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2011 had been a very difficult year for our steel manufacturing operations while our retail business continued to perform well and our property and other businesses fared satisfactorily. The local flat steel industry comprising hot rolled coils (HRC), cold rolled coils (CRC), coloured sheets and downstream flat products was adversely affected by rampant duty-free imports of grades that can be produced locally. This had eroded our market share and threatened the sustainability of our flat steel operations. In addition, the rising costs of production especially cost of raw materials and utilities namely electricity and natural gas had also affected our steel businesses.
We shall continue to work with the authorities on plugging the import loopholes and enforcing the conditions of the National Steel Policy to safeguard the interests of local manufacturers. Discussions are ongoing with potential strategic partners to help grow our steel operations through the transfer of technology, improved quality and better access to overseas markets. In the face of increasing cost and demand for raw materials, we are also exploring opportunities in iron ore and coal mining which will enhance our steel operations and create substantial value-add from extraction of the ore to finished product. |
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In the retail sector, Parkson opened 9 new stores in 2011 with 6 in China, one in Malaysia and 2 in Vietnam. It also ventured into the Indonesian retail market through 7 Centro department stores and one Kem Chicks supermarket, making a total of 104 stores operated by Parkson in these 4 countries. Its operations in Malaysia, Vietnam and Indonesia were listed on the Singapore Stock Exchange under Parkson Retail Asia Limited on 3 November 2011. The newly-built KL Festival City mall in Setapak, Kuala Lumpur with Parkson as the owner and anchor tenant represents the Group’s investment in establishing and managing shopping malls.
Our Malaysian economy is expected to grow at an average of 5-6% in 2012 with the continuing weak global economy pressured by Europe’s debt crisis and the US economic slowdown. Though the Asian economies fared better especially China and India which recorded strong economic growth during 2011, it will not be sufficient to compensate for the slowdown in the advanced economies. Our economic growth will have to be largely driven by domestic demand while sustaining our export levels. The implementation of projects under the Economic Transformation Programme and the 10th Malaysia Plan should help provide the boost for domestic growth with increased demand for building materials including steel products. Consumer spending will be spurred by the 2012 Budget measures which include cash assistance for eligible households and students which will benefit the retail sector.
Our operations must be prepared to face all these challenges and look for opportunities in an increasingly open and competitive environment. Our facilities must be in place and our staff adopt continuous learning to upgrade their skills and keep abreast of new ideas and technologies.
I would like to thank all our staff for your continuing hard work and dedication to enable the Group to carry on despite the difficulties and challenges faced. My appreciation also goes to all our customers, business associates, shareholders, directors and the government authorities for their support and cooperation. I wish you all a happy new year.
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