KUALA LUMPUR (April 17): Automotive parts manufacturer New Hoong Fatt Holdings Bhd is buying a 24,575sqm land in West Java, Indonesia for RM17.97 million to set up a new manufacturing plant for further expansion.

In a filing with Bursa Malaysia, the group said its indirect wholly-owned unit PT Auto Global Parts Indonesia had inked a binding sales and purchase agreement with PT Gerbang Teknologi Cikarang for the land buy, which it will finance with internal funds.

New Hoong Fatt said the leasehold industrial land is located about 35 km east of Jakarta, along the Bekasi-Cikampek Corridor, and can be reached in approximately one hour from Jakarta’s Central Business district.

New Hoong Fatt said the land offers business potentials, due to its strategic location and accessibility.

The land lease tenure will expire on Sept 24, 2027, and is renewable upon expiry, it said.

“The plan is to eventually build the plant to produce the products locally and serve the Indonesian market through better cost competitiveness and shorten the lead-time in delivering quality products to its customers in Indonesia,” it said.

New Hoong Fatt also said the acquisition is a form of risk diversification, where it will reduce potential risk of a single manufacturing location here in Klang. The group expects to complete the buy by the second quarter of 2017.

New Hoong Fatt’s share price rose six sen or 1.55% to settle at RM3.93 today, giving it a market capitalisation of RM295.37 million. The counter has advanced 22.05% from RM3.22 on Jan 3.