n As southeAst AsiA gears up for the launch of the Asean economic Community (AeC) in 2015, international investors are showing increasing optimism in the region’s growth pros-pects. indeed, Asia is expected to once again be the engine of global growth next year. Within that larger context, however, significant shifts are occurring.

As Chinese growth slows, the title for regional star performer is up for grabs and new contend-ers such as Malaysia, which has transformed its economy since the launch of its economic transformation Programme (etP) in 2010, are moving in to fill the spot.

in the four years since Prime Minister Najib Razak unveiled his new economic vision, Malay-sia has made sure strides towards an economy based on innovation, creative technologies and high value-added manufacturing.

the country has rebranded its image as a centre for advanced technology and channelled new investment (lured by a slate of incentives) into 12 strategic sectors, including energy, sci-ence, education, iCt, electronics and palm oil. emerging growth areas like biotechnology, avia-tion and advanced electronics have taken off, while traditional industries have shifted to more knowledge-intensive activities.

the results have been positive. Growth of 6.2 per cent was registered in the first quarter of this year, driven by rising exports. industrial output in the country has registered 15 consecu-tive months of positive growth and services are expected to expand by an average of 6 per cent over the next four years.

these are clear signs of broad-based economic expansion and of the country’s emergence as a regional manufacturing and services power-house. Prime Minister Najib Razak’s re-election last year means that etP reforms will continue to 2018, which, in turn, means that Malaysia is likely to have rising clout as trade within the new Asean economic bloc continues to grow. its role as the AEC’s first chair in 2015 may indeed by a sign of things to come.

AEC chair sees smart shift in perception

MalaysiaMonday, December 29, 2014Special supplement by Haddock & Associates distributed with The Times

PROJECT TEAMsabrina heinekey, executive Director

santiago Mitchell, DirectorMagdalena Zofia Żywicka, Coordinator

Gabriela Bustelo, Journalist

Knowledge is power

sabah statethe nation’s second-largest state offers a wealth of natural and fiscal incentives in the heart of Asean. P2-3

partnershipsPetronas’ joint venture with AMG has produced a revolu-tionary generation of fuel and lubricant products. P2

anD aLsO...P4 New attitudes to taxes produce a substantial boost in returns for iRBM. P6 incentives for oil & gas, finance and tourism in Labuam. P7 Palm oil sustainability protects an economic mainstay.

agribusiness technOLOgyinnovative uses for palm oil and its by-products mean exciting long-term prospects for FGV and its partners. P3

see this report at www.haddockassociates.co.uk

Reimagining energy

n this is A questioN that Petronas, the world’s second-largest LNG supplier and one of Asia’s most profitable companies, takes seriously. since it was established in 1974, it has used its expertise and advanced technologies to reim-agine the future of energy not only for Malaysia, where it manages and adds value to the nation’s oil and gas resources, but also for the world.

Petronas has applied its best minds to researching, innovating and delivering more im-aginative and efficient energy products. Inspired by the quest to make a difference in what tomor-row’s energy will look like, how it will be used and where it comes from, the Malaysian firm has partnered with like-minded global companies

What will tomorrow’s energy look like?

The new complex will be the next regional downstream oil and gas industrial hub”“

to defy conventions in essential energy delivery and to redefine the future through innovative technology and engineering that maximises sustainable energy production.

Managing impact has become a core company value. Focusing on the efficient use of natural resources, Petronas has reduced its carbon footprint and enhanced its data collection for greenhouse gases, energy, water and biodiversity. Working groups for carbon and water are exclu-sively dedicated to the constant improvement of these parameters. Petronas’ sustainability framework, publicly available since 2007, governs its actions in seven core areas: shareholder value, natural resource use, climate change, biodiversity, hse (health, safety and environment), product stewardship and societal needs.

“hse is the utmost priority, with a strong emphasis placed on asset integrity such as reju-venation and major maintenance activities,” says President and Group Ceo tan sri Dato’ shamsul Azhar Abbas. “We have spent around £5.5 bil-lion since 2011 and have allocated a further £3.6 billion for the next five years specifically for this purpose alone.”

he adds that Petronas has various corporate social investment programmes in place in educa-tion, training and environment. “While we aggres-sively expand our portfolios, we commit equally to building communities, providing job opportuni-ties and ensuring the livelihood of the community that we operate our businesses in,” he says.

