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US$9 billion for expansion of Pulau Muara Besar complex

BANDAR SERI BEGAWAN – Hengyi Industries will sink US$9 billion into the Phase II expansion of the Pulau Muara Besar petrochemical complex, the minister at the Prime Minister’s Office (PMO) said Tuesday.

Speaking at the Legislative Council, Pehin Dato Hj Halbi Hj Mohd Yussof said the expansion was still in the planning stage, but dredging works and land reclamation is already underway on Pulau Muara Besar and slated for completion by the end of the year.

In Phase I, Hengyi Industries invested US$3.45 billion for the construction of an oil refinery and aromatics plant, which began operations in November 2019.

Phase II will be significantly larger, increasing capacity of the oil refinery from 160,000 barrels/day to 280,000 barrels/day. The Chinese firm will also build a paraxylene unit, an ethylene plant and purified terephthalic acid (PTA) facility.

The expansion of the downstream oil and gas sector is expected to drive Brunei’s economic growth and post-COVID recovery, with petrochemical products now accounting for the bulk of the country’s exports.


Source: The Scoop

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Brunei economic recovery on the cards in 2023: CSPS projections

Brunei Darussalam’s positive economic growth forecast this year takes into account recovery and economic diversification efforts especially the downstream oil and gas industry relating to Hengyi Industries Sdn Bhd, Brunei Methanol Company Sdn Bhd and Brunei Fertilizer Industries Sdn Bhd.

The forecast also considers internal and external factors such as the spread of a new COVID-19 variant, the continued geo-political situation, high inflation rate, global economic recession and uncertain oil and gas prices and production output.

This was said by Minister at the Prime Minister’s Office and Minister of Finance and Economy II Yang Berhormat Dato Seri Setia Dr Awang Haji Mohd Amin Liew bin Abdullah yesterday during the 19th Legislative Council session.

He said the Centre for Strategic and Policy Studies (CSPS) Economic Outlook 2023 states that the nation’s economy is projected to grow by 2.6 per cent, following a two-per-cent growth in oil and gas sector, where production is expected to increase while activities in non-oil and gas sector are also expected to record a 2.8-per-cent growth.

The CSPS also forecasts the inflation to drop to 2.5 per cent.

The International Monetary Fund (IMF), ASEAN+3 Macroeconomic Research Office (AMRO) and Asian Development Bank (ADB) have also projected positive economic growth this year, at 3.3 per cent, 3.0 per cent and 3.6 per cent respectively.

The IMF, through its World Economic Outlook, in January 2023 projected the global trade volume to slow from 5.4 per cent in 2022 to 2.4 per cent this year before bounding to 3.4 per cent in 2024 due to forecast by the global economic association that the global demand is reduced, affecting global trade.

Source: Borneo Bulletin

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Asean’s place in a ‘dramatically altered’ world

ECONOMIES have slowed down sharply. Long dormant inflation has erupted. Central banks have switched abruptly from long-term quantitative easing to rapid quantitative tightening, with recent rate hikes triggering the sudden failure of several banks.

Indeed, with these snatching headlines, the environment for business has “dramatically altered” as the world returns to a post-Covid, new normal, said Frederick Chin, UOB’s head of group wholesale banking and markets.

Speaking in a keynote address at the 12th Wee Cho Yaw Business Forum on Mar 17, he identified three key opportunities for Asean. The one he delved a little more deeply into, however, was Asean’s advantage in a re-globalised world.

He said the decoupling of US and China since the 2018 trade war might have dampened the globalisation momentum, but major economies remain highly interconnected, thriving on trade and collaboration.

Today’s multipolar world, he continued, should thus be expecting a new post-Covid era of re-globalisation alongside a different set of geopolitical objectives, which would lead to new investment opportunities for Asean.

This is because Asean remains competitive – in terms of its cost, young labour force, and infrastructures – to take advantage of reorganised supply chains, he said.

With that, he believes that Singapore’s total trade flows will exceed its current estimated valuation of about US$1 trillion annually. “I expect that number to grow larger as Asean is poised to return as the production base to the West and China,” he said.

