30/07/2012 (The Star) - South-East Asia's palm oil, energy, construction, and automotive industries are playing a key role in cushioning the impact of the global slowdown on local manufacturing companies.

Unimech Group Bhd executive chairman and managing director Lim Cheah Chooi said the company's sales of its valves for the palm oil industry in Indonesia was expected to grow by about 40% compared with 2011.

“We are in a good position to tap into the growing palm oil business in Indonesia, as we set up 14 marketing offices cum warehouses last year.

“To date we have 34 marketing offices cum warehouses in Indonesia.

Expanding: A worker checking the quality of crude palm oil (CPO) in a state CPO processing unit
in North Sumatra.Indonesia is set to see an investment wave of more than US$2.5bil to nearly
double palm oil refining capacity, — Reuter

“The sales which will generate over 25% of the group's revenue in 2012, compared with 21% in 2011,” he said.

Also, Indonesia is set to see an investment wave of more than US$2.5bil to nearly double palm oil refining capacity, with much of the expansion led by companies owned by some of the most powerful tycoons in Indonesia, according to a recent report by Reuters.

Palm oil processing companies in Indonesia are expanding this year to take advantage of the cut in export taxes for processed oil last October, which saw export duties on refined, bleached and deodorised palm oil to 10% from 23%, which will raise the demand for valves.

Indonesian Palm Oil Board deputy chairman Sahat Sinaga said in May that shipments would reach about 5 million tonnes in the first half of 2012 from 2.6 million tonnes a year earlier, while refining capacity would probably increase to 25 million tonnes next year from 18.5 million tonnes as new plants are built and existing operations were expanded.

Unimech will also count on the demand for its valves in Thailand and Australia to generate growth this year.

“In Thailand, it is the energy sector that is driving the demand for valves, while in Australia the demand is from mining operations.

“In Malaysia, we are now supplying valves to 10 ship building companies.

“We received the Bureau Veritas certification in June, which qualify our valves for use in the marine and ship-building industries,” Lim added.

Meanwhile, Chin Well Holdings Bhd is producing a new range of fastener products for the South-East Asian market, in view of the slowdown in Europe, used in the construction and automotive sectors.

Group director Tsai Chi-yun said the company was widening its range of fastener products under the the British Standard Whitworth and Japan Industrial Standard used in different South-East Asian countries and in Malaysia for the construction and automotive sectors.

Tsai expects performance for financial year ended June 30 to be flat versus the previous financial year.

“The 2013 is expected to be slow also. For the 2012 fiscal year, the group's production is around 110,000 tonnes of fasteners, which is more or less the same as the figure for 2011,” she added.

The European market was badly hit and was expected to generate less than 45% of the group's revenue for the 2013 fiscal year ending next June, she added.

“With the absence of a comprehensive solution to the European debt crisis coupled with slower global economic growth, the group expects the remaining year to be challenging for business.

“Nevertheless, the company is optimistic that it will continue to perform satisfactory in the 2012 financial year as compared with the last period due to the satisfactory performance of its fastener product division,” she added.