Investments in oleochemicals projects in Malaysia have more than doubled during the first five months of 2014, the Malaysian Investment Development Authority recently disclosed.
Plant- and animal-derived oleochemicals are fatty acids, fatty alcohols, glycerols and esters used in biobased lubricants. With at least 16 production facilities and a 20 percent share of the global production capacity, Malaysia is the worlds largest producer of oleochemicals, according to the MIDA.
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Eight oleochemical investments in Malaysia – worth a total of RM 13.8 billion (U.S. $4.4 billion) – were approved between January and May, compared to four projects totaling RM 482 million ($153 million) for all of last year, according to the agencys Seminar On Oleochemical Industry held in Malaysia in August.
Investments from the United States, Japan, Europe and Turkey amount to RM 7.6 billion ($2.4 billion) of total capital, and domestic investments account for the other RM 6.2 billion ($2 billion).
Malaysia is the second-largest producer of palm oils, and more and more palm oil production companies, commonly known as plantation companies in Malaysia, have ventured into downstream oleochemical projects through joint ventures. Examples include IOI Group Bhd., Genting Plantations Bhd., Felda Global Ventures Holdings Bhd., and overseas companies, such as Singapore-based Wilmar International Ltd. and Lam Soon Hong Kong Ltd.
Malaysias Emery Oleochemicals, a 50-50 joint venture between Thailands government-owned olefins and aromatics manufacturer PTT Global Chemical Public Co. Ltd. and palm oil production company Sime Darby Plantations Bhd., reported revenue of U.S. $1 billion in 2013. Emery Oleochemicals produces a range of lubricants, hydraulic fluids, greases and metalworking fluids from production facilities in Malaysia, the U.S. and Germany.
Malaysia has the raw materials but still lacks the technological innovation, the MIDA said. To continue attracting foreign investments and technology for the industry, Malaysia will continue to provide tax exemption incentives like its Investment Tax Allowance and Pioneer Status income tax exemptions, whereby up to 100 percent of investment tax may be exempted.
In 2013, global oleochemicals productionamounted to 15.7 million tons andAsia was the largest producer with a share of 11.1 million tons, according to data released by LMC International, an independent consultancy firm for the agribusiness sector.