SHAH ALAM: Jotun (Malaysia) Sdn Bhd will double its present capacity with the opening of its RM160 million 93,000 sq metre plant in Nilai to cope with rising demand for its products, said its managing director and regional director in Southeast Asia, Peder Bohlin.

He said the factory would be the manufacturing hub in Southeast Asia and would produce paint for its advanced line, namely colour tinters and high-technology anti-fouling marine paints for deep-sea shipping vessels.

At present, Jotun’s capacity is 30 million litres of paint. With the new factory, which is to be the largest paint factory in Southeast Asia and 4.5 times larger than its Shah Alam operations, Jotun’s capacity would increase to 60 million litres of paint.

At the unveiling of the Nilai plant model here yesterday with guests of honour Norwegian Crown Prince Haakon and Crown Princess Mette-Marit as well as Norwegian Minister of Trade and Industries, Trond Giske, Bohlin said pilings for the new factory would start next week and begin operations in March 2011.

In an interview with The Edge Financial Daily earlier, Bohlin said Jotun’s plant in Singapore would be closed, following stricter new health and safety requirements.

“We are a very health and safety-oriented company; it was a question of whether to build a new factory and an additional one in Malaysia, or just one to serve both markets. After a survey, we decided to launch a new factory only in Malaysia as we expect it to be the most modern and cost-efficient,” he said.

Asked of what would become of Jotun’s Singapore operations, Bohlin said the company was investing RM62 million in a new warehouse and customer service centre in Tuas where paint from the Nilai plant would be supplied to.

“The staff at the factory there would be offered jobs in Nilai and at the new service centre in Singapore,” he said, adding “time would show” whether staff needed to be laid off or otherwise.

Malaysia is Jotun’s regional headquarters and is home to the company’s purchasing, IT, marketing and research and development (R&D) operations in Asia-Pacific, he said.

Asked about Malaysia’s attractiveness to Jotun, Bohlin said the people’s multi-lingual capabilities in addition to their ability to operate easily in multi-cultural societies combined with various R&D incentives and five-year tax incentive under the Investment Tax Allowance made it an easy choice for the company.

“I don’t understand why more foreign investors don’t come here; you have an advanced country in many ways, a large market, a well-developed infrastructure and well-educated population,” he said. “It is a very competitive nation, this will continue to strengthen Malaysia’s position globally.”

He said on average, Jotun had seen 15% growth in turnover annually in Malaysia with an overall market share of 18% among some 25 industry players, including two major competitors in ICI and Nippon.

“Our aim is to have a market share of 20%,” he said although he declined to state the timeframe in which to achieve the goal.

Turnover in Malaysia for 2009 was RM295 million, while globally the company saw a turnover of US$2.5 billion, he said, adding in Malaysia, some one million buildings were painted using Jotun paints. He said Malaysia contributed 4% to total turnover for the group.

With regard to the marine coatings business, Bohlin said globally, Jotun was the second largest company with a 25% market share.

“In Malaysia, the (shipping) business here is quite stable. While some other countries were affected by the shipping crisis, locally, the operations are mostly smaller tankers going from West to East Malaysia. Intra-Malaysia trade has been growing, so demand for ships has been stable and developing positively,” he said.

“What affected the business was the offshore (oil and gas) industry, where investments declined and not as many new projects were launched,” he said. “Now, with higher oil prices, things are moving again. We expect the second half of 2010 to be better for the offshore industry.”

In the decorative paint segment, Bohlin said it grew about 5% last year from the RM1.1 billion reported in 2008, and that it could grow another 5% this year.

“There is a close relationship between GDP growth and growth in paint consumption,” he said, adding the outlook in Malaysia for the year was favourable.

Asked about the sustainability of the recovery, Bohlin said the short-to-medium term success in the economy was dependent on government infrastructural projects as those would set a positive tone.

“I expect things to continue to be promising for Malaysia in the next two to four years,” he said.


This article appeared in The Edge Financial Daily, March 11, 2010.