The Sarawak Corridor of Renewable Energy (SCORE) was largely responsible for Sarawak’s receiving the most foreign direct investment (FDI) of any of Malaysia’s states over the first nine months of 2014, valued at RM8.7bn ($2.6bn). In all, the corridor has generated a cumulative investment value of RM32.9bn ($10bn) between its launch in 2008 and the end of 2014, with RM27bn ($8.2bn) being directed towards energy-intensive plants in the Samalaju Industrial Park (SIP).
SETTING THE TONE: One of the pioneer investors into the corridor was Malaysian company Press Metal, which established South-east Asia’s first aluminium smelting plant with capacity of 120,000 tonnes per annum (tpa), in Mukah in 2009. Two years later, the company constructed a second, much larger R1.8bn ($547.6m) 320,000-tpa, facility in SIP. “There are not many other places in the world where hydropower is available near to consumers and where hydro plants are able to be located in areas which do not require long transmissions lines in order to be accessible,” Paul Koon, the group CEO of Press Metal, told OBG.
Japan’s Tokuyama begun construction of a polycrystalline silicon manufacturing facility in 2011. The first phase of the factory came on-line in 2014, and in total the company has committed RM8.4bn ($2.6bn) towards projects in the state. According to the company, its motivation behind selecting Sarawak as the location for the base for its solar manufacturing expansion was driven by favourable feedstock and sourcing conditions as well as the state government’s support in acquiring permits, licences and eligible tax incentives.
OM Material Sarawak (OMS), a joint venture comprising Singapore’s OM Holdings and local conglomerate Cahya Mata Sarawak (CMS), also stands to be a major beneficiary from SCORE, having been awarded a number of keynote construction projects including work on the Pan-Borneo Highway. Another example of a collaborative investment – this one entirely foreign – involves a consortium of Japan’s Sumitomo, South Africa-based miner Assmang and Taiwan’s China Steel known as Sakura Ferroalloys, which is building a RM3.4bn ($1bn), 169,000-tonne manganese alloy smelting plant.
BIG SPENDERS: Rounding out the list of investors who have so far made a capital investment in excess of RM1bn ($304.2m) in the park are two minerals companies. First, Pertama Asia Minerals began construction of its manganese alloys and ferrosilicon smelting plant in 2011. Malaysian Phosphate Additives, another venture involving CMS, is behind the construction of South-east Asia’s first integrated phosphate complex, anticipated for full commissioning in 2018 and valued at RM1.04bn ($316.4m).
“There is a huge potential for the phosphates industry to blossom within SIP.” Lim Lee Wan, managing director of the company, told OBG. “Along with the relevant government players, we are actively looking to attract other players in the downstream phosphates industry to set up within the park so as to have the complete supply chain within one concentrated area in Sarawak.”
SPREADING THE WEALTH: SCORE’s flagship investments outside of Samalaju have for the most part been concentrated in and around Tanjung Manis. In December 2014 Sarz Al Yahya Corporation announced that it will be investing RM3bn-5bn ($912.6m-1.5bn) over the next five years to develop a nipa palm plantation and sap processing complex. Nipa palm is more economical to harvest than palm oil or rubber and the sap can be used to produce sugar, vinegar and ethanol. Meanwhile, Taiwan-based Sea Party international will commit RM2bn ($608.4m) into Tanjung Manis Halal Hub, investing in aquaculture activities such as tilapia breeding and production of halal collagen and gelatine.
Another privately held local conglomerate attracting investors into SCORE is the Hock Lee Group, which has formed a consortium with Brooke Asia and Biochemtex Agro to spend $1bn over the next five years on the construction of Asia’s first second-generation bioethanol and biochemical refinery. Under the name Brooke Renewable, the consortium has said the facility is expected to be established in the vicinity of Bintulu.
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