SEMINAR ON OLEOCHEMICAL INDUSTRY IN MALAYSIA:

Downstream Expansion & Sustainability

C H E M I C A L A N D A D V A N C E D M A T E R I A L I N D U S T R I E S D I V I S I O N

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CONTENT OUTLINE:

About MIDA

Malaysian Investment Performance

Chemical & Advanced Material Industries Division

A Global Scenario of Oleochemical Industry

Oleochemical Industry In Malaysia

Oleochemical Projects Approved by MIDA

Oleochemical Value Chain in Malaysia

Current Policy

Challenges

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SERVICES PROVIDED by MIDA

Services (Initial Stage)

• Meetings with State Authorities • Business matching with Malaysian companies • Visit to companies/suppliers • Visit to potential locations

Evaluating & Granting Approval

• Manufacturing License • Tax Incentives • Expatriate Posts • Import Duty Exemptions

Project Implementation Stage

• Handhold and assist investor until project is implemented

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San Jose

Los Angeles New

York

Boston

Stockholm

Frankfurt

Munich

Milan Paris

London

Dubai

Mumbai

Guangzhou

Taipei

Shanghai

Seoul

Osaka

Tokyo

Sydney

22 Overseas Centres

Chicago

Houston

Singapore

MIDA WORLDWIDE NETWORK

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ALOR SETAR

KOTA BHARU

IPOH

KOTA KINABALU

KUCHING

JOHOR BAHRU

KUANTAN

SEREMBAN

MIDA

HEADQUARTERS

MELAKA

PENANG

KUALA TERENGGANU

MIDA’S STATE OFFICES

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NKEAs selected which can materially

impact economic

growth

Greater KL

Agriculture

Palm oil

Comms Content

Infrastructure

Education

Electrical &

electronics

Oil, gas

& energy

Tourism Wholesale

and retail

Financial

services Business

services

Healthcare

ESTABLISHMENT OF 12 NATIONAL KEY ECONOMIC

AREAS (NKEAs)

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Sector 2012 2013 Percentage of Growth

(%) US$ million

Agriculture, Forestry and

Fishing 104 328 215.7

Mining and Quarrying 3,146 3,643 15.8

Manufacturing 4,282 4,762 11.2

Construction 68 292 328.8

Services 2,568 3,647 42.0

TOTAL 10,169 1,2671 24.6

Source: DOSM

Manufacturing sector continues to be the largest contributor to FDI inflows

FDI INFLOWS TO MALAYSIA BY SECTOR

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2012: USD 54 billion

2013: USD 66 billion

Increased by

29%

USD 66 billion Approved investments

A new record for

approved investments

5,669

Projects Approved

192,000 Jobs Created

TOTAL INVESTMENTS APPROVED IN 2013

72.5 : 27.5 Domestic-to-Foreign investment ratio

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2.6

2.1

2.0 1.3

1.2

1.1

0.6 0.4

0.4 0.4

1.3 3.0

2.0

1.9

1.8 1.7

1.3

1.1

0.7 0.6

0.4 0.4 0.9

Machinery & Equip.

E&E, Transport, Petroleum & Chemical Industries contribute the lion’s share of approved investments in 2013

2012 2013

Basic Metals

Petroleum E&E

Rubber

Food Chemical

Fabricated Metals

Transport

Petroleum

E&E

Chemical

Basic Metal

Scientific & Measuring Equip.

Non-Metalli

c

Food

Fabricated Metal

Rubber

USD Billion Others

USD 15 bil. USD 13 bil.

Transport

Machinery & Equip.

Others Plastic

MANUFACTURING SECTOR

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CHEMICAL AND

ADVANCED MATERIALS INDUSTRIES DIVISION

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CHEMICAL & ADVANCED MATERIALS

CHEMICAL & CHEMICAL PRODUCTS

OLEOCHEMICAL

ADVANCED MATERIALS

PLASTICS

PETROLEUM PRODUCT

INCLUDING PETROCHEMICAL

Subsectors under the Purview of the Division

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24.62

19.22

1.6 0.9 0.91 0.53 0.521.66

0.00

5.00

10.00

15.00

20.00

25.00

30.00

Indonesia Malaysia Thailand Colombia Nigeria PNG Ecuador Others

Million tonnes

Source: MPOB website, 2013 Statistics, Oil World Statistic Update (March 2013)

Major World Producers of Palm Oil (2013)

Total global crude palm oil

production in 2013 : 50.47

million tonnes

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Opportunities

Rising cost of doing business & raw

materials in Europe

Palm oil is proven to be healthy and trans

fats free

High demand for sustainable & bio gradable products

Commitments towards the

Responsible Care Initiative with

regulations under REACH Programme

Natural/plant based products, greener

alternatives to petrochemical

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Global Scenario

Significant expansion in production of fatty acid

and fatty alcohol capacities in the Asia region.

