Thursday 28 Mar 2024
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This article first appeared in The Edge Financial Daily on July 7, 2017

SEPANG: Tasco Bhd’s investment in the global part distribution centre at Kuala Lumpur International Airport’s Free Cargo Zone is expected to give the logistic group an instant boost to its revenue soon.

According to its managing director Freddie Lim Jew Kiat, the distribution centre, which solely caters to Japanese semiconductor manufacturer Renesas Electronics Corp, is expected to generate monthly revenue of RM4 million to RM5 million to Tasco.

However, Tasco anticipates profit margin to be thinner at the initial stage as it will need to build a bigger workforce for the centre.

“We have invested RM20 million in the centre so far. We expect to put in more in the near future,” he told the media following the opening of the distribution centre.

The distribution centre will be fully operational in two months. In fact, Tasco is already facing a happy problem — shortage of space.

Its executive chairman Lee Check Poh said that Tasco is in talks with Malaysia Airport Holdings Bhd (MAHB) to secure bigger area for its operations.

The logistic group’s revenue grew 13.3% to RM584.4 million in the financial year ended Dec 31, 2016 (FY16) from RM515.67 million in the year before, continuing what appears to be a bumpy uptrend on revenue for the group over the past decade.

The group achieved a net profit of RM30.67 million in FY16. Its net profit has been hovering around RM31 million since FY13.

The distribution centre is Renesas’ first outside Japan. It has a working space of 70,000 sq ft and can process 200,000 boxes a month.

Transport Minister Datuk Seri Liow Tiong Lai, who was present to officiate the opening of the centre, said that it was imperative for air freight logistics in Malaysia to be improved in order to capitalise on synergies with shipping facilities.

According to Liow, efforts with MAHB are being made by the government to enlarge air cargo efforts.

“We have directed Malaysia Airlines Holdings Bhd to give priority to local companies who need the space ... but we want the locals to grab opportunities faster,” Liow said.

“Jack Ma alone took up so much space,” he said, referring to the Digital Free Trade Zone which will see the Malaysian Digital Economy Corp and Ma’s Alibaba Group collaborating to develop a total of some 110 acres (44.51ha) in the old Low Cost Carrier Terminal here.

Ma, the founder of Alibaba Group, is also Malaysia’s digital economy adviser.

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