Industries in Malaysia
Petrochemical and Polymer Industry
The petroleum and petrochemical industry covers natural gas, petroleum products and petrochemicals. The industry is an important sector in Malaysia with investments totaling RM60.7 billion as at 2011.
The rapid growth of the industry is mainly attributed to the availability of oil and gas as feedstock, a well-developed infrastructure, a strong base of supporting services, the country's cost competitiveness, as well as Malaysia's strategic location within ASEAN and its close proximity to major markets in the Asia Pacific Region.
Malaysia has the world's 14th largest natural gas reserves and 23rd largest crude oil reserves. Currently, Malaysia produced 2,000 million standard cubic feet per day of natural gas and 730,000 barrels of oil equivalent per day of crude oil. Malaysia also has the world's largest production facility at a single location of liquefied natural gas with production capacity of 24.2 million metric tonne per year.
The long term reliability and security of gas supply ensures the sustainable development of the country's petrochemical industry. The existence of a trans-peninsular gas transmission pipeline system and six gas processing plants, has resulted in a ready supply of gas to the industry.
To complement the existing gas reserves and to ensure further security of gas supply, Malaysia has forged partnerships with other ASEAN members for the supply of gas such as Vietnam, Indonesia and the Malaysia-Thailand Joint Development Area (JDA). In addition, gas supply will be further enhanced with the implementation of the ASEAN gas grid, a venture to make gas available to all the 10 ASEAN countries.
With the full implementation of AFTA, petrochemical manufacturers in Malaysia will benefit from a single market. Manufacturers based in Malaysia will also benefit from the access to a much larger Asia Pacific market. With China being a net importer of petrochemicals, Malaysia's Free Trade Agreement with China will open up new business opportunities for petrochemicals manufacturers in Malaysia.
The presence of world renowned petrochemical companies, such as BP, Shell, BASF, Eastman Chemicals, Toray, Mitsubishi, Idemitsu, Polyplastics, Kaneka, Dairen and Honam speaks clearly of Malaysia's potential as an investment location for petrochemical industries. Most of these companies are working in collaboration with Malaysia's national petroleum company, PETRONAS.
Three major petrochemical zones have been established in Kertih, Terengganu; Gebeng, Pahang; and Pasir Gudang/Tanjung Langsat, Johor. Each zone is an integrated complex with crackers, syngas and aromatics facilities to produce feedstocks for downstream products.
There are also other petrochemical plants in Malaysia such as the ammonia and urea plants in Bintulu, Sarawak and Gurun, Kedah; acrylonitrile butadiene styrene plant in Pulau Pinang; methanol plant in Labuan and the nitrile-butadiene rubber plant in Kluang, Johor.
From being an importer of petrochemicals, Malaysia is today an exporter of major petrochemical products. A wide range of petrochemicals are produced in Malaysia such as olefins, polyolefins, aromatics, ethylene oxides, glycols, oxo-alcohols, exthoxylates, acrylic acids, phthalic anhydride, acetic acid, styrene monomer, high impact polystyrene, ethyl benzene, vinyl chloride monomer and polyvinyl chloride and polybutylene terephthalate. These world scale plants have also contributed significantly to the development of local downstream plastic processing activities by providing a steady supply of feedstock material for the plastic industry.
These factors have led the plastic products industry to become one of the most dynamic industries in Malaysia's manufacturing sector. The plastic industry can be divided into four sub-sectors, namely packaging sub-sector, electrical & electronics and automotive components sub-sector, consumer and industrial products sub-sector and others. The packaging sub-sector, both flexible and rigid (including bags, films, bottles and containers), remains the largest market for the plastic industry. The main production processes involved in the plastic producers industry are injection moulding, pipes and profiles extrusion and foam moulding.
There are more than 1,450 companies in operation, producing products ranging from common household items, packaging materials and conveyance articles to parts and components for the electrical and electronics, automotive, office automation, computer and telecommunications industries.
Malaysia is currently a net exporter of plastic products. The total export of plastic products amounted to RM21.2 billion in 2011, an increased of 12.7 per cent compared with 2010. The main products exported were plastics in primary form, containers of plastics, plates, films, sheets, foils, strips and other articles of plastics. The main export destinations included the EU, the People's Republic of China, Hong Kong, Singapore, Japan and Thailand.The Malaysian plastics industry has been rated as among the most competitive in Asia. Globalisation poses both challenges and opportunities simultaneously for Malaysian plastic manufacturers. Therefore, it is imperative for Malaysian manufacturers to sustain their competitiveness, through improved technologies, enhanced skills and penetrating new markets in developed and developing economies.
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