Major investment will double the capacity of steel products firm

Hiap Teck is seeking new customers for its products, both at home and in overseas markets

The international steel market is highly competitive, but one of Malaysia’s leading suppliers of steel pipes and scaffolding is set to double its production capacity to meet demand both at home and overseas.

Hiap Teck Venture Berhad has gained the confidence and experience to think big through its involvement in challenging, high-profile Malaysian projects, such as Kuala Lumpur International Airport, Kuala Lumpur City Center, and the development of the model garden city of Putrajaya. “We supply the steel for all the mega projects,” says Managing Director Kua Hock Lai.

Based in Klang, Hiap Teck is a public company listed on the Bursa Malaysia Securities Berhad, with paid up capital of RM163.7 million (US$43 million). The group produces a range of iron and steel products –including pipe mills of up to 18 inches– that are particularly suitable for heavy industrial usage such as structural works, water industries, the oil and gas industries and general industrial applications.

Founded in 1987, Hiap Teck saw continuous production growth in the 1990s. In recent years, it has invested heavily in modernizing its facilities and has created a new research and development (R&D) division to enable it to provide added value and expand its current range of products.

The group’s biggest boost yet, however, will come from the opening of a new steel pipe mill. Mr. Kua describes the facility as the first of its kind in Southeast Asia in terms of production capacity, size range, and technology.

“The expansion will be a big step forward for us,” he says. “It will double our production capacity for both the local and the export market. We will be in a better position to participate in major projects—and not just in Malaysia. We will be in a very good position to expand into Southeast Asia and even beyond.”

Exports currently account for 40% of Hiap Teck’s production. The group’s steel pipes, scaffolding and other building materials are already in high demand in Singapore, Australia, the Middle East, North America, Mauritius, Bangladesh, Brunei, Hong Kong, and Sri Lanka.

KUA HOCK LAI Managing Director of Hiap Teck Venture Berhad

Now Hiap Teck is seeking new markets. Mr. Kua welcomes the decision by President Bush to remove tariffs on steel imported into the United States, where the group aims to promote its products, as well as in Canada, where it already has a market.

“Australia has been our export market for a few years and we see big potential and a stable market there. The Middle East is already an existing market for us and we think there is still a big potential there as well. It is also a bigger market, with bigger players."

According to Mr. Kua, one of the important factors enabling the group’s future expansion will be its relationship with Selangor-based Megasteel, part of the Lion Group. The first steel mill in Malaysia to produce flat steel products in the form of hot rolled coils, Megasteel will be Hiap Teck’s main supplier.

Listing Hiap Teck’s competitive advantages, Mr. Kua says, “First, there are the raw materials that Megasteel can supply. Through them we have a steel pipe mill and a coil supplier in Malaysia. Then we have an excellent cost structure and our existing marketing network around the world. Finally, we believe our R&D and product quality set us apart from the competition.”

In addition to serving the construction and the oil and gas industries, Hiap Teck expects to devote a major part of its output over the coming decade to providing steel pipes for large-scale water privatization projects, a crucial part of the planned improvement for Malaysia’s water system.

“One of the main reasons we are investing in growth is because of the water privatization projects,” Mr. Kua explains. “We believe approximately 30% of our output will come from these projects, and we have been doing a lot of groundwork.”