INDUSTRIALISING SABAH THROUGH BIOECONOMY

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1 20 & 21 April 2015 Monday & Tuesday The Magellan Sutera, Sutera Harbour Resort, Kota Kinabalu INDUSTRIALISING SABAH THROUGH BIOECONOMY Datuk Dr. Pang Teck Wai & Dr. Lee Ming Tong

2 PRESENTATION OUTLINE Introduction Sabah Economic Development Agenda Bio-resources in Sabah for Economic Development POIC Lahad Datu: Industrialisation for Bio-Based Economy Development Concluding Remarks

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4 INTRODUCTION Bio-based economy potential in Sabah How to realise the bio-based economy in Sabah

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6 SABAH ECONOMIC DEVELOPMENT STATUS (2014) Economic Activities GDP Value (RM Million) Percentage % Agriculture 9, Mining & Quarrying 9, Manufacturing 3, Construction 1, Service 22, Import Duties Total 45, Source: Department of Statistics Malaysia, Sabah (2014)

7 GDP SABAH INDUSTRIAL DEVELOPMENT 2015 & % 35% 30% 25% Sabah Malaysia 25% 35% 20% 15% 10% < 10% 5% 0% Industrialising Sabah, a key development agenda of State government No economy can be developed by-passing industrialisaton

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9 SABAH, MALAYSIA: RICH IN BIORESOURCES Vast Land Area (73,620 km 2 ) (Agriculture/Forestry) Long Coastline (1,743 km) (Aquaculture) Abundant Bio-feedstock Development of Bioeconomy through Industrial Biotechnology

10 LAND USE IN SABAH (2014) Land Use (000 ha) % National Forests & State Land 4, Plantation Forest Oil Palm Plantations 1, Rubber Holdings Rice Fields Coconut Farms Cocoa Holdings Other Crops Other Land Uses Total 7, Source: Department of Statistics Malaysia, Sabah (2014)

11 OIL PALM INDUSTRY IN SABAH, MALAYSIA (2014) Sabah Malaysia Oil Palm Planted Area (Million Ha) 1.51 (28 %)* 5.39 Palm Oil Mill (No.) Palm Oil Refineries (No.) Palm Kernel Crushers (No.) 127 (28.9%) (22.2%) (29.5%) 44 Oleochemical Plants 0 (0%) 17 Crude Palm Oil Production (Million Tonnes) Crude Palm Kernel Oil Production (Mil. Tonnes) Potential palm-based biomass (Million Dry Tonnes) 6.05 (30.8%) (27.5%) (35%) 80 * Figure in parenthesis denote % national total Source: Malaysian Palm Oil Board (MPOB) Website, 2015 Statistics

12 BASIC RAW MATERIALS FROM OIL PALM TREE Palm Oil Tree Fronds Fresh Fruit Bunches Trunks Milling Process Biomass Palm Kernel Oil Crude Palm Oil Empty Fruit Bunches (EFB) Palm Kernel Shells (PKS) Mesocarp Fiber (MF) Palm Oil Mill Effluent (POME)

13 OIL PALM BIOMASS RESOURCES IN SABAH Biomass Type Mil. Dry Tonnes/Year Oil Palm Fronds Oil Palm Trunks Empty Fruit Brunches Mesocarp Fibres Palm Kernel Shells Palm Oil Mill Effluent TOTAL :

14 VALUE ADDING OPPORTUNITIES IN PALM-BASED BIOMASS DOWNSTREAM INDUSTRIES Feedstocks Currently Underutilised Oil Palm Fronds Downstream Opportunities 16.4 million dry tonnes Oil Palm Trunks Bio-Pellets Bio-Fuels Furniture from Oil Palm Lumber Bio-Ethanol Wood Plastic Composite Bio-Based Chemicals Plywood Current Focus at POIC Lahad Datu: Bio-refinery Bio-fuels 4.5 million dry tonnes Empty Fruit Bunches Particle Board / Molded Particle Board MDF Pulp & paper Finished Paper Products Bio-chemicals Bio-pellets 2.3 million dry tonnes Compost/fertilizer Fibre Animal Feed from Oil Palm Fronds

