UMW HOLDINGS SEES NO SLOWDOWN IN CHINA OPERATIONS

BEIJING, Nov 6 (Bernama) -- UMW Holdings Bhd's business in China, a major contributor to the Malaysian company's oil and gas earnings, will not be affected by the global economic slowdown as it gears up for a huge pipe manufacturing plant in Qinhuangdao to become fully operational.

The Chinese demand alone is filling the order book, leaving no room for
exports, UMW Holdings group managing director and chief executive officer Dr
Abdul Halim Harun said.

"The new plant in Qinhuangdao is currently to supply the domestic market
and
though we have enquiries from overseas, we are unable to meet the demand," he
told Bernama after attending the Malaysia-China Busines Council annual
general meeting which ended on Tuesday in Dalian.

The port city of Qinhuangdao, which co-hosted the Olympic football matches,
is in northern Hebei province and about 320km north east of Beijing.

UMW Holdings has a 49 per cent stake in Zhongyou BSS (Qinghuangdao)
Petropipe Co Ltd with 51 per cent held by BSG, the manufacturing arm of China
National Petroleum Corporation (CNPC), China's largest oil company.

The two parties invested a total of 1.2 billion yuan (US$175.9 million) to
set up the plant that covers a size of 60 soccer fields. The registered capital
of Zhongyou BSS is 873 million yuan (US$128 million).

"It is a big facility and one of the plants is 500m long. We will
commission
the testing of equipment by the end of the year and hopefully by the first
quarter, will go into production," Abdul Halim said.

The initial production target is 300,000 tonnes, to be expanded to 500,000
tonnes later.

Abdul Halim said the plant would supply about 6,800km of pipes for the part
construction of a natural gas pipeline spanning west to east across China and
from Kazakhstan in Central Asia to Shanghai.

He credits UMW Holding's successful tie up with CNPC which began in
2003, with a joint venture in Shanghai BSW Petropipe Co Ltd, to a " win-win"
partnership.

"We have forged a good relationship. In our collaboration with CNPC, we
have
shared experience and knowledge. They know what we want and look to us for
certain things.

"Now, when CNPC wants to open another plant they consider us, knowing our
ability," he elaborates.

UMW Holdings Berhad's principal activities are the importing, assembling
and marketing passenger and commercial vehicles and related spares and
manufacturing original and replacement of automotive parts. Other activities
include manufacturing and trading oil pipes and providing various oil and gas
services.

China's oil and gas sector is set to grow in keeping with the energy
demands
of the country's rapid development.

State media had reported that imports would meet 55 per cent of China's oil
consumption in 2010, rising to 66 per cent in 2020. The natural gas in total
energy use will double from 2.8 per cent in 2005 to 5.3 per cent in 2010 to help
curb pollution.

Next to automotive, the oil and gas division started just six years ago and
is the second biggest contributor to UMW's group earnings. Revenue from the oil
and gas division grew from RM42.1 million (US$11.9 million) in 2004 to RM1.4
billion (US$395.5 million) in 2006.

Overseas operations make up 80 per cent of the oil and gas revenue and most
of that comes from its China operation, Abdul Halim said.

"That's how big our China income is. In terms of natural gas pipes, we are
among the top three in China and are looking into other businesses with
lubricants being next," he said.

"The construction of our lubricant plant in Xinhui is starting very soon
and
the products will be distributed all over China," he added.

In July, UMW Corporation Sdn Bhd, a wholly-owned subsidiary, announced a
joint venture with Hong Kong-based Dah Chong Hong (Motor Service Centre) Limited
to set up the lubricant manufacturing plant in Xinhui, located in China's
southern Guangdong province.

The plant has a planned output of 50 million litres with the potential to
double its capacity to tap the high growth local market.