Asia's first cross-border oil linkage in the offing
Asia's first cross-border oil linkage in the offing
SINGAPORE (AFP): A spillover of petroleum-related investments
from Singapore to Malaysia's southern Johore state is likely to
create Asia's maiden cross-border linkage of the oil and
petrochemical industry, a report said yesterday.
Petroleum-linked companies bypassing Singapore, bugged by
space constraints and rising business costs, are finding Johore a
good alternative investment location, The Singapore Oil Report, a
local petroleum journal said.
Johore's proximity to Singapore -- less than two kilometers
(1.24 miles) of sea separate them -- allow companies to take
advantage of the weaker Malaysian currency and its lower labor,
land and business cost, it said.
Success in attracting some big-name investors in recent years
has provided Johore with the nucleus of a hydrocarbon sector that
will spawn a host of support and spin-off industries, the journal
said quoting industry and government officials.
"While we still look to Singapore for some technical help and
high-level engineering, Johore is starting to develop its own set
of skills," said a spokesman for the Titan group, the largest
private investor in the state.
The spokesman said that such value-added manufacturing could
only boost demand for quality service companies.
The growing petrochemical industry in Johore is already adding
to demand for Singapore's engineering and contracts works
expertise, the journal said.
The Titan group has invested nearly US$590 million in three
petrochemical plants and is evaluating plans to spend another
$300 million on two new plants.
The journal said Titan, whose plants have a mixture of state
and private Malaysian, American and Taiwanese partners, imports
most of its naphtha from Singapore.
Among the other major petroleum-linked investors in Johore are
Dutch oil giant Shell, Idemitsu Chemical of Japan, BASF of
Germany, and ICI of Britain.
"Slowly but surely, Asia's first cross border linkage of the
oil and petrochemical industry is emerging," the journal said,
adding that Johore's hydrocarbon investments complemented
Singapore's established oil and chemical sector.
The hydrocarbon sector's contribution to Johore's investments
reached a new high of 45 percent in the first seven months of
last year.