15 VALUE ADDING OPPORTUNITIES IN PALM-BASED BIOMASS DOWNSTREAM INDUSTRIES Products Currently Exported Downstream Opportunities Crude Palm Oil Refined Palm Oil Palm Olein Palm Stearin Refined Palm Kernel Oil Crude Palm Kernel Oil Palm Kernel Olein Palm Kernel Stearing FOODS PHYTONUTRIENTS OLEO-CHEMICALS BIO-REFINERY Cooking Oil Carotenes Methyl Ester Bio-chemicals Shortening Tocols (Vitamin E) Personal Care (petroleum Margarine Co-enzyme Q 10 Products substitutes) Vanaspati Squalene Cosmetics Confectionary Phytostrols Plastics Bakery Fats Lecithin Textile Processing Ice cream Metal Processing Cocoa butter Lubricants alternatives Emulsifiers Specialty fats Soap Noodles Degreasing Confectionary fats Compound Coffee Whitener/ Protective Creamer Coatings Filled Milk Explosives

16 VALUE ADDITION TO PALM-BASED BIOMASS PRODUCTS Bio-chemicals Bio-ethanol Wood products Pellets Bio-energy Animal feed fertilizer Source: Agensi Inovasi Malaysia (AIM), Value (RM/tonne dry biomass)

17 VALUE ADDITION TO PALM OIL INDUSTRY RM / MT 11,000 15,000 5,000 8,000 3,500 5, ,300 Source : Malaysian Biotechnology Corporation 2014

18 POTENTIAL IMPACT OF PALM BASED BIOCHEMICAL INDUSTRIES INVESTMENT ON SABAH ECONOMY Feedstock source Total quantity (Mil. tonnes per year) Max unit value (RM/tonne per year) Total value (RM billion per year) Palm-based biomass 30 3, billion Palm oil , billion At 1% contribution to investment share FDI = RM2 billion per year: sufficient to effect industrial shift Sabah s economy

19 COASTAL BIORESOURCES IN SABAH Total coastal length in Sabah: 1,743 km (longest in Malaysia) Lahad Datu marine fishing area: 3,700 sq. km. Abundant natural fishing reefs Existing fishing villages and aquaculture investors Proposed location of National Aquaculture Key Strategic Partners : Biotech Corporation Malaysia & Fisheries Department Sabah

20 POIC LAHAD DATU: STRATEGIC LOCATED WITH INSTALLED INFRASTRUCTURE TO ACCELERATE THE AQUACULTURE INDUSTRIAL DEVELOPMENT IN LAHAD DATU

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22 POIC LAHAD DATU, SABAH Background: Set-up in January 2005 under POIC Sabah Sdn Bhd. Wholly owned by Sabah Government of Sabah under the purview of Ministry of Industrial Development (MID). As the first comprehensive developed (infrastructure) palm oil industrial cluster in the world. Project development : 4,400 acres of integrated Industrial complex designed to cater for light, medium and heavy industries. Objectives: To value add to palm oil and palm biomass. Development of related and other industries. Creating job and investment opportunities.

23 POIC LAHAD DATU: LOCATED AT THE CENTRE OF OIL PALM GROWING BELT IN SABAH Availability of raw materials: At the vicinity of : 1.51 million hectares oil palm plantations 124 crude palm oil mills 14 palm oil refineries Easy access to : 6.05 million tonnes of Crude Palm Oil 28 million dry tonnes of palm-based biomass for downstream activities

24 NATURAL DEEP SEA PORT & LARGE INDUSTRIAL LAND BANK PHASE 2 PHASE 1 PHASE 3 Deep & sheltered harbour ~ depth up to over 20-metres 20,000 acres of land bank along the coast line

25 PORT & INDUSTRIAL INFRASTRUCTURE AT POIC LAHAD DATU Piperacks Liquid Bulk Terminal Interchange Dry Bulk Terminal Electricity Container Terminal Ready by 2017 Water Bulking Facilities

