Siq12 online

2014 2014

JULY - SEPT 2014 ISSUE 12/2014 JULY - SEPT 2014 ISSUE 12/2014

COVER STORY:

Oiled up for

OIL ROYALTY

GAP TO INVEST IN SOGIP >>Page 6

>>Page 8

UMS OIL AND GAS RESEARCH COURSES.

EXCLUSIVE INTERVIEW TECK GUAN SDN. BHD.

TAKING THE PLUNGE

>>Page 11

>>Page 12

>>Page 14

Contributors:

Ministry of Industrial Development (MID)

Ministry of International Trade and Industry (MITI) Sabah Economic Development Corporation (SEDCO) Sipitang Oil & Gas Development Corporation Sdn. Bhd. (SOGDC) Universiti Malaysia Sabah(UMS) Dr. Douglas Furtek (Teck Guan) CC Pung (POIC) Pusat Kraftangan Sabah (PKS) Rubyanne Disimon Team of Sabahtoday

Published by Ministry of Industrial Development Tingkat 9, 10, 11, Blok C, Wisma Tun Fuad Stephens, Karamunsing, Beg Berkunci No.2037, 88622 Kota Kinabalu, Sabah, Malaysia.

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elcome to SIQ 12 even when production is late and printed together with the last Issue of 2014. I am grateful to everyone at Sabahtoday for helping me to put all the materials together with pictures and colours on subjects that are heavy on words and figures.

At least a big effort is made to highlight the promotion of industrial activities in Sabah, in particular the development of downstream Oil and Gas, and Palm Oil. Read “Taking the Plunge” from POIC on Sabah’s brave journey to Oil Palm value adding.

There are people in Sabah still asking for more Oil Royalty for the State as an easy way out.

Others believe the development of oil and gas industry in Sabah will bring more benefits. Elected members of the Sabah State Assembly have their say at the last sitting in July this year. I have waited for Rubyanne after her A-Level exams to give me “Oiled up for the Oil Royalty” as the Cover Story for this Issue. The young writer has a clear understanding of all the arguments on the subject and she is not afraid to share her views. Let’s hear it from the boys and girls.

I put in MY SAY the start of chemical industries in Sipitang with Petronas laying the long gas pipeline to Bintulu in Sarawak from Kimanis in Sabah. The question is where can we get the best “value” for our gas and the challenge is how quickly the State can develop SOGIP and be ready for investors intending to go there. PETRONAS can even provide gas to SOGIP from Sarawak when there is a demand for downstream activities in SOGIP that can generate better returns.

I am also grateful to many others that have contributed to this Issue by providing information and news on industrial and business activities in Sabah. I hope readers can help us to share information on development of industries and other business activities in Sabah from SIQ and sabahtoday. my. Our aim is simply to see Sabah continues to have good sustainable economic growth.

Raymond Tan

COVER STORY

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12 EXCLUSIVE INTERVIEW

TECK GUAN SDN. BHD.

OILED UP FOR OIL ROYALTY

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GAP TO INVEST IN SOGIP

TAKING THE PLUNGE

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BANDAR TITINGAN TAWAU TAKES ANOTHER STEP TOWARDS REALIZATION

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11 UMS OIL AND GAS RESEARCH COURSES

18 SABAH GOES WEST

19 SABAH’S FIRST ECO-FRIENDLY TWIN TUNNEL

COVER STORY

Oiled up for

By Rubyanne Disimon

T

he term “Oil Royalty” has been largely publicised since it was first introduced in the manifestos of many political camps. As of lately, discussions and claims-mainly claims- have surfaced once more stirring up tensions in the media platform. Many politicians have even ‘jumped on the gun’ demanding up to 20% oil royalties out of state entitlement. After diving into the swarm of statements found, one definite pattern continued to be a surprise; a lot of requests are voiced out with little or no explanation given. At this rate, it is everyone’s guess as to why it is so. The term “Oil Royalty” has tallied up since the first sentence

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and you might have a rash idea about it. But, allow me, if you please, to elevate your views or to form a new perspective on the matter.

What is Oil Royalty? ( It has no relation to the Royal family) Oil Royalty is an ownership of a portion of production income or revenue.

Prior to the formation of Malaysia, the British have planted their rights over Sabah and Sarawak which included, the unexplored waters surrounding it.

