October – December 2006

Quarterly

newsletter

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Malaysian Tin Products

MANAGEMENT COMMITTEE

FOR YEAR 2005/2006

PRESIDENT

MR. MAMORU KAWASAKI

(ALTERNATE – MR. LOH YOON SOON)

SELAYANG SOLDER SDN BHD

VICE-PRESIDENT

MR. TEOH LAY HOCK

NIHON SUPERIOR (M) SDN BHD

HON. SECRETARY

MR. C.S. LIM

METAL RECLAMATION (IND) SDN BHD

TREASURER

MR. JASON LEE

HENKEL (MALAYSIA) SDN BHD

Letters to the Editor are welcomed. We appreciate your feedback to further improve our editorial content. Please address your letters to:

The Editor

The Malaysian Tin

Products Newsletter

P O Box 12560

50782 KUALA LUMPUR.

COMMITTEE MEMBERS

MR. CHEN TIEN YUE

ROYAL SELANGOR INTERNATIONAL SDN BHD

EN. AB. PATAH MOHD

PERUSAHAAN SADUR TIMAH MALAYSIA

(PERSTIMA) BHD

MR. KOJI TSUBONO

SENJU (M) SDN BHD

SECRETARIAT ADDRESS

The Malaysian Tin

Products Manufacturers’ Association (MTPMA)

8th Floor, West Block

Wisma Selangor Dredging

142-C, Jalan Ampang

50450 KUALA LUMPUR.

EDITORIAL SUB-COMMITTEE

MR. LOH YOON SOON

MR. TEOH LAY HOCK

MR. C.S. LIM

MR. JASON LEE

MR. CHEN TIEN YUE

TN. HAJI MUHAMAD NOR MUHAMAD

MS. LYNETTE PICHOO

Tel: 03 – 21616171

Fax: 03 – 21616179

Email: mtpmasec@mtpma.org.my

The Malaysian Tin Products Newsletter is published quarterly by the Malaysian Tin Products Manufacturers’ Association (MTPMA). The opinion and statements expressed in the Newsletter are not necessarily those of the MTPMA or the Editorial Sub-Committee and neither endorsement nor confirmation are intended or implied.

Dear Members,

As the last quarter of the year draws to a close, economic growth forecasts for the year ahead have been encouraging and promising. Even though Malaysia’s GDP growth rate is estimated to be at around 5.5% for the forthcoming year, down slightly from previous estimates due to the slowing down of the global economy, this figure doubtless stands as still a bullish forecast for 2007.

Equally promising is the favourable outlook that the rest of the world has for Malaysia, and particularly for the country’s business climate. According to a recent World Bank report entitled “Doing Business 2007”, Malaysia has been ranked 25^th place amongst 175 countries as one of the most business friendly nations. This ranking was based on indicators such as the time and cost for businesses to meet governmental regulations; to start and close a business; obtain licenses; get credit; pay taxes and other related areas. Such a positive perspective of the country is definitely encouraging for future trade and investment opportunities from the rest of the world.

We also close the year with the anticipation of a bountiful era ahead of us with governmental forecasts that the electrical and electronics industry will be hitting the RM82.4 billion mark in terms of investments by the end of the 14-year period of the Third Industrial Master Plan which will end in 2020. The sector is also expected to experience investment growth rates of 7.1% annually during that period, and exports should total RM738.9 billion by the end of 2020. Such estimates coupled with forecasts from recent studies by several local research houses that Malaysia’s manufacturing sector including the electrical and electronics industry will register high growth levels in 2007 are certainly welcomed and favourable for our business outlook in the near future.

I hope that our positive endeavors and energy of this year will continue to spill over into the years to come. I thank all members of the Association for their continued support, and wish everyone a very happy and productive new year.

With best regards,

Mamoru Kawasaki

President

ELECTRICAL & ELECTRONICS NEWS

Pact will Boost Our Exports, Say US Electronic Firms in Malaysia

US electronic firms based in Malaysia are confident that a Malaysia-US FTA would further boost their exports and help them to tap opportunities in Malaysia’s services sector. Dell Asia Pacific Sdn marketing director Hazree M Turee said with a FTA in place, the firm can now tap the US procurement market. Dell contributes about 28 per cent of electronics exports, and 95 per cent of its notebooks exported to the US come from its Penang outfit.

“The remaining 5 per cent for the US Government procurement market had to be sourced from our European plant but with the FTA, we can also produce the remaining 600,000 notebooks which costs a total of US$700 million (RM2.56 billion).”