26 POIC LAHAD DATU INDUSTRIALISING SABAH THROUGH INDUSTRIAL CLUSTERING CONCEPT CPO MILLS PALM OIL REFINERIES FOOD BASED INDUSTRY HOTEL & HOSPITALITY NUTRA- CEUTICAL INDUSTRY PORT HANDLERS /OPERATORS BULKERS FINANCIAL INSTITUTIONS LAND DEVELOPERS EDUCATIONAL INSTITUTIONS PORT & LOGISTICS CLUSTER SMI CLUSTER OIL PALM PLANTATIONS FERTILIZERS BIO REFINERY Oil Palm Industrial Cluster, Aquaculture Industrial Cluster and Other Clusters OIL PALM INDUSTRIAL CLUSTER BIOPELLET INDUSTRY BUILDING MATERIALS & CONSTRUCTION OLEO- CHEMICALS INDUSTRY BIOFUELS INDUSTRY WAREHOUSES PACKAGING TECHNOLOGY PROVIDERS TRANSPORTATION COMPANIES MACHINERY EQUIPMENT COMPANIES REAL ESTATE COMPANIES HALAL PRODUCT MANUFACTURERS RESEARCH INSTITUTES GOVERNMENT & RELATED AGENCIES ENERGY SUPPLIERS OIL & GAS CLUSTER AQUA/AGRO INDUSTRIAL CLUSTER HALAL CLUSTER BIO- TECHNOLOGY CLUSTER

27 AQUACULTURE INDUSTRIAL CLUSTER AQUA BROOD STOCKS AND HATCHERIES FRESH SEAFOOD INDUSTRY AQUA FEED SUPPLIERS AQUA FACILITIES AND EQUIPMENT SUPPLIERS FISH CULTURE OTHER AQUA- CULTURE SEA CUCUMBER CULTURE AQUACULTURE PRODUCTION INDUSTRY MOLLUSCA CULTURE SEAWEED CULTURE CRUSTACEANS CULTURE AQUA-BASED HEALTH PRODUCT INDUSTRY PROCESSED SEAFOOD INDUSTRY AQUA-BASED COSMETIC PRODUCT INDUSTRY WATER TREATMENT, SUPPLY & SERVICES AQUA-HEALTH TREATMENTS, SUPPLY &SERVICES R&D INSTITUTION AQUACULTURE TECHNOLOGY PROVIDERS PROCESSING FACILITIES FINANCIAL INSTITUTIONS COLD STORAGE & PACKAGING TRANSPORTATION COMPANIES GOVERNMENT & RELATED AGENCIES

28 POIC LAHAD DATU: STRATEGY TO DEVELOP BIO-BASED ECONOMY IN SABAH BIO-BASED ECONOMY Oil Palm Cluster Halal Cluster Biotechnology Cluster Palm Oil Palm Biomass Oil Palm Based Foods Phytonutrients Oleo-chemicals Biorefininery Fertilisers Animal Feeds Bio-energy Wood Products Bio-ethanol Bio-chemical Foods Phytonutrients Aquaculture Fish Others

29 POIC LAHAD DATU: LAND DEVELOPMENT MASTERPLAN Bio-refinery Phase 2 Phase 3A

30 POLICY SUPPORT: LEAP FROG THE BIO-BASED ECONOMY Needs: Basic infrastructural development E.g. of Specialty infrastructure: canning, cold storage, packing, processing, handling facilities

31 CONCLUDING REMARKS Sabah is rich in land (oil palm) and sea bio-resources for bio-based economy development amounting to as high as several hundred billion Ringgit Malaysia per year. POIC Lahad Datu s industrialization model is tailored made to realise the bio-based economy development in Sabah. Developing bio-based economy is a necessary condition towards transforming Sabah into developed economy. FDI is critical in developing Sabah s bio-based economy. Appropriate policy support to accelerate the potential of bio-based economy development in Sabah.

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