This article first appeared in The Edge Financial Daily on July 18, 2017

KUALA LUMPUR: ML Global Bhd is partnering with Sany Construction Industry Development (M) Sdn Bhd, a subsidiary of China’s Sany Group Co Ltd, to set up a precast concrete panel manufacturing plant with an initial investment of up to RM40 million.

The two parties inked a memorandum of understanding (MoU) for the joint venture (JV) yesterday, in which ML Global will hold a 51% stake, while Sany Construction will hold the balance of 49%. Sany Group is a Chinese multinational, heavy machinery manufacturing company headquartered in Changsha, Hunan.

The partnership comes ahead of the Construction Industry Development Board’s (CIDB) goal of enforcing a 50% industrial building system (IBS) usage for private-sector projects and 70% for public-sector projects by next year, as outlined in the Construction Industry Transformation Programme (CITP).

“The initial investment for the first phase of the plant will be around RM35 million to RM40 million, which will be divided between the JV partners as per the equity holdings.

“Phase 1 of the facility will take six months to complete and we aim to commence production by the end of the first quarter of 2017,” said ML Global executive director and chief executive officer (CEO) Datuk Richard Lim.

On completion of the first phase, the plant, which will be sited in Nilai, Negri Sembilan, will have the capacity to produce precast concrete panels for up to 2,000 apartments per year.

Lim said ML Global plans to expand the facility, as the first phase of the plant is expected to be fully utilised upon completion.

“2,000 units per year is insufficient for our current construction. Right now, we are building about 6,000 units per year. We will take it one step at a time as we have to make sure that the transition to this new technology is smooth,” he said.

Lim said construction costs are expected to be the same as using the current construction methods, for the first two years, after taking into account transportation costs.

However, he said the utilisation of IBS lowers construction time by 30%, allowing for faster delivery of projects. He also added that the expected continued increase in wages will make IBS cheaper than current construction methods in the future, as labour requirements for IBS are significantly lower.

He also shared that ML Global’s subcontractors were facing a shortage of workers, making the plant a strategic long-term move.

ML Global is 55.3%-owned by LBS Bina Group Bhd. MITC Engineering, previously LBS Bina’s 75%-owned construction arm, was injected into ML Global last year for RM225 million.