08:23     FE POLYCHEM<08012> - Announcement                                   

                                                                              
    The Stock Exchange of Hong Kong Limited takes no responsibility for       
    the contents of this announcement, makes no representation as to its      
    accuracy or completeness and expressly disclaims any liability            
    whatsoever for any loss howsoever arising from or in reliance upon        
    the whole or any part of the contents of this announcement.               
                                                                              
                                                                              
    FAR EASTERN POLYCHEM INDUSTRIES LIMITED                                   
    (Incorporated in Bermuda with limited liability)                          
    (Stock Code: 8012)                                                        
                                                                              
    Continuing Connected Transaction                                          
                                                                              
                                                                              
    The Company's wholly-owned subsidiary, Far Eastern Industries             
    (Shanghai) Ltd., is party to an on-going technological licence            
    agreement with an associate of the Company's controlling shareholder,     
    Far Eastern Textile Ltd. The Agreement, entered into prior to the         
    Company's listing in January, 2000, is for a term of ten years            
    expiring on 31st December 2009 and is in its sixth year of operation.     
                                                                              
                                                                              
    A waiver from strict compliance with the announcement and                 
    shareholders' approval requirements contained in Chapter 20 of the        
    GEM Listing Rules was granted by the Stock Exchange at the time of        
    the Company's listing. At the time of listing, the Company set and        
    disclosed annual caps on the licence fee payable by FEIS for the          
    financial years up to the year ended 31st December 2001. In January       
    2002, the annual caps on the licence fee payable by FEIS were renewed     
    at the same level for a period of three years from 1st January 2002       
    to 31st December 2004.                                                    
                                                                              
    On 15 April 2005, the parties to the Agreement agreed to a reduction      
    in the annual licence fee payable by FEIS from US$10 per metric tonne     
    of polyester polymer to US$2.50 per metric tonne of polyester and         
    agreed to set a reduced annual cap for a further period of three          
    years from 1st January 2005 to 31st December 2007. The annual cap in      
    respect of the licence fee payable by FEIS has been reduced from          
    US$1.25 million to US$0.7 million (approximately HK$5.5 million) per      
    annum.                                                                    
                                                                              
    The new annual cap represents considerably less than 2.5% of the          
    Company's annual sales and less than HK$10 million. It is only            
    subject to the reporting and announcement requirements as set out in      
    Rules 20.45 to 20.47 of the GEM Listing Rules an is exempt from the       
    independent shareholders' approval requirements under Chapter 20 of       
    the GEM Listing Rules.                                                    
                                                                              
                                                                              
    By order of the Board Far                                                 
    Eastern Polychem Industries Limited                                       
    Wai-Man Yim Company                                                       
    Secretary                                                                 
                                                                              
                                                                              
    Hong Kong, 15 April 2005                                                  
                                                                              
    As at the date of this announcement, Mr. Shi-Tong Hsu, Mr. Jar-Yi         
    Shih, Mr. Champion Lee, Mr. Lih-the Chang and Mr. Chin-Sen Tu are         
    Executive Directors of the Company; Mr. Shaw-Y Wang is a                  
    Non-executive Directors and Mr. Tak-Lung Tsim, Mr. Ying-Ho Wong and       
    Mr. Shih-Hung Chan are Independent Non-executive Directors.               
                                                                              
    This announcement, for which the Directors collectively and               
    individually accept full responsibility, includes particulars given       
    in compliance with the GEM Listing Rules for the purpose of giving        
    information with regard to the Company. The Directors, having made        
    all reasonable enquiries, confirm that, to the best of their              
    knowledge and belief: (1) the information contained in this               
    announcement is accurate and complete in all material respects and        
    not misleading; (2) there are no other matters the omission of which      
    would make any statement in this announcement misleading; and (3) all     
    opinions expressed in this announcement have been arrived at after        
    due and careful consideration and are founded on bases and                
    assumptions that are fair and reasonable.                                 
                                                                              
    The above announcement is a summary only. For the full version of         
    this announcement, please refer to the `Latest Company Announcements'     
    page on the GEM website at www.hkgem.com.