Sime Darby plans up to RM2b China expansion

By Adeline Paul RajPublished: 2009/12/01
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The conglomerate is looking at the industrial, motor, property and plantation segments, says its president and group chief executive

Conglomerate Sime Darby Bhd (4197) plans to spend as much as RM2 billion to expand in China over the next five years, its chief said.

Sime Darby, the world's top oil palm planter by landbank, wants to expand there in all its core businesses, its president and group chief executive Datuk Seri Ahmad Zubir Murshid said.

"We're looking at the industrial, motor, property and plantation side. Over the next five years, (we'll) probably (spend) between RM1 billion and RM2 billion," he told reporters after the group's annual general meeting (AGM) in Kuala Lumpur yesterday.

Sime Darby's other core businesses include energy and healthcare.
Sime Darby has been exploring growth opportunities worldwide, with particular emphasis on China.

It already has some RM2 billion invested in China in ports, water, energy, utility, refinery and bunkering businesses, analysts said.

It makes sense for the group to expand in China as it is the fastest-growing economy in the world and also one of the largest consumers of palm oil, said James Ratnam, a plantation analyst at TA Securities Sdn Bhd.

The bulk of the group's investments there are in the ports and industrial businesses, he noted.

In Sime Darby's latest annual report, Ahmad Zubir said the industrial division was increasing its exposure to China, particularly in the mining sector, to "capitalise on the twin trends of urbanisation and resource scarcity".

Sime Darby's strong interest in expanding in China has sparked talk that the group may sell a stake in the company to Chinese investors.

Ahmad Zubir said last week that Sime Darby was "open" to selling a stake, but had yet to be approached by any investors.

Yesterday, when asked how much of a stake it would be willing to sell, he said it was something that had "not been discussed at the board or at the AGM".

On another matter, he said the group has no exposure to Dubai, the United Arab Emirates city that is in turmoil because its state companies cannot pay off massive debts. - By Adeline Paul Raj