However, the ownership rights were displaced under Petroleum Development Act 1974 which declared,

that the surface owners will have a maximum share of 5% revenue while in turn, the managerial department will be solely handled by the nation-owned Company, PETRONAS, mineral owners, including the payment of taxes and royalties.

Pretty straight forward, right?

Well, not quite so. Over the years, Conspiracy Theorists across the interweb have crafted myths that 5% revenue is transferred to the state government but the rest of it is instead given to the Federal Government.

“Is there any truth in it?” you may wonder.

COVER STORY

Perception vs.Truth A number of Sabah’s elected members of Parliament and of the State Assembly have come forth and have protested to the mass media calling out injustice in the government’s part for limiting the State’s production income. Once again, is it true? Last July, the misconception of the Oil Royalty distribution was finally debunked by the Minister of Special Tasks, Datuk Teo Chee Kang in the State Assembly sitting.

He had even explained the in-depth knowledge of the money flow in the industry. In his explanation, cash payments, another term for oil royalties, consists

of the first component, 5% royalty to the state and the Federal Government respectively and the second component would be the cost of production which includes, the cost of exploration, exploitation extraction and purification.

He added, that a person of prior understanding of the billion dollar industry would be aware that a staggering amount of investments are flowed into the exploration exercise. To put it into perspective, the extraction process carries essentially between RM8.0 billion to RM12.0 billion of risks as it could possibly be unsuccessful and on top of that, if the project was to fail, the risks are rightfully split

Winning game vs. Losing game

Later in the State Assembly, fellow assemblyman, Datuk Dr Jeffrey Kitingan queries of the ownership request on the mineral rights in the State’s waters.

Datuk Teo responded, that it is yet another mere misconception that the ownership of rights rests on the state. By virtue of the deed commonly known as the Oil Agreement, the rights are titled under PETRONAS. However, he reassures the State government that the Federal government is open to review the Petroleum Development Act 1974 as well as the renegotiation of the deed.

dollar investment. Dismally, dubbing it unappealing in any market condition.

Are the demands of a royal hike a positive resolution? Economically, it is questionable.

Let us view it in this sense.

Supposedly, your company was approached by the State to build a Retail store worth 1 million ringgit.

However, there is one complication at hand; they are requesting for a 20% share of the pie in advance. Now, 20% of the million ringgit pie leaves about RM800,000.00 whereas 70% of it is left aside for construction and design costs, leaving about

among the company and its partners.

Figure 1 : Production Sharing Contractor Entitlement Reference : JURUTERA January 2005

RM240,000.00 in profit sharing. The monetary share, as we have calculated, is very low for a million

Datuk Teo Chee Kang explained that in order for a maximum efficiency in a project, an expectancy of 70% of production costs are to be exercised whereas the rest is distributed as oil royalties and taxations. But, if 20% of oil royalties are pressed, it brings about 10% of shared profit, excluding taxes, for PETRONAS and its partners as explained through the retail store analogy which leaves, the question of “Would it be economically sensible to do so?”

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Panoramic view vs. Microscopic view

the upstream activities, searching and extracting new materials, while limiting The oil and gas industry have propelled Malaysia to the midstream and great heights since the first downstream activities, refining, distribution and oil extraction in Sarawak marketing ventures. in the year 1910 from Statistically, as low as 10% is providing the country with devoted to the midstream economic growth, it has and will provide resourceful and downstream sector. energy for the people for At the State Assembly, decades long. It is even in a voice of concern, estimated that 40% of the country’s income is derived Chief Minister Datuk Seri Panglima Musa from the Oil and Gas Haji Aman advises the industry. Across the globe, State Government that an astonishing 89 billion by investing further in liters of oil are consumed daily. It is almost impossible downstream activities, it will bring forth more lucrative to imagine a day without returns in welfare as well it. Let alone a world as paving a large highway without. However, at the for specialised workers rate of the consumption, in the job department. it is predicted that the Rather than demanding resources will be depleted for a royalty hike, it will be by the year 2039 which economically effective leaves about 25 years in to add more income to the making. the state from alternative sources.

It has been an overdue question of “Are we equipped enough for the future?” If not, by rephrasing the question, how can we be?

The Oil and Gas Industry has spent decades in conformity towards 4

He continued by mentioning few forthcoming collaborative projects including through M3nergy Bhd, a stateowned company in their venture into Oil extraction and

production and the Asian Supply Base Sdn Bhd in the mid-stream department by providing support services in the Oil and gas companies in the state’s waters. Hopefully, by taking its first dive into new ventures such as these, many companies will be empowered to widen their horizons and hop on the bandwagon themselves.

