Pushed by increasing interest in Vietnam as a manufacturing base for multinational firms, VS Industry Berhad is boosting investment in its plastic injection molding and toolmaking factory there.
Malaysian molder VS said April 23 that it and its partners were planning to raise investment in their first Vietnam plant from US$6 million to US$10.2 million, to build additional capacity and warehouse space. The firm employs 15,000 in factories in China, Indonesia and Malaysia.
``The directors are optimistic about the future growth of the plastic injection industry in Vietnam,'' the company said in an April 23 filing to the Hong Kong Stock Exchange. The Vietnam operation is part of VS's Hong Kong- listed associate company, VS International Group Ltd.
Company officials did not respond to an interview request, and VS International provided few details about the Vietnam operation in public filings. But the firm suggested last year in its annual report that rising labor and operational costs in China, where it has 14 factories, make Vietnam more attractive.
``Considering the increasing overhead in China and given the rather low-cost infrastructure in Vietnam, the investment in Vietnam is envisaged to enhance the group's competitiveness in the long run,'' VS International said. ``Our early presence ... will enable us to grasp the golden opportunity to emerge as one of the major plastic molded product suppliers in Vietnam.''
The Vietnam plant is part of a broader expansion that VS Berhad, based in Johor, Malaysia, is undertaking.
Last year, VS opened an electronics plastics plant in Qingdao, to increase its presence in North China, and told Malaysian newspapers it was opening a new molding plant, with 39 presses, at its Johor headquarters. The Johor plant is expected to boost injection molding capacity by 20 percent.
The company counts vacuum cleaner maker Dyson and electronics firms Sony and Samsung among its customers.
VS Berhad, which says it is among the 50 largest contract manufacturers in the world, said that its Hong Kong-listed VS International subsidiary had plastic sales of HK$1.1 billion (US$141 million) last year, representing 80 percent of its sales.
About US$2.6 million of the additional money for the Vietnam factory is coming from a company controlled by the brother of VS Berhad Chairman Beh Kim Ling. The remaining $1.6 million is coming from a VS subsidiary.
VS International Group Ltd. shareholders need to vote on the Vietnam transaction at a May 11 meeting.