The US$1 trillion figure, he noted, was calculated based on Singapore’s 40 per cent stake in Asean trade, owing to its status as a transshipment hub and financial centre.

Zooming in on the Asean trade pie, estimated to be closer to US$2.5 trillion, Chin said just under US$900 billion relates to the region’s trades with China, while over half a trillion US dollars relates to its trades with the US.

Intra-Asean trade accounts for another US$600 billion to US$650 billion, while Asean trades with Europe make up the last remaining chunk.

The forum that Chin spoke at was organised by the National University of Singapore’s (NUS) Global Asia Institute, with UOB as the strategic partner. 

The annual event, which was established in 2008 with a donation from then-UOB chairman Wee Cho Yaw and his family to bring together academic and industry experts to share thought leadership, returned this year after taking a three-year pause due to the pandemic.

Before an audience of more than 240 business leaders, Chin also spoke about the enduring place of technology and innovation, and opportunities in global climate action.

While noting that cheap capital is of the past and high valuations are destroyed in the tech sector, he said that “more opportunities will arise as companies transform their organisation and operations”.

“Technology and innovation will continue to shape and reshape our lives and remain a core investment theme for all sectors,” he added. Nevertheless, he noted monopoly, ethics and cyber risks as external negativities to watch in the sector.

Within climate action, he pointed out that the 2050 transition capital requirement is more than US$120 trillion, of which 50 per cent will be in Asia.

“This provides new opportunities as companies decarbonise their operations, and transition towards net zero targets,” he said. “To seize the opportunity presented for businesses within Asean, we must be prepared.”

Besides, environmental, social and governance (ESG) issues are becoming mainstream and last November’s United Nations Convention on Climate Change emphasised implementation, he added.

Implementation happened to be the topic of the panel discussion that followed, in which Japfa chief financial officer Kevin Monteiro shared how he used a “whole of company” approach to get sustainability buy-in at the mainboard-listed agri-food company. 

Initially, the company too faced “a lot of resistance”, with those in charge of operations wondering why the company would choose to impose an additional cost on chicken, an inexpensive protein, when competitors are not doing it. 

That helped Japfa realise that it was not enough for top management to be trained on this, said Monteiro, it was also important to embed sustainability thinking within the whole organisation to achieve sustainability impact. 

That was why the group moved to extend sustainability training to financial controllers – who tend to be the “driver” or “blocker” of sustainability initiatives, depending on where they stand, he said – and will now make sustainability a training priority across all functions. 

Nevertheless, what helped with acceptance was the company’s ability to raise financing at a lower cost, he said: “That’s a real tangible benefit that people could see and take home.”

Incentives should be given to banks to hand out more “carrots” for companies to help embed sustainability within their organisations, he suggested. “Policies or incentives via banks would be a real touch point moving forward,” he said.

At another panel discussion on supply chain resilience, NUS’ Goh Puay Guan pointed out that the pendulum to supply chain approaches is still swinging as companies work on balancing cost and resilience needs.

To deal with disruptions such as shipping delays, companies have had to shift from a cost optimal “just in time” approach to the more costly “just in case” approach, featuring supply chain diversification and larger inventories.

But when things return to normal, the question that comes up is “when will the chief financial officer win”, quipped the associate professor in supply chain management and technology management.

“To some extent, companies have to diversify,” he said. “But what is the extent by which you find balance of diversification versus cost optimisation? (This is something to watch) in the next two years.”


Source: The Business Times. Link Here.

ASEAN must improve payment connectivity: Indonesia's central bank

Indonesia's central bank has called on ASEAN countries to improve payment connectivity to facilitate cross-border trade and investment. The bank's governor emphasized the importance of interoperability among different payment systems in the region to promote economic integration and growth. He also highlighted the need for standardization of payment systems and regulations across ASEAN countries. The central bank has been working on initiatives to promote cross-border payment connectivity, such as the ASEAN Payment Connectivity Framework and the QRIS payment system. The bank hopes that these efforts will encourage other ASEAN countries to collaborate and improve payment connectivity in the region.

