Posted November. 15, 2017 08:56,
Updated November. 15, 2017 09:25
Korean power cable producer LS Cable & System will begin the construction of a production plant in Myanmar. This is its third time establishing a new production corporation in 2017, following LS Cable & System Poland and LS Cable & System U.S.A. The company has been accelerating in expanding the overseas market, in order to find a breakthrough from the electric wire cable market, which is saturated in Korea.
According to the Korea-based cable company on Tuesday, it is building the factory in Myanmar as a collaboration between LS Cable & System and Gaon Cable, an affiliated company. A total of 18 million U.S. dollars will be invested in building the new factory on a 19,800-square-meter lot within Myanmar's Thilawa special economic zone.
The name of the production corporation is “LSGM (LS Gaon Cable Myanmar).” Once the construction is completed in November next year, the new cable factory will produce aerial cables for electrical infrastructures, and low voltage (LV) cables used in buildings and housings.
Cable companies, including LS Cable & System, have their eyes on the Southeast Asian market. Since economies are growing rapidly in the region, power demand for infrastructure such as buildings and power plants is surging. Myanmar’s average rate of economic growth per year exceeds 10 percent. The fact that the Asian Infrastructure Investment Bank (AIIB), which was established in 2016, is expanding infrastructure investments centrally in Southeast Asian countries, also had a positive influence. In late September, LS Cable & System received an order for the project of constructing electrical grid in Bangladesh, one of AIIB’s first loans.
Thanks to the prosperity in the Southeast Asian market, LS Cable & System’s scale of receiving orders in Asia is growing for three years in a row. The total value of orders received has grown from 170 billion won in 2015 to 700 billion won as of October 2017. LS Cable & System Asia, the holding company the two corporations of LS Cable & System in Vietnam, has its sales of 2017 increased by more than 20 percent compared to 2016, which is expected to record the highest ever.
“In the past, Southeast Asian countries were passive about infrastructure investments due to shortage in funds, but now they are receiving funding from AIIB and are investing more and more,” said a personnel at LS Cable & System.
Also even advanced countries including Singapore, which already have been provided with electric wire cables, are having their markets opening again, centered on “higher value cables,” such as extra high voltage underground cables and submarine cables. LS Cable & System signed a contract with Singapore’s Energy Market Authority to provide extra high voltage cables worth 370 billion won, which is the highest value ever in exporting extra high voltage cables.
The U.S. market, which has demands for replacing deteriorated cables, is expected to be a new market. “As U.S. President Donald Trump has revealed that the United States will invest 1 trillion dollars into infrastructure for the next four years, we expect that the United States will invest in replacing electric wire cables as well,” LS Cable & System said.
The operating profit of LS Cable & System for the third quarter of this year was 30.64 billion won, which has increased by 325.68 percent year-on-year. The operating profit of the third quarter of 2016 was 9.397 billion won.