Hup Seng plans to build plant in Indonesia

BATU PAHAT: Biscuit maker Hup Seng Industries Bhd plans to set up a manufacturing plant in Indonesia within the next two to three years as part of its expansion plan.
Chairman Datuk Keh (Kerk) Chu Koh said it had received business proposals from several Indonesian companies and businessmen to set up operations in the republic.
He said among the proposals were from medium-sized biscuit and confectionery manufacturers that lacked capital to expand their business.
“Others include big investors with strong financial support but do not have experience in biscuit making,” Keh told StarBiz after the company’s EGM on Tuesday.
At the EGM, shareholders approved the proposed share split involving the subdivision of every one existing share into five sub-divided shares held by entitled shareholders.
They also approved the bonus issue of 200 million shares on the basis of one share for every three subdivided shares held on the entitlement date.
He said the company would consider the business proposals from the Indonesian parties.
“Apart from the right partner, we will also have to consider other factors such as the location of the plant, power supply and infrastructure,’’ said Keh.
He said if the company were to invest in Indonesia, it would materialise only after 2015, when the Asean Economic Community (AEC) kicked off.
AEC aims to form a single regional market and production base, fair economic competition among Asean members, the integration and development of SMEs to accelerate progress of less developed members, and full integration with the global economy.
“Indonesia has a huge domestic market and having a strong footing there will definitely help to improve our earnings in the long term,’’ added Keh.
Separately, he said the local biscuit-making industry was facing its “toughest time” with hike in prices of raw materials and power tariff.
Keh said the prices of wheat flour, milk, palm oil extract, fuel, sugar and packaging materials had experienced double or triple-fold increase in recent years.
He said local biscuit makers were thus forced to either increase the price of their products or reduce the size of their finished products.
“Many will opt for the latter as most customers would not be aware that the biscuit size had been reduced but will notice any price increase,’’ said Keh.