MALAYSIA CHEMICALS 2014

Economy | Petrochemicals | Oleochemicals | Industrial and Specialty Chemicals | Distribution and Logistics CONTENTS

FIGHTING FOR ITS MOMENT CHALLENGES AND Malaysia’s Chemical Industry OPPORTUNITIES Transport, Human Resources and 8. An Introduction to Malaysia: A brief Sustainability overview of the country and economy 10. Interview with the Malaysian 34. Chemical Barriers: Hurdles for the Investment Development Authority industry (MIDA) 35. Interview with the Malaysian Plastics 11. Finding its Place: The chemical industry Manufacturers Association (MPMA) of Malaysia 3 7. Interview with Brunel-Energy Malaysia 13. Interview with the Chemical Industries 38. Production to Consumption: Transport, Council of Malaysia (CICM) Logistics and Distribution 41. Interview with Finn Chemicals 42. Interview with Kerith Terminals 43. Interview with Suka Chemicals A DIVERSIFIED PORTFOLIO 44. Interview with Kuantan Port Consortium Malaysian Chemical Production 46. Interview with Leschaco Malaysia 4 7. Interview with Brenntag Malaysia 16. RAPID Growth: Refining and petrochemicals 18. Natural Products: The oleochemical industry INTO THE FUTURE 20. Interview with KLK Oleo Final Thoughts, Index and Credits 22. Interview with Evyap Sabun Malaysia Rubber and rubber gloves 50. Final Thoughts 23. Sector Support: Specialty and industrial 52. Index 24. chemicals 54. Credits Interview with BASF Malaysia 25. Interview with Schaefer Kalk 26. Interview with DuPont Malaysia 28. Interview with Linde Malaysia 29. Interview Hextar Chemicals 30. ANALYSIS: The New Face of the 31. Malaysian Chemical Industry

This research has been conducted by Vanessa Acuna Chapela and Anita Kruger Edited by Barnaby Fletcher Graphic design by Gonzalo Da Cunha

A Global Business Reports Publication For more information, please contact [email protected], follow us on Twitter @GBReports or check out our blog at gbroundup.com

MALAYSIA CHEMICALS 2014 Industry Interviews Exclusive interviews with the leading industry figures in Malaysia’s chemical sector, including the Malaysian Investment Development Authority, KLK Oleo, and BASF Malaysia.

10, 20, 24

Analysis In-depth opinions from our on-the-ground team on the current state and changing trends of Malaysia’s chemical industry, taken from our weekly newsletter the GBRoundup.

31

Production Breakdown We explore each of the various subsectors of Malaysian chemical production in depth, from petrochemicals to oleochemicals to industrial and specialty chemicals.

16, 18, 24

AVERAGE AND MINIMUM MANUFACTURING WAGES IN ASEAN Source: PwC MINIMUM WAGES MONTHLY IN USD AVERAGE Quantitative MANUFACTURING WAGES 43 Data 101 132 Cambodia 182 64 Indonesia 45 N/A The most relevant quantitativeLaos data666 17 presented in an easily Malaysiaccessiblea format,N/A 181 Myanmar 212 N/A allowing you to view economicPhilippines and1,63 market9 79 Singapore 263 49 statistics, identify prevailingThailand trends and107 visualize infrastructure. Vietnam

LITERACY RATEk Source: CIA World Factboo 93.1 % 9, 12, 17, 19, Total Popoulation 25, 35, 39 95.4% Male 90.7% Female Final Thoughts Industry leaders give their opinions on the future facing Malaysia’s chemical sector and their own companies: the challenges, the opportunities, and the changing trends. TOP UNIVERSITIES IN ASIA Source: QS University Rankings 2013

UNIVERSITY RANK Universiti Malaya (UM) 33 Universiti Kebangsaan Malaysia (UKM) 57 Universiti Sains Malaysia (USM) 61 Universiti Teknologi Malaysia (UTM) 50, 51 68 Universiti Putra Malaysia (UPM) 72

EDUCATION EXPENDITURE 5.9 % OF GDP

Source: CIA World Factbook EDITORIAL Global Business Reports

An Introduction to Malaysia

Darwin

PERLIS Indian A brief overview of the country and KEDAH South China Sea Ocean economy Derby PENANG LABUAN Cairns KELANTAN TERENGGANU SABAH Broome Ipoh Tennant Creek Pacic Ocean Mount Isa PERAK NORTHERN TERRITORY Port Hedland Mackay

