Lulu plots $200m Malaysia hypermarket entry

29-May-2014 - Last updated on 02-Jun-2014 at 07:43 GMT

"With a population of over 29 million, Malaysia needs quality Halal-only hypermarkets and we will be the first to operate 100% Halal hypermarkets there."

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UAE retailer Lulu Group is planning to expand eastward with a US$200m investment to open Halal-only hypermarkets in Malaysia, with other south-east Asian markets to follow.

The retail group is working with the Malaysian government-run Federal Land Development Authority (Felda) on the expansion project, which will also see Felda supply Malaysian products for sale in the Middle East.

Lulu owner Yusuff Ali MA announced the expansion plan last week at a signing ceremony in Abu Dhabi, alongside Malaysian prime minister Mohamed Najib Tun Abdul Razak, who was on a state visit to the UAE. At the ceremony, Yusuff Ali and Datuk Faizoull Ahmad, director-general of Felda, formally signed the agreement to open the hypermarkets.

First Halal hypermarkets

"With a population of over 29 million, Malaysia needs quality Halal-only hypermarkets and we will be the first to operate 100% Halal hypermarkets there," said Yusuff Ali at the ceremony.

“With the cooperation of Felda, we will initially be opening five world-class hypermarkets with international standards, salaries and fully Halal-compliant. After completion of these projects we will be able to provide direct employment to 2,500 Malaysian citizens and indirect employment to about 5,000 people,” he added.

Each store will require between US$30-40m investment, which will be financed by Lulu directly, according to Yusuff Ali. Felda will provide the land and buildings for the stores, and will also supply a number of product ranges to be sold in the hypermarkets, which will also be distributed in Lulu's Middle East outlets.

“Felda is currently promoting processed food (frozen and dry), fresh fruits and vegetable and aquaculture as well as crafts, health and wellness products. Felda has been successful in transforming Malaysian entrepreneur community from the humble beginning of selling only for the local market, to now catering to the larger international market in partnership with the Lulu Group,” said a statement from Felda and Lulu on the deal.

Indonesia to follow

Initially Lulu will build five hypermarkets in Malaysia, with the first to open in early 2016. Yusuff Ali also said the group would open two outlets in Indonesia in 2015, but did not provide any further details.

Lulu and Felda are considering a number of sites for these first Malaysian stores, including Kota Bharu Kelantan, Bukit Katil Malacca, Ipoh Perak, Nilai Icon City Negeri Sembilan, Shah Alam Selangor, among others.

The Lulu Group currently has 110 stores across the Middle East and India. Forbes lists Yusuff Ali as the richest Indian in the Arab world.