Chemicals

This article was first published in MGCC Perspectives, the magazine of the Malaysian-German Chamber of Commerce and Industry

Standfirst: Foreign companies stand a good chance of capitalising on Malaysia’s emerging biotech and chemical sector. This report is aimed to help first movers to get a real understanding of the situation.

 

Malaysia offers itself as an ideal manufacturer and supplier market due to its diverse industry structure and its favourable geographical location. The country's economic development is dynamic, and despite a short-term slump it is growing strongly again, averaging growth of 5.4 percent since 2010. Above all, the export-oriented industry in the sectors electronics, biotechnology and chemicals are seen as an attractive sales potential for foreign companies.

 

ON THE RISE FOR OVER A DECADE

Malaysia began as a producer and exporter of raw materials (palm oil, tin, rubber and oil and gas) and has built industries such as petrochemicals, chemicals and rubber products on this basis. The chemical industry in Malaysia is one of the most developed in the world. The industry is not only capable of fulfilling the nation's requirement of chemical products but also exports these to ASEAN (Indonesia, Thailand, Singapore & Vietnam), East Asia (China, Japan & Korea), India, US and the Netherlands with an overall amount of RM 68.8 billion in 2017.

Year

RM (billion)

Overall

ASEAN

China

Japan

India

US

Netherlands

2015

55.1

20.2

10.6

3.0

3.1

2.3

1.8

2016

59.1

20.7

11.9

3.3

3.0

2.6

2.2

2017

68.6

23.9

14.4

3.9

3.4

3.2

3.2

Important Export Markets
Source: Department of Statistics  & compiled by MATRADE

 

Malaysia is especially advanced in the petrochemicals and oleochemicals sectors. This is because Malaysia is endowed with huge amount of petroleum and palm oil resources. In fact, Malaysia is the second largest exporter and manufacturer of oleochemicals for over a decade now.

The availability of feedstock and resources that come from key sub-sectors such as palm oil and hydrocarbon, oil and gas, oleochemicals and petrochemicals continue to grow. In tandem with this growth, the industry is gradually shifting to the production of higher value-added oleochemical derivatives and bio-based chemicals.

Malaysia's chemical industry investments are set to surpass 2017’s RM 4.1 billion if more international petrochemical producers come to do business at the Refinery and Petrochemical Integrated Development (RAPID). With the RAPID projects coming on-stream, the country is poised to shift to become a net exporter and a leading producer of petrochemicals in ASEAN by year 2020. Dato' Muhtar Hashim, Deputy Chairman of Chemical Industries Council of Malaysia said there are opportunities for international players to invest in the petrochemical hub within RAPID: "The availability of raw materials for refinery activities and utility support is set to be available from 2020. But I see the opportunities are for bigger players as the investments would be very high."

 

MALAYSIA'S BIOTECH LANDSCAPE

Malaysia is the second in Asia after China and the first in ASEAN to establish its own national bioeconomy initiative. As of 2015, bioeconomy as a whole is estimated at 11.3 per cent of the total Malaysian GDP, a contribution equivalent to RM131 billion. This value encompasses economic impact from all sectors of economy that could possibly benefit from application of bio-based technology, like agriculture, chemical production, as well as oil and fat processing. At a stimulated 15% annual growth, the size of the Malaysian Bioeconomy sector is projected to grow to RM149.1 billion in 2020 and RM181.2 billion in 2030 respectively.

Although the biotech sector in Malaysia is so far not as developed as it might be elsewhere, Dr Mohd Shuhaizam, CEO of Malaysian Bioeconomy Corporation, pointed out the opportunities Malaysia will be able to offer for the rest of the world such as Agricultural Biotechnology Development, Healthcare Biotechnology Development, Industrial Biotechnology Development and Bioeconomy Community Development.

Malaysia’s wealth of natural resources, in line with the country’s continuous efforts to establish bioeconomy as a key contributor to economic growth, can create a pathway to bring in technologies and investments to Malaysia. Bioeconomy also benefits the society and nation through breakthroughs in agricultural productivity, discoveries in healthcare and the adoption of sustainable industrial processes, while helping to meet the most pressing global challenges, such as the increasing global population, depletion of fossil fuel and natural resources, and increasing environmental pressures and climate change.

 

About the author:
Julia Kaiser works with MGCC’s marketing team. She specialises in research for the medical, pharmaceautical and bio-technology sectors.

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