Thu, Nov 23, 2006 - Page 12 News List

Yuen Foong Yu gains approval for subsidiary

MALAYSIAN VENTURE Through its overseas arm, Yuen Foong Yu hopes to boost foreign shareholding up to 30 percent to strengthen its technology and competitiveness

By Jessie Ho  /  STAFF REPORTER

Yuen Foong Yu Paper Manufactur-ing Co (永豐餘造紙) said yesterday that the company has gained government approval to set up a Malaysian subsidiary, a move driven by the company's desire to expand operations abroad while skirting government regulation.

The Investment Commission on Tuesday passed Yuen Foong Yu's application to invest US$148 million in YFY International Labuan Co in Malaysia.

YFY Industrial Paper Co (永豐餘工業用紙), an affiliate of Yuen Foong Yu that was spun off from the company in September last year, will shift all its shares over to the Malaysian entity, Juliana Liu (劉瑞娥), spokeswoman for Yuen Foong Yu, said in a phone interview yesterday.

YFY Industrial Paper is the largest paper utensil manufacturer in Taiwan and China. To satisfy growing international demand for industrial paper, the company plans to introduce more foreign shareholders or strategic partners, Liu said.

Some foreign papermakers and investors that YFY Industrial Paper has talked with, however, were concerned about a range of investment restrictions in Taiwan, Liu said. The China-bound investment cap of 40 percent of a company's net value is one example, she said.

To resolve these concerns, the company decided to establish YFY International Labuan and transfer all its shares to the Malaysian holding company, Liu said.

Yuen Foong Yu's restructuring scheme was approved by its board in August, according to a filing to the stock exchange yesterday.

"The market in Taiwan is saturated, and we must expand, especially to emerging markets where demand for industrial paper is strong," Liu said.

Through its overseas arm, Yuen Foong Yu hopes to boost foreign shareholding up to 30 percent, and forge alliances with foreign partners to strengthen its technology and competitiveness, Liu said.

Yuen Foong Yu participated in the Morgan Stanley Asia Pacific Summit held in Singapore last Tuesday and Wednesday. During the summit, companies talked one-on-one with investors and analysts.

Many foreign investors have shown interest in the company, Liu said, "we do not rule out listing the Malaysian company on an overseas stock exchange."

YFY Industrial Paper has three mills in Taiwan and China producing Kraft board and white board for the manufacturing of high quality corrugated and colored boxes. The company also has a total of 17 paper utensil mills in Taiwan and China where it produces corrugated cases, colored cases, colored cartons, food utensils and paper pallets.

Shares of Yuen Foong Yu rose 3.15 percent to close at NT$13.1 (US$0.4) on the Taiwan Stock Exchange yesterday.

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