Malaysia is distribution, supply centre for Asean

> World’s largest furniture retailer to invest RM908 million in facillity

KUALA LUMPUR: IKEA, the world’s largest furniture retailer headquartered in the Netherlands, will invest RM908 million to establish its regional distribution and supply chain centre for Asean in Malaysia.

The centre, which will adopt the structure and technology of IKEA’s biggest regional distribution centre in Germany, will also be among the top 10 largest regional distribution centres of IKEA Group globally.

The new centre will manage an inventory of 9,500 stock keeping units (SKUs) worth RM6.6 billion annually. IKEA’s new 100,000 square metre specialised warehouse will utilise its integrated ICT systems and automation to reduce the dependency on labour and significantly increase the efficiency and accuracy of its inventory management processes.

The establishment of the regional distribution and supply chain centre in Malaysia will strengthen its role in supporting IKEA’s growth in the Asean region. IKEA’s retail stores in Malaysia are among IKEA’s most visited stores globally. The centre will serve 12 retail stores in Asean, which will increase to 20 stores by 2026.

On congratulating IKEA, International Trade & Industry Minister Datuk Seri Mustapa Mohamed said the project, which resulted from continuous engagements and facilitation by the Malaysian Investment Development Authority (MIDA), represents a significant milestone for both IKEA and Malaysia.

“IKEA’s decision of selecting our country as a base to support retailers in Malaysia, Singapore, Thailand, Indonesia, Vietnam, the Philippines and India underscores the strategic fit of this country in supporting IKEA’s overall growth strategy in the Asean region,” Mustapa said in a statement.

The establishment also adds momentum towards making Malaysia a regional distribution hub and preferred logistics gateway to Asia as outlined in the National Logistics and Trade Facilitation Masterplan and National ECommerce Strategic Roadmap (NESR), he added.

“Deployment of technology in the logistics chain has been identified as the key factor in strengthening the capabilities of logistics service providers towards enhancing trade facilitation mechanisms. Thus, IKEA’s high-flow and automated warehouse is certainly wellaligned to this agenda,” said Mustapa.

The Malaysian government has also been actively encouraging large local conglomerates and multinationals to set up their regional establishment in Malaysia through various business models, including the Principal Hub (PH) scheme that allows companies to centralise their global activities such as procurement and distribution.

Such establishments bring along many multiplier effects to the country, ranging from creating high-value jobs, incurring high business spending, intensifying usage of local ancillary services, increasing the flow of foreign exchange as well as strengthening the value chain in targeted industries.

To date, MIDA has approved a total of 26 PH projects since its introduction in May 2015. Over the next 10 years, these projects are poised to contribute RM16.8 billion in business spending, utilise local ancillary services worth RM2.2 billion and generate more than 1,800 high-value jobs for Malaysians. Among the renowned companies that have been accorded with the PH scheme are Honeywell, Super Group, Avago Technologies, Lotte Chemical Titan, Daikin and Sharp.