Celebrating its 40th anniversary this year, Petronas is today a fully integrated global

industry player with a network of operations in 36 countries. indeed, the Financial Times has identified it as one of the new seven sisters: the most influential state-owned oil and gas companies outside the OECD. Headquartered in the iconic Petronas twin towers in Kuala Lumpur, Petronas has undergone a corporate restructuring befitting its status as Malaysia’s single largest economic driver. since its forma-tion, the company has contributed more than £120 billion to the state coffers – 45 per cent of the government’s budget is dependent on the company – and its growth as an international oil company (ioC).

“As the sole Malaysian company to be listed in the Global Fortune 500, we have continuously made various efforts in diversifying our portfolios and presence across regions. We are compet-ing with the ioCs of the world; we have no other choice than to be at par with them just to get onto a level playing field. But somewhere along the way we also realised that being an ioC

Continued on page 2 u

Reimagining energy The iconic Petronas Twin Towers are a globally recognisable symbol of Kuala Lumpur and reflect Petronas’ status as the country’s largest single economic driver

n Doing business comes naturally in sabah, Malaysia’s second-largest state perched on the mountainous and biodiverse northern point of the island of borneo.

For generations, visitors from around the world have travelled here to uncover the myster-ies hidden within sabah’s diverse and pristine rainforests and to experience the exhilaration of conquering Malaysia’s highest peaks, including the 4,095-metre Mount Kinabalu.

Tourism continues to be a critical and develop-ing foundation of sabah’s economy, but it is the ease with which its people, comprised of more than 100 different ethnic groups,embrace partnerships and new ventures that is capturing the imagination of foreign investors and entrepre-neurs.

The openness and ingenuity nurtured by island life has been instrumental in building a booming natural resource sector, including a world-leading palm oil industry, as well as a growing local port-folio of oil and gas production.

now, that same spirit of invention is reengi-neering the region’s economic future through education, training, research and innovation.

sabah, which looks directly across the water to the Philippines, Vietnam and Hong Kong, could not have chosen a more promising moment to begin its emergence as a regional presence in southeast Asia’s growing economy.

Just as the attention of the international com-munity is turning toward the rollout of the Asean economic Community (AeC) in 2015, sabah’s sharp focus on fostering innovation is transform-ing the state’s industries and is creating new opportunities in iCT and green technologies.

barings Asset Management recently released a report stating that a new economic zone will “de-liver superior risk-adjusted returns for investors compared to other emerging markets.”

With a population of more than 3.5 million people within a country of 28 million, investors in sabah will gain access to a massive pool of consumers, workers and resources as the AeC

begins liberalising trade and growing the econo-mies of its member countries.

Dr Mohd Yaakub Haji Johari, Chief execu-tive Officer of Sabah’s economic development agency seDiA (sabah economic Development and investment Authority) says the AeC will provide the strategically located state with new opportunities in shipping, logistics, manufacturing and high-tech industries, while shining a spotlight on sabah’s traditional strengths.

Fuelled by innovation and its geographic posi-tion near shipping routes, he says local entre-preneurs are keen to build sabah’s position as a business hub within the new economic zone. The ongoing expansion of the sabah Development Corridor aims to be the gateway for this regional trade and investment.

Dr Haji Johari adds that the open perspective of local entrepreneurs, researchers and govern-ment agencies is an important asset that sets sabah apart as it works with international inves-tors and partners. “We know how to find our way and we respect each other,” he explains.

sabah’s exotic landscapes and biodiver-sity provide a thrilling backdrop to its growing economic capacity. As an example, a visitor can find 700 species of trees per 10-hectare plot in sabah, which is equal to the total number of tree species in Canada and the united states combined.

The 44,000 hectares of the Danum Valley Conservation Area, sabah’s largest protected area of lowland rainforest, boasts a staggering 200 species of plant per hectare and is home to more than 340 species of birds, 120 species of mammals, 72 species of reptiles and 56 species of amphibians.

However, if Dr Haji Johari believes sabah’s mix of cultures and island heritage provide distinct natural advantages in attracting foreign invest-ment and partnerships, seDiA certainly is not solely depending on those advantages to make its case to potential partners.

The economic development body is pitch-ing an aggressive suite of incentives to foreign

Where new ventures are a way of life

This is an independent publication by HADDOCK AnD AssOCiATes2

business

is about more than just our geographical footprints; we had to ensure that our gov-ernance and business conduct are of global standards,” says the Ceo.

The implementation of a corporate en-hancement programme started at the top with the creation of a new board with extensive industry experience, one who could drive the transformation of the organisation’s inter-nal culture to one more in line with an ioC. improved performance management and the enforcement of international governance practices completed the overhaul.