He was speaking at a briefing on “Selling to the US Government - Benefits to Malaysian Companies” in Kuala Lumpur yesterday. Agilent Technologies Microwave Products (Malaysia) Sdn Bhd vice president Noorashidah Ahmad said a FTA would make it easier in undertaking commercial transactions and expedite the movement of capital investment and resources between both countries.

“It will lead to a multiplier effect as it will see a growth of supplier base support in Malaysia,” she added. In a separate statement, members of several US and Malaysian business organisations also supported the successful conclusion of the third round of Malaysia-US FTA talks.

They include the US-Malaysia FTA Business Coalition, the American Malaysian Chamber of Commerce, the Federation of Malaysian Manufacturers, the Malaysian International Chamber of Commerce and Industry and US-Asean Business Council.

(Sources: Business Times, 2 November 2006)

German Chipmaker to Set Up Plant in Penang

After a protracted period of study and negotiations, a German-based microelectronics company Packaging Technologies (Pac Tech) GmbH has decided to set up manufacturing operations in Malaysia. The company has purchased a piece of land in Penang to set up the plant and production is expected to start in June 2007. The plant will be the company’s main operations in Asia.

“The company had set up a plant in the US four years ago. But Asia is a dynamic market. Malaysia with its human resources and infrastructure for chip production presents itself as a good site for the manufacture of chips,” a company spokesperson said. According to Pac Tech Asia’s managing director Frau Zakel, the company will concentrate on mass production.

Sixty per cent of Pac Tech’s products are sold in Asia and with the new production site in Malaysia, the company is expected to strengthen its position in the lucrative Asian market. The plant in Malaysia emerged following a cooperation with a Japanese trading house, Nagase & Co which had acquired a 60 per cent stake in Pac Tech. Zakel said the new plant in Malaysia would entail an investment of some €5 million (RM23.4 million) in the first two years.

“After that, another €10 million (RM46.8 million) will be invested for an expansion phase,” she said. Meanwhile, Marina Emmanuel reports from Penang: Invest-in-Penang Bhd board member Datuk Wong Siew Hai had travelled to the company’s headquarters in Germany earlier this year to convince the group to invest in Penang. “This investment fits very much into investPenang’s focus area in luring high technology firms which are small and have great potential to grow.

InvestPenang is an entity of the Penang Government whose primary focus is to sustain, rejuvenate and further promote the business environment in the state. Wong described the new investment as a “good hit” since Pac Tech has also considered other locations like Vietnam and China. He said the company has already acquired a 53,512 sq ft wafer bumping facility which was previously the site of Auer Precision in Phase 4 of the Bayan Lepas Free Industrial Zone.

The production floor space will occupy up to 40,000 sq ft, including cleanroom facilities and in the initial production phase, it will be capable of processing 600,000 wafers per year. Pac Tech Asia is expected to hire 25 people when it first begins operations and is due to increase this figure to 80 by the time operations are ramped up.

(Sources: Business Times, 12 December 2006)

ECONOMIC NEWS

Commodities In Correction Mode

The outlook for most soft and hard commodities remains uncertain going forward, with the exception of crude palm oil (CPO), gold, rebar, wire rod, nickel and copper, OSK Research said.

Soft commodities are those that are grown and not mined while hard commodities are mostly metal based. In its latest technical note, the brokerage said the prices of crude oil, soybean oil and rubber should decline further while aluminium and hot roll coil prices were likely to remain flat. However, commodities such as CPO, gold, rebar, wire rod, nickel and copper, were set to register stronger growth, it added.

According to OSK Research, 2006 has been an eventful year for most commodities so far. “This is a year during which most commodities charted their multi-year highs but a correction has set in,” the research house said. Employing the Reuters-Jefferies CRB Index to gauge the direction of the broader commodities, OSK Research said it appeared that the commodities started putting the brakes on a five-year long uptrend in August.

On the performance of Nymex crude oil spot month futures, the brokerage said the commodity’s downside risk was “getting higher”. “We believe the commodity is in the midst of staging a technical rebound to correct its oversold structure,” it added.

However, the research house said, the failure of the commodity to overcome the resistance level of US$67 to US$70 per barrel would reinforce the view that the downside had legs with good support around the US$55 to US$57 band. OSK Research sees the average price of the commodity at US$62.60 per barrel next year, down 6% from US$66.90 per barrel this year. Meanwhile, Malaysian Derivatives Exchange Bhd’s three-month CPO futures is technically strong and looks resilient.

