CEMENT Industries of Malaysia Bhd (CIMA) wants to form strategic alliances with interested parties in the ready-mixed concrete business, said managing director Datuk Rosli Sharif. He said the company will introduce its vendor-managed inventory system by the end of this year whereby it will assist companies under the programme to manage their inventories. "We are doing it on our own now with our unit, Unipati Concrete. We are inviting partners to work with us under this strategic alliance," Rosli said when contacted by Business Times on Saturday. Unipati Concrete Sdn Bhd manufactures ready-mixed concrete for sale in Peninsular Malaysia.
Rosli said this effort is expected to translate into an increase in the company’s supply to the ready-mixed concrete industry to 12 per cent next year from the current 9 per cent or half of its domestic market share. CIMA’s share in the domestic market stands at about 18 per cent.
Rosli also said domestic demand for cement is quite stable this year, amounting to about 14Mt. "In 1987/88, domestic demand for cement was only 3Mt. The growth over the last 15 years is tremendous. "I think the future is good. Demand is getting better. Housing demand continues to be the engine of growth to our construction industry. We’ll be working with them (developers) in servicing our customers," he added. He also said CIMA will decide next year whether to set up its second plant in Bahau, Negri Sembilan. The plant is planned to supply cement to Singapore.
"The price of cement in Singapore is low now. We expect the price to increase from next year. So, we’ll have to make a tough decision next year," Rosli said. CIMA already has a plant in Bahau and another in Bukit Ketri, Perlis. The two plants have a combined clinker production capacity of 2.8Mta and cement production capacity of 3.4Mta comprising ordinary portland cement (OPC), Type II OPC and masonry cement.
Rosli said the cost of setting up a new cement plant could be about half a billion ringgit. He said the company’s focus is to increase its total Malaysian production by 10 per cent with its two existi ng plants to cater to the domestic market. Rosli said CIMA will also look at other opportunities that will lead to an increase in the volume of production. Besides Singapore, he said, the company exports to Myanmar and is looking at Riau in Sumatra as a potential market.
Rosli also said the newly-launched logistics winning edge solution system using Optimal One Supply Chain Management will increase the company’s share in the domestic market. The system, which enables the company to deliver orders on time and allows customers to make their orders 24 hours a day, is expected to result in a big increase in its domestic market share and attract new customers. Rosli said the company can now benchmark itself against the world, bringing it a step closer in realising its vision to become a world-class operator by 2006.