PAHANG Alice Springs SELANGOR Learmonth Gladstone KUALA LUMPUR Kuala Lumpur QUEENSLAND PUTRAJAYA SARAWAK WESTERN NEGERI Carnarvon AUSTRALIA SEMBILAN

MALACCA Brisbane JOHOR SOUTH AUSTRALIA Johor Bahru Geraldton Cook Kalgoorlie Bourke

Port Augusta Broken Hill NEW SOUTH Perth WALES Port Lincoln Adelaide Sydney Canberra VICTORIA 150km

Melbourne

On the 26th April 2014 United States Pres- population of over 30 million and a GDP 7.5% in 2012, with industry the lead con- ident Barack Obama visited Malaysia, the per capita of $17,500, it represents an at- tributor to GDP at 41%. This has driven first visit by a US head of state in 48 years. tractive market. Its GDP growth – 4.7% solid GDP growth since the country re- TASMANIA Economics were a focal point of his discus- in 2013 with an average of above 5% covered from the Asian financial crisis of 500km sions with Malaysian Prime Minister Na- over the past decade – ranks among the 1997/98 and the local business community Hobart jib Razak. Yet although the two countries best in the already-impressive Southeast often praises the government for seeking agreed to upgrade their bilateral relations, Asia. Pro-business policies and an improv- to promote investment and international Obama failed to secure clear support from ing infrastructure have seen investments trade. In an attempt to further Malaysia Razak for his proposed Trans-Pacific Part- pour in from around the world: capitaliz- on its path to become a high-income, nership. ing on its Islamic heritage and expertise developed country by the year 2020, the The idea that Malaysia would not pander in Sharia-compliant banking and finance Malaysian government is committed to to American requests would have been services has made it one of the favorite stimulate growth in the manufacturing surprising not too long ago. The US is, af- destinations of Gulf country investments. sector through the Economic Transforma- ter all, the largest source of foreign capital The transformation of Malaysia from an tion Plan (ETP). to Malaysia, investing $1.9 billion in 2013 agricultural to a diversified and knowl- The measures have laid the foundation for and with bilateral trade reaching $35 billion edge-based economy – started in the a bright economic future in Malaysia. GDP annually. Today’s Malaysia, however, can 1980s but arguably coming to fruition now growth in 2014 is expected to be 5.15%, afford to pick and choose its agreements – has made it a role model for many de- followed by 5.5% in 2015. Long the un- and its partners: on the 17th of April it veloping countries. After gaining indepen- derdeveloped cousin of its neighboring – signed a free trade agreement with Turkey. dence from British rule in 1963, the contri- and one-time federal partner – Singapore, The demand that Malaysia finds itself in bution of agriculture to GDP has dropped Malaysia now poses a competitive threat: is a telling indication of both its current from 28.8% in the 1970s to 11.2% in 2013. a manufacturing location that can offer economic strength and its growing poten- Malaysia continues to show a remarkable comparable quality at a cheaper cost and tial. As a middle-income economy, with a industrial production growth rate, reaching with a far larger domestic market.

MALAYSIA CHEMICALS 2014 - 8 - Industry Explorations Global Business Reports FACTSHEET

MALAYSIA AT A GLANCE Source: CIA World Factbook

Population: 30,073,353 (July 2014 estimate) Capital: Kuala Lumpur Head of Government: Prime Minister Mohamed Najib bin Abdul Najib Razak Currency: Ringgit (MYR) Darwin GDP: $312.4 billion (2013 estimate) PERLIS Growth Rate: 4.7% (2013 estimate) GDP per Capita: $17,500 (2013 estimate) Economic sector breakdown: agriculture: 11.2%, Indian KEDAH South China Sea industry: 40.6%, services: 48.1% (2013 estimate) Ocean Exports: $230.7 billion (2013): electronic equipment, palm oil, petroleum and LNG, wood and wood products, Derby PENANG Cairns LABUAN palm oil, rubber, textiles, chemicals, solar panels KELANTAN TERENGGANU SABAH Imports: $192.9 billion (2013): electronics, machinery, Broome Ipoh petroleum products, plastics, vehicles, iron and steel Tennant Creek Pacic products, chemicals Ocean Mount Isa PERAK Major Trade Partners: China, Singapore, Japan, USA NORTHERN TERRITORY Port Hedland Mackay

