US-China dispute will impact forex, supply chain


Malayan Flour Mills Bhd (MFM) believes the trade war between the US and China would have minimal impact on its food business but the US Federal Reserve’s tighter monetary stance would influence its foreign-exchange (forex) exposure.

“Our raw materials are all quoted in the greenback and imported. We import soy milk, maize and other products which are all priced in the US dollar.

“How the trade war impacts the forex market is vital for us,” MFM MD Teh Wee Chye (picture) told reporters after the group’s EGM in Kuala Lumpur last Friday.

He added that the US-China trade tensions have caused the price of soy milk to come down which could be a potential opportunity.

“We also have to see how the trade war will impact the supply chain before we can see how Malaysia could benefit from it. And if there is benefit, it will be from the location standpoint.

“That said, it will not happen overnight as it will take a long duration for the US to build a supply chain from China,” he said.

In regard to the outlook, Teh said it would highly depend on when the trade war will come to an end, as well as how both the countries can bode a reconciliation.

Meanwhile, the flour miller aims to raise gross proceeds of up to RM110.06 million to support the expansion of three ongoing projects.

MFM is expanding its poultry processing plant in Sitiawan, Perak, a new aqua feed milling plant in Lumut, Perak, while extending its existing jetty and upgrading of ship unloaders.

When asked about undertaking any new projects, Teh said the company would not be taking up new projects as priority is given to complete these three major projects first.