"There is a strong push from the government to facilitate growth of the chemical industry here, but we need partners to bring in expertise and new technologies to further develop the industry."

Dato’ Muhtar Hashim

EXECUTIVE DIRECTOR, CHEMICAL INDUSTRIES COUNCIL OF MALAYSIA (CICM)

June 23, 2022

Could you introduce CICM to our international audience?

CICM was created 40 years ago, and currently has a membership of 115 companies, half of which are manufacturers, categorized as ordinary members, while the rest are associates members, comprising of service providers to the chemical sector, like logistics, warehousing, consultants and others. At an organizational level the Council is divided into different committees across four core activities: Responsible Care, Regulatory Affairs, Safe Road and Business Support & Development. As a custodian of Responsible Care initiative in Malaysia, this committee represents CICM’s flagship role. The Regulatory Affairs Committee looks after compliance matters and acts as a liaison arm between members, government agencies and regulatory bodies. Our Business Support and Development Committee plays an outreach function for members to network and find parties to collaborate with. Equally important, focusing on safe handling and transportation of chemicals, we have the Safe Road Committee to provide guidance to our members in this area. As part of our effort to promote awareness about the industry, CICM conducts various activities like the yearly Responsible Care Run to engage with the public. We also organize regular seminars and webinars, as well as an annual Responsible Care Awards and the Chemical Industry Dinner.

How significant is the chemical industry to Malaysia’s economy?

The industry is made of more than 100 large corporates and thousands of smaller support businesses that complete a widely diverse ecosystem. The industry is a significant contributor to the country’s economy as the third biggest export earner, after electronics and petroleum products. In 2021, chemicals represented 5.7% of total export proceeds - or the equivalent of US$16.7 billion. 50 years ago, small fertilizer companies started to spring off the country’s large agriculture sector; the chemical industry then grew into production of basic downstream chemicals like methanol and ethanol. Around 35-40 years ago, world scale petrochemical plants were built to produce ammonia, ethylene, propylene, polymers and aromatics. The industry grew in East Malaysia, as well as the east coast of the peninsula, where natural gas is available. More recently, in the state of Johor, a special petrochemical complex designed to encourage the production of downstream specialty chemicals that can feed off the olefins from a naphtha-based refinery was developed to be an integrated refinery and petrochemical hub. The Malaysian chemical sector had attracted US$1.3 billion of investment in 2021, and the government is eager to attract further investment.

What makes Malaysia an attractive investment destination for chemical players?

Our geographical position makes Malaysia an important base not just for production, but also for the growing need for storage, especially in Pengerang, at the southern tip of Peninsula Malaysia. The country’s infrastructure is also mature, with plenty of deep ports, airports, and specialized LNG terminals in Bintulu, Pengerang and Melaka, among others. The availability of natural resources also plays strongly as an advantage. Malaysia is a very stable country. Various incentives to attract foreign investors as well as skilled foreign workers have been put in place.

How is Malaysia recovering after the pandemic?

The number of cases has gone down significantly. However, precautionary restrictions remain in place. We are in a transitional phase whereby most people still work from home. The chemical industry is still getting used to new ways of working.

What are some of the key challenges the industry faces?

Many of our members have flagged logistics as a particularly sore issue. The regulatory environment for logistic companies has changed drastically, with customers demanding compliance with carbon emission requirements and sustainable packaging to reduce plastic waste, as an example. The arrival of AI, digitalization, 5G and other technologies have also put pressure on companies to become more competitive. The impact of global geopolitical issues also trickle down to the Malaysian marketplace. The current conflict in Ukraine has pushed up the prices of crude and palm oil, posing severe challenges to many manufacturing units but, on the flipside, it also churns out opportunities for some, at least in the short run.

Do you have a final message?

I invite chemical players to come to Malaysia, talk to the industry people here, consult CICM and our government agencies, to obtain a firsthand picture of what the country offers. There is a strong push from the government to facilitate growth of the chemical industry here, but we need partners to bring in expertise and new technologies to further develop the industry.

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