The commodity was poised to stage a technical jump to at least to RM1,600 per tonne, with the ultimate target of RM1,780 per tonne next year, the brokerage added. As for other commodities, OSK Research expects the price of rubber to decline further and aluminium’s fortunes to be mixed but with more downside risk. It added that hot roll coil price was likely to stay flat while gold, copper, rebar, wire rod and nickel prices should remain strong.

(Sources: The Star, 4 October 2006)

Johore Tin In Talks On 2nd Indonesian Plant

Johore Tin Bhd is in talks to set up another can-making factory in Indonesia, managing director Edward Goh Swee Wang said. He said the company sees Indonesia as a high growth market due to the huge demand for cans there, and because the company has not yet gone aggressively into that market.

“We will, however, tread very carefully as there are many can makers in Indonesia,” Goh said. He said the factory would service another part of Indonesia and not North Sumatra, where it already has operations. The North Sumatra factory caters to local demand only. On the home front, Johore Tin will see the completion of its factory in Seelong, Johor, by the end of the month.

The company will consolidate its two factories in the state to this new location, which is expected to bring costs down. The new factory also gives room for future line expansion. Johore Tin also has a factory in the Klang Valley. “The fact that we are now listed on the main board has not changed our business perspective much.

“We will continue to expand in line with our plans the past year or so,” Goh said. Johore Tin yesterday was transferred from the second board of Bursa Malaysia to the main board. Goh expects turnover for 2006 to be on par with last year, even though it actually experienced higher growth this year. He said this was due to steel prices which were down in the first 9 months of this year. Goh said its local operations have been sustainable and are registering steady growth, with no signs of a decline.

Prices of raw materials are expected to record an uptrend, due mainly to an increased demand towards the end of the year. For the first six months of its financial year ending December 31, Johore Tin registered a net profit of RM3.2 million on RM59.9 million revenue.

(Sources: Business Times, 11 October 2006)

Tight Supply may Raise Price of Tin

The price of tin will likely hit US$12,000 per tonne next year as fears grow over the tight supply situation globally. The commodity soared to an all-time high at US$11,300 per tonne on the Kuala Lumpur Tin Market (KLTM) on Monday, but closed US$80 lower at US$11,220 per tonne yesterday on some technical correction.

Dealers expect the commodity to be traded between US$10,800 and US$11,000 per tonne for the rest of this week after the significant price surge. The average tin price last year was US$7,410 per tonne. A trader told StarBiz the metal’s performance next year was expected to remain bullish, as the growth in supply seemed to be lagging behind consumption.

Dealers said recent developments such as the clamping down of illegal tin mining operations in Indonesia – the world’s largest tin producer – as well as the unrest in Bolivia, the world’s fourth largest tin producer, when its mining cooperatives and state-employed miners clashed, could result in a disruption in tin supply next year.

Indonesia-based PT Timah, one of the world’s largest tin companies, is also reducing its production by about 4,000 tonnes this year to support the trading of the metal on the international market. A dealer said the tin stockpile of the United States Defence Logistics Agency (DLA) was dwindling. DLA has systematically offloaded about 10,000 tonnes of its stockpile per annum. At last count, however, the DLA stockpile is believed to be at 8,000 tonnes. “This means that beyond 2007, supply of tin in the world market will be lower,” the dealer added.

Independent tin authority CRU International Ltd said the supply deficit had been filled by US DLA and drawn down on inventory by the London Metal Exchange’s players (tin producers and consumers). Reported inventory in terms of weeks of consumption decreased to 5.4 weeks last year from 9.8 weeks in 2001. CRU said: “For this year, inventory is expected to be lower to 4.7 weeks.” For this year, world production of refined tin is projected at 359,300 tonnes against higher world consumption estimated at 364,500 tonnes. A dealer said China had been recording double-digit growth in consumption since 2002, and as the largest consumer of refined tin since 2003.

(Sources: The Star, 13 December 2006)

MEMBERS' NEWS

Fresh Designs From Islamic Motifs In Royal Selangor ’s Collection

Continuing its design philosophy of ‘Pewter has a new attitude,’ well-known pewter maker Royal Selangor breathes new life into conventional decorative items with its latest collection, Alif. Inspired by traditional Islamic art and architectural designs, the Alif collection gives a new perspective to classical elements, giving birth to a new range of home and desktop accessories as well as fresh designs in personal accessories.