PAHANG Alice Springs SELANGOR Learmonth Gladstone KUALA LUMPUR Kuala Lumpur QUEENSLAND PUTRAJAYA SARAWAK $312.4 WESTERN NEGERI Carnarvon AUSTRALIA SEMBILAN billion MALACCA Brisbane JOHOR GDP SOUTH (current US dollars) 2013 AUSTRALIA Johor Bahru Geraldton Cook Source: CIA World Factbook Kalgoorlie Bourke

Port Augusta Broken Hill NEW SOUTH POPULATION AND WORKFORCE Perth WALES INFORMATION Port Lincoln Source: CIA World Factbook Adelaide Sydney Canberra VICTORIA 150km Population 2014 30,073,353 Melbourne

This bright outlook is not without its dark spots. Infrastructure still remains inade- Malaysia’s economy has historically quate in many parts of the country. Though been healthy and is expected to deliver TASMANIA the regulatory framework is constantly “ 500km a growth rate of between 4% and improving, companies still list the imple- Hobart 5% for 2013. When considering the mentation of that framework – carried out country’s growth potential one is really through inefficient government bureau- looking at a stable political situation, cracy – as a major hurdle for doing busi- educated labor force with an efficient ness. Corruption is also frequently cited infrastructure. There is little to no geo- as a challenge, with the country ranking at graphical threat like floods and earth- a respectable but room-for-improvement quakes and the availability of feedstock 53rd in Transparency International’s 2013 is very high. Most importantly, the Corruption Perceptions Index. Inequality Malaysian government provides various remains high, with the World Bank putting government incentives to facilitate the Gini Coefficient – a measure of in- doing business here, lending a strong equality – at a relatively high 46.2 in 2009. competitive edge to those who invest in Nonetheless, the story of Malaysia re- Malaysia. mains a story of growth and improvement, Labor Force 2013: powered by a dynamic private sector and 13,190,000 sensible government policies. One of the Unemployment 2014: - Nazmi Sallehudin, Director, 3.1% greatest examples of these attributes is in Chemicals Division, CCM Chemicals Poverty Line 2007: the chemical sector: an industry that has 3.8% grown from a side note to Asia’s major Employment in Manufacturing and chemical hubs to a major player. • Construction 2013: 37% Industry Explorations - 9 - ” MALAYSIA CHEMICALS 2014 INTERVIEW Global Business Reports

