FGV Annual Report 2015

58 Felda Global Ventures Holdings Berhad Annual Integrated Report 2015 Business Operations Review Sugar Facing the Challenges Ahead Officiated at end February 2016, the Sugar Cluster unveiled its first trading office in Dubai. As part of its internal plans to expand geographical reach, MSM Trading International DMCC will be the Group’s centre to trade raw and refined sugar in the region, catering to the Middle East & North Africa (MENA) and Asia Pacific (APAC) regions. The trading centre will be supplemented with our Indonesian office to meet the growing demands in the region. With the aid of competitive pricing in neighbouring ASEAN countries, we hope to ramp up both domestic and direct export sales to the MENA and APAC regions. Simultaneously, the Cluster will take opportunity of its growing footprint to leverage on existing capabilities and embed greater efficiency and higher quality of services along the sugar supply chain. Across the Cluster we are moving forward with an asset-light strategy in mind. The idea is to enter the upstream sugar plantations segment in the long run but in the nearer term we must be selective about our expansion targets. Instead of acquiring sugar cane farms at this stage, the Cluster is opting to venture into M&As or partnerships in sugar mills first. This way, the Sugar Cluster will be able to control the supply of raw sugar without the high risks and startup costs involved with cane plantations. Owning our own mills effectively mean better prices and lower dependency on imports. Towards Global Presence The ultimate vision is to rank the Sugar Cluster amongst the top 10 global sugar players by 2020. To this end, we target to increase our refining capacity to 2.25 MT per annum by 2020 and beyond. Presently, the Cluster is overseeing the construction of a stand-alone sugar refinery with a 1 million MT annual capacity in Johor, slated for completion by 2017. This new facility will be the key catalyst to realise the Group’s long term vision, enabling the Cluster to potentially raise its domestic market share to at least 80%, from 65% now.