Petrochemical - Perihal MIDA

1 1 Profit From malaysia sA Perfect Time to Benefit from malaysia sPetrochemical InfrastructurePetrochemicalIndustryThrou gh the harnessing of its oil and gas reserves and the forging ofsmart partnerships with some of the world s largest petroleumcompanies, malaysia has establish the ideal infrastructure tosupport a vibrant Petrochemical 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 , investor benefit from the facilities that are already in Petrochemical complexes offer centralised utilities, efficientstorage services, and a comprehensive transportation network that helpreduce capital and operation addition, malaysia provides a wide range of tax incentives to meet thevarying needs of investor.

2 Customised incentive package that cover taxand non-tax incentive are also available to key United States is the largest sources of investments in malaysia spetrochemical sector, followed by Japan, the United Kingdom, Germanyand ,SarawakPetrochemical_June 08:MIDA (petro) 7/30/09 3:09 PM Page 1 malaysia .. has the world s 23rd largest crude oil reserves inclusive condensates ( billion barrels) has the world s 14th largest natural gas reserves ( billion barrels) is the world s largest production facility at a single location of liquefied natural gasLocation of Oil Refineries in MalaysiaOil RefineriesLocationPetronas Penapisan (Terengganu) Sdn BhdKertih, TerengganuPetronas Penapisan (Melaka) Sdn BhdTangga Batu, MelakaMalaysia Refining Company Sdn BhdTangga Batu, MelakaShell Refining Company (FOM) BhdPort Dickson, Negeri SembilanEsso ( malaysia ) BhdPort Dickson, Negeri SembilanRich inoil & gas reservesandPetrochemicalFeedstocksAbove: Storage tanks in Kertih, TerengganuBelow:The Duyong Gas Complex off TerengganuTop, facing page:A gas processing plant in Terengganu2 ProfitfromMalaysia sPetrochemical IndustryPetrochemical_June 08:MIDA (petro) 7/30/09 3.

3 09 PM Page 23 PetrochemicalTo 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 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 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.

4 Meanwhile, malaysia sPeninsular Gas Utilisation (PGU) trans-peninsular gas transmission pipelinechannels sales gas to industries around the of Petrochemical FeedstocksPetrochemicalCapacityCompany/R efineryProducts(mtpa) million Petronas Penapisan (Terengganu) Sdn Bhd Petronas Penapisan (Melaka) Sdn Bhd malaysia Refinery Company Sdn Bhd Shell Refinery Company (FOM) Bhd Esso ( malaysia ) BhdMethane (sales gas) million Petronas Gas BerhadEthane malaysia LNG Tiga Sdn BhdPropaneButaneCondensateLiquefied PetroleumGas (LPG) million Titan Petchem (M) Sdn Bhd Ethylene malaysia Sdn Bhd Optimal Olefins (M) Sdn BhdPropylene854 thousand Titan Petchem (M) Sdn Bhd MTBE (M) Sdn Bhd Optimal Olefins (M) Sdn BhdBenzene, Toulene775 thousand Titan Petchem (M) Sdn Bhdand Xylene (BTX) Aromatics malaysia Sdn BhdPetrochemical_June 08:MIDA (petro) 7/30/09 3:09 PM Page 34 ProfitfromMalaysia sPetrochemical IndustryKertih, TerengganuFormerly a quiet fishing village, Kertih has now transformed into a 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 & 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 PortPetrochemical Plants in Kertih Producing.

5 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 Choridein Petrochemical ZonesWorld-class FacilitiesPetrochemical_June 08:MIDA (petro) 7/30/09 3:09 PM Page 45 PetrochemicalTop, facing page: Centralised tankage facilities at the Kertih TerminalAbove: The control room of a Petrochemical plant in Gebeng, PahangBelow: The BP Amoco plant in GebengGebeng, 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 & 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.

6 East Coast HighwayPetrochemical 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)Petrochemical_June 08:MIDA (petro) 7/30/09 3:09 PM Page 56 ProfitfromMalaysia sPetrochemical IndustryPasir 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 & 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 TanjungLangsat- Equipped with a twin-berth jetty consisting of outer (30,000 DWT) andinner (7,000 DWT) berthsPetrochemical Plants in Pasir Gudang-Tanjung LangsatProducing.

7 Ethylene Propylene BTX Polyethylene Polypropylene High Impact Polystyrene Ethylbenzene Styrene Monomer Expandable Polystyrene Ethylene Vinyl AcetateMalaysia has a skilledand trainable 08:MIDA (petro) 7/30/09 3:09 PM Page 67 PetrochemicalBintulu, 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 million tonnes a year. Presently, the complexis the world s largest LNG production facility at a single & Infrastructure Bintulu Port Bintulu AirportPetrochemical Plants in Bintulu Producing : Ammonia Urea LNG Synthetic Gas Oil Synthetic Kerosene Synthetic Naphtha Synthetic Solvents Synthetic Detergent Feedstock Synthetic Paraffin Wax / Waxy RaffinateAbove: The Malaysian Liquified Natural Gas plant in Bintulu, SarawakBelow: A panaromic view of the Bintulu Petrochemical operationsPetrochemical_June 08:MIDA (petro) 7/30/09 3:09 PM Page 78 ProfitfromMalaysia sPetrochemical IndustryA corporate tax rate of 25% applies to both local and foreign-owned companiesin malaysia .

8 A wide range of tax incentives is also available to these incentives are constantly reviewed by the government to ensure thatcompanies in malaysia maintain their competitive 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 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 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 Pre-packaged IncentivesCustomised packages that cover tax and non-tax Incentives to Strengthen Industrial Linkages6.

9 Incentives for R&D7. General Incentives Industrial Building Allowance Infrastructure Allowance Tariff Related IncentivesIncentivesforGrowthAbove and below:Among the businessorganisations foreigninvestors can approachfor assistance is theMalaysian InternationalChamber of Commerce& industry whichrepresents businesscommunities fromabout 40 08:MIDA (petro) 7/30/09 3:09 PM Page 89 PetrochemicalChallenges & OpportunitiesThe Way AheadWith 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 ofUS$1,282 billion and a total trade of US$1,404 is a positive growth in ASEAN regional trade. Total exports to ASEAN increased by 10 per cent to US$ billion in 2008. This is expected to receivea boost when manufacturers begin to take advantage of the wider regionalbusiness manufacturers based in malaysia will not only benefit from AFTAbut also from the access to a much larger Asia Pacific market.

10 For example, malaysia s total exports to China have increased from US$ billion in 1995 toUS$ billion in 2008. Even more impressive is malaysia s export ofpetrochemical to China which has multiplied 26 times from US$43 million toUS$ billion within the same 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 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 s Multimedia SuperCorridor has resulted in aworkforce competentin the 08:MIDA (petro) 7/30/09 3:09 PM Page 910 ProfitfromMalaysia sPetrochemical IndustryMalaysia uses the latest digital andfibre optics technology to providehigh quality telecommunicationservices at competitive is an adventure inMalaysia a land of Lumpur s light rail transitprovides a convenient mode Investors ChooseMalaysia Strategic location Gateway to ASEAN and AFTA Economic stability