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An increasing number of companies have established International Procurement
Centres (IPCs) operations in the country.
To date, there are a total of 162 IPC operations have been approved in
Malaysia.
The total annual sales turnover of the 162 IPCs approved was estimated at
RM52.9 billion and their business spending was estimated at RM4.5 billion
per annum.
Of the total, about 60 per cent of the IPCs were servicing the E&E industry,
followed by the chemicals, machinery and industrial parts, textiles and
furniture industries say the 2004 Performance of the Manufacturing and
Related Services Sector Report.
In terms of ownership by major countries, about 46 per cent or 74 IPCs were
from Japan, followed by 26 from Malaysia, 13 from the USA, 11 from Taiwan
and nine from Singapore.
Almost 93 per cent of the approved IPCs have started operations. Japanese
companies, with their strong network of production bases in the Asia Pacific
region, are the major investors for IPC operations in the country.
The IPCs serve as procurement and distribution centres and undertake supply
chain management for their manufacturing operations both in Malaysia and
abroad.
To date, a total of 26 Malaysian companies have set up IPC operations in
order to centralise the procurement and distribution function.
These companies include Proton in the automotive industry; Ramatex, Canteran
Apparel and Sleep Focus, and Lerxing in the textiles industry; Unisem,
Carsem, Formosa Prosonic, Capatronics, PNE PCB, and Grand Circuit in the
electronic component industry; Public Packages and Denko Communications in
the packaging industry; and SRM Technology in the machinery industry.
A total of 21 companies were approved with IPC status in 2004 compared with
32 in 2003.
The total paid-up capital of IPCs approved in 2004 amounted to RM5.4 million
while the average annual sales turnover and business spending were estimated
at RM3.7 billion and RM114.2 million respectively.
Of the IPCs approved, 17 were foreign-owned and four by Malaysian companies.
In terms of usage of local seaports and airports, out of the RM2.5 billion
worth of goods proposed to be exported by these IPCs, about 80 per cent will
be exported through seaports and 20 per cent through airports.
Of the goods to be exported through seaports, a total of RM1 billion (51 per
cent) will be exported through Port Klang, Penang Port (RM521.3 million or
26%), Pasir Gudang Port (RM377.6 million or 19%) and Port of Tanjung Pelepas
(PTP) (RM78.3 million or 4%).
Of the goods to be exported through local airports, a total of RM440.3
million or 91 per cent will be exported via Penang International Airport.
IPCs are expected to source products from local companies including SMEs to
further enhance the industrial linkages within the manufacturing sector and
to help local companies become global suppliers.
In 2004, of the proposed average annual procurement valued at RM3.1 billion,
about 68 per cent or RM2.1 billion worth of goods will be sourced from local
companies, hence widening the market opportunities for locally manufactured
goods.
The presence of IPCs contributes to the growth of value-added services and
supply chain activities for the overall manufacturing sector.
These regional establishments have also created positive impact on the
growth of the logistics industry as their logistics requirements are usually
outsourced to local service providers.
In addition, these services will lead to positive spin-offs to the economy
through the increased utilisation of local infrastructure, utilities and
other related facilities.
These establishments also strengthen inter and intra linkages through the
local sourcing of raw materials, parts and components and services.
The relocation and successful implementation of the regional operations of
some world renowned MNCs to Malaysia will serve as a pull factor for other
MNCs to consider setting up their regional operations in Malaysia.
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