Asian crisis to boost S'pore oil industries

Asian crisis to boost S'pore oil industries

SINGAPORE (AFP): The Asian economic crisis is expected to boost Singapore's oil and petrochemical industries with would-be rivals hobbled by financing problems, according to an industry journal.

The January issue of the monthly Strategist Oil Report, received here yesterday, said problems besetting South Korea, Thailand and Malaysia are hampering their efforts to challenge Singapore's leading regional role in the industry.

"Even mighty Japan, with earlier plans to step up its oil product exports, has been humbled by growing fears about the creditworthiness of its banks," the report said.

Singapore will face pressures from poor industry margins in the coming year or two, but enjoys relatively low debt levels, an increasingly integrated oil-petrochemical production system and a trading regime quick to identify and exploit opportunities, it said.

Foreign partners of South Korean companies, which looked set last year to challenge Singapore's position as Asia's oil and petrochemicals center, now demand to examine the Koreans' credit lines before doing business.

"Other countries with similar, but less aggressive, expansion plans before the onset of the crisis are also in retreat," the report said.

Thailand's petrochemical companies have had to scale back or cancel announced projects, while Malaysia's efforts to develop its own integrated oil and petrochemical complex on its east coast is likely to face a slowdown as the country adopts austerity measures, it said.

"The move by Singapore's industry a few years back to integrate oil and petrochemical production is providing a timely piece of competitive advantage as it has led to higher productivity and reduced cost," the report said.

But it warned that advantages enjoyed by Singapore may prove temporary if the region "remains mired in economic difficulties, or if political unrest erupts in less stable neighboring countries unable to adapt to increasingly harsh living conditions."

Singapore's chemical industry, led by petrochemicals, is expected to post 12-percent growth in output to S$27 billion (US$16 billion) in 1997, according to the government's Economic Development Board.

Seven islets are now being amalgamated into a highly advanced chemical industry complex, with heavy foreign investment, in a bid to push Singapore ahead of the competition in the 21st century.

The oil sector, however, has not been faring as well. Oil domestic exports in November eased 17.4 percent to $1.21 billion mainly due to slower shipments to Hong Kong and Japan.