Malaysian firm to wrap up packaging JV this year
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.