This article first appeared in The Edge Financial Daily, on January 22, 2016.

KUALA LUMPUR: SCGM Bhd, the country’s largest manufacturer of thermo-vacuum form plastic packaging, has appointed Sabah-based Kim Teck Cheong Consolidated Bhd (KTC) as sole distributor of its Benxon-brand food packaging and plastic cups to food and beverage retailers and manufacturers in Sabah, Sarawak and Brunei.

SCGM managing director Datuk Seri Lee Hock Chai expects the collaboration to boost its presence in the three markets “significantly”, in the coming years.

“We target to increase revenue contribution from Sabah, Sarawak and Brunei, from 3% recorded in the financial year just-ended on Dec 31, 2015 (FY15) to 15% in three years,” Lee told reporters after the signing of a memorandum of understanding (MoU) between SCGM and KTC here yesterday.

For FY15, SCGM recorded a revenue of RM106.63 million, of which the three markets accounted for 3%.

Under the MoU, KTC will distribute SCGM’s Benxon-brand products, through its 6,419 distribution points, across 18 distribution centres. This is a huge addition to SCGM’s existing 10 distribution points in these states.

SCGM corporate affairs manager David Cheng said that these three markets are relatively untapped and the collaboration would enable the group to make inroads into these markets.

“Even though we have been in business in Sabah and Sarawak for the past 10 years, but we really couldn’t penetrate the market because we didn’t have the infrastructure. But through this MoU, we can make further inroads to all the shops which we were not be able to enter before,” Cheng said.

Cheng added that apart from Sabah, Sarawak and Brunei, SCGM, which exports to 30 countries around the world, is aiming to expand to Cambodia and Laos.

KTC group executive director Dexter Lau said the partnership is expected to increase the ACE Market-listed company’s sales by another 4% within one year.

“This shall be the benchmark and platform for KTC’s recognition, in which we shall not be confined to consumer products, but also venturing into packaging, leveraging on SCGM’s unparalleled expertise in its field,” he added.

Lau noted that SCGM’s products are of the biodegradable type and still not widely recognised in Sabah and Sarawak, but there are signs of consumers beginning to use such products as their awareness over health and the environment grows.

Lau also said KTC plans to transfer its listing status to the Main Market of Bursa.

SCGM shares shed eight sen or 2.56% to close at RM3.05 for a market capitalisation of RM413.2 million yesterday, while KTC’s stock ended the day 0.5 sen or 1.2% higher at 42 sen, bringing a market capitalisation of RM212.2 million.