IKEA unveils plan for $212mn regional distribution and logistics centre in Malaysia

By James Henderson
IKEA is to build a $212mn (RM908mn) regional distribution and supply chain centre in Malaysia, which will manage an inventory of 9,500 stock keeping uni...

IKEA is to build a $212mn (RM908mn) regional distribution and supply chain centre in Malaysia, which will manage an inventory of 9,500 stock keeping units worth $1.54bn (RM6.6 bn) annually. 

The centre, which will adopt the structure and technology of IKEA’s biggest regional distribution centre in Germany, will also be among the top 10 largest regional distribution centres of IKEA Group globally.

The new 100,000m2 facility will utilise integrated ICT systems and automation to reduce the dependency on labour and significantly increase the efficiency and accuracy of its inventory management processes.

The centre will serve 12 retail stores in Southeast Asia, which will increase to 20 stores by 2026.

YB Dato’ Sri Mustapa Mohamed, Minister of International Trade & Industry said, “The project, which resulted from continuous engagements and facilitation by the Malaysian Investment Development Authority, represents a significant milestone for both IKEA and Malaysia.

“IKEA’s decision of selecting our country as a base to support retailers in Malaysia, Singapore, Thailand, Indonesia, Vietnam, Philippines and India underscores the strategic fit of this country in supporting IKEA’s overall growth strategy in the ASEAN region.”

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The Malaysian Government has also been actively encouraging large local conglomerates to set up their regional establishment in Malaysia through various business models including the Principal Hub (PH) scheme that allows companies to centralise their global activities such as procurement and distribution.

Such establishments bring along many multiplier effects to the country, ranging from creating high-value jobs, incurring high business spending, intensifying usage of local ancillary services, increasing the flow of foreign exchange as well as strengthening the value chain in targeted industries.

As to date, 26 PH projects have been approved since its introduction in May 2015.

Over the next 10 years, these projects are poised to contribute $3.93bn (RM16.8bn) in business spending, utilise local ancillary services worth $510mn (RM2.2bn) and generate more than 1,800 high value jobs for Malaysians.

Among renowned companies that have been accorded with the PH scheme include Honeywell, Super Group, Avago Technologies, Lotte Chemical Titan, Daikin and Sharp.

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