Techbond Group Bhd's (TGB) new upstream polymerization plant in Vietnam has commenced production of base material, polyvinyl acetate (PVAc) polymer, the raw material used by TGB to manufacture industrial adhesives.
The production commencement at the Vietnam-Singapore Industrial Park II (VSIP II) will enable TGB to achieve cost savings through reduced transportation of raw materials from third-party suppliers.
It will also lower the company's reliance on external suppliers and improve TGB's profit margin from now on, coupled with the tax incentives given in Vietnam.
The setup of TGB's VSIP II factory complex entitles the company to a full tax exemption in Vietnam for the first two years upon having taxable income and a 50 per cent reduction of payable tax amounts in the subsequent four years.
TGB managing director Lee Seng Thye said that the capability to produce its own raw material provides the company with greater control over the quality, properties, and characteristics of the polymer.
"Currently, we plan to meet our own polymer needs for existing industrial adhesives.
"Subsequently, the excess will be used to produce new types of adhesives to be sold to customers. Techbond's new polymerization plant is part of our new 6,968 sq meters factory complex in VSIP II, which comprises new industrial adhesives manufacturing lines, warehouses, office, and quality control center," he said in a statement today.
He said TGB also took a big step toward becoming a pioneer in non-toxic palm oil-based industrial adhesives. Together with the Malaysian Palm Oil Board (MPOB), the company has successfully filed a patent application for the improved production process of palm-based polyol.
"We were able to significantly reduce the production process of the polyol, which is key in enabling commercialization.
"Currently, we are undergoing testing with our customers and potential customers as well," Lee said.
To recap, 72 per cent or RM28.7 million of the proceeds raised from TGB's initial public offering (IPO) exercise in December 2018 has been earmarked for the VSIP II factory complex. The new factory complex sits on a 30,000 sq meters land with a built-up size of 6,968 sq meters, and TGB existing factory in Vietnam sits on 9,037 sq meters land with 3,972 sq meters built up.