It is undeniable that change is inevitable. One can be feared by it or one can be empowered by it.

Those who are willing to be moved by it can rise above the circumstances that withhold them. In order to fulfil the nation’s aspiration for the year 2020, a dive into unchartered waters is necessary. As the Prime Minister has expressed in the recent Oil and Gas conference, in order to move pass a limbo of a middle class economy, crucial decisions need to be taken with stride for the country’s future. On that note, let not oneself get oiled up for oil royalty but instead, let priorities be clear for a dynamic progress to the prosperous future.

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State government has succeeded in getting Petronas to agree for Sabah to own10% equity in LNG9 in Bintulu

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By virtue of the Petroleum Development Act 1974 all those rights together with the signing of the instrument as prescribed under the act which is more commonly known as the Oil Agreement dated June 1976, all the rights are now vested in a corporation incorporated under the same Act which is Petronas. Actually, it is a misconception to say that we still have the right by virtue of Section 24 of the Land Ordinance

“

M3nergy had been given 100% control of the marginal fields in Sandakan by Petronas -Chief Minister Datuk Seri Panglima Musa Haji Aman at the State Assembly, 16th July 2014

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......then the company has to share what is left with its risk sharing partner. Therefore, the oil and gas business is one with intense capital and high risk. It is not like what people say that Sabah gets 5 per cent while the federal government gets 95 per cent… That is a wrong perception -Datuk Teo Chee Kang at the State Assembly, 16th July 2014

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Petronas should just surrender the oil and gas ownership back to Sabah and Sarawak instead of making excuses and avoiding paying royalties Bingkor State Assemblyman -Datuk Jeffrey Kitingan

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It is time to review the percentage of the oil royalty MP Penampang -Darryl Leiking

INDEX: Ownership 2. (1) The entire ownership in, and the exclusive rights, powers, liberties and privileges of exploring, exploiting, winning and obtaining petroleum whether onshore or offshore of Malaysia shall be vested in a Corporation to be incorporated under the Companies Act 1965 or under the law relating to incorporation of companies.

-Petroleum Development Act 1974 Cash payment by the Corporation In return for the ownership and the rights, powers, liberties and privileges vested in it by virtue of this Act, the Corporation shall make to the Government of the Federation and the Government of any relevant State such cash payment as may be agreed between the parties concerned.

-Petroleum Development Act 1974 The national oil company, Petronas, provides about 40% of the federal budget in taxes, dividends and royalties -Economy of Malaysia (Wikipedia resource)

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GAP to invest in SOGIP

Signing and exchange of the MOU with GAP, PCG and SOGDC by Mr. Marian Rybak, Mr. Shazali Hamzah and Mr. Haji Abdul Kadir. Witnessed by Chief Minister Datuk Seri Panglima Musa Hj Aman, President of GAP Mr. Pawel Jarczewski and Minister of Industrial Development Datuk Raymond Tan.

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n September 15, 2014, Sipitang Oil & Gas Development Corporation Sdn Bhd (SOGDC) together with Petronas Chemicals Group Berhad (PCGB) and Grupa Azoty Pulaway (GAP) have signed a Memorandum of Understanding to conduct a joint feasibility study for producing urea and ammonia derivatives in Sipitang Oil & Gas Industrial Park (SOGIP).

The parties would undertake a preliminary technical, economic, raw material supply, logistic, infrastructure and utilities study for the development of the petrochemical products. GAP was represented by its Vice President Mr. Marian Rybak, Mr Shazali Hamzah, President and CEO of PETRONAS Chemicals Group Berhad while SOGDC was represented by its General Manager, Tuan Haji Abdul Kadir Damsal.

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The investment potentials emanating from the joint collaboration between two major players in the urea, ammonia their derivatives will generate multi-billion investments in SOGIP. The signing ceremony was held in Poland witnessed by the Chief Minister of Sabah, YAB Datuk Seri Panglima Musa Haji Aman.

Apart from witnessing the MOU, the purpose of the visit is to attract GAP to SOGIP and the state presence is to show its commitment and interest towards GAP investment in SOGIP. GAP wishes to expands its market to the Asia region and both parties would benefit from making SOGIP its Asian hub.