Distinctive geometric motifs have decorated many impressive Islamic architectural wonders such as the magnificent Alhambra in Spain and the majestic Dome of the Rock in Israel. A popular motif is the muqarnas which uses the principal of geometric shapes to create visual depth. The Alif collection incorporates the muqarnas motif into the design of its home accessories like the Arabesque vase and the Al Andalus platter available in medium and large sizes, the pewter-lidded glass jar and the Assalaamualaikum clock complete with the inscription of the Arabic greeting around the rim.

Demonstrating meticulous craftsmanship, the line of home accessories also include two plaques with the famous Islamic verse Alhaya’ laa ya’ tii ilaa bikhair (prudence brings nothing but goodness). The first and last words of the Arabic alphabet, Alif and Ya are transformed into stylish pewter paperweights that jazz up the desktop.

Personal accessories are given a new definition with five versatile and chic pendants that can be turned into a keychain, hairpiece or belt. The designs of Octagon, Star, Eclipse, Gateway and Facets add excitement to any wardrobe.

Named after the joyful expressions surrounding Hari Raya, Royal Selangor offers four Raya packages – Syawal, Fitri, Barakah and Salaam – that celebrate the peace, fellowship and unity of this Muslim festival in true Malaysian style. Accompanied by a delicate piece of hand-drawn batik by celebrated batik artist Emilia Tan, each package features skillfully crafted arabesque designs on functional pewterware.

Welcome visiting friends and family with refreshing beverages from a pewter pitcher served in dainty pewter tumblers found in the Syawal bundle. The coolness of refrigerated drinks retained by the pewter ensures a truly thirst-quenching experience during your open house. Impress guests with Fitri by serving tidbits of cookies in a cembul and pewter coasters with traditional wood carving motives. For a bigger serving of festive bits, the Barakah bundle offers a beautiful geometric pewter-lidded cookie jar filled with irresistible butter cookies.

Looking for a balik kampung gift this Hari Raya? Royal Selangor has the perfect gift idea. Consisting of a photoframe and an intricately carved trinket box, the Salaam bundle will surely capture the joyous celebration of Hari Raya. Whether to delight guests during Open House or as a Hari raya gift for family and friends, Royal Selangor has an extensive range of pewterware that will meet your Hari Raya needs. Check out Royal Selangor ’s homeware collection that features elegant oil lamps to tea light holders and dining ware. Starting from RM150, the Royal Selangor Raya packages are available at all Royal Selangor outlets, as well as the Royal Selangor Visitor Centre in Setapak.

Royal Selangor - Home Grown Brand, International Success

We’ve all gone to a Royal Selangor outlet to pick a gift for a friend’s wedding or birthday or a foreign visitor. We all know it as the world’s foremost brand in pewter ware. But it wasn’t always like this. What we know as Royal Selangor today has come a long way since its humble beginnings. It all started in 1885 when founder Yong Koon arrived in Malaya and joined his two brothers as tinsmith. While their main trade was making household items such as pails, gutters and weighing scales, they created pewter ware like incense burners, joss-stick holders and candle stands on the side which proved popular with Chinese migrants.

The Yong brothers were an enterprising lot. They catered to market demands and moving times. When the British presence in Malaya started growing, they started producing functional European-styled cigarette boxes, ashtrays, vases and teapots. By the 1930s, the brothers had 22 employees producing as assortment of functional household products. Then, during the Japanese occupation, they turned to making sake sets as gifts for Japanese military officials.

In 1968, the company, then known as Selangor Pewter, opened its first retail outlet in Malaysia and by the 1970s the company started venturing abroad – first to Singapore, Hong Kong and Australia, then to Europe and Japan. Growing the business internationally was a significant move for Royal Selangor as it successfully established itself as a global brand. Since then, the company has continued to actively expand its presence internationally.

By 2001, half of the company’s revenues came from its overseas markets but there was still a huge market yet to be penetrated – most notably North America. Royal Selangor already had an office and market presence in Canada but to really tap the North American market, they needed a stronger foothold.

An opportunity presented itself in 2002. Up for sale was a manufacturing and distribution company in Nova Scotia, Canada. Acquisition of this company would significantly improve its presence and network on the continent, and thus give Royal Selangor the impetus for growth in North America. With this in mind, the company decided to bid for the company.

But there was just one setback. Royal Selangor did not have the funds in Canada to purchase a manufacturing and distribution company. The company then turned to a bank that it was using in both Malaysia and Canada with the hope that the bank could provide some assistance.

