Tan Chong reviews Bagan Datuk RM500m auto hub project

By RAHIMI YUNUS

Tan Chong Motor Holdings Bhd said it is “still assessing” the proposed automotive hub in Bagan Datuk, Perak, a RM500 million investment announced two days before the 14th General Election (GE14) last year.

The hub was planned on a 338-acre (136.8ha) site in Bagan Datuk, Perak, the constituency of the former Deputy Prime Minister Datuk Seri Dr Ahmad Zahid Hamidi.

Tan Chong had wanted to tap the North Corridor Economic Region growth area when it announced the half a billion ringgit project.

“We appreciate that there is some interest in this project. We are still assessing it and, hence, it’s premature to comment at this stage,” Tan Chong’s representative said
in an email reply to The Malaysian Reserve.

Meanwhile, a source familiar to the matter said Tan Chong has cancelled the proposed automotive hub after it conducted reviews of the project back in May.

“Later in August, they said the project was called off due to changes in policy,” according to a source who was privy to the company’s briefing.

The source did not elaborate on the policy changes which led to the shelving of the project.

There were questions on whether Tan Chong would push through the project after the Pakatan Harapan coalition pulled the shutter on Barisan Nasional’s (BN) six-decade rule in the May 9 GE.

Perak BN also lost the state to the Opposition despite Ahmad Zahid retaining his Bagan Datuk parliamentary seat.

The unexpected Pakatan Harapan victory had thrown the spanner to many corporate and investment promises as companies readjusted to the new political realities.

The Tan Chong Motor Group had planned to invest RM100 million in land acquisition and phase 1 of the construction of a bus and truck plant, the company said in May.

Former Prime Minister Datuk Seri Mohd Najib Razak’s constituency of Pekan is also an automotive hub.

Bagan Datuk, a largely agriculture-based constituency, was chosen to be the site of Tan Chong’s new bus and truck plant over Serendah, Selangor, said the source. It is not known whether Tan Chong would revert to Serendah if it goes ahead with the plan.

The proposed automotive plant in Bagan Datuk was intended to cater for the rising demand of commercial vehicles (CVs) as the company explores new export markets in the region, including Thailand, Sri Lanka, Bangladesh, Indonesia and a few others.

Analysts had earlier expressed mixed views about the project, citing concerns that the priority of the company was to improve its Nissan passenger car sale, though the expansion plan in the CV segment could strengthen its automotive business.

Nissan domestic sales fell from the peak of 42,200 units in 2015 to 27,200 units in 2017, according to Hong Leong Investment Bank Bhd analysts Daniel Wong and Muhammad Fazli Akmal Zamri in a research note.

Tan Chong, which is also the franchise holder and exclusive distributor for trucks and buses under UD Trucks and Silverbus brands, sold 8,070 units of CVs comprising Nissan and UD Trucks brands in 2017, according to Malaysian Automotive Association statistics. 

The group delivered 6,895 units of CVs combining the two brands for the January-November 2018 period.

As at the first half of 2018 (1H18), Nissan stood at the fifth rank in passenger vehicle segment and third in the CV segment behind Toyota and Isuzu. UD Trucks ranked 10th in the CV segment in 1H18.

It is also not known about the other projects announced by Ahmad Zahid for Bagan Datuk, including the construction of a US$9.7 billion (RM39.77 billion) Bagan Datoh energy port which comprises the development of an oil pipeline that would cut across Peninsular Malaysia to Bachok, Kelantan.