Guan Chong eyes Europe push via investment in Ivory Coast

The country offers attractive investment incentives in terms of tax savings, where the rm will enjoy 8 years of zero corporate tax

by SHAHEERA AZNAM SHAH / pic by RAZAK GHAZALI

GUAN Chong Bhd’s investment in Ivory Coast is expected to boost its exposure to the European region which is currently the world’s largest consumer market for confectionery chocolate.

Guan Chong group MD and CEO Brandon Tay Hoe Lian (picture) said the West African country’s abundant supply of raw materials and supportive business operating environment would facilitate the group’s venture in the European market.

“The expansion of our operation in Ivory Coast is premised upon strengthening our access to a stable source of raw materials, as well as supporting our growth into Europe, which is the world’s largest cocoa-consuming market.

“The country also offers attractive investment incentives in terms of tax savings, whereby we will enjoy eight years of zero corporate tax.

“There will also be no import duties on the export of cocoa ingredients to Europe and it is already a hub for major global chocolate producers,” he told The Malaysian Reserve.

Currently, Guan Chong is the fourth-largest cocoa grinder in the world and sources about 20% of its raw materials from Ivory Coast and Ghana — the two largest cocoa beans producers globally. The remaining 80% of its cocoa is sourced from other producers such as Indonesia, Papua New Guinea, Ecuador and Nigeria.

Ivory Coast is the world’s largest producer of cocoa beans with an estimate of 2.15 million metric tonnes (MT) produced for the 2019/2020 season while Ghana is the second-largest at 800,000MT.

Guan Chong is allocating about RM120 million in capital expenditure this year for the development of its bean processing facility in Ivory Coast.

The new plant will be the group’s fourth grinding factory and its first outside South-East Asia.

The Johor-based group currently has two grinding facilities in Pasir Gudang with a combined capacity of 130,000 tonnes, in addition to its plant in Batam, Indonesia, which serves as Guan Chong’s largest factory by capacity.

Upon completion, the new plant in Ivory Coast will add another 60,000 tonnes to Guan Chong’s bean processing capacity to a total of 310,000MT.

“Our expansion to Ivory Coast has more to do with market access to the European market than to cost. As Asia is a fast-growing chocolate market, our plants in Batam and Pasir Gudang will continue to position for the ever-increasing demand for cocoa ingredients in countries like Indonesia, China and Japan,” he said.

Tay said the new factory, which was initially slated for completion in the first quarter of 2021, is experiencing a delay in its construction due to the limitation of workers allowed on site.

“Due to the Covid-19 pandemic and the state of emergency in Ivory Coast, we are required to limit the number of construction workers on site. This has resulted in a slower construction progress.

“We are targeting for the new plant to commence production in the second half of 2021,” he said.

Previously, Tay said its factories had not been hugely impacted by the limited operating environment caused by the pandemic attributable to the factory’s high automation rate and sufficient level of inventories.

According to Bloomberg, Asia — the region with the highest expansion rate to cater for the world’s demand — could see a 9% drop in grinding production this year while Europe is estimated to fall by 3%.

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