Poland is a country in central Europe by Belarus, Czech Republic Germany, Lithuania, Russia, Slovakia and Ukraine. A

new era began when Poland became an EU member in May 2004. Pulawy is a town in Lubelskie Voivodeship located on the Vistula River, it is the seat of the poviat authorities, a town with a very long history.

Today, it is the second largest manufacturer of fertilizers in Europe.

Grupa Azoty is a trustworthy and recognized company, whose value is built on the ability to forge sustainable business relationships, based on partnership and mutual understanding of needs, GAP is an integrated manufacturer of polymide 6 trading under the name Tarnamid, which is produced through the polymerization of manufactured caprolactam. The company is the country’s sole producer of polyacetal resin sold as Tarnoform.

GAP manufactures fertilizers in two granulation types, differentiated as “macro” and “standard”. Their products include: Salestrosan, Nitrochalk, Ammonium saltpetre and Ammonium Sulphate. Since 2008, GAP has been listed on the Warsaw Stock Exchange among the elite group of companies included in the RESPECT index portfolio, which lists companies regarded as an attractive investment, as well as managed responsibly and in a balanced manner.

GAP has forged the sound and dynamically developing Grupa Azoty. The companies comprising it provide a comprehensive business offer for the most demanding of clients, whose priorities lie in high quality and state-of-the-art technologies.

Overview of GAP factories.

Chief Minister’s arrival at GAP’s factory received by company’s President Mr. Pawel Jarczewski (3rd from left) and Vice-President Mr. Marian Rybak (2nd from left).

GAP IS:

1 The largest producer

of nitrogen fertiliser in Poland.

Visit to the fertilizer packaging and warehousing factory.

2 Second largest producer of

nitrogen of the European Union.

3 Third largest global producer of melamine.

The fertilizers are packed and ready to export.

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T

he Sabah Sarawak Gas Pipeline (SSGP) to Bintulu is part of the infrastructure put in place by PETRONAS when oil and gas landed at the Kimanis Sabah Oil and Gas Terminal (SOGT).

Sabah has to appreciate the initiative taken by PETRONAS, when looking back now, is the catalyst for the development of oil and gas activities in Sabah.

In particular, the establishment of Sipitang Oil and Gas Industrial Park (SOGIP) with its anchor tenant, the Sabah Ammonia and Urea Plant (SAMUR) that will position PETRONAS Chemicals Group Berhad as the second largest Urea producer in South East Asia. All this started in a short span of 4 years with the Federal Government providing facilitation funds to build road and

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other infrastructure for SOGIP. It is envisaged that SOGIP will be the hub for development of petrochemical Industries in Sabah.

The development of the downstream processing of gas is important not just for better returns to PETRONAS and Sabah, but also the creation of quality jobs and supporting business activities, particularly, the small and medium size industries (SMI). In addition, part of the supply of natural gas from SOGT is used for the generation of electricity with two new power plants in Kimanis providing a total capacity of 400 Megawatt.

The biggest challenge is to get the message across to the people in Sabah that there are more benefits for Sabah especially for the future generation

when we can put in place downstream processing oil and gas activities like the oil and gas industrial parks in Kerteh, Gebeng and Bintulu.

The 500 Kilometer of gas pipeline (SSGP) and the Kimanis Sabah Oil and Gas Terminal (SOGT) is an integrated project for the processing of oil and gas from offshore Sabah at a total construction cost of RM8 billion from PETRONAS. SSGP which runs in a southwesterly direction passing through Sipitang for the development of SOGIP.

PETRONAS has agreed to limit the flow of gas to Bintulu to 500 Million Metric Standard Cubic Feet of Gas per Day (mmscfd), the rest is to be used only in Sabah.

There is much anticipation that as SOGIP grows, more gas is required and we can tap into the supply from Sarawak too from

“

Is there enough value to make it worthwhile to take all the trouble of sending the gas to an existing facility hundreds of miles away -Neil Gilmour, Shell Vice President Integrated Gas Development.

(Source-Borneo Post)

SSGP. Gas can flow in both directions. SOGIP is assured of adequate gas supply for development of gas downstream processing industries.

SAMUR in Sipitang has taken up 90 mmscfd of gas and still available another 90 mmscfd of gas of which PETRONAS has planned to utilize 75 mmscfd of gas to develop a similar plant codenamed Markisa.