Ministry supports Jakarta Muslim Fashion Week through Road to JMFW

The Indonesian Ministry of Tourism and Creative Economy is supporting Jakarta Muslim Fashion Week (JMFW) through its "Road to JMFW" program. The program aims to promote Indonesia's Muslim fashion industry and provide a platform for local designers to showcase their work. It includes a series of events, such as fashion shows, exhibitions, and workshops, leading up to the main JMFW event in July. The ministry hopes that the program will help to stimulate the country's creative economy and position Indonesia as a leader in the global Muslim fashion industry.

ASEAN orients AIF toward green infrastructure funding: ministry

The ASEAN Infrastructure Fund (AIF) is being oriented towards funding green infrastructure projects in the region. The Indonesian Ministry of Finance, which is the current chair of the AIF, announced that the fund will focus on supporting sustainable and environmentally friendly infrastructure projects. The AIF was established to finance infrastructure development in ASEAN countries and currently has a total capitalization of USD 4.4 billion. The shift towards green infrastructure funding reflects ASEAN's commitment to addressing climate change and promoting sustainable development in the region. The ministry hopes that the AIF's focus on green infrastructure will encourage private sector investment in the sector and support ASEAN's economic growth.

ASEAN to look at global banking problem's spillover: BI

The Association of Southeast Asian Nations (ASEAN) will be closely monitoring global banking issues and their potential spillover effects in the region. Indonesia's central bank has emphasized the need for ASEAN to be vigilant and prepared for any adverse effects of global banking problems on the region's financial stability. The central bank has been working to strengthen ASEAN's financial resilience, including through initiatives such as the ASEAN Payment Connectivity Framework and the ASEAN Banking Integration Framework. The central bank has also been collaborating with other regional and international organizations, such as the Financial Stability Board and the International Monetary Fund, to address global banking issues and promote financial stability in ASEAN.
 
Full article: here
Source: Antaranews

Indonesian Industry Ministry highlights four targets at Hannover Messe 2023

The Indonesian Ministry of Industry has highlighted four targets for its participation in the Hannover Messe 2023, a major industrial fair in Germany. The first target is to promote Indonesia's automotive industry and showcase the country's electric vehicle technology. The second target is to promote the development of Indonesia's Industry 4.0 ecosystem and digital transformation initiatives. The third target is to promote the country's halal industry, particularly in the food and beverage sector. The fourth target is to strengthen Indonesia's position as a global hub for downstream industries and encourage investment in the country's industrial zones. The ministry hopes that its participation in the fair will help to boost Indonesia's industrial sector and attract foreign investment to the country.

Malaysia reviewing export ban on renewable energy

The Malaysian government is reviewing its ban on the export of renewable energy, said the country’s minister of natural resources, environment and climate change Nik Nazmi Nik Ahmad.

The review, which has been discussed twice in Cabinet meetings under the recently established coalition government, is being undertaken by the environment ministry, as well as Malaysia’s economic and trade ministries, he said.

“The discussions are happening now. I will be presenting a paper [to Cabinet] soon,” Nik Nazmi told reporters on the sidelines of a launch event of Malaysia’s Energy Transition Outlook (METO) report on Thursday.

Malaysia’s ban on exporting renewable energy has been in place since October 2021, and was instituted by a government led by former prime minister Ismail Sabri Yaakob. It focused primarily on halting Malaysia’s export of renewable energy to Singapore.

The ban, however, does not extend to the passage of electricity from other countries to Singapore. This has allowed for the establishment of a hydropower pipeline from Laos to Singapore via Thailand and Malaysia. It also did not stop the East Malaysian state of Sarawak from entering into discussions to export hydropower to Singapore last year.

“We can leverage the strong demand for renewable energy from our neighbours to create a financial framework to decarbonise,” said Nik Nazmi, adding that exporting renewable energy presents “fascinating opportunities” for Malaysia, and potentially places it at the centre of the Asean power grid.

