By SADNA SAIFUDDIN

The logistics sector is expected to fare favourably in 2004, spurred by the growing outsourcing trend.

Haisan Resources Bhd. managing director Ong Chin Yet said more companies are outsourcing their business functions such as logistics and information technology to focus on their core business.

"This outsourcing trend is definitely catching on in the logistics industry. It began with multinational companies which latched on to the benefits of outsourcing to third-party logistics players as an avenue of creating a competitive edge for their business," he told Business Times in an interview.

" The logistics framework, however, needs to be in top form to achieve the Government's objective of establishing Malaysia as a regional hub for halal products," Ong said.

The proposition to make Malaysia the regional hub for halal food has been continuously reiterated, stated by the Government in the stimulus package as well as one of the objectives in the Third National Agriculture Policy (1998 - 2010).

Malaysia plans to capture at least 5 per cent of the global halal food market, which is estimated at a staggering US$346.7 billion (US$1 = RM 3.80) a year.

On the corporate front, Ong said Haisan expects the still competition it experienced during 2003 for its industrial refrigeration equipment to continue throughout next year due to several new entrants into the industry from countries such as Thailand and China.

Haisan is involved in temperature-controlled logistics (TCL)/ warehousing services, engineering of industrial refrigeration and ice manufacturing.

The TCL/ warehousing services, which contribute 47 per cent to the group in 2003, are expected to grow further in tandem with the increased acceptance and demand for frozen food worldwide.

'We see many opportunities for growth in this area, especially in the niche area of cold logistics in which there are not many players,' he added.

"Although the company expects competition to heighten next year, it remains positive that stable growth can be achieved in its TCL/ warehousing division. In addition, Haisan also plans to venture further into the regional market in 2004 and provide value-added services to companies that intend to outsource their warehousing and logistical needs," Ong said.

Ong believes that there will be opportunities for Haisan to expand and strengthen its position in the market place on the back of the improving global economies.

The upward revision of forecast growth for Asia as well as Malaysia is an indication that the economy is rebounding, he said.

"Asia's ability to weather major external shocks is a further testament to its fundamental strengths," he added.

Ong said that there will be higher movement of products across borders in view of the globalised economic environment and Haisan hopes to tap into this opportunity.

"As per normal expectations, the logistics industry is expected to grow twice as much as in comparison with the gross domestic product growth. This would serve as a positive indicator and bodes well for the group to further spearhead its business growth," he added