So far PETRONAS is looking at interested parties to develop other petrochemicals derived

from Ammonia and Urea.

Today, it has attracted investors from Europe like BASF (Germany), TOTAL (France) and Grupa Azoty Zaklady Azotowe Pulawy SA (Poland) to come to SOGIP and study the prospect of setting up petrochemical plants.

Other than the fact that gas can be made available, the State with the assistance of the Federal Government will put the infrastructure and utilities including a container port in SOGIP. The Port will be a significant

game changer for the oil and gas activities within the Brunei Bay. Chemical companies in Europe are on the lookout for a suitable point of entry in Asia where their products are sold far from Europe to countries like China and other Asian countries.

They know there is a huge market in the region.

Sabah offers the best strategic location for such countries to establish a point of entry to the Asian market.

Air and shipping route in the region.

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SABAH AMMONIA UREA PLANT (SAMUR) AT SIPITANG

SABAH OIL & GAS TERMINAL AT KIMANIS

The SOGIP Master Plan is a significant milestone for Sabah, as it provided the necessary roadmap for Sabah’s petrochemical industry and other related oil and gas activity including heavy industries. The Master 10

Plan is a collaboration between Sipitang Oil & Gas Development Corporation Sdn Bhd (SOGDC), PETRONAS and Malaysia Petroleum Resources Corporation (MPRC). This collaboration produced a credible road map that also takes into account the national, state and PETRONAS aspiration for the Oil and Gas sector. As a result it will enable the Master Plan to be implemented

quickly and smoothly.

Since SOGDC inception in August 2010 in a short period of time we have a definitive petrochemical industry road map and SAMUR will be completed soon. Beside this we have another Ammonia Plant under PETRONAS in the works with Grupa Azoty Zaklady Azotowe “Pulawy” S.A from Poland to process the Ammonia into a higher value added product.

UMS OIL & GAS COURSES

UMS Faculty of Engineering’s students welcome Datuk Raymond Tan during his visit. The students are from TimorLeste.

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niversiti Malaysia Sabah (UMS) has excelled in producing quality graduates since its establishment in 1994. The University is committed to the people and fulfills the vision of the nation through its vision to educate the society based on principles of sustainable development. Having identified the potentials of Oil and Gas sector in the region, UMS took the initiative to address the issue of human capital development catering to all levels of skills to meet the ever demanding Oil & Gas industry.

The Oil and Gas industry requires human resource made up of a wide range of disciplines. Pool of talents from UMS (especially from the Faculty of Engineering) to develop the nation’s relevant human capital, is readily available.

Presently, the Centre of Training and Studies in Oil & Gas Engineering, under the UMS Oil & Gas Corporation offers a whole range of OIl and Gas Industry related Programmes; 1) in

Master Oil &

of Gas

Engineering Engineering

2) Master of Science in Safety, Health, Environment & Quality Technology.

3) Bachelor of Engineering in Oil & Gas Engineering 4) Executive Bachelor Degree and Diploma Programmes 5) Professional/Competency courses for the Oil& Gas industry

- Introduction to Lifting and Hoisting Operations - Basic & Advanced Firefighting - Defensive Driving - Welding and Cutting Safety - Onshore/Offshore Crane Operations

6) Seminars, conferences, workshops Technical & Competency Courses for the Oil & Gas Industry are offered in collaboration with Kudat Offshore Oil & Gas Sdn Bhd: - Minimum Industrial Standard – Basic Offshore Induction and Emergency Training (MIS-BOSIET) - Authorised Gas Tester - Supervisory Safety - Incident/Accident Investigation - Designated First Aider - Basic Hydrogen Sulphide - Basic First Aid - Fire & Emergency Response

Team Member Course - Basic Emergency Response Course - Advanced Emergency First Aid - Rigging and Slinging - Banksman Course - Lifting Equipment Focal Point

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EXCLUSIVE INTERVIEW WITH TECK GUAN “however, I can tell you, that

getting into biogas was a very wise business decision for Teck Guan.

Our anaerobic digesters are remarkably productive. We have enough biogas to fuel brick kilns and enough left over to support several MW gas generators.

-Dr. Douglas Furtek Director, Operational Innovation, Research, and Development

’’

Teck Guan Brick Factory. Inset: Dr. Douglas Furtek.

Question: When did Teck Guan started using the technology to convert Palm Oil Mill Effluent (POME) to biogas and utilizing it for brick baking process?