He added: “If Malaysia does export [its renewable energy], we can and must sell at market rates – this will give us the wherewithal to scale up, including to make technology cheaper and introduce new technologies such as battery storage, among other things.”

“We also do not have to sell all the green electrons produced - we can ration it to ensure that Malaysian industries benefit,” he said.

According to the recently-launched METO report, jointly published by the environment ministry and International Renewable Energy Agency (IRENA), however, the reality is that Malaysia may ultimately still be a net importer of electricity. 

The report describes the situation as “a tale of two halves”. It said that in a 1.5 degree scenario, Peninsular Malaysia would be importing power, while the East Malaysian states of Sabah and Sarawak would be power exporters, as the latter two regions have a strong supply of hydropower, which would outstrip peak electricity demand up to 2050.

The planned expansion of hydropower by Sarawak would create an opportunity for electricity trade with Indonesia and Brunei, it added. 

“This is an important resource that can balance variable renewable supply regionally and aid regional decarbonisation,” said the report.

Political will is not enough
Nik Nazmi, who was appointed Malaysia’s environment minister in November 2022, also said that the government remains committed to removing or reducing subsidies for electricity, especially for non-domestic high- and medium-voltage consumers.

Energy subsidies in Malaysia have eaten up at least 7 per cent of gross domestic product (GDP) in the past decade, according to data compiled in the METO report.

Malaysian consumers continue to be shielded from the real cost of energy, the report added. It called for more targeted subsidies towards lower- and middle-income sources, and the redirecting of investments towards renewables and energy efficiency for longer-term energy security and sustainability.

While industry players are aware that the price of electricity will have to be increased, some are pushing back based on short-term interests, said Nik Nazmi.

Others however, are open to adopting renewable energy but have complained about high costs in the form of bureaucratic red tape related to implementation, something that the minister promised to address.

Other measures to facilitate the energy transition which were announced on Thursday included the additional allocation of 630 megawatts for renewable energy generation projects this year and the roll-out of a framework that will enable businesses to access renewable energy directly from developers.

The government is also exploring the establishment of an energy transition fund to support the expansion and deployment of renewable energy, although the size of the fund is still being discussed, said the minister.

As far as political will goes, the Malaysian government and other key actors in the domestic energy industry have exceeded expectations, said IRENA director-general Francesco La Camera. 

La Camera, who is in Kuala Lumpur this week on a visit, said he did not expect the high level of commitment from the Malaysian government on its energy transition plans. “I am quite satisfied, honestly,” he told Eco-Business.

He added, however, that while the political will of the current government is clear, leaders will need to build social consensus towards decarbonising the energy sector in order to achieve its net-zero aspirations. Both the METO report and a townhall held on Monday, organised by the environment and economic ministries with key players in Malaysia’s energy transition scene, are positive steps towards that end, said La Camera.

According to the report, Malaysia will need at least US$375 billion of investment to acheive its net-zero goals by 2050. The transition towards cleaner energy is expected to save Malaysia up to US$13 billion annually, and reduce energy-related emissions by up to 60 per cent in a 1.5-degree scenario. 

“With higher energy efficiency, electrification, and renewables use, Malaysia’s energy consumption can be reduced by 25 per cent in the 1.5-degree scenario,” said the report, with oil use in the energy mix to halve from today and electricity to comprise 40 per cent of the total final energy consumption, compared to about 21 per cent in 2018.

The production of clean hydrogen and its derivative fuels must ramp up to at least 1.5 million tonnes 2050 in order to achieve this, it said.

Source: Eco Business

Malaysia keeps April crude palm oil export duty at 8%

The world's second largest palm exporter calculated a reference price of 4,031.45 ringgit ($914.16) per tonne for April

Malaysia has maintained its April export tax for crude palm oil at 8% and raised its reference price, a circular on the Malaysian Palm Oil Board website showed on Thursday.

The world's second largest palm exporter calculated a reference price of 4,031.45 ringgit ($914.16) per tonne for April. The March reference price was 3710.35 ringgit a tonne.

