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.