since 1974. However, Malaysia strategy D PAT: Notwithstanding Malaysia’s re- Datuk Phang Ah has changed significantly, shifting the serves and resources that provide a focus away from non-renewable deplet- competitive advantage, another dif- Tong & Yee Nai ing activities to becoming increasingly ferentiating factor is the ease of doing strong in downstream chemical produc- business in Malaysia. Investors will find Tuck tion. Malaysia would like to sustain the it hard to find another country in the re- usage of its reserves through building gion that offers the same type of stabil- partnerships between local and foreign ity that Malaysia can in terms of policy, DPAT: Deputy CEO companies that aim to produce higher continuity, consistency and predictabil- YNT: Director, Technology and Business value added products. ity. Malaysia has a proven track record Division and many foreign companies are open- Malaysian Investment Can you highlight some of the trends ing up even more branches and opera- Development Authority and new developments in the indus- tions in the country as their confidence (MIDA) try that are emerging with the higher in the regulatory framework continues quality projects that you mention? to grow. The World Bank now ranks YNT: Although they remain the backbone Malaysia 12th out of 187 countries in of the chemical industry, there tends terms of the ease of doing business. In to be decreased focus on commod- the world competitiveness report using ity chemicals as the industry evolves. the four parameters of economic effi- RAPID is probably going to be one of the ciency, business efficiency, government last big projects that will be very com- delivery and infrastructure, to determine modity driven, but on the other hand, competiveness, Malaysia wasranked will supply many of the products that are 15th out of 58 countries. Malaysia can- needed for further downstream chemical not necessarily compete in terms of ef- production. Malaysia is also very strong ficiency with Singapore that is at ranked in oleochemical production, however it at number one, but though it is a very DPAT is growing increasingly difficult to ob- efficient city-state, it is also very expen- tain a license for basic oleochemical- sive and has an evident space constraint. Can you highlight MIDA’s role in the production, as it appears it has reached Malaysia is set to gain from this as in- Malaysian chemicals industry and the it satiation point. In this segment too, vestors look to Malaysia to overcome greater economy? the trend is towards the manufacturing these constraints andas MIDA, we are D PAT: MIDA was established more than of further downstream products. There being very selective in terms ofselecting 35 years ago in 1967, when it was still is a whole range of biochemical prod- and developing very particular industries one of only three investment agencies uct manufacturing that Malaysia is also to complete the value chain that we en- in the world. It is the first point of entry aiming to attract. In the inorganic seg- vision. for any company wishing to set up oper- ment,the polysilicon sector will be an ations in Malaysia. Its role has recently interesting area to watch. In the Sarawak Can you give us your outlook on MY increased from promoting and coordi- corridor we are expecting to see an in- chemicals industry for the next five nating only industrial development in the creased drive for renewable energy as years? country, to also include the services sec- we look at energy intensive industries to YNT: As always the outlook of the chemi- tor, excluding the financial, construction power with hydro electricity, creating a cal sector is very dependent on the price and telecommunication industries. MIDA more sustainable and certifiable way to of the raw materials. Another factor that isyour not run-of-the-mill investment de- producechemicals in this area such as impacts the sector is the discovery of velopment authority in that it does not polysilicon. alternative energies such as shale gas. only market and promote economic ac- For Malaysia, the most important ques- tivity in Malaysia, but also facilitates and How can Malaysia succeed in at- tion is how we can sustain our reserves. assists companies in obtaining the right tracting investments over its strong This does not mean that it is the end documentation and benefitting from the neighbors such as Singapore? of the line for our oil wells; we are just numerous incentives that are available. YNT: While Malaysia is blessed with extended their life. We are also looking Under the Economic Transformation some valuable reserves, these are not into developing our renewable and bio- Plan that was launched in 2010chemical world-renowned or highly exceptional. materials production and utilization and production is a promoted activity hav- What sets Malaysia apart in the region, is leveraging on our palm-oil advantage. ing been identified as a National Key itsstrategic location and the fact that the Further more we will be focusing on Economic Area (NKEA) and the biggest country still has an abundance of land downstream activities and are also try- investment-generating sector in the and energy.The world’s biggest market is ing to develop our automotive and aero- country. Historically, Malaysia has been China and the Middle East and Malaysia space industries that will be able to use strong in the oil and gas sector as a net is at the center of these two growth the products supplied by downstream exporter of crude oil and natural gas points. chemicals manufacturers. •

MALAYSIA CHEMICALS 2014 - 10 - Industry Explorations Global Business Reports INTERVIEW

