This article first appeared in The Edge Financial Daily, on April 6, 2016.

KUALA LUMPUR: Malaysian Resources Corp Bhd (MRCB) will build a RM56.8 million cold storage processing and distribution centre in Kajang, Selangor, for Giant, the hypermarket and chain store retailer.

MRCB’s wholly-owned subsidiary MRCB Builders Sdn Bhd signed a contract with GCH Retail (M) Sdn Bhd yesterday, via the latter’s associate Jupiter Lagoon Sdn Bhd, a wholly-owned subsidiary of Hong Kong-based Dairy Farm International Holdings Ltd.

GCH Retail operates Giant’s chain of hypermarkets and supermarkets in Malaysia.

The 140,000 sq ft processing and distribution centre will be built on a five-acre (2ha) site in Kajang. It will be built on a 12-month fast-track basis and is expected to be completed in August next year.

Speaking to reporters after the signing ceremony, GCH Retail regional director for Malaysia and Brunei Datuk Tim Ashdown said the development of the new processing and distribution centre is important to the group as it will allow it to control the supply chain more actively, further bringing down its logistics costs.

The group’s current fresh food facility is one that measures 40,000 sq ft, and is located in Balakong.

The cost savings it anticipate to enjoy with the new centre, which will serve 120 stores across Peninsular Malaysia, will enable it to deliver lower prices to customers, Ashdown added.

Ashdown also shared that the group plans to open five new Giant stores this year. It has opened one store in Kangar, Perlis, so far, and will open the remaining four in Kelantan, Sabah, Terengganu and Setapak, Kuala Lumpur. The group currently has 150 stores nationwide.

“As time goes by, they (Giant) will expand based on capacity, based on size. I think it is good that Giant is investing more in Malaysia and this will enhance our distribution network locally,” said MRCB executive director Mohd Imran Mohamad Salim.

The distribution centre is designed to cope with the rise in the number of stores as the group expands, added Mohd Imran.

On the retail industry’s outlook, Ashdown said he hope things will take a turn for the better soon.

“It has been a difficult year. I hope things will start to be better. We are trying to play our part, promoting things people are interested in,” he added.

MRCB has had a long working relationship with Dairy Farm spanning over 10 years, and was awarded the RM125 million contract to build Giant’s Sepang distribution centre in 2009, and the facility’s RM30 million phase 2 extension in 2015, according to a media statement from MRCB.

Over the years, MRCB has constructed 12 Giant outlets in Malaysia, valued at over RM500 million. The last of the dozen — a RM52 million outlet in Setapak here — is set to be delivered this month.

MRCB shares slipped 1 sen or 0.8% to close at RM1.22 yesterday, valuing it at RM2.16 billion.