UMW Corporation Sdn. Bhd (UMWC)., a wholly-owned subsidiary in the UMW Group, has entered into a Letter of Intent (LOI) with Komatsu Ltd. (Komatsu) to form a strategic partnership premised on the long standing business relationship between UMW and Komatsu on 29 August 2017.
Komatsu and the UMW Group have a principal-distributor relationship spanning more than 50 years. The UMW Group holds exclusive franchise for the distribution of Komatsu heavy equipment in Malaysia, Singapore, Myanmar and Papua New Guinea.
The LOI ascertains the intention of UMWC and Komatsu to establish a Joint Venture Company (“JVC”) for the Heavy Equipment business in UMW. UMWC and Komatsu intend to hold 74% and 26% of the issued and paid up share capital of the JVC, respectively.
The proposed joint venture is to further strengthen and expand market penetration of Komatsu’s products in Malaysia, Singapore, Myanmar and Papua New Guinea. It is also intended to boost sales by capturing new growth segments with the introduction of new products to meet customer demand.
Komatsu manufactures construction and mining equipment, utilities and forest machines. UMWC and Komatsu envisage ample growth opportunities in the construction sector, underpinned by implementation of infrastructure projects and further supported by sales to the natural resources sector such as mining and forestry.
President and Group Chief Executive Officer of UMW Holdings Berhad, Badrul Feisal bin Abdul Rahim, said: “We are excited with the heightened opportunities that this proposed joint venture will bring to both organisations. Our working relationship with Komatsu spans over half a century. During this time, we have built a strong brand name for Komatsu products that we distribute in the four countries. The market for the heavy equipment is poised for growth in sectors such as construction, mining and forestry. Komatsu’s highly-reliable and wide range of equipment will allow us to penetrate new markets and generate growth potential.”