BASF unveils massive investment drive in Asia-Pacific

FRANKFURT (AFP) - German chemicals giant BASF unveiled on Tuesday plans for a huge investment drive in the Asia-Pacific region, where it hopes to take advantage of above-average growth to more than double its sales.

BASF, which currently generates around 16 per cent of its revenues in Asia Pacific, announced plans to invest 10 billion euros (S$16 billion) there by the end of the decade and create up to 9,000 new jobs.

The German giant said it aims to generate annual sales of 25 billion euros in the region by 2020, up from 11.7 billion euros in 2012.

More than 2.0 billion in regional sales would be achieved through new business and acquisitions by 2020.

In 2012, BASF booked total worldwide sales of 72.1 billion euros on a workforce of 110,000.

The cumulative annual growth rate for real chemical production for Asia Pacific is estimated at 6.2 per cent until 2020, well above the world average of 4.0 per cent, BASF said.

And the German group's aim would be to "grow profitably at least two percentage points above regional chemical output."

"To achieve this, BASF plans to invest 10 billion euros together with its partners by 2020 to further develop its local production footprint in Asia Pacific," it said.

In March, BASF announced it would focus its business in Asia on chemicals destined for the textile and leather industries.

The group said it aims to produce around 75 per cent of the total products it sells in Asia in the region by 2020.

"Local production improves resource efficiency by reducing the transportation needed for imports and exports, and by enhancing energy and raw material efficiency," it explained.

BASF said it currently operates more than 100 production sites in the Asia Pacific region, including two highly-integrated sites in Kuantan, Malaysia and in Nanjing, China.

In addition to those main markets, BASF said it also hopes to explore "untapped markets in Mongolia, Laos, Myanmar, and Cambodia."

"In the next decade, Asia Pacific will face huge challenges while remaining the fastest growing market for the chemical industry," said BASF executive board member Martin Brudermueller.

BASF said it aims to conduct 25 per cent of its global research and development (R&D) in Asia Pacific by 2020, with a total of around 3,500 R&D personnel in the region, up from around 800 in 2012.

It plans to establish research facilities in the areas of electronic materials, battery materials, agriculture, catalysis, mining, water treatment, polymers and minerals, it said.

Investors did not appear particularly enthusiastic about the massive investment drive and BASF shares were underperforming the overall market in Frankfurt on Tuesday, gaining a modest 0.21 per cent, while the blue-chip DAX 30 index was up 0.85 per cent.