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.