from local companies appears to be crude palm-oil demand goes down,which Dr. A Hapiz lagging. Why is this the case and how is also affecting the down-stream oleo- will this be addressed? chemical sector. Malaysia is currently Abdullah Malaysia is implementing standards and ranked the world’s number two palm-oil regulationsthrough bodies such as Min- producer behind Indonesia and accounts istry of International Trade and Industry for approximately 20% and 12.5% of the (MITI) and Malaysian Investment De- global capacities for fatty acids and fatty velopment Authority (MIDA), have been alcohols respectively. Chairman very active in trying to facilitatelocal Chemical Industries compliance with regulations that are up Can you elaborate on key projects Council of Malaysia to global standards. REACH is one exam- that will drive growth in Malaysia’s (CICM) ple of such an initiative. The competency chemical sector over the next few buildingprocess takes time and it may years? seem slow, but all the required legislation The Economic Transformation Pro- will come in due time. gramme (ETP) was launched at the end of 2010 with the goal of elevating Malaysia Can you give us an overviewof the to developed nation status by 2020. Two Malaysian chemical industry and the of the 12 National Key Economic Areas contributing factors to the strong (NKEAs) that have been identified form growth of around 63% in 2012? the mostimportant part of the chemi- Malaysia has a very diverse chemicals cals industry,namely petrochemicals and industry comprising varioussub-sec- oleochemicals. tors - petrochemicals, such as basic Two key petrochemical projects are industrial chemicals, fertilizers, pesti- PETRONAS’ Refinery and Petrochemical cides;oleochemicals; cosmetics and Integrated Development (RAPID) project toiletries; organic chemicals; industrial in Johor at a cost of about RM60 bil- gases; paints and coatings; as well as lion and PETRONAS Chemicals Group’s chemical traders, distributors and service Sabah Ammonia Urea (SAMUR) project Can you tell us more about the CICM’s providers. In 2012, the chemicals indus- in Sabah at the cost of about RM4.5 bil- role and evolution in Malaysian chem- try,including the petrochemicals industry, lion. ical industry? contributed RM 55.8 billion or 7.4% to The CICM was established and incorpo- Malaysia’s GDP. Looking at Malaysia’s Can you highlight some of the fea- rated in Malaysia in 1982 with the key natural resources and competitive advan- tures that differentiates Malaysia’s objectives of promoting development tages, the available feedstock leads you chemical sector in the region? and co-operation within the Malaysian to the chemicals industry’s cornerstones, Malaysia is a very politically stable coun- chemical industry. We aim to serve as namely oil and gas and petrochemicals try that welcomes multinational com- a channel of communication between and oleochemicals. panies to partner with local companies. the industry and the government and to The chemical industry is dependent on Malaysia is alsoat the center of Asia Pa- promote Health, Safety and Environment regional and global economy and while cific’s growth and strategically located to (HSE) excellence and sustainable devel- the European economy is not as healthy access any of the surrounding markets. opment. CICM’s thrust over the recent as it should be, the US is beginning to What is even more outstanding is that years has been on the Responsible Care pick up. China is probably going to deliver neighboring countries in the Asia Pacific initiative, with our new vision centeringon 5% to 6% GDP growth this year, which is region complement each other rather the word ‘sustainable’, which is pivotal if comparatively low from its previous dou- than compete. Malaysia has a well-en- we still want a vibrant chemical industry ble-digit growth, andgrowth in India has trenched feedstock in terms of gas, in 20 years.In our new vision, we also call not really lived up to expectations. . crude oil and palm oil. Lastly, Malaysia’s ourselves a ‘champion’that is by taking Yet, looking at countries such as Indone- chemical industry has shown its ability the lead and pushing our members to in- sia, Vietnam and Myanmar as well as to progress and has had ahead-start in corporate sustainable business models. other Southeast Asian countries that are the region in terms of joint ventures and This isto be crafted around our Respon- doing relativelywell,theybalance things partnerships with multinational compa- sible Care initiative. Running chemical out for the petrochemical and natural nies, meaning know-how; and the tech- plants is risky and trying to run it without gas markets. At the moment, the palm nology level is excellent. There are, how- any disruptions is extremely difficult and oilsector is slow, as it is price driven and ever, two sides to this coin, as when our requires a collectively focused effort. depends on the harvest scenario and workforce is seen as highly skilled, they substitutes. Malaysia’s biggest palm-oil become very desirable employees for Multinationals seem to be very aware export markets continue to be India and countries in the Middle East, for exam- of international environmental sus- China, and when these economies are ple, where there are many petrochemical tainability standards, but compliance not growing too well, the demand for facilities being built. •

Industry Explorations - 13 - MALAYSIA CHEMICALS 2014 Global Business Reports

Sector Support

Specialty and Industrial Chemicals

As admirable as the Malaysia’s – largely successful – efforts in the petrochemical and oleochemical markets are, they have been assisted by the country’s wealth of natural resources. A more telling and impressive sign of the country’s ability comes from its industrial and specialty chemical sectors. These sub-segments of the chemical in- dustry have important linkages to practi- cally every other sector in the economy. As such, they are key to Malaysia’s on- going efforts to diversify their economic base. Paul Ellis, managing director of Schae- fer Kalk in Malaysia, explains the signif- icance of the quicklime and other lime products that the company produces in Malaysia: “Schaefer Kalk sells its product as a chemical that goes into the manufacturing of other products. Malaysia’s geographical characteristics allow Schaefer Kalk to produce some of the world’s finest quality quicklime and hydrated lime. Schaefer Kalk has managed to develop our product to the extent that we have international oil companies that use our products in the manufacturing of oil additives. With the growing automotive industry in Asia, many American oil additive manufactur- ing companies are moving to this region. Schaefer Kalk has had the opportunity to develop products for these companies to use here in Asia.” Taking the cue from leading international players, the sector continues to attract positive attention. “The Linde Group recognizes Malaysia’s long-term growth potential and has, over the past three years, invested around 90 million MYR ($28.41 million) in the business here,” says Wong Siew Yap, managing director of Linde Malaysia. Linde is just one of

