IKEA to invest $212 million to build regional supply center in Malaysia: government

The logo of IKEA is seen above a store in Voesendorf, Austria, April 24, 2017. REUTERS/Heinz-Peter Bader

KUALA LUMPUR (Reuters) - Netherlands-headquartered furniture retailer IKEA will invest 908 million ringgit ($212.10 million) to set up one of its largest regional distribution and supply chain centers in Malaysia, the Southeast Asian country said.

The supply chain center will manage an inventory worth 6.6 billion ringgit annually, catering to IKEA’s growth in the ASEAN region, the Malaysian Investment Development Authority (MIDA) said in a statement on Tuesday.

The new 100,000 square meter warehouse will supply to 12 existing retail stores in the region. IKEA plans to grow its number of stores in ASEAN to 20 by 2026.

IKEA did not immediately respond to a request for comment.

Malaysia is a significant market for IKEA, with retail stores in the country being among IKEA’s most visited globally.

“The establishment (of the warehouse) also adds momentum toward making Malaysia a regional distribution hub and preferred logistics gateway to Asia as outlined in the National Logistics and Trade Facilitation Masterplan and National E-Commerce Strategic Roadmap,” Minister of International Trade and Industry Mustapa Mohamed said.

Malaysia has been encouraging large local conglomerates and multi-national companies to use the country as a gateway to the region through various initiatives, including the principal hub scheme that allows companies to centralize their global activities such as procurement and distribution.

The web of companies that make up IKEA has recently focused ownership of retail operations, which also include shopping centers and food retail, on IKEA Group. Supply chain management and design has transferred to brand owner and franchiser Inter IKEA.

Reporting by Liz Lee; Editing by Himani Sarkar