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Profit From Malaysia’s
A Perfect Time to Benefit from Malaysia'sPetrochemical Infrastructure
PetrochemicalIndustry
TThrough the harnessing of its oil and gas reserves and the forgingof smart partnerships with some of the world's largest petroleumcompanies, Malaysia has establish the ideal infrastructure to
support a vibrant petrochemical industry.
The presence of petroleum giants such as Shell and ExxonMobil for over100 years demonstrates their long-term confident in Malaysia's oil andgas industry. Through efforts spearheaded by the government and thecountry's national oil company, Petroliam Nasional Berhad (PETRONAS),Malaysia has also attracted investors and business partner amongpetrochemical multinationals such as, ConocoPhilips, Kaneka,Polyplastic, Toray, Dairen, Mitsui, BP, BASF, Idemitsu, Titan and EastmanChemicals.
Today, investor benefit from the facilities that are already in place.Integrated petrochemical complexes offer centralised utilities, efficientstorage services, and a comprehensive transportation network that helpreduce capital and operation costs.
In addition, Malaysia provides a wide range of tax incentives to meet thevarying needs of investor. Customised incentive package that cover taxand non-tax incentive are also available to key project.
The United States is the largest sources of investments in Malaysia'spetrochemical sector, followed by Japan, the United Kingdom, Germanyand Taiwan.
The ASEAN Bintulu Fertiliserplant in Bintulu, Sarawak
Malaysia...• has the world's 23rd largest crude oil reserves inclusive condensates (5.52 billion barrels)• has the world's 14th largest natural gas reserves (14.66 billion barrels)• is the world's largest production facility at a single location of liquefied natural gas
Location of Oil Refineries in Malaysia
Oil Refineries Location
Petronas Penapisan (Terengganu) Sdn Bhd Kertih, Terengganu
Petronas Penapisan (Melaka) Sdn Bhd Tangga Batu, Melaka
Malaysia Refining Company Sdn Bhd Tangga Batu, Melaka
Shell Refining Company (FOM) Bhd Port Dickson, Negeri Sembilan
Esso (Malaysia) Bhd Port Dickson, Negeri Sembilan
Kemaman Bitumen Company Sdn Bhd Telok Kalong, Terengganu
Rich in oil & gas reserves and
PetrochemicalFeedstocks
Above:Storage tanks in Kertih, Terengganu
Below:The Duyong Gas Complex off Terengganu
Top, facing page:A gas processing plant in Terengganu
2 Profit from Malaysia’s Petrochemical Industry
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Petrochemical
To complement the existing gas reserve and to ensure further security of gassupply, Malaysia has forged partnerships with other ASEAN member for thesupply of gas such as Vietnam, Indonesia and the Malaysia-Thailand JointDevelopment Area (JDA). In addition, gas supply will be further enhanced withthe implementation of the ASEAN gas grid, a venture to make gas available toall the 10 ASEAN countries.
The availability of feedstock at competitive price has made Malaysia a viablepetrochemical hub in the ASEAN region, attracting more than US$9 billion ofthe investments from leading petrochemical and chemical manufacturers.
The six gas processing plants located in Kertih, Terengganu - with a combinedcapacity of 2,000 million cubic feet (mmscf) of sales gas per day - ensure theindustry an adequate supply of petrochemical feedstocks such as methane(sales gas), ethane, propane, butane and condensates. Meanwhile, Malaysia'sPeninsular Gas Utilisation (PGU) trans-peninsular gas transmission pipelinechannels sales gas to industries around the country.
