Furniture retailer IKEA is set to invest MYR908m ($212m) into establishing a regional distribution and supply chain centre in Malaysia.

The proposed 100,000m² facility is expected to house 9,500 stock-keeping units (SKUs) worth MYR6.6bn ($1.54bn) per annum and will be used to cater to the needs of Association of Southeast Asian Nations (ASEAN) markets.

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Using integrated information and communications technology (ICT) systems and automation, the specialised warehouse intends to reduce labour dependency and optimise its inventory management processes.

“Deployment of technology in the logistics chain has been identified as the key factor in strengthening the capabilities of logistics service providers towards enhancing trade facilitation mechanisms.”

Malaysian Minister of International Trade & Industry (MITI) YB Dato’ Sri Mustapa Mohamed said: “IKEA’s decision of selecting our country as a base to support retailers in Malaysia, Singapore, Thailand, Indonesia, Vietnam, Philippines and India underscores the strategic fit of this country in supporting IKEA’s overall growth strategy in the ASEAN region.

“Deployment of technology in the logistics chain has been identified as the key factor in strengthening the capabilities of logistics service providers towards enhancing trade facilitation mechanisms.”

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Through the centre, the retailer will supply 12 retail stores in the ASEAN region with an opportunity to increase to 20 stores by 2026.

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The latest investment is consistent with the Malaysian Government’s principal hub (PH) scheme that enables international companies to establish regional facilities in order to centralise their global activities such as procurement and distribution.