The export tax structure starts at 3% for crude palm oil in a 2,250 to 2,400 ringgit-per-tonne range. The maximum tax rate is set at 8% when prices exceed 3,450 ringgit a tonne.

($1 = 4.4100 ringgit) (Reporting by)

Source: Zawya

BNM expects export and import growth to moderate in 2023

FOLLOWING two consecutive years of double-digit expansion, Malaysia’s gross export growth in 2023 is expected to register a modest growth similar to the trend in other economies, said Bank Negara Malaysia.

The central bank in its Economic and Monetary Review 2022 (EMR 2022) said this is in line with the weaker global growth outlook, especially in Malaysia’s key trade partners in the advanced economies.

Nevertheless, BNM said the impact would partly be mitigated by the reopening of China’s economy and continued growth in regional economies.

The central bank said manufactured exports, which contributed 84% of Malaysia’s total exports, are projected to expand at a slower pace of 2.7% in 2023 (2022: 22.3%).

This, it said, is due to broad-based moderation across the E&E and non-E&E segments.

“Slowing demand for consumer electronics is expected to weigh on global semiconductor sales,” it said.

BNM said this is corroborated by insights from the central bank’s regional economic surveillance, which indicated that some E&E firms have started to experience lower order volume.

However, BNM said the greater adoption of automation and digitalisation globally will continue to provide some underlying support to exports in 2023.

The central bank also noted that slower external demand would also weigh on exports of non-E&E manufacturing segments.

Nevertheless, it said this would be partially cushioned by the ramp-up of production of a major oil refinery in Johor.

BNM said commodities export is projected to decline by 5.0% in 2023 (2022: 41.7%), driven mainly by lower commodity prices.

BNM said crude palm oil prices are expected to ease after hitting record highs last year, weighing on agricultural exports.

“This more than offset improvement in oil palm output following receding labour shortages,” it said.

Similarly, BNM said lower mineral prices, in tandem with the slowdown in global oil demand, would weigh on mineral export growth in 2023.

BNM said risks to export growth are tilted to the downside, stemming mainly from slower-than-anticipated external demand and further escalation of geopolitical tensions.

Nevertheless, it noted that there are upside risks to export growth which include faster recovery in China, which could provide support to global trade activity.

BNM is projecting that gross import growth to slow down to 1.1% in 2023 (2022: 31.3%), due to a more moderate increase in domestic demand and slower manufactured export growth.

It said that intermediate imports are expected to record a smaller growth following slower inventory build-up amid easing supply chain disruptions.

However, BNM said continued expansion in domestic demand, albeit at a more moderate pace, would provide support to import growth of consumption and capital goods.

Source: The Malaysian Reserve

Malaysian timber exports hold steady, but EU regulation may hinder growth

MALAYSIA’S timber export contributed RM23.25 billion to the country’s economy as of November last year, despite the drop in demand from Europe according to Malaysian Timber Industry Board’s (MTIB) report. 

This marked a continuous growth since 2020 when timber exports were recorded at RM22 billion. It increased by 3% to RM22.74 billion in 2021. 

MTIB subsequently announced that it is aiming for timber exports to hit RM28 billion by 2025, which is in line with the National Timber Agricommodity Policy and the National Timber Industry Strategic Plan 2021-2025. 

Meanwhile, the domestic sales for timber is targeted to reach RM20 billion in 2025 after recording RM8.14 billion as of November 2022. 

To achieve the target, MTIB said that it is now actively promoting the use of wood in the local market via promotional campaigns in the mass media, and participating in and organising exhibitions such as the Wood and Lifestyle Fair. 

Chief statistician Datuk Seri Dr Mohd Uzir Mahidin, on the other hand, viewed that the export trend of timber products in Malaysia is volatile. It began to peak in 2006 with a value of RM22.9 billion. 

“Japan is the main export destination for Malaysian timber products, contributing 30.1% or RM2.1 billion in 2021,” Mohd Uzir said in Malaysia Trade Statistics Review. 

