Malaysian firm to wrap up pack­ag­ing JV this year

The Myanmar Times - - Business - STEVE GIL­MORE s.gil­more@mm­times.com

KUALA Lumpur-listed firm Dai­bochi Plas­tic and Pack­ag­ing In­dus­try will in­vest over US$12 mil­lion in a lo­cal joint ven­ture with Myan­mar Smart Pack In­dus­trial, in or­der to cater to the do­mes­tic and over­seas mar­kets.

The Malaysian pack­ag­ing com­pany signed a mem­o­ran­dum of un­der­stand­ing (MoU) with Myan­mar Smart Pack In­dus­trial (MSP) yes­ter­day, paving the way for the for­mer’s first over­seas pro­duc­tion fa­cil­ity.

Un­der the terms of the MoU, Dai­bochi will in­vest $6.8 mil­lion into the joint ven­ture – Dai­bochi Pack­ag­ing Myan­mar (DPM) – for a 60 per­cent stake. DPM will take over the ex­ist­ing MSP pro­duc­tion fa­cil­i­ties, said, Thomas Lim, Dai­bochi’s man­ag­ing di­rec­tor.

The com­pany in­tends to fund its stake in the JV from in­ter­nal funds and bank loans, but de­clined to com­ment on whether it would bor­row from lo­cal or in­ter­na­tional banks. The Malaysian firm will also in­vest an ad­di­tional $5.5 mil­lion over three years to en­hance the fac­tory’s “pro­duc­tion ca­pac­ity, qual­ity and ef­fi­ciency”.

Dai­bochi has ex­ported to Myan­mar in the past but only in “neg­li­gi­ble” amounts, said Mr Lim. The joint ven­ture will al­low the firm to bet­ter meet lo­cal de­mand, he said.

“DPM’s first pri­or­ity would be to ful­fill de­mand from Myan­mar,” Mr Lim told The Myan­mar Times. “There­after we will look to se­cur­ing more cus­tomers from South­east Asia.”

Lower man­u­fac­tur­ing costs in Myan­mar will im­prove Dai­bochi’s com­pet­i­tive ad­van­tage in the ex­port mar­ket, the firm said.

“We are set to make sub­stan­tial in­vest­ments to grow DPM into a ma­jor con­sumer pack­ag­ing player not only in Myan­mar but also among ASEAN coun­tries,” the com­pany said.

‘DPM’s first pri­or­ity would be to full­fill de­mand from Myan­mar. ’ Thomas Lim Dai­bochi man­ag­ing di­rec­tor

MSP recorded $6 mil­lion in rev­enue and $1.4 mil­lion in pre-tax prof­its in 2015, ac­cord­ing to the Dai­bochi press re­lease. The fig­ures for the first six months of this year are $4.4 mil­lion and $1.3 mil­lion re­spec­tively, the re­lease said.

Dai­bochi and MSP are ex­pected to sign a Myan­mar In­vest­ment Com­mis­sion-ap­proved joint ven­ture agree­ment and deed of guar­an­tee within the next 30 days.

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