malaysian_experience in poic_sabah palmex thailand 2011

Copyright © POIC, 2008

Joint Paper : Joint Paper : Joint Paper : Joint Paper : Joint Paper : Joint Paper : Joint Paper : Joint Paper : Datuk Dr. Pang Teck Wai (CEO) Datuk Dr. Pang Teck Wai (CEO) Datuk Dr. Pang Teck Wai (CEO) Datuk Dr. Pang Teck Wai (CEO) Datuk Dr. Pang Teck Wai (CEO) Datuk Dr. Pang Teck Wai (CEO) Datuk Dr. Pang Teck Wai (CEO) Datuk Dr. Pang Teck Wai (CEO)

& Rose Pun& Rose Pun& Rose Pun& Rose Pun& Rose Pun& Rose Pun& Rose Pun& Rose PunPOIC Sabah Sdn BhdPOIC Sabah Sdn BhdPOIC Sabah Sdn BhdPOIC Sabah Sdn BhdPOIC Sabah Sdn BhdPOIC Sabah Sdn BhdPOIC Sabah Sdn BhdPOIC Sabah Sdn Bhd

9 Sept 20119 Sept 20119 Sept 20119 Sept 20119 Sept 20119 Sept 20119 Sept 20119 Sept 2011



Presentation Outline

•• The Industrial Cluster ConceptThe Industrial Cluster Concept

•• The benefits of industrial clusteringThe benefits of industrial clustering

•• Key success factors for industrial clustersKey success factors for industrial clusters

Malaysian Experience in Palm Oil Industrial Cluster (POIC Malaysian Experience in Palm Oil Industrial Cluster (POIC

Lahad Datu Experience)Lahad Datu Experience)

•• Suitability of oil palm for industrial clusteringSuitability of oil palm for industrial clustering

•• Palm Oil Industrial Cluster ConceptPalm Oil Industrial Cluster Concept

•• Ingredients in creating Palm Oil Industrial ClusterIngredients in creating Palm Oil Industrial Cluster

•• Progress and status of developmentProgress and status of development



The Industrial Cluster Concept


•• Michael Porter, Harvard Business SchoolMichael Porter, Harvard Business School

–– A cluster is a geographically proximate group of A cluster is a geographically proximate group of

interconnected companies and associated interconnected companies and associated

institutions in a particular field, linked by institutions in a particular field, linked by

commonalities and complementarities (1998)commonalities and complementarities (1998)


What are the benefits of clustering?

• Creates agglomeration economies

– reduced transportation costs

– ready access to labor force with specialised skills

– availability of specialised inputs and services

– lowered transaction costs (including search & information costs, bargaining & decision costs, policing & enforcement costs)

– spur competition - encourages rapid information, knowledge, and technology transfer

– lead to growth of new businesses

• Promotes social infrastructure/Networking

– facilitates technology and knowledge diffusion; fosters mutual understanding & trust (cuts costs of identifying, evaluating, accessing, exchanging products)

– Encourages networking among firms

• Permits focused deployment of public resourcesCopyright © POIC, 2011


• Targeting specific industries may not be easy

• Can take a long time to realise benefits

• May be a long and costly process

• Supportive institutions may be difficult to establish

However, there are challenges …



Industry Driven

Entrepreneurial mindset

Strong research base

Ready access

to capital

Skilled workforce Balanced infrastructure

Comprehensive

support services

Effective networking

Supportive public

sector policies

Key Success Factors for Industrial Clusters


Competitive advantages of

oil palm for industrial Cluster


Products from the Oil Based

Crude Palm Oil

Refined Palm Oil

Palm Olein

Palm Stearin

Crude Palm Kernel Oil

Refined Palm Kernel Oil

Palm Kernel Olein

Palm Kernel Stearin

� Cooking Oil� Shortening� Margarine� Vanaspati� Confectionary� Bakery fats� Ice cream� Cocoa butter

alternatives

Products Currently ExportedFood Based

Value Adding Opportunities


� Personal care products� Cosmetics � Plastics� Textile processing� Metal processing� Lubricants� Emulsifiers� Soap� Degreasers� Protective coatings� Explosives

Oleochemicals

Phytonutrients

� Carotenes� Tocols (Vitamin E) � Co-enzyme Q10

� Squalene� Phytostrols� Lecithin


Residues from Oil Palm

Oil Palm Trunks

Empty Fruit

Bunches

Oil Palm Fronds

Products Currently Underutilised Downstream Opportunities

Value Adding Opportunities

Fibre

Finished Paper Product

Wood Plastic Composite

Pulp & paper

Plywood

Briquette

MDF

Particle Board

Pellets

Furniture from Oil Palm Lumber

Moulded Particle Board

Compost

Animal Feed from Oil Palm Fronds

3.5 million trees

6 million tonnes

19 million tonnes


The Palm Oil Industrial

Cluster Concept (POIC)



