Tasco develops global distribution hub in DFTZ for Renesas

This article first appeared in The Edge Financial Daily, on June 30, 2017.
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SHAH ALAM: Along with its foray into the cold chain logistics segment, Tasco Bhd has established a global distribution hub in the Digital Free Trade Zone (DFTZ) in Sepang for Japanese semiconductor manufacturer Renesas Electronics Corp.

“Whatever [Renesas] produces is sent to our KLIA (Kuala Lumpur International Airport) warehouse to be integrated. We have something like a factory where we do ‘pick and pack’, and from there we distribute [the products] globally,” said executive chairman Lee Check Poh following the group’s extraordinary general meeting (EGM) yesterday.

Renesas is one of the world’s largest producers of microcontrollers and microprocessors. It was established in 2003 as a joint venture between Hitachi Ltd and Mitsubishi Electric Corp.

Managing director Freddie Lim Jew Kiat (pic) revealed that Tasco is expected to be involved in Renesas’ manufacturing process and will be importing components globally.

“The warehouse is actually temperature-controlled. It is how we will expand our dry service menu into the cold service menu — not just for food and beverages or pharmaceuticals, but also for semiconductors,” said Andy Lee, Tasco’s executive director and head of the supply chain solutions division.

He added that an additional two warehouses to be opened by Tasco would make it the largest warehouse operator in the KLIA area with a total of four warehouses.

The directors, however, are tight-lipped about the details of the warehouse ahead of the opening ceremony of the hub next Thursday.

“Malaysia still carries very good conditions to be a regional hub,” Check Poh said, explaining that more companies were looking here despite Singapore’s better infrastructure due to high costs in the republic.

Check Poh added that Sony’s international procurement office has started moving the distribution of its parts from Singapore to Malaysia, where it has been working with Tasco since 2008.

“[However,] we see operations getting more sophisticated and need many things to cope [with that],” he said.

Another hub business the group is targeting as a possibility for future expansion is halal products, Check Poh said, considering how Tasco is primarily concentrated on food and industrial logistics.

At the EGM, the company saw near unanimous approval from shareholders for the group’s proposed acquisition of Gold Cold Transport (GCT) for RM186.08 million and of 39.52 acres (16ha) of land on Pulau Indah for RM113.83 million.

GCT is expected to boost Tasco’s financial year 2017 revenue by an additional RM100 million once it begins contributing in July, bringing the total revenue to around RM700 million, said Check Poh.

Synergies are expected to be gained by selling Tasco’s sea freight and air freight services to GCT, a combined consumer and industrial focus, and shared geographical markets, explained Andy.

Meanwhile, the cold chain warehouse sitting on the land on Pulau Indah is currently running at full capacity. Tasco will look into building a second or third warehouse depending on specific customer demands, Andy said.

“Our focus for the Westport land is making it a regional hub. We would like to promote it to existing customers,” he said.