The rapid growth of the industry is mainly attributed to the availability of oil and gas as feedstock, 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.
According to the CIA World Factbook, Malaysia has the world’s 24th largest natural gas reserves (1,183 billion cubic meter) and 30th largest crude oil reserves (3.6 billion barrels). The country also hosts one of the world's largest production facilities at a single location for liquefied natural gas.
The long term reliability and security of gas supply ensures 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 implementation of AFTA, petrochemical manufacturers in Malaysia stand to 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 opens up new business opportunities for petrochemicals manufacturers in Malaysia.
The presence of world renowned petrochemical companies, such as BASF, Eastman Chemicals, Toray, Idemitsu, Polyplastics, Kaneka, Dairen and Lotte speaks clearly of Malaysia's potential as an investment location for petrochemical industries. Most of these companies are 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 houses 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. Sabah has also recently made its mark in this industry with the newly developed plant to produce ammonia and urea in Sipitang Oil & Gas Industrial Park (SOGIP).
Moving forward, a new petrochemical zone is being established in Pengerang, Johor namely Pengerang Integrated Petrochemical Complex (PIPC). PIPC is located on a single plot measuring about 20,000 acres. The site will host a national integrated refinery and petrochemical project by PETRONAS known as Pengerang Integrated Complex (PIC) with an estimated cost of USD27 billion. PIC will consist of Refinery and Petrochemical Integrated Development (RAPID) project and associated facilities. The associated facilities will comprised of the cogeneration plant, air separation unit, water supply project, regasification terminal and centralised & shared utilities and facilities. These projects are planned to be fully operational by 2019.
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, 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. In fact, Malaysia’s plastics industry has been rated as among the most competitive in Asia.
It 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 about 1,300 plastic 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.
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.