Production of Petrochemical Feedstocks
Petrochemical Capacity Company/RefineryProducts (mtpa)
Naphtha 2.4 million • Petronas Penapisan (Terengganu) Sdn Bhd• Petronas Penapisan (Melaka) Sdn Bhd• Malaysia Refinery Company Sdn Bhd• Shell Refinery Company (FOM) Bhd• Esso (Malaysia) Bhd
Methane (sales gas) 39.2 million • Petronas Gas BerhadEthane • Malaysia LNG Tiga Sdn BhdPropaneButaneCondensateLiquefied PetroleumGas (LPG)
Ethylene 1.63 million • Titan Petchem (M) Sdn Bhd
• Ethylene Malaysia Sdn Bhd
• Optimal Olefins (M) Sdn Bhd
Propylene 854 thousand • Titan Petchem (M) Sdn Bhd• MTBE (M) Sdn Bhd• Optimal Olefins (M) Sdn Bhd
Benzene, Toulene 775 thousand • Titan Petchem (M) Sdn Bhdand Xylene (BTX) • Aromatics Malaysia Sdn Bhd
4 Profit from Malaysia’s Petrochemical Industry
Kertih, TerengganuFormerly a quiet fishing village, Kertih has now transformed into a petrochemicalhub. It houses the Petronas Petrochemical Integrated Complex (PPIC) thatlinks the entire range of the oil and gas value chain - beginning from upstreamexploration and production to the final stage of petrochemical manufacturing.
Facilities & Infrastructure• Gas processing plants• Peninsular Gas Utilisation (PGU) project• Centralised utility facilities
- Supply of utilities such as power, industrial gases, water and steam• Institut Teknologi Petroliam
- Training centre• Kertih Port
- Centralised tankage facilities- Mainly bulk liquid port
• Kuantan Port- Centralised tankage facilities- Container and bulk liquid port- Railway linking Kertih, Gebeng and Kuantan Port
Petrochemical Plants in Kertih Producing:• Paraxylene• Benzene• Ammonia• Acetic Acid• Ethylene• Polyethylene• Propylene• Ethanolamines• Ethoxylates• Glycol Ethers• Butanol• Butyl Acetate• Ethylene Oxide• Ethylene Glycol• Low Density Polyethylene• Vinyl Chloride Monomer• Polyvinyl Choride
in Petrochemical ZonesWorld-class Facilities
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Petrochemical
Above:The control room of a petrochemical plant in Gebeng, Pahang
Below:The BP Amoco plant in Gebeng
Top, facing page:Centralised tankage facilities at the Kertih Terminal
Facilities & Infrastructure• Peninsular Gas Utilisation (PGU) project• Centralised utility facilities
- Supply of utilities such as power, industrial gases, water and steam• Kuantan Port
- Centralised tankage facilities- Pipeline and piperack system connecting Gebeng to Kuantan Port- Container and bulk liquid port- Railway linking Kertih, Gebeng and Kuantan Port
• Environment Technology Park- Incorporating a training centre, a waste collection and processing centre aswell as raw material management and storage facilities, maintenance andservicing facilities.
• East Coast Highway
Petrochemical Plants in Gebeng Producing:• Acrylic Acid and Esters,• Syngas• Butyl Acrylate• Oxo-alcohols• Phthalic Anhydride and Plasticizers• Butanediol• Tetrahydrofurane• Gamma-butyrolactone• Polyester Copolymers• Purified Terephthalic Acid• Dispersion Polyvinyl Chloride• Methyl Methacrylates Copolymers• MTBE• Propylene• Polyacetals• Polypropylene• Polybutylene Terephthalate (PBT)
Gebeng, PahangGebeng is another petrochemical hub for multinational playerslike BASF, Amoco, Kaneka, Eastman and Polyplastics. Thepetrochemical zone provides an integrated environment thatmeets the specific needs of the petrochemical industry.
6 Profit from Malaysia’s Petrochemical Industry
Pasir Gudang-Tanjung Langsat, JohorPasir Gudang, located next to the Johor Port, is now an established industrialarea. To cope with the needs of the growing petrochemical industry, theadjacent Tanjung Langsat site has been developed to enhance manufacturingcapacity.
Facilities & Infrastructure• Peninsular Gas Utilisation (PGU) project• Tank farms are being developed for bulk storage of petrochemical liquid• Johor Port
- With a 1,000-metre berth and a hazardous cargo jetty- Three hazardous liquid bulk terminals to handle LPG, chemicals andpetrochemicals
• Tanjong Pelepas Port, a world-class container port• Tanjung Langsat Port
- Located adjacent to the 4,000 acres of industrial land in Tanjung Langsat- Equipped with a twin-berth jetty consisting of outer (30,000 DWT) andinner (7,000 DWT) berths
Petrochemical Plants in Pasir Gudang-Tanjung LangsatProducing:• Ethylene• Propylene• BTX• Polyethylene• Polypropylene• High Impact Polystyrene• Ethylbenzene• Styrene Monomer• Expandable Polystyrene• Ethylene Vinyl Acetate
Malaysia has a skilledand trainable workforce.
