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We wish to announce that on 23 April 2005, the Group entered into a joint venture in Vietnam to undertake the business of bus chassis assembly, sale of bus chassis and complete bus and the provision of related after sales services.

Incorporation of new subsidiary

In connection with the above, the Directors wish to inform that the Group has incorporated a company with the name of TCIE (Labuan) Pty. Ltd. under the Offshore Companies Act 1990 in the Federal Territory of Labuan, Malaysia on 22 April 2005 as an investment holding company for the Group's proposed investment in the above joint venture.

TCIE (Labuan) Pty Ltd has an authorized capital of US$2,000,000/- made up of 2,000,000 ordinary shares of US$1/- each and an initial issued and paid-up capital of US$1/- which will subsequently be increased to US$310,000/- and is wholly-owned by Tan Chong Motor Holdings Berhad (“TCMH”).

Details of the Joint Venture

On 23 April 2005, TCIE (Labuan) Pty Ltd (“TCIE”) entered into a Joint Venture Agreement with Tan Chong Industrial Machinery (Pte) Ltd (“TCIM”) and Danang Automobile Mechanical and Electrical (“DAMECO”) to undertake the business of bus chassis assembly, sale of bus chassis and complete bus and the provision of related after sales services in Vietnam (“Joint Venture”).

Pursuant to the Joint Venture, a joint venture company shall be established in Vietnam to be named Tanda Motor Company Ltd. (“TMCL”), a limited liability company with an initial investment capital of US$2 million comprising a legal capital of US$600,000/- and a loan capital of US$1.4 million. The legal capital of TMCL shall be held by the joint venture parties in the following proportion:-

Based on a 51% share, the Group will contribute US$306,000/- (approximately RM1.16 million) as its share of the legal capital. The loan capital will be raised by TMCL in the form of borrowings mainly to fund its working capital requirement.

Under the joint venture arrangement, TMCL will separately enter into an Assembly and Distribution License Agreement with Nissan Diesel Motor Co., Ltd. of Japan to be the sole assembler and distributor of Nissan Diesel bus chassis in Vietnam.

Assembly and sales operations under TMCL is expected to commence in late 2005 or early 2006 with an initial target volume of about 400 units of buses per annum.

Background and rationale for the Joint Venture

TCMH, through its wholly-owned subsidiary, Tan Chong Industrial Equipment Sdn Bhd, has been involved in the assembly and distribution of Nissan Diesel trucks and buses in Malaysia for over three decades. The Joint Venture is part of the Group’s regional expansion effort into businesses related to its core activities.

Information on DAMECO

DAMECO is a state owned corporation based in Danang City, Vietnam and is presently involved in the business of bus assembly.

Information on TCIM

TCIM is wholly owned subsidiary of Tan Chong International Ltd (“TCIL”) based in Singapore and is the sole distributor of Nissan Diesel trucks and buses in Singapore.

Related party transaction

TCIM is a subsidiary of TCIL, a public company whose shares are listed and quoted on The Hong Kong Stock Exchange. TCIL and its group of companies are involved in activities including the distribution of motor vehicles and heavy commercial vehicles in Singapore and Thailand.

Tan Chong Consolidated Sdn Bhd ("TCC") is a direct major shareholder of TCMH and TCIL. Dato' Tan Heng Chew, the Executive Deputy Chairman and a director of TCMH, by virtue of his shareholding in TCC, is deemed a major shareholder of TCMH and TCIL. Dato' Tan Heng Chew is also a director of TCC. Mr Tan Eng Soon, the Managing Director of TCMH, by virtue of his shareholding in TCC is also deemed a major shareholder of TCMH and TCIL. Mr Tan Eng Soon is also a director of both TCC and TCIL. TCIL and TCIM are persons connected with TCC, Dato' Tan Heng Chew and Mr Tan Eng Soon for the purposes of the Listing Requirements of Bursa Malaysia Securities Berhad ("BMSB LR"). As the definition of “transaction” under the BMSB LR includes “any business transaction or arrangement entered into”, the investment is therefore deemed to be a related party transaction under Chapter 10 of the BMSB LR.

Financial effect of the investment

The investment will be financed by internal funds. The investment is not expected to contribute significantly to the Group's revenue and profit in the immediate term during the initial start up but is expected to produce reasonable rates of return over the medium term.

Approval and consent

The Group had on 3 February 2005 obtained the approval of the Controller of Foreign Exchange of Bank Negara Malaysia to remit funds of up to US$310,000/- (equivalent to RM1.178 million) for investment in TMCL. This investment does not require the approval of the shareholders of TCMH as the applicable percentage ratio set out in Chapter 10 of the BMSB LR in relation to the investment is less than 5%.

The joint venture arrangement is, amongst others, subject to the necessary approval being obtained from the relevant authorities for the parties to the joint venture to undertake the investment and issuance of investment licence to that effect; the granting of assembly licence and certain tax incentives.

Disclosure of interest of directors and major shareholders and persons connected with directors or major shareholders

Except for the disclosures made in relation to TCC, Dato' Tan Heng Chew, Mr. Tan Eng Soon, TCIL, none of the other directors and major shareholders of TCMH and the persons connected with such directors or major shareholders has any interest direct or indirect in the above arrangement.

Directors’ recommendation

The Board of Directors of TCMH (excluding the directors who are deemed interested) is of the opinion that the investment in TCML to be undertaken is in the best interest of TCMH.

This announcement is dated 25 April 2005.