Petrochemical_July09.pdf

8/17/2019 Petrochemical_July09.pdf

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Profit From Malaysia’s

A Perfect Time to Benefit from Malaysia’s

Petrochemical Infrastructure

PetrochemicalIndustry

Through the harnessing of its oil and gas reserves and the forging of 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 Dow Chemicals, ConocoPhilips,Kaneka, Polyplastic, Toray, Dairen, Mitsui, BP, BASF, Idemitsu, Titan andEastman Chemicals.

Today, investor benefit from the facilities that are already in place.Integrated petrochemical complexes offer centralised utilities, efficient

storage 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 Fertiliser

plant in Bintulu, Sarawak


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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

Rich in oil & gas reserves and

Petrochemical

Feedstocks

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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P e t r o c h e m i c a l

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 of the 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/Refinery

Products (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) 20.4 million • Petronas Gas Berhad

Ethane • Malaysia LNG Tiga Sdn Bhd

Propane

Butane

Condensate

Liquefied 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


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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 upstream

exploration 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 Zones

World-class Facilities


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Top, facing page: Centralised tankage facilities at the Kertih Terminal Above: The control room of a petrochemical plant in Gebeng, PahangBelow: The BP Amoco plant in Gebeng

Gebeng, PahangGebeng is another petrochemical hub for multinational players

like BASF, Amoco, Kaneka, Eastman and Polyplastics. The

petrochemical zone provides an integrated environment thatmeets the specific needs of the petrochemical industry.


• 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)


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Pasir Gudang-Tanjung Langsat, JohorPasir Gudang, located next to the Johor Port, is now an established industrial

area. To cope with the needs of the growing petrochemical industry, theadjacent Tanjung Langsat site has been developed to enhance manufacturingcapacity.


• 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 and

petrochemicals• Tanjong Pelepas Port, a world-class container port• Tanjung Langsat Port

- Located adjacent to the 4,000 acres of industrial land in TanjungLangsat

- Equipped with a twin-berth jetty consisting of outer (30,000 DWT) andinner (7,000 DWT) berths

Petrochemical Plants in Pasir Gudang-Tanjung Langsat

Producing :• 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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Bintulu, Sarawak Home 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 23.3 million tonnes a year. Presently, the complexis the world’s largest LNG production facility at a single location.


• 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


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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 allowance

consisting 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 to Strengthen Industrial Linkages

6. Incentives for R&D

7. General Incentives

• Industrial Building Allowance

• Infrastructure Allowance

• Tariff Related Incentives

Incentivesfor Growth

Above and below: Among the businessorganisations foreign

investors can approachfor assistance is the

Malaysian InternationalChamber of Commerce

& Industry whichrepresents business

communities fromabout 40 countries.


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Challenges & Opportunities The Way Ahead

With the full realisation of the ASEAN Free Trade Area (AFTA), in 2009petrochemical manufacturers in Malaysia will benefit from a singlemarket with a total population of 575 million, a combined GDP of

US$1,282 billion and a total trade of US$1,404 billion.

There is a positive growth in ASEAN regional trade. Total exports to ASEANincreased by 10 per cent to US$48.91 billion in 2008. This is expected to receivea boost when manufacturers begin to take advantage of the wider regional

business network.

Petrochemical manufacturers based in Malaysia will not only benefit from AFTA but also from the access to a much larger Asia Pacific market. For example,Malaysia’s total exports to China have increased from US$1.29 billion in 1995 toUS$18.06 billion in 2008. Even more impressive is Malaysia’s export of petrochemical to China which has multiplied 26 times from US$43 million toUS$1.15 billion 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 Super

Corridor has resulted in aworkforce competent

in the K-economy.


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Malaysia uses the latest digital andfibre optics technology to provide

high quality telecommunication

services at competitive prices.

Life is an adventure inMalaysia—a land of perpetual

summer.

Kuala Lumpur’s light rail transit

provides a convenient mode of commuting.

Why Investors Choose Malaysia

• 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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P e t

r o c h e m i c a l

Malaysian Industrial Development Authority Block 4, Plaza Sentral, Jalan Stesen Sentral 5, 50470 Kuala Lumpur, Malaysia

Tel: (603) 2267 3633 Fax: (603) 2274 7970

E-mail: [email protected] Website: www.mida.gov.my

MIDA’s Overseas Offices

ASIA-PACIFIC

AUSTRALIA

Consul-Investment/Director

Consulate of MalaysiaMalaysian Industrial Development Authority

Level 6, 16 Spring StreetSydney, NSW 2000 Australia

Tel: 61 (2) 9251 1933Fax: 61 (2) 9251 4333

E-mail: [email protected]

JAPAN

DirectorMalaysian Industrial Development Authority

32F, S hiroyama Trust Tower

4-3-1,Toranomon, Minato-kuTokyo 105-6032, Japan.Tel: 81 (3) 5777-8808

Fax: 81 (3) 5777-8809E-mail: [email protected]: www.midajapan.or.jp

Director

Malaysian Industrial Development AuthorityMainichi Intecio 18F

3-4-5 Umeda, Kita-kuOsaka 530-0001, Japan.Tel: 81 (6) 6451-6661

Fax: 81 (6) 6451-6626E-mail: [email protected]