Recalls Peter Loh, finance manager of Royal Selangor International Sdn Bhd, “I remembered that we already had a relationship with HSBC in Canada. I then contacted our HSBC relationship manager here in the Malaysian office and informed them of our predicament. I remembered them working till eight, nine o’clock at night because of the time difference when liaising with their Canadian counterparts to get things done for us.”

“When you bid for a company, you don’t know whether you’re going to be successful or not. If you are successful, then you have to show that you have the money there,” he explains. So what Royal Selangor needed was credit facility in Canada. But that is easier said than done, especially when you’re a relatively small foreign-owned company operating in a foreign country.

“HSBC Malaysia supported our application for the credit facility with extremely positive recommendations and documentation to its office in Canada that we were a solid and secure business. That was important in securing the credit facility. Within a very short period of time, HSBC Canada agreed to provide us with the standby credit facility in North America which enabled us to bid for the company which resulted in us successfully acquiring the Canadian company.”

According to Loh, Royal Selangor’s North American operations have grown by approximately 50% since the acquisition. “The bigger volume and a more extensive distribution channel in North America have also increased our negotiation strength within this market,” adds Loh. Today, Royal Selangor products are distributed in more than 20 countries around the world through its own retail shops as well as a network of distributors. Royal Selangor is also in fine stores such as Harrods and John Lewis in Britain; and Wako and Mitsukoshi in Japan.

The company has ten marketing offices, complete with warehousing facilities around the world in Australia, Canada, Britain, the United States, Japan, Hong Kong, Singapore, China, Thailand and Malaysia, and a network of exclusive distribution agents in other markets.

Looking ahead, Loh expects the company to grow with its expanded new business in online sales and new market segments such as interior architecture. “There are also opportunities in reaching out to the younger market segment and “buy for self” segment (as opposed to the gift segment),” he enthuses.

As Royal Selangor continues to grow at home and abroad under the stewardship of third generation Yongs, Loh says it is always looking towards HSBC’s comprehensive range of commercial banking services. After all, it only makes sense to choose a bank with global network and expertise.

Christmas Sparkle with Royal Selangor

Christmas may not be white in Malaysia but can be sparkling. Royal Selangor has rolled out 12 ornaments – Snowflake, Star, Heart, Christmas Tree, Present, Dove, Holly, Bell, Mistletoe, Ornament, Candy Cane, and Stocking. These adorably designed pewter pieces are versatility, as they can not only be used to decorate the Christmas tree, but double up as neckpiece, keychain or even combined to form trinkets for a charm bracelet which makes it a great gift.

As part of its Christmas celebration, Royal Selangor has come up with five special selections, with each selection – Noel, Plus, Teddy Bear’s Picnic, Vinifera and Glow – offering a combination of designs. Starting from RM90, Royal Selangor’s Christmas offerings are available at all Royal Selangor outlets and the Royal Selangor Visitor Centre in Setapak.

Pewter Trinkets Add Sparkle

Royal Selangor has come up with 12 Christmas ornaments for that magical touch this season. The elegant forms of these 12 collectibles – Snowflake, Star, Heart, Christmas Tree, Present, Dove, Holly, Bell, Mistletoe, Ornament, Candy Cane and Stocking – will add sparkle to a Christmas tree, giving a sense of joy and luxury to any living space. Decorating the Christmas tree with loved ones will be made even more memorable as they discover the warmth of pewter through these adorable designs.

Versatile as always, each piece also doubles up as neckpiece, keychain or, for the more imaginative, combined to form trinkets for a charm bracelet. They can also be gifts for family and friends. As part of its Christmas celebration, Royal Selangor has five special gift selections. Each selection – Noël, Plus, Teddy Bear’s Picnic, Vinifera and Glow – offers a combination of designs that capture the celebration and joy of the season.

Noël is a choice of three or six Christmas ornaments (RM90-RM162) while Plus is a range of accessories (RM170). Teddy Bear’s Picnic consists of a picnic bubbler and a baby mug (RM212) and Vinifera is a pair of Marine wine goblets (RM360). Glow, a pair of Nick Munro votives and Erik Magnussen tealight holders, is at RM432.

Royal Selangor’s Christmas offering is available at all its outlets and the Royal Selangor Visitor Centre in Setapak, Kuala Lumpur. Royal Selangor will be giving away a teddy bear or gift voucher (while stocks last) for every purchase of RM300 and above in a single receipt.