Moving forward, Petronas, a pioneer in offshore enhanced oil recovery techniques, intends to use this expertise onshore in pro-jects with the potential to add up to 1 billion barrels of oil to its current resources over the next 20 to 40 years. The addition of the ninth train to the company’s Lng facility in sarawak will spur further growth in the company’s downstream activities. Petronas is also now building the world’s first floating LNG produc-tion plant, which will allow it to develop small and stranded gas fields in deep water.

Construction is under way on a mammoth refinery and petrochemical integrated devel-opment (RAPID) in Johor. With refinery start-up expected in 2019, the $27 billion complex will process 300,000 barrels of oil per day and boast a petrochemical capacity of 7.7

million tonnes per year of various grades of products. The complex will produce differenti-ated and specialty chemical products, such as synthetic rubber and high-grade polymers, and is “positioned to be the next regional downstream oil and gas industrial hub,” says Mr Azhar Abbas.

Petronas hopes to continue forming the strategic partnerships, such as its Formula one partnership with Mercedes-benz, that have helped put Malaysia on the map. “We are a commercially driven company build-ing the ecosystem for a better tomorrow. My vision for Petronas is for it to be the global partner of choice, with high standards of cor-porate governance and integrity,” concludes Mr Azhar Abbas.

u Continued from page 1

innovation and investment target sabah’s old and new industries

Toto Wolff, Executive Director of the Mercedes AMG-Petronas F1 Team

Fiscal incentives complement Sabah’s natural wealth and location attracting global investors

We have a workforce that has been trained throughout the world”Dato’ Sri Mustapa Mohamed, Minister of International Trade and Industry“

A partnership designed to thrilln PETRONAS’ technical partnership with AMG, the high performance division of Mercedes Benz, has produced a new gen-eration of fuel and lubricant products that are revolutionising fluid technologies and creating winning Formula One (F1) teams

since new race regulations were announced three years ago, Petronas’ fuel and lubricant engineers have worked hand in hand with AMg technical experts at centres in brix-worth and Brackley to design highly efficient, customised fluids for Mercedes Benz’s F1 Wo5 Hybrid Power unit. Petronas’ Primax ef-ficiency and Syntium products were the result of this labour and they have helped the team win 13 of 16 races this championship season, with a presence on the podium in every race to date.

Petronas’ trackside laboratory tests the fluids in action, providing the team with real-time feedback on site. The data Petronas gathers at the track is later sent to its R&D facilities for the development of high perfor-mance products for passenger cars.

Forged in 2010, the Mercedes AMg-Petronas partnership has also created new

opportunities for talent development and capacity building. since 2012, Malaysian students from the universiti Teknologi Pet-ronas have been members of the staff at the brackley facility.

Toto Wolff, executive Director of the Mercedes AMg-Petronas F1 Team, ac-knowledges that his former racing career has given him an advantage as a manager because he understands the mechanics of the business. He says, “if you know what is going on in a car and what the driver, the organisation and the engineers mean, it gives you an edge because you understand whether something is right or wrong. i can use this knowledge to understand if an or-ganisation is functioning properly. it’s about risk analysis and risk assessment.”

He believes that the Mercedes AMg-Petronas partnership has produced a winning organisation. “in the last couple of years, we have managed to transform a team that was not competitive into one which finished second last year and was World Champion this year,” he says. “That was a big challenge, but we were very hungry. And we nurtured the motiva-tion within the people here to achieve that.”

We had to ensure our governance and business conduct are of global standards”

“

offers incentives that can reach as high as full income tax exemptions for 10 years.

Local entrepreneurs and government officials in Sabah have identified the state’s potential to become an incubator of education and training institutions as the AeC is established and are targeting partnerships with uK institutions of higher learning.

The newly established university College sabah Foundation has been negotiating with the

university of salford to establish a collaborative training programme and gateshead College has also expressed interest.

The Minister of international Trade and industry, Dato’ sri Mustapa Mohamed, also highlights the inclination of Malaysian students to study overseas. “We have a workforce that has been trained throughout the world,” he says. “We have students everywhere, from poor to the richest countries. so this gives diversity. if you want people who speak Mandarin, French, german, english... they are here. This is important. We are exposed to the world.”

The importance of skilled talent is particularly acute for high-end manufacturing industries, es-pecially in the development of green technology, which benefit from Sabah’s focus on research and conservation.

