Sherpa Hossainy's Blog

BASF plans to ramp up investment in Asia Pacific; targets Myanmar

Posted in ASEAN, Business, Industries, Investment, Myanmar, Yangon by Sherpa Hossainy on July 10, 2013
Ethylene Unit at BASF-YPC Company Limited / Ethylen-Anlage in der BASF-YPC Company Limited

A steam cracker operator carries out a routine inspection at a BASF plant in China. BASF

Aims to invest $13b in the region

Published in Myanmar Business Today (Vol 1, Issue 20) on June 20, 2013

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German chemical giant BASF announced it will invest over $13 billion (€10 billion) and create around 9,000 new jobs in the Asia Pacific region as part of its new growth strategy.

While about half of the money set aside for expansion will be spent in China, BASF is also planning to explore “untapped markets” in Myanmar, Laos, Cambodia and Mongolia, it said.

According to the firm’s new global strategy, BASF aims to scale up its sales to $32.6 billion (€25 billion) in the Asia Pacific region by 2020.

“BASF is implementing its global ‘We create chemistry’ strategy in Asia Pacific with a set of ambitious targets and a focus on sustainability. By being involved in those emerging markets, we not only open up new growth opportunities beyond 2020, but we become part of an emerging industry structure in these countries,” Dean Draper, Managing Director, ASEAN sub-region, BASF Southeast Asia, told Myanmar Business Today in an email response.

“BASF will set up task forces to explore the potential in Asia Pacific’s untapped markets. We target annual sales of €110 million in these markets by 2020,” Draper said.

Draper said: “In Myanmar, BASF is present and working with partners in the construction, agriculture and rubber industries. For example, end of May this year in Yangon we launched “Master Builders Solutions,” our global BASF brand of advanced chemical solutions for the construction industry.

“The untapped markets are a new area and we are at a relatively early stage. You will see other announcements of our more specific plans in the future.”

The world’s largest chemical company saw its margins slide in the region to 10 percent in 2012, which prompted it to shift its research and procurement to the world’s fastest growing chemical market to help double profitability.

BASF has a “good chance” to reach the average profitability of the group, Martin Brudermüller, vice chairman, board of executive directors, said at a press conference in Hong Kong.

On a group level, BASF aims to lift margins to 20 percent by the end of 2020 from a current 14 percent.

“In the next decade, Asia Pacific will face huge challenges while remaining the fastest growing market for the chemical industry. With our Asia Pacific strategy, we are positioning BASF as the leading provider of sustainable solutions for the Asia Pacific region. Based on our strong global R&D network, we will considerably strengthen our innovation capabilities in Asia Pacific, enabling us to better serve our customers in all industries in the region,” Brudermüller said in a statement.

BASF estimates the cumulative annual growth rate (CAGR) for real chemical production through 2020 for Asia Pacific at 6.2 percent, well above the world average of four percent.

BASF will conduct around one quarter of its global research activities from Asia Pacific. By 2020, BASF plans to reach a total of around 3,500 R&D personnel in the region, up from around 800 in 2012.

BASF is also going to establish research facilities in the areas of electronic materials, battery materials, agriculture, catalysis, mining, water treatment, polymers and minerals.

The company is currently considering establishing a second Innovation Campus Asia Pacific following inauguration of the BASF Innovation Campus Asia Pacific in Shanghai, China.

More than $ 2.62 billion in regional sales will be achieved through new business and acquisitions by 2020, BASF said.

By 2020, BASF aims for local production of approximately 75 percent of the products it sells in the Asia Pacific region in order to intensify its collaboration with and strengthen its supply position to customers in Asia Pacific.

BASF, which currently operates more than 100 production sites in the Asia Pacific, including two highly-integrated Verbund sites, located in Kuantan, Malaysia, and Nanjing, China, will invest in a range of efficiency measures that will save approximately $1.31 billion annually by 2020, it said.

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One Response

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  1. Fontego Capital (@FontegoCapital) said, on July 18, 2013 at 6:00 pm

    The blog was absolutely fantastic! There is Lot of great information which can be helpful in some or other way. Keep updating the blog, looking forward for more contents.


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