1 Profit From Malaysia’s A Perfect Time to Benefit from Malaysia’s Petrochemical Infrastructure Petrochemical Industry T hrough the harnessing of its oil and gas reserves and the forging of smart partnerships with some of the world’s largest petroleum companies, Malaysia has established the ideal infrastructure to support a vibrant petrochemical industry. The presence of petroleum giants such as Shell and ExxonMobil for over 100 years demonstrates their long-term confident in Malaysia’s oil and gas industry. Through efforts spearheaded by the government and the country’s national oil company, Petroliam Nasional Berhad (PETRONAS), Malaysia has also attracted investors and business partners among petrochemical multinationals such as ConocoPhilips, Kaneka, Polyplastic, Toray, Dairen, Mitsui, BP, Shell, BASF, Idemitsu, Honam and Eastman Chemicals. Today, investors benefit from the facilities that are already in place. Integrated petrochemical complexes offer centralised utilities, efficient storage services, and a comprehensive transportation network that help reduce capital and operation costs. In the near future, a new world class petrochemical complex will be developed by PETRONAS in Pengerang Johor. This facility will develop new value-added products and expand market segments for petrochemical products in Malaysia. In addition, Malaysia provides a wide range of tax incentives to meet the varying needs of investor. Customised incentive package that cover tax and non-tax incentives are also available to key project. From 2000 to 2012, Germany is the largest source of investments in Malaysia’s Petrochemical sector, followed by Japan, United States, Netherlands, United Kingdom, Singapore, France and South Korea. The ASEAN Bintulu Fertiliser plant in Bintulu, Sarawak
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1
Profit From Malaysia’s
A Perfect Time to Benefit from Malaysia’sPetrochemical Infrastructure
PetrochemicalIndustry
Through the harnessing of its oil and gas reserves and the forging ofsmart partnerships with some of the world’s largest petroleumcompanies, Malaysia has established 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 partners amongpetrochemical mult inationals such as ConocoPhil ips, Kaneka,Polyplastic, Toray, Dairen, Mitsui, BP, Shell, BASF, Idemitsu, Honam andEastman Chemicals.
Today, investors 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 the near future, a new world classpetrochemical complex will be developed by PETRONAS in PengerangJohor. This facility will develop new value-added products and expandmarket segments for petrochemical products in Malaysia.
In addition, Malaysia provides a wide range of tax incentives to meet thevarying needs of investor. Customised incentive package that cover taxand non-tax incentives are also available to key project.
From 2000 to 2012, Germany is the largest source of investments inMalaysia’s Petrochemical sector, followed by Japan, United States,Netherlands, United Kingdom, Singapore, France and South Korea.
The ASEAN Bintulu Fertiliserplant in Bintulu, Sarawak
Malaysia ...• has the world’s 24th largest crude oil reserves inclusive condensates (5.8 billion barrels)
• has the world’s 15th largest natural gas reserves (14.66 billion barrels)
• has one of the world’s largest liquefied natural gas (LNG) production facility at a single location
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
Petron Malaysia Refining & Marketing Bhd Port Dickson, Negeri Sembilan
Kemaman Bitumen Refinery Telok Kalong, Terengganu
Rich in oil & gas reserves and
PetrochemicalFeedstocks
Above:Storage tanks in Kertih, Terengganu
Right:The Duyong Gas Complex off Terengganu
Top, facing page:A gas processing plant in Terengganu
2 Profit from Malaysia’s Petrochemical Industry
Production of Petrochemical Feedstocks
Petrochemical Capacity Company/RefineryProducts
Naphtha 611,000 bpd • Petronas Penapisan (Terengganu) Sdn Bhd• Petronas Penapisan (Melaka) Sdn Bhd• Malaysia Refinery Company Sdn Bhd• Shell Refinery Company (FOM) Bhd• Petron Malaysia Refining & Marketing Bhd• Kemaman Bitumen Company Sdn Bhd
Methane 42.16 million • Petronas Gas BerhadEthane MTPA • Malaysia LNG Sdn Bhd Propane • MLNG Dua Sdn Bhd Butane • MLNG Tiga Sdn BhdCondensateLiquefied PetroleumGas (LPG)
Ethylene 1.22 million • Lotte Chemical Titan Holding Sdn BhdTPA • Petronas Chemical Ethylene Sdn Bhd
• Petronas Chemical Olefins Sdn Bhd
Propylene 955 thousand • Lotte Chemical Titan Holding Sdn Bhd
TPA • Petronas Chemical MTBE Sdn Bhd• Petronas Chemical Olefins Sdn Bhd
Benzene, 888 thousand • Lotte Chemical Titan Holding Sdn Bhd
Toulene TPA • Petronas Chemical Aromatics Sdn Bhd
Xylene 3
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To complement the existing gas reserve and to ensure further security of gassupply, Malaysia has forged partnerships with other ASEAN member’s 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 RM11.11 billionof the investments in 2012 from leading petrochemical and chemicalmanufacturers.
