IKEA looks to inject RM900 million into creating regional distribution hub in MY

IKEA plans to invest over RM900 million into establishing its regional distribution and supply chain centre for ASEAN in Malaysia. The project is facilitated by the Malaysian Investment Development Authority.

According to the press statement, Malaysia has "always been a significant market" for the company, with its retail stores being one of the most visited stores globally. The new centre will enable the country to strengthen its role in supporting IKEA's growth in ASEAN, serving 12 retail stores in the region. IKEA plans to increase the number of stores in ASEAN to 20 by 2026.

The new 100,000mcentre will adopt the structure and technology of IKEA's largest regional distribution centre in Germany, and will be among the top 10 largest regional distribution centres of IKEA Group worldwide. To reduce dependency on manpower and boost the efficiency and accuracy of its inventory management processes, IKEA's new centre will adopt integrated ICT systems and automation.

According to YB Dato’ Sri Mustapa Mohamed, Minister of International Trade & Industry, the new regional distribution centre "adds momentum" to the National Logistics and Trade Facilitation Masterplan and National E-Commerce Strategic Roadmap, which strives to transform Malaysia into a regional distribution hub and preferred logistics gateway to Asia.

“IKEA’s decision of selecting our country as a base to support retailers in Malaysia, Singapore, Thailand, Indonesia, Vietnam, Philippines and India underscores the strategic fit of this country in supporting IKEA’s overall growth strategy in the ASEAN region," Mohamed said.

"Deployment of technology in the logistics chain has been identified as the key factor in strengthening the capabilities of logistics service providers towards enhancing trade facilitation mechanisms. Thus, IKEA’s high-flow and automated warehouse is certainly well-aligned to this agenda,” he added.

Earlier this year, IKEA Southeast Asia's head of marketing Tze Kuen Yeong left the company to take on a new marketing role at H&M Singapore. A+M understands that she is to replace Caroline Fersing, head of marketing of H&M Singapore and Malaysia, who is taking a new role internally. IKEA Group also named Jesper Brodin as its new president and CEO, replacing Peter Agnefjäll. Currently based in Älmhult, Sweden, Brodin will take up his new position in Leiden, The Netherlands, effective 1 September 2017.

A+M has reached out to IKEA for further comment.