- 24 - Image: BASF Industry Explorations Global Business Reports EDITORIAL

tions. In 2013, BASF rebranded over 30 Daniel Loh construction brands all under the Master Builders Solutions name so that people can identify the wide range of products with BASF. MALAYSIA R&D SPENDING Another example of Malaysia specific Source: Battelle innovation is the development Clearfield

GDP R&D GERD Rice Production system. Malaysia was (PPP,$ BILLION) (% OF GDP) (PPP,$ BILLION) Managing Director facing a weedy rice infestation, which BASF MALAYSIA threatened the well being of the county 2012 507 0.8% 4 as rice is Malaysia’s staple diet. The tech- 2013 531 0.8% 4 2013 557 0.8% 5 nology was originally developed in the US, for a similar problem they had faced with corn. Working closely together with MALAYSIA’S EXPORT CONTRIBUTION the Malaysian Agriculture Research and INCREASE BY SECTOR Development Institute (MARDI) when Source: Oxford Economics the rice yield dropped tremendously, we

FOOD AND ANIMALS MINERAL FUELS MANUFACTURES were able to develop a crossbreed of rice BEVERAGES AND TOBACCO CHEMICALS OTHER that is resistant to a specific herbicide. RAW MATERIALS MACHINERY AND TRANSPORT With BASF’s Clearfield production sys- 120 tem, we were able to increase the yield from three to four mt per ha to eight mt 100 per ha. As per BASF’s product steward-

80 ship guide and focus on sustainability, we advised that the system should be 60 used for two consecutive seasons, be- fore alternating one season with normal 40 production to ensure that this is a long-

20 term solution, instead of the crossbreed becoming susceptible to a new form of % of 2014 2017 2021 the problem. This shows BASF’s com- total 2016 2020 2030 mitment to the long-term viability of its solution and not just a ‘quick-fix’. leading specialty and industrial chem- ical companies that have facilities in Can you tell us what the main oppor- Malaysia and the A-list includes players tunities and challenges are for BASF such as BASF, Evonik, DOW and DuPont. in Malaysia? As a highly technical sector, the drive Can you highlight some of BASF most As per Malaysia’s Economic Transforma- is for international companies to bring innovative products used in Malaysia tion Plan (ETP) there are five key sectors research and development facilities to and elsewhere in the region? that are identified as National Key Eco- the country to increase innovation in the BASF is very strong in construction nomic Areas (NKEAs) that are highly region holding such a vast market with chemicals in Malaysia. Our technologies relevant for BASF and where we see unique needs. Ellis, from Germany-head- have been used in many highly publi- the most opportunities. These are agri- quartered Schaefer Kalk, explains the cized construction projects such as the culture, electronics and electrical, con- company’s position in this regard: “It is Burj Khalifa in Dubai and the construction struction, oil and gas, palm oil and rub- certainly time to seriously consider hav- of the Penang 2nd Bridge in Malaysia. ber. We have the competitive advantage ing a technical expertise base in Asia, BASF developed the polymer technology in the availability of feedstock through especially looking at growth markets that was needed for pumping concrete our partnership with Petronas. Unfortu- such as the rubber glove industry that is mixture vertically, without the separation nately Malaysia has a limited local mar- located here. Malaysian materials have of the cement and aggregates, upward ket and up to 90% of BASF production in certain characteristics that the European called BASF Smart Dynamic Concrete. Malaysia is exported. BASF is close to its materials cannot have because of the Using this technology has also had a feedstock in Malaysia, but not that close quality characteristics of the limestone positive environmental impact, as it re- to its customers, which adds to trans- here. The process of bringing in more quires less machinery, labor and parts portation costs. Another challenge for technical expertise to Malaysia is start- replacement. The product which was ini- Malaysia’s chemical industry is the very ing and there is a general shift from re- tially developed in Germany was further significant competitive threat that China locating research and development cen- adapted through joint development to poses, especially when we look at the ters in Europe and the US to Asia.” • suit the local project needs and condi- upstream commodity chemicals. •

