Evergreen moves into Indonesia

Evergreen moves into Indonesia

SENAI: Evergreen Fibreboard Bhd is expanding into Indonesia to further strengthen its position as one of Asia's top five fibreboard makers, chief operating officer Kuo Jen Chiu said. 

The company would start operations in Indonesia this year via new subsidiary PT Hijau Lestari Jaya. 

He said Evergreen had in March this year signed a memorandum of understanding (MoU) on a joint venture with PT Hutrindo Jaya Fibreboard Mfg Co and PT Uforin Prajen Adhesive Industry. 

Under the agreement, Evergreen took up 51% equity in the new subsidiary while the Indonesian companies held 49%. 

"There are only five fibreboard makers in Indonesia now and the prospect for the industry is bright," he told StarBiz after the company's AGM yesterday. 

Kuo said three of the producers were in Sumatra, including Hijau Lestari Jaya in Palembang and one each in Java and Kalimantan. 

He said although Hutrindo Jaya had a licence to produce fibreboard, it did not specialise in the product because it was more into supplying electrical and electronic items. 

Kuo said the acquisition of land and buildings, plant and equipment by the two Indonesian firms was valued at US$21mil. 

The Palembang plant would start operations in October this year with an annual production of 110,000 cu m of fibreboard in the first year and 300,000 cu m in the third year. 

"We are looking at 50:50 for the domestic and export markets, especially to the Middle East,'' Kuo said. 

He said rubberwood, the main raw material for fibreboards, was abundant in Sumatra and was 40% cheaper than local rubberwood. 

Kuo said the company had a total production of 700,000 cu m a year - 280,000 cu m at its Batu Pahat plant, 320,000 in Hatyai, Thailand and 100,000 at its Permas Jaya facility. 

He said the Indonesia plant and a third line installed at the Hatyai plant would boost the company's total annual production to 1.06 million cu m of fibreboard by the third quarter 2008. 

For the financial year ended Dec 31, 2006, Evergreen's revenue rose to RM528.1mil from RM457.5mil in 2005. Its pre-tax profit jumped to RM67.73mil from RM54.25mil.