TIONG SENG HOLDINGS inked a joint venture agreement last Friday (July 12) to set up a plant in Myanmar to manufacture precast components -- and signalled its plan to extend its precast knowhow to more plants in Asia.
The Myanmar plant will be the third precast plant for Tiong Seng.
The deal comes just a year after Tiong Seng officially opened its $36-million one-of-its-kind Prefab Hub in Singapore in May 2012.
Tiong Seng has just started building another wholly-owned precast plant in the Iskandar region in Johor.
For the Myanmar plant located in south Yangon, Tiong Seng through its wholly-owned subsidiary, Robin Village Development, has taken a 30% equity stake in the JV.
Robin Village will charge a consultancy fee and technology transfer fee, which was not revealed, for providing its knowledge on the precast business to the JV.
The principal partner in the JV is High Tech Concrete Technology, which is wholly-owned by Shwe Taung Development Co., a construction giant and one of the most prominent conglomerates in Myanmar.
High Tech Concrete Technology has a 55% stake while another Shwe Taung unit, Sin Mian Development, 15%.
The JV will invest S$10 million in the plant, which will initially supply precast components to a Myanmar government affordable housing project.
Sited on a 50,000 sq m piece of of land, the plant will be constructed from 4Q this year and production for the first phase will start in 2Q2014.
By 1Q2015, the plant will have a capacity of 55,000 cubic metres -- which Tiong Seng CEO Pek Lian Guan estimated would be sufficient for the building the equivalent of 1,500-2,000 HDB flats a year.
The equivalent figure would be higher for Myanmar's government housing project as it is of simpler design than the HDB.
Why precast in Myanmar?
Mr Pek gave three reasons at press briefing after the signing ceremony of the JV:
1. Myanmar faces a shortage of skilled craftsmen, so precast technology is required to overcome the skill deficiency and reduce dependence on labour in general. (In Tiong Seng's experience, the precast method saves about 30% of labour)
2. Precast production shortens construction time overall.
3. Precast production is carried out in a sheltered environment, so work is not disrupted by rainfall.
(In Yangon, the amount of rainfall between May and October totals about 250 cm, compared to about 230 cm for the full year in Singapore.)
Aside from the initial government housing project, the JV will look to supply to other construction projects in Myanmar. There will be lots of projects as the country is undergoing a high rate of urbanisation.
In Yangon alone, the demand for affordable housing is 200,000 units a year but only 20,000 units are supplied, according to recent research.
Mr Aik Htun, Chairman of Shwe Taung Development Co., Ltd said: "We look forward to capturing the abundant opportunities in Myanmar together with Tiong Seng."
IE Singapore will continue to play a role in Tiong Seng's international business. Said Mr Kow Juan Tiang, Group Director for Environment and Infrastructure Solutions, IE Singapore: “Its venture into Myanmar through its precast plant would enable the company to gain a strategic foothold in this emerging market, giving it a boost in its internationalisation drive. IE Singapore will continue to partner the company closely on a comprehensive market strategy to further improve market outreach and grow its market share in Myanmar.”