GEORGE TOWN: UNIMECH GROUP BHD expects contribution from its Indonesian business to grow to 30% of the group’s revenue in 2022.

       At present, Indonesia generates about 27% of its revenue.

       Unimech currently has nine warehouses and 45 branches in Indonesia supplying industrial valves for its palm oil industry.

       The group also recently started operations for its valve manufacturing facility supplying to the marine industry.

       Group executive director Y F Sim told StarBiz that the growing palm oil and marine industries would spur the contribution from Indonesia.

       “Indonesia’s production is estimated at 48 million tonnes in 2021, up two million tonnes from the previous year.

       “It is expected to climb to 49.5 million tonnes in 2022.

       “Palm oil demand has been rebounding since April 2021, which is causing high vegetable oil prices and contributing to food price inflation in various markets around the world,” he said.

       Unimech’s valves are used in the production of crude palm oil (CPO) and palm kernel oil.

       Unimech’s valves are used in the production of crude palm oil (CPO) and palm kernel oil.

       “An increase in production results in higher sales of our valves,” Sim said.

       Sim said the Indonesian government’s commitment to the B30 programme would boost biodiesel consumption to 9.2 million tonnes. This is equivalent to eight million tonnes of CPO.

       According to Sim, the group’s valve production factory in West Java, which commenced operations recently, will benefit from the Indonesian government’s plan to expand its national shipping industry ability from 85,000 deadweight tonnes (DWT) in 2015 to 300,000 DWT by 2025.

       “Indonesia’s Investment Coordinating Board (BKPM) wants to develop the country’s shipping industry, which is estimated to be worth US$20bil (RM84.37bil).

       “The board said the industry had a multiplier effect, which is able to spur growth in other sectors of the economy and create employment.

       “The potential for the shipping industry is huge – the demand for ships not only for cargo, but also passenger ships, ferries, fishing boats and so on,” Sim said.

       He added that Indonesia aimed to grow its knowledge and improve its national design capability through its domestic ship engineering companies.

       “Therefore, the Indonesian maritime players are expected to continue improving their capabilities and build more specific classes of ships, including the Korvet, Frigate, cruise ships, liquefied petroleum gas carriers and liquefied natural gas carriers,” he said.

       Sim said in 2020, the Indonesian market remained the group’s biggest overseas market, contributing RM67.64mil or 26.1% of the total revenue of the group.

       “Because of the pandemic, the Indonesian contribution should remain flat in 2021.

       “However, we can expect the contribution to grow to about 30% in 2022,” he said.

       The group expects to deliver about RM290mil worth of valves, fittings, pumps and industrial instruments to its overseas and domestic customers this year, increasing nearly 10% over 2020.

       “So far this year, we have delivered over RM210mil worth of products.

       “Our revenue and profit before tax for 2021 will be much better than 2020, based on the third quarter’s profit before tax, which is almost equivalent to the 2020 revenue. The profit before tax for the first nine months increased by 16% over a year ago,” he said.