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Petrochemical
Bintulu, SarawakHome to several gas-based petrochemical plants, Bintulu is also the largestproducer of liquefied natural gas (LNG) in Malaysia. There are three LNG plantswith a combined capacity of 24.2 million tonnes a year. Presently, the complexis the world's largest LNG production facility at a single location.
Facilities & Infrastructure• Bintulu Port• Bintulu Airport
Petrochemical Plants in Bintulu Producing:• Ammonia• Urea• LNG• Synthetic Gas Oil• Synthetic Kerosene• Synthetic Naphtha• Synthetic Solvents• Synthetic Detergent Feedstock• Synthetic Paraffin Wax / Waxy Raffinate
Above:The Malaysian Liquified Natural Gas plant in Bintulu, Sarawak
Below:A panaromic view of the Bintulu petrochemical operations
8 Profit from Malaysia’s Petrochemical Industry
A corporate tax rate of 25% applies to both local and foreign-owned companiesin Malaysia. A wide range of tax incentives is also available to these companies.These incentives are constantly reviewed by the government to ensure thatcompanies in Malaysia maintain their competitive edge.
1. Incentives for Manufacturing Companies
• Pioneer Status: Income tax exemption of 70% or 100% on the statutoryincome for five years; or
• Investment Tax Allowance: Investment tax allowance of 60% or 100%on the qualifying capital expenditure for five years. The allowance can beutilised to offset against 70% or 100% of the statutory income.
• Reinvestment Allowance: Reinvestment allowance of 60% for 15 yearson the qualifying capital expenditure. The allowance can be offset against70% or 100% of the statutory income.
• Accelerated Capital Allowance: An accelerated capital allowanceconsisting of an initial allowance of 40% and an annual allowance of 20%is available for three years after the reinvestment allowance period.
2. Incentives for High Technology Companies
• Pioneer Status with a tax exemption of 100% on the statutory income forfive years; or
• Investment Tax Allowance of 60% on the qualifying capital expenditurefor five years which can be offset against 100% of the statutory income.
3. Incentives for Strategic Projects
• Pioneer Status with a tax exemption of 100% on the statutory income forten years; or
• Investment Tax Allowance of 100% on the qualifying capital expenditurefor five years which can be offset against 100% of the statutory income.
4. Pre-packaged Incentives
Customised packages that cover tax and non-tax incentives.
5. Incentives for R&D
6. General Incentives
• Industrial Building Allowance
• Tariff Related Incentives
IncentivesforGrowth
Above and below:Among the businessorganisations foreign
investors can approachfor assistance is the
Malaysian InternationalChamber of Commerce
& Industry whichrepresents businesscommunities fromabout 40 countries.
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Petrochemical
Challenges & OpportunitiesThe Way Ahead
With the full realisation of the ASEAN Free Trade Area (AFTA), in 2010, totalMalaysian exports to ASEAN countries increased by 14.8 per cent toRM2.84 billion. It shows a positive growth in ASEAN regional trade. This
is expected to receive a boost when manufacturers begin to take advantage ofthe wider regional business network.
Petrochemical manufacturers based in Malaysia will not only benefit from AFTAbut also from the access to a much larger Asia Pacific market. For example,Malaysia's total exports to China have increased from RM67.36 billion in 2009 toRM80.59 billion in 2010. Even more impressive is Malaysia's export ofpetrochemical to China which has doubled from RM88.59 million to RM192.91million within the same period.
With China and India being net importers of petrochemical products, especiallyfine chemicals and specialised products, petrochemical manufacturers can takeadvantage of Malaysia strategic location to open up new business opportunities,
Malaysia already has the infrastructure and systems in place for petrochemicalmanufacturers to compete favourably with regional players. The challenge now isto identify more value-added products, expand market segments, and developeffective marketing strategies. The Malaysian government, on its part, willimplement measures to further enhance the business environment, infrastructuredevelopment, human resources support and the position of feedstock supply -the factors for a stable and conducive investment environment that ensures thefurther development of Malaysia's petrochemical industry.
