandvik’s stringent standards for sustainability, quality, and safety.

“Sandvik’s commitment to delivering maximum value in sustainability, performances, quality, safety, flexibility and total economy is evident in this endeavour,” he said during the Sandvik Seremban Grand Launch ceremony here today.

The launch ceremony was officiated by Negeri Sembilan Menteri Besar Datuk Seri Aminuddin Harun.

Eriksson said that with an initial investment value of RM150 million, the factory would create potential job opportunities for the local community.

He added that the machines assembled in Malaysia at the new factory would be the Toro LH517 loader, with production expected to ramp up over the coming year, while the Toro TH545 trucks would commence production later in the year as part of a crossmanufacturing plan.

“Battery product manufacturing is slated to begin by the third quarter of this year, with the BEV unit assembly scheduled for 2025 aligning with future electrification goals,” he said.

Meanwhile, Aminuddin said the launch of the Seremban factory underscored Sandvik’s commitment to a new assembly production facility, indicating a major advancement in the underground mining equipment sector.

“I would like to express my gratitude to Sandvik for choosing Negeri Sembilan as the first site of its kind in Malaysia and I hope Sandvik may contribute to the creation of skilled workforce in this state,” he said.

The new factory, spanning over 8,000 square metres, is located in the Sendayan Techvalley Industrial Park and comprises 15 versatile assembly cells.

Sandvik Mining and Rock Solution, a business area within the Sandvik Group, is a leading global supplier of equipment and tools, parts, services, digital solutions and sustainability-driven technologies for the mining and construction industries.

Source: Bernama

Sandvik launches new load and haul factory in Malaysia