Malaysian agribusiness giant Felda Global Ventures Holdings Bhd (FGV) has inked a joint venture agreement to set up a $15-million rubber processing plant and scout for greenfield and brownfield opportunities in Myanmar, the company said.
FGV’s subsidiary FGV Myanmar (L) Pte Ltd entered into the deal with local Pho La Min Trading Co Ltd (PLM) to form FGV Pho La Min Co Ltd.
FGV will subscribe to a 51 percent stake in the joint venture entity and PLM will hold the rest.
FGV and PLM will build a modern rubber processing plant in Myeik with a target capacity of 24,000 tonnes a year, FGV said. The plant in Myeik in southeastern Myanmar is scheduled to be completed by the first quarter of next year.
“We have high ambitions for this company to excel as a big player in Myanmar in the rubber-related industry,” FGV Group President and Chief Executive Officer Mohd Emir Mavani Abdullah told the media during the signing.
“The joint venture company plans to be involved in many areas but this year we will concentrate on the rubber industry,” Emir said.
FGV has been aggressively pursuing opportunities in Myanmar since 2011. It signed a memorandum of understanding with PLM in 2012 to develop a complete supply chain in palm oil, rubber and sugar in Myanmar. It is already exporting palm oil products such as SAJI cooking oil, Adela industrial margarine, Mariana shortening and SunBear bread spread range to Myanmar.
“We want to further expand our product distribution in Myanmar and we hope once we reach 20,000 metric tonnes of supply, we can open a small packaging plant here,” he said.
Last year, FGV exported about 14,000 metric tonnes of cooking oil products to Myanmar.
The joint venture company also plans to open another plant in Mon state and develop 30,000 hectares (ha) of greenfield and 10,000ha of brownfield land, he said.
However, the greenfield development would be done in stages as the Myanmar government only allows a 70-year land lease for foreigners, he added.
He also said the company would also consider the possibility of venturing into the downstream business.
“It could be anything like slippers or maybe a small factory making tyres. We will continue to look into all possibilities and opportunities in the rubber industry here,” he said.
Emir said FGV is also looking to venture into the sugar industry since Myanmar still has a sugar shortfall.
“The country only has 12 to 14 sugar mills … there is a lot of growth potential here. We are looking into the possibility of how we can co-invest with the government, either in raw sugar or refined sugar.”
He said the company is keen to work with local smallholders and might later look into the possibility of acquiring a sugar mill in the country.
Emir said the group also plans to venture into Cambodia, focusing on rubber plantation and processing. He said FGV group was looking at brownfield activities in Indonesia and Africa.
PLM has expanded its business portfolio in recent years and is currently looking at new markets around the world. PLM mostly deals in the export of assorted types of Myanmar rubber.