Where is the brick factory situated?

Teck Guan: The switch from fueling the two kilns with palm kernel shells (PKS) to biogas occurred in March 2012. Four anaerobic digesters (AD) of 10,000 m3 total capacity and fed with POME, as well as an adjacent 2,000,000 brick per month capacity factory, are located at Teck Guan’s Sungai Burung Palm Oil Mill in Tawau district near Kunak.

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Q: What is the process of using biogas to bake the bricks?

TG: Raw biogas from the AD is piped about 100 m to the two brick factory kilns. The 63% methane biogas is mixed with the correct proportion of air for complete combustion and generation of the proper heat within the kilns. Several pipes with the biogas/air mixture are inserted through the tops of the kilns. Hot exhaust is used to dry fresh moist bricks.

Q: Why is biogas preferred compared to conventional method? What is the comparison in terms of quality and output of the bricks?

TG Biogas is easy to pipe from the AD, to mix with air in the proper proportion, and to

feed into kilns. Solid fuels like PKS must be trucked to the brick factory and carefully dispensed into the kilns for proper combustion. PKS leaves ash that must be cleaned up and can produce smoke (POM). Biogas makes a clean, hot, blue flame that leaves no residue. Bricks are definitely superior after biogas baking due to the more constant and even temperature distribution in the kilns. The throughput is also higher with biogas because of the hotter flame and hassle-free operation.

Q: How effective is the technology using biogas for bake bricks for the industry in Sabah? What are the environmental impact of producing/using biogas?

Perfect kiln flames

Teck Guan anaerobic digesters

Does biogas affect climate change and is it considered a green technology? Is biogas environmentally carbon efficient?

TG: Biogas is much better than PKS as a kiln fuel. We will not return to solid fuels. As mentioned above, biogas burns with a clean blue flame. There is no smoke to pollute the atmosphere and no residual waste to dispose of. And because biogas is a renewable “green” fuel derived from agricultural

Extra biogas for highly efficient gas generators

waste, the net greenhouse gas emission is zero. Biogas is an ideal fuel in all regards.

Q: What are the other usage for biogas? Can it replace fossil fuel and generate electricity power?

TG: Biogas that has been upgraded to biomethane by removing most of the carbon dioxide, water vapor, hydrogen sulfide, and minor contaminating gasses can do anything natural gas can: • Heat buildings,

• Be fermented by microorganisms to make biofuels or high-value

biochemicals.

Q: How much does the technology cost?

TG: The expenses are confidential business information. I can tell you, however, that getting into biogas was a very wise business decision for Teck Guan. Our anaerobic digesters are remarkably productive. We have enough biogas to fuel brick kilns and enough left over to support several MW gas generators.

• Fuel boilers to generate steam, • Fuel gas generators for electricity, Datuk Raymond Tan visiting the brick factory of Teck Guan

• Be compressed and used to run cars and trucks, like the taxis in West Malaysia, • Be converted into methanol, which can be mixed with gasoline or used as a platform chemical, • Be converted into liquid drop-in fuels to replace gasoline,

The bricks in the brick factory of Teck Guan

• Be converted into

biohydrogen for fuel cells,

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TAKING THE PLUNGE Sabah’s brave journey to oil palm value-adding

time a major exporter of beans, but not the high-value chocolate and other products.

S

ince its independence in 1963, Sabah has been trying to shake off the colonial legacy of lowvalue economy dependent on agriculture and the exploitation and export of raw commodities.

It hasn’t been easy.

It began in the early 1900’s with timber. Vast tracts of primary forests were exploited but only round logs and some sawntimber were exported. Local workers were employed in logging camps. Any economic spin-off was minimal. Then the British brought into Sabah (then North Borneo) hordes of foreign workers to plant rubber and the rubber sheets produced were exported.

Malaysia was formed and offshore oil and gas were discovered in Sabah. They were exported, too. Along came cocoa. The industry became so large that Sabah was at one

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Planters ditched cocoa in the 80s because of pest issues and promises of better returns in oil palm. Today, any talk about cocoa would be about the missed opportunities. Oil palm is different. Sabah is now the biggest producer of crude palm oil in Malaysia, accounting for about 30% of the national output. The state has about 1.45 million hectares of some of the highest yielding plantations in the country.

