Malaysia Chemicals Report 2009

The chemicals industry is one of Malaysia’s key industries, catering not only for its own national requirements but also exporting to a number of countries worldwide. The Malaysian chemicals and chemical products industry has become the second largest contributor to the manufactured exports sector, after the electrical and electronics industry. Vast petroleum and palm oil resources have enabled Malaysia to establish itself at the forefront of chemicals export. In 2008, MYR64,808mn (US$18,021mn) worth of palm oil and palm oil based products were exported from Malaysia, according to the Department of Statistics Malaysia. Meanwhile, MYR43,698mn (US$12,156mn) worth of crude petroleum and MYR28,635mn (US$7,962mn) worth of other petroleum based products were exported, forming a large part of Malaysia’s MYR663,494mn (US$184,446mn) export total for 2008.

Projects And Expansions

In March 2009, Malaysia Chemicals major CCM launched a MYR10mn (US$2.8mn) hi-tech R&D facility, called Innovax. The new centre will be used to help the manufacture and development of new pharmaceuticals products. Meanwhile, in May 2008, CCM entered into a strategic supply deal with Jordan-based The Arab Potash Company. CCM is looking to guarantee its supply potassium chloride and therefore help the smooth operation of its fertilisers division.

Trade Agreements In December 2008, Malaysia’s minister of international trade and industry bought the Association of Southeast Asian Nations (ASEAN) region closer to its goal of forming an integrated economic community after signing three agreements with Singapore.

Meanwhile, in February 2009, both Japan and Malaysia introduced the ASEAN-Japan Comprehensive Partnership Agreement (AJCEP). The AJCEP is based on bilateral economic partnership agreements between Japan and individual ASEAN nations and is the third major regional agreement implemented in East Asia. The first was the China-ASEAN FTA, which was introduced in 2005, while in 2007 the Korea- ASEAN FTA was agreed.

Industry Forecast The Malaysian chemicals industry witnessed 37% growth in domestic sales value in 2004 and sustained solid growth up until mid-2008. It expanded rapidly and had been forecast to reach sales figures of MYR60816mn by 2009. However, BMI has now revised our forecast downwards, as recent events have halted this rapid expansion, and we expect chemical sales to contract in 2009 before recovering, alongside the economy, in 2010. The output for petroleum, chemical, rubber and plastic products fell by 17.1% year-on-year in January 2009. Production of rubber and plastic products shrank 27.1%, while chemicals and chemical products were the worst hit with output shrinking by 29.9% y-o-y.