Resintech Bhd ventures into rubber plantation in Cambodia

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SHAH ALAM: Polyvinyl chloride (PVC) and polyethylene products maker Resintech Bhd is venturing into the rubber plantation sector in Cambodia to diversify its business.

“We have signed a 70-year joint-venture (JV) agreement with a Cambodia agriculture company to jointly develop 6,000ha of agriculture land there,” Resintech managing director Datuk Teh Kim Poo told reporters after the group’s annual general meeting yesterday. He declined to name the Cambodian firm.

Teh said the JV is a 10:90 split between Resintech and the Cambodian firm.

“So far, we have spent less than RM5 million on the maiden agriculture project,” he said.

Teh said the project is now in the planting stage, but expects it to start contributing to Resintech’s financials by 2020.

“Normally, it takes about five to six years for the trees to reach maturity. Hence, we may see the first contribution in the top and bottom lines in six years,” he said.

Apart from venturing into plantation, the group is hoping to secure several pipe-supply contracts for the long-delayed Langat 2 water treatment plant in Selangor from main contractors to further boost the group’s revenue.

“We are definitely interested in [participating in] the project and we have received many enquiries. However, nothing has been concluded [to date],” he said.

Langat 2 is a key component in the Pahang-Selangor water transfer project. Planned in 2000, it is deemed the best remedy to treat raw water channelled from Pahang to meet the rising demand in Putrajaya, Kuala Lumpur and Selangor.

Going forward, Teh said the group is aiming to expand its footprint in the agriculture sector in the coming years, albeit on a small scale, so as not to jeopardise its core business.

Presently, Resintech’s core business — PVC manufacturing — contributes 95% to the group’s total earnings.

Resintech has also allocated RM1 million per year to upgrade its equipment to help boost its productivity output.

This article first appeared in The Edge Financial Daily, on September 30, 2014.