Oil PalmPlantations

CPOMills

Refineries

Biofuel Producers

Oleochemicals Companies

Fertiliser Companies

Machinery/Equipment Companies

Technology Providers

Government & Related Agencies

Research Institutes

Educational Institutions

Energy Suppliers

Financial Institutions

Residential

Commercial Development

Transportation Companies

Biomass Companies

Bulkers

Port Handlers/ Operators

Warehouses


Supporting Industries


Ingredients necessary for palm oil

industrial cluster success

~ POIC Lahad Datu Experience


1. State-backed: Owned and supported by the State Gov. of

Sabah. Strong Federal and State Gov. financial support to develop basic infrastructures ~ port, electricity, industrial land

2. Raw materials: Lots of PO - very limited value adding

3. Strategic project location : Centre of PO belt, deep &

sheltered harbour (20m draft)(20m draft), 2 km from town centre, 1 km

from the existing Lahad Datu Port

4. Market access: Strategic location – South East Asia Market

5. Strategic leverage: Proximity to plentiful supply resources

and strategically located at the confluence of shipping lines

with easy access to global markets

6. Infrastructure support: Competitive infrastructure support

& speed of completion

7. Investment theme: Refinery, fertilizer, oleochemical,

renewable energy biomass and commodities being the

sought-after thematic focus

8. Presence of major industry player: Able to form a cluster

- gives confidence to new investor

9. Relaxation of licensing criteria: E.g: approval of refinery

license – to locate as many as possible in order to form a

cluster strategy

10. Technology driven: Commercialization of Malaysia’s R&D

technologies in PO

Strategic

leverage

Market Access

ProjectLocation

State-

backed Competitive

infra

Industry

player

Knowledge & Technology

Raw

materials

POIC- Critical StrengthsPOIC- Critical StrengthsOpportunities

Licensingcriteria

Good

Investm

ent

Theme


2

3


Putting the pieces together Putting the pieces together Opportunities

Good

Investment

Theme

Knowledge

& Technology

Copyright © POIC Sabah Sdn Bhd

Project

Location

Industry

playerMarket

access

State -

backed

Competitive

infra

Strategic

leverage

Licensing

criteriaRaw

Materials



22.30

16.99

1.89 1.50 0.89 0.77 0.44 0.48 0.34

0.00

5.00

10.00

15.00

20.00

25.00

Indo

nesia

Malay

sia

Other

s

Thailand

Nigeria

Colom

bia

Ecu

ador

PNG

Cote d’Ivoire

Major World Producers of Palm Oil (2010)

Source: MPOB, 2011

(Million tonnes)

Sabah 5.32

Total global CPO production: 45.59 million tonnes


Snapshot of the Palm Oil Industry in Sabah (2010)

SabahMalaysia (total)

Planted area (mil. ha) 1.40 (30%)* 4.85

Mills: Number

Capacity (mil. tonnes FFB/yr)

124 (29%)*

31.1 (32%)*

421

97.38

CPO Production (mil. tonnes) 5.32 (31%)* 16.99

Relative Productivity

SabahMalaysia (average)

FFB Yield (tonnes/ha/yr) 20.16 18.03

CPO Yield (tonnes/ha/yr) 4.30 3.69

* Percentages of country’s total

Source: MPOB, 2011


Lahad Datu

Sabah

Kota Kinabalu

Oil Palm Planted Areas

Copyright © POIC, 2008Copyright © POIC, 2011

(About 1.24 million ha)


Kota Kinabalu..

Medan

DumaiBitung


Kota Kinabalu..

Medan

Dumai Bitung


Location Strengths ~ presence of existing cluster

Felda LDEO

Kwantas

Refineries

2500 t/d1000 t/d

2200 t/d

N

Leluasa Untung

1400 t/d



Infrastructure ~ speed of completion & delivery

Phase 1 & 2

Earthworks Completed

Roads & Drain Completed

Water Completed

Sewerage Completed

Telecommunication Completed

Electricity Completed

Liquid Jetty - Ph 1& 2 Completed

Bulk Fertilizer Terminal May 2012

Pipe Rack By end of 2011


Phase 3A

Earthworks Completed

Roads March 2012

Drains Dec 2011

Water Oct 2011

Sewerage Sept 2011

Electricity Sept 2011


Infrastructure Support


Outer Berth� 500M from the shoreline� 2 berths, outer and inner� 20M draft� Up to 100,000 dwt

Inner Berth� 60M – 70M shoreline � 5 loading platforms, linear berthing length of 600m with

10m to 12m draft � Up to 20,000 dwt barge/vessel.