“We were thinking so what if we are a major producer. We needed to do something to deepen the oil palm industry, to make it meaningful to the people of Sabah in terms of enjoying the spread effects of an industry that contributes more than 30 per cent of Sabah’s GDP,” recalled Datuk Dr Pang Teck Wai, the chief executive officer of the Sabah government-owned POIC Sabah Sdn Bhd. “We didn’t do much with timber. We missed the boat with cocoa. We know we cannot afford to fail with oil palm.”

Datuk Dr Pang Teck Wai, Chief Executive Officer, POIC Sabah Sdn Bhd

An economist, Dr Pang led a group of government officers in a feasibility study on a proposed palm oil industrial cluster to promote oil palmrelated downstream valueadding industries. The idea was in line with objectives in the Sabah Industrial Master Plan (of which Dr Pang was among the authors) to diversify Sabah’s economic base by promoting resource-based industries to generate new wealth and create jobs.

The government took the plunge and registered POIC Sabah Sdn Bhd, wholly-owned

by Chief Minister Incorporated and placed under the purview of the Ministry of Industrial Development. Its anchor project: Lahad Datu palm oil industrial cluster, or better known as POIC Lahad Datu.

Today, as POIC Sabah Sdn Bhd approaches its 10th anniversary of inception, oil palm industrialization through the clustering concept is well and truly on its way.

With over RM3 billion in

investments, POIC Lahad Datu is the only cluster of its kind in Malaysia and its model is being studied and considered for replication in Sarawak and Indonesia.

Dr Pang attributed the rapid progress of POIC Lahad Datu to the support of the state and federal governments.

A RM500-million container terminal is under construction.

When completed in 2017, POIC Lahad Datu will be an industrial cluster with a comprehensive range of port infrastructure.

Completed earlier and now in operation are a liquid terminal and a bulk terminal, and a pipe-rack system that connects factories to the liquid terminal.

The project has so far received over RM1 billion in allocation with which it has developed phases 1 & 2 covering 1,150acre.

“What slowed Sabah’s industrialization ambition has been the absence of adequate infrastructure. We are fortunate to have government leaders and officers who appreciated that, and gave us the support

and funding to allow POIC Lahad Datu to have a competitive edge,” Dr Pang said.

As the container terminal takes shape and investors in phases 1 & 2 continue to erect their factories, POIC Lahad Datu has embarked on the development of phase 3, covering some 3,000 acres. Expected to rise from this former undeveloped land will be industrial clusters, notably a refinery cluster leveraging on the availability of oil palm biomass.

Governments and companies, including from Malaysia, from across the globe are in pursuit of renewable energy and optimization of resources. In Malaysia, the National Biomass Strategy 2020 and the Economic Transformation Programme target to generate about RM30 billion in gross national income from biomass. These national agendas have identified Sabah as the hub for the exploitation of biomass.

The key to making biomass industry a reality in Sabah is the aggregation of biomass, produced in plantation and

mills spread over a wide area.

POIC has spearheaded the formation of a biomass jointventure between competing oil palm mills as one of the ways of aggregating biomass. It is also on the verge of setting up a biomass collection centre at POIC Lahad Datu.

‘The potential uses of biomass are widely known and companies wanting to use biomass to produce second generation biofuel and other valuable oleo derivative products are lining up … waiting for us to assure them of biomass availability,” said Dr Pang. “I think we are finally getting there.”

Globally, experts are predicting a quantum leap in interests in biomass in response to sentiments for sustainability, renewability and ‘green’ label.

Said Dr Pang: “Buy-in (by government and industry players) is the key connecting all the dots to making biomass the next big thing in our industrialization and economic expansion.’

By CC Pung

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BANDAR TITINGAN TAWAU TAKES ANOTHER STEP TOWARDS REALIZATION

T

Bhd. (ABT) firming up the commitment of both parties to implement the visionary development over the next 15 years.

The first pact was inked between Sabah Economic Development Corporation (SEDCO) and the project initiator and developer, Akar Budi Tuah Sdn.

The second agreement was signed between ABT and PBJ Properties Development Sdn. Bhd. for the construction of the first phase of the project comprising a specialist medical center, a hotel, commercial and office lots,

he long-anticipated Bandar Titingan Tawau (BTT) is set to commence its initial development soon with the signing of two joint venture agreements for the project in Kota Kinabalu recently.

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and a service apartment.

The first phase would cost approximately RM49 million.