The six gas processing plants located in Kertih, Terengganu - with a combinedcapacity of 2,000 million cubic feet (mmscf) of methane (sales gas) per day -ensure the industry an adequate supply of petrochemical feedstocks such asmethane (sale gas), ethane, propane, butane and condensates. In addition,Malaysia’s newly constructed LNG Regasification Facilities at Sungai UdangPort in Melaka is expected to add another 3.8 million mmscf of sales gas perday to the country. Meanwhile, Malaysia’s Peninsular Gas Utilisation (PGU)trans-peninsular gas transmission pipeline channels sales gas to industriesaround the country.
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) that linksthe 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 Petroleum Petronas (INSTEP)
- 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
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
Gebeng, PahangGebeng is another petrochemical hub for multinational players like BASF, Reliance, Kaneka, Eastman and Polyplastics. The petrochemical zone provides an integrated environment that meets the specific needs of the petrochemical industry.
- 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 as
well as raw material management and storage facilities, maintenance and servicing facilities.
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 and
petrochemicals• 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) and
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 23.3 million tonnes a year. This complex is one theworld’s largest LNG production facilities at a single location.
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 to Strengthen Industrial Linkages
6. Incentives for R&D
7. General Incentives
• Industrial Building Allowance
• Tariff Related Incentives• Tax Incentives for Small and
Medium Enterprises to registerpatent and trademarks
Incentives for 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 & OpportunitiesThe Way Ahead
W ith the full realisation of the ASEAN Free Trade Area (AFTA), in 2012, trade
with ASEAN expanded 8.2% to RM358.14 billion, accounting for 27.3%
of Malaysia’s trade compared with 26% in 2011. Exports increased by
9.7% to RM188.22 billion while imports grew by 6.5% to RM169.92 billion. Almost all
major manufactured exports to ASEAN registered increases. It shows a positive
growth in ASEAN regional trade. This is expected to receive a 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 RM80.10 bilion in 2010 to RM88.75 billion
in 2012. This increase is due to higher exports of petroleum and petrochemical
products to China.
With China and India being net importers of petrochemical products,
especially fine chemicals and specialised products, petrochemical manufacturers
can take advantage of Malaysia’s strategic location to open up new business
opportunities.
Malaysia already has the infrastructure and systems in place for petrochemical
manufacturers to compete favourably with regional players. The challenge now is to
identify more value-added products, expand market segment, and develop effective
marketing strategies. The Malaysian government, on its part, will implement measure
to further enhance the business environment, infrastructure development, human
resources support and the position of feedstock supply – the factors for a stable and
conducive investment environment that ensures the further development of
Malaysia’s petrochemical industry.
Malaysia’s Multimedia SuperCorridor has resulted in a
workforce competent in the K-economy.
10 Profit from Malaysia’s Petrochemical Industry
Why Investors ChooseMalaysia
Malaysia uses the latest digital andfibre optics technology to provide
high 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.
• 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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Malaysian Investment Development AuthorityMIDA Sentral, No. 5, Jalan Stesen Sentral 5, Kuala Lumpur Sentral, 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 - PACIFICAUSTRALIAConsul-Investment/DirectorConsulate of MalaysiaMalaysian Investment Development AuthorityLevel 6,16 Spring StreetSydney, NSW 2000, AustraliaTel: (612) 9251 1933 Fax: (612) 9251 4333E-mail: [email protected]
PEOPLE’S REPUBLIC OF CHINAShanghaiInvestment Consul/DirectorConsulate General of Malaysia(Investment Section)Malaysian Investment Development AuthorityUnits 807-809, Level 8Shanghai Kerry CentreNo. 1515, Nanjing Road (West)Shanghai, 200040People’s Republic of China Tel: (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)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) / DirectorEmbassy of Malaysia(Malaysian Trade and Investment Centre)Malaysian Investment Development Authority17th Floor, Standard Chartered BankKorea Limited Building47, Jongro, Jongro-guSeoul 110-702, Republic of Korea Tel: (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 Avenue Maker MaxityBandra Kurla Complex, Bandra (E)Mumbai 400051, IndiaTel: (9122) 2659 1155/1156Fax: (9122) 2659 1154E-mail: [email protected]
THAILANDDirector/Investment CounsellorMalaysian Investment Development Authority3601, 36th Floor, Q. House Lumpini Building South Sathorn Road Tungmahamek, Sathorn Bangkok 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]
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 America Tel: (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 630 Lakes on Post Oak 3050 Post Oak Boulevard Houston, TX 77056 United States of AmericaTel: (1713) 979 5170 Fax: (1713) 979 5177/78E-mail: [email protected]
AFRICAREPUBLIC OF SOUTH AFRICACounsellor (Investment) Economic OfficeHigh Commission of MalaysiaMalaysian Trade Centre,Ground Floor, Building 5Commerce Square Office Park39 Rivonia RoadSandhurst, SandtonJohannesburg, Republic of South AfricaTel: (2711) 268 2307/268 2314Fax: (2711) 268 2204E-mail: [email protected]
For more information, please contact:
Chemical & Advanced Materials Division Malaysian Investment Development AuthorityLevel 25, MIDA Sentral, No. 5, Jalan Stesen Sentral 5Kuala Lumpur Sentral50470 Kuala Lumpur, MalaysiaTel : (603) 2267 6777Fax : (603) 2274 8464E-mail : [email protected] : www.mida.gov.my
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