He noted that the export value of furniture products was seen to soar to RM16.6 billion in 2021 despite the uncertain trend. 

“The average annual growth rate of this product between 1990 and 2021 was at 7.9%,” he said. 

The top five destination countries for the export of wooden furniture include the US, Japan, Singapore, the UK and Australia. 
Challenges with EU 

The country’s timber industry still has a few obstacles to overcome, mainly with the requirements in certification of the European Union Deforestation Regulation (EUDR) that may limit the export-ing of timber products into multiple markets. 

On Dec 6 last year, the EU reached an agreement on a new law to prevent companies from placing commodities — namely palm oil, soya, timber, rubber and cocoa — linked with deforestation and forest degradation into the EU market. 

The regulation has called for all relevant companies to abide by mandatory due diligence rules if they place their products on the EU market. 

Companies were also required to prove that their products were deforestation-free and present precise geographical information on where the commodities were sourced. 

Therefore, the Malaysian government, stakeholders and timber players will need to work together to overcome the certification barriers. 

Previously, the local timber industry took almost a decade to achieve the Timber Legality Assurance System (TLAS) — to assure the legality of all timber and timber products exported from Malaysia — according to Sabah Timber Industries Association (STIA). 

In light of the EU’s new deforestation regulation, Plantation and Commodities Minister Datuk Seri Fadillah Yusof recently announced that Malaysia may stop exporting palm oil to the EU. 

Fadillah said the regulation would additionally burden Malaysian commodities exporters to the EU market, specifically the additional traceability requirements and data that must be provided to end customers based in the EU. 

“The EU must commit to genuine engagement with producing countries. We stand ready to enhance further this mutually-beneficial partnership, especially by building on the recent signing of the Malaysia-EU Partnership and Cooperation Agreement (PCA), as well as possible resumption of Malaysia-EU Free Trade Agreement (FTA) negotiations,” he said in a press conference recently. 

Fadillah, who is also the deputy prime minister, stressed that Malaysia values the EU as one of its important trading and investment partners. However, the EU’s new regulation could block market access and hurt small traders. 

At this juncture, the minister said that Malaysia has complied with all the standards and requirements regarding the environment and sustainability.

“We need to engage with experts from overseas and look at this issue from all angles to counter whatever move that the EU may make. 

“The other option we have is just to stop exporting to the EU and focus on other countries,” he said. 

Cultivating Timber Sustainably

As the timber industry is one of the main contributors to the Malaysian economy, logging activity can be considered an important activity to cater to the demand. 

Despite being one of the world’s largest exporters of timber, Malaysia has retained more than 50% of its total landmass, while maintaining the right balance between conservation and development. 

In 2020, Malaysia was awarded a gold medal for achieving the biggest increase in forest area certified by the Programme for the Endorsement of Forest Certification (PEFC) with over 950,000ha of certified forest or an annual increase of over 20%, making it a total of more than 5.2 million ha. 

In 2021, the country launched the Malaysian Forestry Policy to reaffirm the importance of certification with special reference to the Malaysian Timber Certification Scheme (MTCS) in promoting sustainable forest management (SFM). 

The scheme provides an independent audit of timber product manufacturers or exporters through Chain of Custody (CoC) certification to ascertain that the timber-based products manufactured or exported are sourced from sustainably-managed forests. 

“All MTCS-certified timber products are also allowed to carry the PEFC label, which is accepted in many developed countries, most notably in Europe,” according to the MTCS website. 

Over the years, the annual export of certified timber and timber products has notably increased with a cumulative total of 2.62 million cu m exported to 72 destinations across the globe, as of July 31, 2021. 

“The key objective of forest management in Malaysia has been to ensure continuity of product flow, while conserving our complex ecosystems and maintaining our rich and varied flora and fauna,” it said. 

At this juncture, Malaysia’s continued achievements in sustainable agricommodity emphasise that the development of the timber industry can and must go hand-in-hand with the conservation of tropical forests.

Source: The Malaysian Reserve

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