Malaysia’s Multimedia SuperCorridor has resulted in a
workforce competentin the K-economy.
10 Profit from Malaysia’s Petrochemical Industry
Malaysia uses the latest digital andfibre optics technology to providehigh quality telecommunicationservices at competitive prices.
Life is an adventure inMalaysia—a land of perpetual
summer.
Kuala Lumpur’s light rail transitprovides a convenient mode of
commuting.
Why Investors ChooseMalaysia
• Strategic location
• Gateway to ASEAN and AFTA
• Economic stability
• Government’s commitment
• Rich reserves of natural gas
• Competitive source of raw materials
• World-class facilities
• Integrated infrastructure
• Skilled technical manpower
• Quality of life
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Petrochemical
Malaysian Investment Development AuthorityBlock 4, Plaza Sentral, Jalan Stesen Sentral 5, Kuala Lumpur Sentral, 50470 Kuala Lumpur, MalaysiaTel: (603) 2267 3633 Fax: (603) 2274 7970E-mail: [email protected] Website: www.mida.gov.my
MIDA’s Overseas Offices
ASIA-PACIFICAUSTRALIAConsul-Investment/DirectorConsulate of MalaysiaMalaysian Investment Development AuthorityLevel 6, MAS Building16 Spring StreetSydney, NSW 2000, AustraliaTel: (612) 9251 1933Fax: (612) 9251 4333E-mail: [email protected]
JAPANTokyoDirectorMalaysian Investment Development Authority32F, Shiroyama Trust Tower4-3-1, Toranomon, Minato-kuTokyo 105-6032, JapanTel: (813) 5777 8808Fax: (813) 5777 8809E-mail: [email protected]: www.midajapan.or.jp
OsakaDirectorMalaysian Investment Development AuthorityMainichi Intecio 18F3-4-5 Umeda, Kita-kuOsaka 530-0001, JapanTel: (816) 6451 6661Fax: (816) 6451 6626E-mail: [email protected]
PEOPLE’S REPUBLIC OF CHINAShanghaiConsul (Investment)Consulate General of Malaysia(Investment Section)Malaysian Investment Development AuthorityUnits 807-809, Level 8Shanghai Kerry CentreNo. 1515, Nanjing Road (West)Shanghai, 200040People’s Republic of ChinaTel: (8621) 6289 4547/5298 6335Fax: (8621) 6279 4009E-mail: [email protected]
GuangzhouDirectorMalaysian Investment Development AuthorityUnit 1804B-05CITIC Plaza Office Tower233 Tianhe Be RoadGuangzhou, 510610People’s Republic of ChinaTel: (8620) 8752 0739Fax: (8620) 8752 0753E-mail: [email protected]
TAIWANDirector (Investment Section)Malaysian Friendship & Trade CentreMalaysian Investment Development Authority12F Suite A, Hung Kuo BuildingNo. 167, Tun Hua North RoadTaipei 105, TaiwanTel: (8862) 2713 5020/2718 6094Fax: (8862) 2514 7581E-mail: [email protected]
KOREA, REPUBLIC OFCounsellor (Investment)Embassy of Malaysia (Investment Section)Malaysian Investment Development Authority17th Floor, SC First Bank Building100, Gongpyung-dong, Jongro-guSeoul 110-702, Republic of KoreaTel: (822) 733 6130/6131Fax: (822) 733 6132E-mail: [email protected]
UNITED ARAB EMIRATESDirector/Consul InvestmentMalaysian Investment Development AuthorityConsulate General of Malaysia(Investment Section)Unit 2205, 22nd Floor, Tower ABusiness Central Tower, Dubai Media City(P.O. Box: 502876) DubaiUnited Arab EmiratesTel: (9714) 4343 696/4343 697Fax: (9714) 4343 698E-mail: [email protected]
INDIADirector/Consul InvestmentMalaysian Investment Development AuthorityConsulate General of Malaysia(Investment Section)81 & 87, 8th Floor, 3rd North AvenueMarker MaxityBandra Kurla Complex, Bandra (E)Mumbai 400051, IndiaTel: (9122) 2659 1155/1156Fax: (9122) 2659 1154E-mail: [email protected]