The development of BTT is aimed at enhancing the livelihood of the surrounding community and transforming the existing Kg. Titingan into an orderly planned and modern township. The overall development on the 326-acre reclaimed site

will feature six components namely Commercial Lots (Shopping malls, hotels, offices, shops etc), Public Infrastructure (Administrative centre, educational institutions, CIQ); Mixed-Development (Waterfront, Condos, SOHO & club-house); Housing & Residential; open space & landscape and other amenities.

BTT intends to offer a conducive and balanced living environment through the harmonizing of the people, nature and technology elements. ”BTT goes in tandem with the pace of development in Tawau and the economic potentials of the district and its surrounding areas. It augurs well for the people here in view of the

ever increasing standard of living, higher population growth and Tawau’s strategic location as a gateway for trade and tourism to neighbouring territories.” said SEDCO Chairman, Dato’ Sri Hj Nasir Tun Sakaran.

Tawau district to progress into a hub for commerce, education, healthcare and recreation hence an attractive gateway for the East ASEAN Growth Area populace.

Present to witness the signing ceremony was The project he added is in Apas Assemblyman cum line with SEDCO aspiration Minister of Youth & Sport, in that the pursuit of Datuk Hj Tawfiq Datuk Hj commercial objectives Abu Bakar Titingan and should not neglect the Permanent Secretary to interest and well being of the Ministry of Industrial the community. ”It also Development cum SEDCO upholds our entrepreneurial Director, Datuk Hj Hashim objective whereby local Paijan. In the SEDCO-ABT entrepreneurs will be given JV Agreement, SEDCO the opportunity to take was represented by Dato’ part in the development Sri Nasir & Group General of BBT itself as well as in the Manager, Pengiran future economic activities Saifuddin Pg Tahir while ABT within the area”, he said. by its Chairman, Datuk K.Y. Mustafa and Managing Once fully executed, BTT Director, Dr Ismail Idris. will be the catalyst for

Bandar Titingan Tawau project signing

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SABAH GOES WEST

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he Ministry of Industrial Development Sabah through the Department of Industrial Development and Research (DIDR), collaborated with Malaysian Investment Development Authority (MIDA), POIC Sabah Sdn. Bhd., Sawit Kinabalu, K.K.I.P. Sdn. Bhd. and Sipitang Oil and Gas Development Corporation Sdn. Bhd. (SOGDC), to organize a seminar on Investment Opportunities in Sabah.

The seminar had about 150 participants. The objective of the seminar was to highlight potential business ventures and investment opportunities that are available in Sabah. It was held in Aloft Kuala Lumpur Sentral, Kuala Lumpur on September 11, 2014.

Topics that were mainly focused was on sectors such as oil palm, biomass, oil & gas, logistics, and small & medium

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enterprises (SMEs).

Deputy Chief Minister cum Minister of Industrial Development Sabah, Datuk Raymond Tan officiated the seminar, gave his keynote address as well as moderated the Q&A session.

In his speech, he said that Sabah aims to attract more than RM5 billion worth of investments in the manufacturing sector this year alone.

Those who attended the seminar were mostly interested local companies and ambassadors from various countries such as Singapore, Korea, Poland, Denmark, Canada, India, Australia, Zambia, Spain, Lesotho, Czech Republic and Peru, to name a few.

SABAH’S FIRST ECO-FRIENDLY TWIN TUNNEL

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abah’s first ecofriendly twin tunnel project started in October 2011 and it is scheduled to be opened to traffic on April 2015. The 600-meter tunnel, which was implemented by the state’s Infrastructure Development Ministry has an estimated cost of RM60 million. The new route shortens the stretch from the container terminal at the Sepanggar Bay to Kota Kinabalu Industrial Park by 3km, compared with the previous 10km via the Sulaman-Sepanggar Bay route.

On May 20, 2014, Chief Minister Datuk Seri Musa Aman officiated a ceremony for the construction of Sepanggar Tunnel .

These tunnels also shorten the distance to Universiti Teknologi Mara (UiTM) by 7km, thus creating more road links.The chief

minister also mentioned that the tunnel and road construction has started combining environmentally

friendly methods and high technology in order to minimize the negative impact on the environment.

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Ministry of Industrial Development

Tingkat 9, 10, 11, Blok C, Wisma Tun Fuad Stephens, Karamunsing, Beg Berkunci No.2037, 88622 Kota Kinabalu, Sabah, Malaysia.