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Saturday, March 1, 2008

UDS Capital: Five corridors to spur construction and housing

MUAR: UDS Capital Bhd sees the five economic growth corridors in the country spurring development activities, especially in the construction and housing sectors.

The five are the Iskandar Development Region, Northern Corridor Economic Region, East Coast Economic Region, Sabah Development Corridor and Sarawak Corridor of Renewable Energy.

Executive chairman Datuk Koh Kim Toon said these activities would augur well for the company’s furniture manufacturing and trading businesses.

Datuk Koh Kim Toon (right) and Datuk Tan Khoon Hai.

Its wholly-owned subsidiary Syarikat U.D. Trading Sdn Bhd is involved in the dealing of furniture, plywood, small hardware, parts, equipment and construction materials.

Koh said the inflow of local and foreign investment to these growth corridors would create demand for residential and commercial properties.

“Domestic demand for furniture and building materials is likely to increase in tandem with activities taking place in the corridors,” Koh told StarBiz after the company AGM on Monday.

As such, local furniture manufacturers should not be unduly worried about the subprime problem in the US that had slowed demand for Malaysian-made furniture, he said.

Koh said the company exported 60% of its furniture, with the US market accounting for 15% of its exports. The rest goes to Europe, Middle East and Japan.

Meanwhile, executive director Datuk Tan Khoon Hai said the company wanted to strengthen the trading activities of hardware and laminated chipboard for projects in the local construction industry.

He said US demand for made-in-Malaysia furniture was expected to pick up when the US economy improved.

“The anti-dumping move by the US against Chinese-made furniture will see more orders come to Malaysia,” said Tan.

With the US also likely to impose the same ruling against furniture from Vietnam, buyers would have to look at other sources including Malaysia, he said.

Tan said the Vietnamese authorities now required foreign investors to have deposits or bank guarantees before setting up operations to protect the welfare of local workers.

He said the move had caused foreign investors to relocate their operations from Vietnam and more investors were coming back to Malaysia.

Tan said 35% of the company’s furniture now catered to the middle and higher-end market segment, and 65% to the lower to middle-end bracket.

“We are targeting to have equal contribution from both segments in the next one or two years,” said Tan.

For the financial year to Aug 31, 2007 (FY07), UDS cut its pre-tax loss to RM2.13mil on improved turnover of RM135.89mil compared with RM9.2mil and RM116.11mil respectively in FY06.

By The Star - StarBiz (by Zazali Musa)

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