Asia has the highest capacity in the world of

which 65% comes from SEA region (Malaysia

& Indonesia)

Major oleochemical producers in the world

market : KLK, Oleon, Musim Mas, Croda,

Emery, IOI, Wilmar.

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Major Producers of Basic Oleochemical in the world

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Oleochemical Industry in Asia

Asia creates large market for Oleo Industry

major consumer & producer of oleochemical

products. 68% of the world consumption and

60% of world production.

Vertical Integration

Large plantations have started to invest in

downstream feedstock processing

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Plantation companies who have ventured into downstream oleochemical activities through

Joint Ventures

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OLEOCHEMICAL

INDUSTRY IN MALAYSIA….

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Source : Economic Reports/Bank Negara Annual Report, Malaysia 11/12

1970s

1980s

Today

Resource-Based Food Industries

Started producing basic

Oleo

Innovation, R&D Driven

Specialty Oleo Chemical

Derivatives

By 2020

One of the largest basic oleo chemical producers with 20% of global production

SUCCESS STORY – PALM BASED OLEOCHEMICAL INDUSTRY

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Comprises of the basic oleo chemical and oleochemical derivatives subsector.

Malaysia is the largest producer of oleochemicals in the

world : 20% of global capacity.

Almost 16 oleochemical plants are established in Malaysia.

Major Home Grown Players : IOI, KLK, Emery, Natural

Oleochemical, Oleon, FGV.

Malaysia has the raw material but still lack on the

technology innovation.

Related supporting regulation bodies;

MPIC

MPOB

MPOC

Oleochemical Industry In Malaysia

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Oleochemical Projects Approved by MIDA

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Approved Oleochemical Projects in 2013

Domestic Investment :

RM333 Million

Foreign Investment :

RM149 Million

283 Job Opportunities

4 Projects

RM482 Million

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Approved Oleochemical Projects From January- May 2014

Domestic Investment : RM6.2 billion

Foreign Investment : RM7.6 billion

2,791 Job Opportunities

8 Projects

RM 13.8 billion

OLEOCHEMICAL VALUE CHAIN

IN MALAYSIA

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FEEDSTOCK BASIC DERIVATIVE SPECIALTY CONSUMER

Oleochemical Value Chain

MAJOR OPERATING COMPANIES IN MALAYSIA

Plantation /Millers

ME,Fatty Acid, Fatty Ester, Glycerine

PRODUCTS

Sulfo Fatty Acid

Ester, Alkyl

Chlorides, Fatty

Acid Ethoxylates

EGMS, Methyl Ester

Sulphonate (MES)

Methyl Ester

Food Industry, Toiletries

Confectionary, Pharmaceutical

Oil & Gas, Dairy Products

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Existing and Emerging

Applications

Bio lubricants

Surfactants *

Agro Chemicals

Glycerol Additives

Biopolyols Surfactants

Soaps and Detergents

Cosmetics

Food Emulsifiers

EMERGING EXISTING

* better improved performance

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TAX INCENTIVE

Pioneer Status (PS)

Income Tax Exemption

70 % or 100 % for 5 or

10 years

Investment Tax Allowance (ITA)

60 % or 100 % on qualifying capital

expenditure for 5 or 10 years

Second Round of Incentive for resource based

industry

production > 100 MT per day,

comply to the EIA (Environmental

Impact Assessment)

CATEGORY: A. General List IV Manufacture of Palm Oil Products and their Derivatives; Oleochemical or

oleochemical derivatives or preparations.

B. Small Scale Companies List V. Manufacture of Oil Palm products and their derivatives; processed products from

palm oil / processed products from palm from biomass/waste/by product

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Challenges

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Thank you

PROMOTED INDUSTRY

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Global Oleochemical capacity by Region from 2005-

2013 (000’ tonnes)

MALAYSIA HAS SIGNED SEVEN (7) BILATERAL FTAs

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• 20 Public And 21 Private Universities :-

(6 Chemical Engineering & UKM has a specific course on

Oleochemicals)

• 400 Colleges, Polytechnics, Industrial Training Institutes and Private Colleges

• 7 reputable foreign University branch campuses in Malaysia

University of Nottingham Malaysia

Curtin University Sarawak

University of Southampton Malaysia

Newcastle University Medicine Malaysia

Heriot-Watt University Malaysia

Swinburne University Of Technology, Sarawak

Monash University Malaysia

(source: MOHE 2013)

HUMAN CAPITAL