Tasco to invest additional RM400m to expand warehouse capacity over next two years
06 Jun 2024
Integrated logistics solutions provider Tasco Bhd (KL:TASCO) plans to invest an additional RM400 million from now to 2026 to expand its warehouse capacity.
Executive chairman and substantial shareholder Lee Check Poh said the group has so far invested RM300 million in the expansion of its warehouses, exceeding the minimum RM240 million investment in capital expenditure (capex) to qualify for the income tax exemption under the Malaysian Investment Development Authority’s (Mida) integrated logistics services (ILS) scheme.
“Mida has awarded us the ILS scheme twice. The first one was for a five-year period from 2003 to 2007. We invested RM90 million in the first round. The second one was for a five-year period from 2021 to 2026 of a minimum RM240 million investment, which we have already invested RM300 million, as of today,” he said at the launch of Tasco’s new four-storey warehouse under phase one of the Shah Alam Logistics Centre (SALC) on Thursday.
The event, which was officiated by Selangor Menteri Besar Datuk Seri Amirudin Shari and Japanese Ambassador to Malaysia Katsuhiko Takahashi, was in conjunction with the group’s 50th anniversary this year.
“We still have two more years to go. From our investment strategy pipeline, we will most probably invest another RM400 million until 2026, bringing total capex to RM700 million under the second ILS scheme,” Lee said, adding that the warehouse expansion is expected to create 800 jobs this year alone.
The newly built warehouse adds 600,000 sq ft to the 400,000 sq ft of warehousing space Tasco currently owns in the same premises.
According to Lee, about 70% of Tasco’s newly launched four-storey SALC warehouse has been leased out to customers. He added that Tasco is currently in negotiations with a potential customer to take up the remaining space.
Warehousing capacity at Shah Alam hub to grow to 1.4 million sq ft by 2026
Part of the RM400 million capex will be used for phase two of SALC, which will see another 400,000 sq ft of warehousing space added, bringing the total to 1.4 million sq ft by 2026. “The group’s old headquarters will be demolished and replaced with a four-storey warehouse, which will connect to today’s newly-launched warehouse and will use the same ramp,” said Lee.
Tasco also plans to build two new warehouses in Northport, which will span 600,000 sq ft in total. Almost half of that facility will cater to cold storage warehousing with automated storage and retrieval systems (ASRS). Tasco’s 70%-owned subsidiary Tasco Yusen Gold Cold Sdn Bhd (TYGC) is currently the biggest cold chain player in Malaysia. In 2019, Japan Overseas Infrastructure Investment Corp for Transport and Urban Development (JOIN), a Japanese government investment company, had invested 30% in TYGC.
Lee conceded that the massive inflow of new warehousing capacity coming into the market could result in an oversupply in the short term. “But I believe in the medium-and long-term, it should stabilise so long as the economy keeps growing.”
Earlier in his speech, Amirudin said the Department of Statistics, Malaysia data showed that Selangor’s population has pushed past 7.3 million and this continues to grow.
“That is more than 20% of Malaysia’s population located across nine districts and 12 local councils. And the majority are young people primed to enter or have just entered the workforce thanks to the more than 160 universities located across the state.
“These two factors mean you not only have a ready-made market, but a workforce primed to take up the job opportunities your investment will surely offer,” he noted.
Amirudin added that his state administration will table the mid-term review of the First Selangor Plan (RS-1) at the upcoming Selangor State Assembly in July. “We will then present RS-2 in 2025 or early 2026. Infrastructure and the services sector are one of the key pillars (in the plan) where we will establish the Greater Klang Valley as the metropolis of Selangor and Malaysia. Working together with the private agencies, the government sector, the people of Selangor and companies, we are confident that activities in Selangor will contribute 30% to the national gross domestic product by 2026/2027.”
Tasco’s share price closed unchanged at 96.5 sen on Thursday, giving it a market capitalisation of RM772 million. Its share price has risen 25% so far this year.
Source: The Edge Malaysia