SINGAPOREDirector/Consul InvestmentMalaysian Investment Development AuthorityNo. 7, Temasek Boulevard26-01, Suntec Tower OneSingapore 038987Tel: (65) 6835 9326/9580/7069Fax: (65) 6835 7926E-mail: [email protected]
THAILANDDirector/Investment CounsellorMalaysian Investment Development Authority3601, 36th Floor, Q. House Lumpini BuildingSouth Sathorn RoadTungmahamek, SathornBangkok 10120, ThailandTel: (66) 2677 7487Fax: (66) 2677 7488E-mail: [email protected]
EUROPESWEDENEconomic CounsellorEmbassy of MalaysiaKarlavägen 37, P.O. Box 26053S-10041 Stockholm, SwedenTel: (468) 791 7942/440 8400Fax: (468) 791 8761E-mail: [email protected]
UNITED KINGDOMDirectorMalaysian Investment Development Authority17 Curzon StreetLondon W1J 5HR, United KingdomTel: (4420) 7493 0616Fax: (4420) 7493 8804E-mail: [email protected]
GERMANY, FEDERAL REPUBLIC OFFrankfurtDirector/Consul InvestmentMalaysian Investment Development AuthorityConsulate General of Malaysia(Investment Section)17th Floor, Frankfurt KastorPlatz der Einheit 160327 Frankfurt am Main, GermanyTel: (4969) 7680 7080Fax: (4969) 7680 708-20E-mail: [email protected]
MunichDirectorMalaysian Investment Development Authority6th Floor, BurkleinhausBurkleinstrasse 1080538 Munich, GermanyTel: (4989) 2030 0430Fax: (4989) 2030 4315E-mail: [email protected]
FRANCEDirectorMalaysian Investment Development Authority42, Avenue Kleber75116 Paris, FranceTel: (331) 4727 3689/6696Fax: (331) 4755 6375E-mail: [email protected]
ITALYConsul-InvestmentConsulate of Malaysia (Investment Section)Malaysian Investment Development Authority5th Floor, Piazza Missori 320123 Milan (MI), ItalyTel: (3902) 3046 521Fax: (3902) 3046 5242E-mail: [email protected]
NORTH AMERICALOS ANGELESConsul (Investment)Consulate General of Malaysia(Investment Section)550, South Hope Street, Suite 400Los Angeles, California 90071United States of AmericaTel: (1213) 955 9183/9877Fax: (1213) 955 9878E-mail: [email protected]
SAN JOSEDirectorMalaysian Investment Development Authority226, Airport Parkway, Suite 480San Jose, California 95110United States of AmericaTel: (1408) 392 0617/8Fax: (1408) 392 0619E-mail: [email protected]
NEW YORKConsul (Investment)Consulate General of Malaysia(Investment Section)313 East, 43rd Street, New YorkNew York 10017United States of AmericaTel: (1212) 687 2491Fax: (1212) 490 8450E-mail: [email protected]
BOSTONDirectorMalaysian Investment Development AuthorityOne International Place, Floor 8Boston, MA 02110United States of AmericaTel: (1617) 338 1128/338 1129Fax: (1617) 338 6667E-mail: [email protected]
CHICAGODirectorMalaysian Investment Development AuthorityJohn Hancock Center, Suite 1515875, North Michigan AvenueChicago, Illinois 60611United States of AmericaTel: (1312) 787 4532Fax: (1312) 787 4769E-mail: [email protected]
HOUSTONDirectorMalaysian Investment Development Authority6th Floor, Suite 630Lakes on Post Oak3050 Post Oak BoulevardHouston, TX 77056United States of AmericaTel: (1713) 979 5170Fax: (1713) 979 5177/78E-mail: [email protected]
Chemical Industry DivisionMalaysian Investment Development AuthorityBlock 4, Plaza Sentral, Jalan Stesen Sentral 5Kuala Lumpur Sentral50470 Kuala Lumpur, MalaysiaTel : (603) 2267 3557Fax : (603) 2274 8464E-mail : [email protected] : www.mida.gov.my
October 2011
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