Chemical Company of Malaysia Berhad Annual Report 2019

| Group Managing Director’s | Management Discussion and Analysis We will also continue to collaborate with private and public universities in Malaysia to solidify the Polymers business’ technical knowledge and enhance its application testing facility to generate sustainable growth. Today, we are working closely with educational institutions such as Monash University, Universiti Putra Malaysia and Universiti Malaysia Terengganu, as well as exploring other opportunities for smart partnerships and collaboration. In all that we do, we want to be seen as an innovative partner. We plan to actively seek out and pursue strategic collaborations and partnerships with third parties including our customers, suppliers or research institutes. The aim here is to create sustainable growth, develop technical knowledge, and enhance our application testing facility. Forefront technology or new know-how discovered in a laboratory environment has much potential and can be converted into industrial application. We will also focus on talent development to ensure the right people with the right skills are in place for the long- term. The Polymers Division intends to maintain its position as one of the leading players in the polymers coating business. Based on our own research, the Division is currently one of the Top-3 players supplying coating solutions to the glove player in the country. Moving forward, the Division will continue to focus on ramping up production output via its expansion project to support the growth in market demand. The Division will also undertake automated production Moving forward, global demand for gloves is expected to remain robust. In February 2020, MARGMA announced that demand for rubber gloves had surged 100% globally due to countries implementing defensive and preventive strategies to avoid cross contamination from the COVID-19 outbreak. Depending on the trajectory of the global pandemic, MARGMA anticipates international demand could reach 345 billion pieces in 2020, compared to 298 billion in 2019. Of this total, Malaysia is aiming to export around 225 billion pieces of gloves. The robust demand for gloves is expected to be sustained by several worldwide trends including more stringent healthcare regulations, increasing healthcare spending, growing usage of gloves in emerging countries, and increased usage of gloves in other segments such as the industrial, food processing and cleanroom segments, among others. Albeit the expectation of a robust demand in 2020, the Polymers Division remains cautious of the impact of foreign currency fluctuations to its margin, and the competition from new market entrants to the market space. With that in mind and to stay ahead of the competition, the Division will focus its efforts on strengthening its product development capabilities and undertaking capacity expansion. Ongoing efforts are also in place to improve the production process including leveraging on automation with the objective of enhancing cost efficiency and quality improvement. In line with the Group’s commitment to become a world class player in the Polymers market, the Polymers Division will continue to prioritise R&D investments over the next few years. By developing new product portfolios, processes and services, we are looking to augment our business value and spur sustainablegrowth for theGroup.Wewill also leverage on advanced equipment and expanded resources as product innovation is the key to increasing yields, improving our long-term sustainability and staying relevant to our markets. Our efforts will entail the development of innovative products that are targeted to meet performance requirement and regulations standard as well as introduce variances which are effective and efficient during application. We will also explore new technologies and the use of advanced materials to achieve the desired properties. DEBOTTLENECKING LEADS TO BETTER OPERATIONAL EFFICIENCIES Following a debottlenecking exercise conducted by the Polymers Division at its Bangi manufacturing plant, the plant’s workflow has improved and its capacity has increased by an additional 10% from 18,000 MT/pa to 19,800 MT/ pa. 26 CHEMICAL COMPANY OF MALAYSIA BERHAD