PEOPLE’S REPUBLIC OF CHINA

Consul (Investment)

Consulate General of MalaysiaMalaysian Industrial Development Authority

Units 807-809, Level 8,Shanghai Kerry Centre

No. 1515, Nanjing Road (West)Shanghai, 200040, ChinaTel: 86 (21) 6289 4547 /

5928 6335Fax: 86 (21) 6279 4009



Unit 1804B-05CITIC Plaza Office Tower233 Tianhe Bei Road Guangzhou,

510610, ChinaTel: (8620) 8752 0739

Fax: (8620) 8752 0753E-mail: [email protected]

TAIWAN

Director (Investment)

Malaysian Friendship & Trade CentreMalaysian Industrial Development Authority

12F, Suite A, Hung Kuo BuildingNo. 167, Tun Hua North RoadTaipei 105, Taiwan

Tel: 886 (2) 2718 6094 /

2713 5020 (GL)Fax: 886 (2) 2514 7581E-mail: [email protected]

KOREA, REPUBLIC OF

Counselor (Investment)

Embassy of Malaysia (Investment Section)Malaysian Industrial Development Authority

17th Floor, SC First Bank Building100, Gongpyung-dong, Jongro-gu,

Seoul 110-702, Republic of KoreaTel: 82 (2) 733 6130 / 6131Fax: 82 (2) 733 6132


UNITED ARAB EMIRATES

Director/Consul InvestmentMalaysian Industrial Development Authority

Consulate General of Malaysia(Investment Section)Unit 2204-2206, 22nd Floor, Tower A

Business Central Tower, Dubai Media City(P.O. Box: 4598)

DubaiUnited Arab EmiratesTel: 00 971-4-4343-696 /697

Fax: 00 971-4-4343-698E-mail: [email protected]

INDIA

Director/Consul InvestmentMalaysian Industrial Development AuthorityConsulate General of Malaysia (Investment Section)

81 & 87, 8th Floor, 3rd North Avenue, Maker Maxity

Bandra Kurla Complex, Bandra (E)Mumbai 400051India

Tel: 00 91 22 2659 1155 / 2659 1156

Fax: 00 91 22 2659 1154


EUROPE

SWEDEN

Economic CounsellorMalaysian Industrial Development Authority

c/o Embassy of Malaysia

Karlavaegen 37P.O. Box 26053S-10041 Stockholm, Sweden

Tel: +46 (8) 791 7942/4408 400Fax: +46 (8) 791 8761E-mail: [email protected]

UNITED KINGDOM


17, Curzon StreetLondon W1J 5HRUnited Kingdom

Tel: +44 (0) 207493 0616Fax: +44 (0) 20 7493 8804


GERMANY, FEDERAL REPUBLIC OF

Director/Consul InvestmentMalaysian Industrial Development Authority

Consulate General of Malaysia(Investment Section)

17th Floor, Frankfurt KastorPlatz der Einheit 160327 Frankfurt am Main

GermanyTel: 0049 (0) 69 76807080

Fax: 0049 (0) 69 7680708-20E-mail: [email protected]

FRANCE

Director

Malaysian Industrial Development Authority42 Avenue Kleber,

75116 Paris, France.Tel: +33 (1) 47276696 / 4727 3689

Fax: +33 (1) 4755 6375E-mail: [email protected]

ITALY

Consul-Investment,

Consulate of Malaysia (Investment Section)Malaysian Industrial Development Authority

5th Floor,Piazza Missori 3,20123 Milan (MI), Italy

Tel: (3902) 3046 521Fax: (3902) 3046 5242


NORTH AMERICA

LOS ANGELES

Consul-Investment

Consulate General of Malaysia (Investment Section)Malaysian Industrial Development Authority

550, South Hope StreetSuite 400, Los Angeles, California 90071United States of America

Tel: 1 (213) 955 9183,1 (213) 955 9877

Fax: 1 (213) 955 9878E-mail: [email protected]

SAN JOSE

Director

Malaysian Industrial Development Authority226 Airport Parkway, Suite 480

San Jose, California 95110United States of America

Tel: 1 (408) 392 0617/8Fax: 1 (408) 392 0619


NEW YORK

Consul-InvestmentConsulate General of Malaysia (Investment Section)

313 East, 43rd StreetNew York, NY 10017United States of America

Tel: 1 (212) 687 2491Fax: 1 (212) 490 8450


BOSTON


One International Place, Floor 8

Boston, MA 02110United States of AmericaTel: 1 (617) 338-1128 / 338-1129Fax: 1 (617) 338-6667


CHICAGO

Director

Malaysian Industrial Development AuthorityJohn Hancock Center, Suite 1515875, North Michigan Avenue

Chicago, Illinois 60611United States of America

Tel: 1 (312) 787 4532Fax: 1 (312) 787 4769



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Chemical Industry Division

Malaysian Industrial Development Authority

Block 4, Plaza Sentral, Jalan Stesen Sentral 5

Kuala Lumpur Sentral

50470 Kuala Lumpur, Malaysia

Tel : 603 2267 3557

Fax : 603 2274 8464

E-mail : [email protected]

Website : www.mida.gov.my

July 2009

For more information, please contact:

Documents

Petrochemical_July09.pdf