� Designed to berth 4 vessels

at one time

� 2 outer berths can

accommodate 2 ships up to

30,000DWT.

� The outer berths draft is

about 12m

� 2 inner berths can

accommodate ships up to

10,000DWT.

� The inner berths draft is

about 10m

� 2 high speed gantry cranes

& integrated conveyer belt

system will be installed to

unload the bulk cargo at

the western side of the jetty

� The conveyer belt system

with the gantry crane is

designed to handle bulk

cargo at the speed of 1,000

tones per hour.

Liquid Jetty

Bulk Fertilizer Terminal

(Under Construction)



Our progress and where we are today …

1. Land sales

2. Ranged of industries

3. Companies starting up

4. Future prospect



1. Land Sales as at August 2011

No.Acreage

Allocated

Purchase/Lease

Price (RM/mil)

Employment

Created

Investment

Value

(RM/mil)

Concluded

Sales36 414.87 215.2 2059 2,208.90

Lease

Agreement1 6.22 0.32 25 7.00

Sales in

Progress8 204.76 106.83 819 1,175.00

Total 45 625.85 322.35 2,903 3,390.90



Aerial View of Phase 1 & 2

Copyright Copyright ©© POIC Sabah Sdn BhdPOIC Sabah Sdn Bhd Copyright © POIC, 2011


Status of Sales as at August 2011



Fertilizers Cluster

Mine Chem （Sabah) Sdn Bhd Sabah Softwood Hybrid Fertilizer

Sdn Bhd

Excelwin Biotech

Sdn Bhd

Agri Borneo Fertilizers

Sdn Bhd

Behn Meyer & Co (M)

Sdn Bhd

CCM Agriculture (Sabah)

Sdn Bhd

Union Harvest (East

Malaysia) Sdn Bhd

Felda Agricultural Services

Sdn Bhd

Taiko Fertilizer Sdn Bhd


Refineries Cluster

Reliance Synergy

Sdn Bhd

Lahad Datu Edible Oils DXN Oleochemicals

Sdn Bhd

Zurex Corporation Sdn Bhd

QL Bioenergy Sdn Bhd

Global Biodiesel Sdn Bhd

Mewah Oils Sabah Sdn Bhd

Southern Acids (M) Berhad

Sawit Raya Sdn Bhd


2. Confirmed investor’s and ranged of industries

EXISTING CATEGORY OF INDUSTRIES NO. OF INDUSTRY

1. Fertilizers 9

2. Refinery 8

3. Storage/Warehousing & Logistic 8

4. Biodiesel 5

5. Supporting Industry/ Palm Oil Related Activities 8

6.Palm Kernel Crushing (1) / Bio Palm Kernel Expeller (1)/ Upstream

Palm Kernel Extraction Plant (1)3

7. Process & Packaging /Consumer Packaging Plant 4

8. Small Renewable Energy Power. Programme (SREP) 2

9. Commercial Development/Puspakom Facility 2

10. Oleochemical 1

11. Spent Bleached Earth/Solvent Extraction Plant 2

12. Bulking Facility 1

Total = 50



Facilities completed



SPC Biodiesel Sdn Bhd (Australian)

Global Bio-Diesel Sdn Bhd (Korean)

CCM Agriculture (Sabah) Sdn Bhd

Behn Meyer & Co (M) Sdn Bhd

Asia Depot Sdn Bhd Zurex Corporation Sdn Bhd



Anjur Handal Sdn Bhd Blossom Bio Energy Sdn Bhd (Japanese JV)


Choy Huat Construction Sdn Bhd


Facilities under constructions



Eco Biomass Energy Sdn Bhd

CHP Plant Project (SREPP)

(Target completion : August 2012)

Mewah Oil Sabah Sdn Bhd

Refinery

(Target completion : 1st Quarter 2012)

Taiko Fertiliser Sdn Bhd

Fertilizer

(Target completion : End of 2012)

QL Bioenergy Sdn Bhd

Refinery, Palm Kernel Crushing




Felda Agricultural Services

Fertilizer


Syarikat Tuah Jaya

Transportation & Forwarding Facility


Bristeel Properties Sdn Bhd

Local Commercial Development & Warehouses

[Port City]

(Target completion : 2012)



POIC Lahad Datu

& FutureProspect



Land banks for future expansions


Industries Allocation for Phase 3A



Summary

• A cluster is a geographic concentration of

interdependent firms in related industries supported by

• With proper planning and implementation, industrial

clusters can bring significant economic, social and

environmental benefits

• The oil palm is particularly suitable for industrial

clustering

• Several oil palm industrial clusters in various

developmental stages


malaysian_experience in poic_sabah palmex thailand 2011

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