Industry Explorations - 25 - MALAYSIA CHEMICALS 2014 INTERVIEW Global Business Reports

project need. We have developed our try and often in remote locations, the Ong Ewe Hock model from just bringing in products to logistics for the collection of biomass is the market to collaborating with the mar- complicated. Having a center point for ket and offering local solutions, driven the collection of biomass is key for this by DuPont’s integrated science. While sector to function. The Malaysian govern- DuPont has divested in the coatings area ment is well aware of these challenges of its business in the second quarter of and has put many programs in place to this year, the company grew through the facilitate this. The bio-based economy Managing Director acquisition of the Danish food ingredient has been identified as one of the key DuPont Malaysia conglomerate, Danisco, more than two focus areas of the Economic Transforma- years ago. As a part of that acquisition, tion Plan, which illustrates encourage- we also gained the plant in Penang that ment from the government to partner has more than 160 people and is an im- with local enterprises to help bring the portant part of DuPont’s global opera- necessary technologies to Malaysia. tions in Malaysia. Other countries that are successful in leveraging on biomass have large Can you tell us more about the indus- acreages of corn for example, such as tries that you will be targeting under the US and China. While Malaysia does DuPont’s new global strategy? not have this advantage, we firmly be- DuPont is renowned for its advanced ma- lieve that we can tap into biomass from terials and these products – such as poly- palm oil for potential usage, including cel- mers, specialty chemicals and electronic lulosic ethanol. DuPont’s demonstrating material – remain a significant part of our plant in Tennessee hosts visitors from product portfolio. Central to our global both Malaysia and Indonesia and show- strategy is the bio-base industry, which cases the technology that DuPont can is an integral and connecting part of offer to convert waste into energy or use- both DuPont’s advanced material, nutri- able material. DuPont continues to work tional and agricultural solutions. Through closely with major players in the industry DuPont has been pioneering new the acquisition of Danisco we have en- and though technological development is technologies in Malaysia since 1974. hanced our capabilities in this central in- still very much US-centric, we believe the Can you highlight some of DuPont’s dustry as Danisco is not only specialized technology can be replicated in Malaysia key milestones in last decade? in food ingredients, but had also acquired once we uncover the right partner. DuPont in Malaysia started of with as a Genencor, one of the world’s largest representative office in Malaysia in fermentation companies producing in- Apart from the complicated logistics the 1970s with only 30 people and has dustrial enzymes. This is a very important of sourcing bio-waste in Malaysian, since grown to employ more than 250 segment as DuPont specializes in hybrid could you elaborate on other main people. One of our key milestones has or biogenetic seeds and crop protection challenges that need to be overcome been establishing our rice field research chemicals as well as specialty food in- for the industry to flourish? center in 1997, built on about 14 acres gredients. Finally, DuPont is focused on Having environmentally sustainable op- of land in Penang. This facility has been sustainability science and sustainable erations is becoming an increasingly approved by the relevant authorities growth and DuPont believes firmly that important factor across all industries, such as the Pesticide Board and affords the growth in available biomass and bio including palm oil. There is a drive for DuPont the opportunity to test the ac- waste that accompanies global popula- less land to be cleared and enhanced tive ingredients of its chemicals in a safe tion growth can be converted into some productivity from the land at a lower and closed space. Another highlight for of the chemicals such as polymers that cost to support sustainability. This can be DuPont in Malaysia has been relocating we are selling today. achieved through planting material en- to the new Kuala Lumpur office that cen- hancement. The oil-palm plant has many tralizes DuPont’s presence in Malaysia. Could you elaborate on the biomass genetic traits that have not yet been not It is necessary to collaborate with the prospects in Malaysia and how it fully mapped. The breeding matter of the scientific community and with the gov- compares with other countries where oil-palm industry is still very traditional ernment. This strategic move means that DuPont is present? and it takes about 11 years per breeding DuPont is now more connected, both In the last two years, delivering solu- cycle. Through genetic mapping we be- in terms of infrastructure and software. tions through our integrated system lieve we can optimize the breeding cycle DuPont’s move to the city is consistent has become very important to DuPont. time, rendering the yield and quality of with DuPont’s global collaborative in- In Malaysia, such large-scale biomass the material more predictable. It also novation strategy and we are now able is available from palm oil. However, due presents an opportunity to repurpose the to connect to 10,000 scientists and re- to the geography of the palm-oil planta- technologies that we are using to screen searchers on real-time basis, based on tions, being scattered across the coun- crops and seeds. •

MALAYSIA CHEMICALS 2014 - 28 - Industry Explorations