However, it should be noted investments in innovation are driving success in traditional industries as well, such as in agriculture and the region’s robust palm oil sector. For example, Palm oil industrial Cluster Lahad Datu was established

This is an independent publication by HADDOCK AnD AssOCiATes 3

business

Future expansionn In June of 2012, Felda Global Ventures (FGV), the world’s third-biggest oil palm plantation operator, listed on the Malay-sian bourse in what was the largest IPO in Asia that year, raising $3.3 billion. The following year, it used these funds to launch a global expansion that aims to see it become one of the top 10 agribusiness conglomerates in the world by 2020

group President and Ceo Mohd emir Mavani Abdullah says, “2013 was a landmark year for acquisitions and exploring new opportunities that are a strategic fit to our long-term growth targets. Armed with iPo proceeds, we began a disciplined and focused process of invest-ing in our growth engines for the future.”

one of these growth engines is the com-pany’s R&D arm, which has of late been de-veloping such innovative uses for palm oil and its by-products, such as high-performance “green rubber” products like PureprenaTM and ekoprenaTM (epoxidised). Advances made in high-grade and eco-friendly carbon nanotubes (CnT) and graphene, the fruits of a joint initiative between FgV and Cambridge

nano systems, have the potential to launch an entire new generation of electronic devices and cables, thus impacting global industries such as aviation, oil and gas, electricity and nuclear power, to name a few.

The untapped value of phytonutrients is of special interest to FgV, which has developed new techniques for extracting high concen-trate, palm-based vitamin e. Palm oil is one of the most complete sources of this powerful anti-oxidant, which contains anti-cancer properties and has been shown to reverse arterial blockage.

FgV’s global expansion will only increase the company’s ability to power these devel-opments. Today, with operations in more than 10 countries across four continents, FgV is looking at new opportunities to boost its upstream expansion in Africa’s tropical belt, as well as Myanmar, Cambodia and Papua new guinea.

“FgV’s long-term prospects promise to be both exponential and spectacular, providing an opportunity for our shareholders to own a stake in what may well be the biggest growth story in corporate Malaysia,” says Mr emir.

Where new ventures are a way of life

If you want people who speak Mandarin, French, German, English... they are here”

“

Asean academicsn sAbAH, is poised to capitalise on its central location to become a hub for education, training institutions and partnerships in Asean. “Whenever we engage with potential foreign investors, including british institutions of higher education, we talk to them about looking at sabah as a base for Asean. in fact we have been receiving quite a number of students from China, brunei, the Philippines and east-ern Kalimantan,” says Dr Mohd Yaakub Haji Johari, Ceo of the sabah economic Develop-ment and investment Agency (seDiA). For many years, foreign investment in Malaysia’s education and training institutions was not an option, but this has changed as much of the country’s service sector has been liberalised. “now foreign investors can have 100 per cent equity ownership in private education institu-tions. They can team up with a local partner or set up on their own,” says Dr Haji Johari. investors can also access a facilitation grant of up to 10 per cent of the total project cost under a framework targeting public-private joint ventures. At the university College sabah Foundation, exciting new initiatives aim to address specific education and training needs, such as its new aviation school in develop-ment. “The idea is to provide training and eventually maintenance, repair and overhaul facilities in sabah that can cater to the need of the aviation industry in east Asia, which has one of the fastest growths in air traffic,” concludes Dr Haji Johari.

investors in order to catapult the development of sabah’s knowledge-intensive industries, which include iCT, agro-biotech, pharmaceuticals, aviation and maritime industries, research and development, energy, green technology and high-end manufacturing.

investment in the designated clusters, such as the sandakan education Hub, can be eligible for special investment incentives of up to 100 per cent income tax deduction for 10 years through seDiA, according to Dr Haji Johari.

“investors may also access the facilitation grant of up to 10 per cent of the total project cost under the public-private partnership scheme,” he adds.

in addition to efforts to provide the right education and training opportunities locally to provide both new and traditional industries with a skilled and versatile workforce, sabah has access to a groundbreaking national programme that aims to attract foreign talent.

newcomers can obtain resident status under Malaysia’s My second Home programme, which

to accelerate the development of value-added downstream industries, including refineries, ferti-liser plants and biomass, which will diversify and strengthen the region’s economy.

innovation and the discovery of new resources are fuelling growth in the oil and gas sector in sabah, which represents about a quarter of Malay-sia’s production. The sabah Development Corridor has supported the sipitang oil and gas industrial Park where Malaysian energy giant Petronas has made major investments.

These inflows are just the beginning. By 2025, the sabah Development Corridor initiative aims to triple sabah’s gDP per capita and increase its economy by four times through focused growth-oriented programmes that aim to create more than 900,000 new jobs.

A vital element in the plan is a strategy to capi-talise on the arrival of the Asean economic Com-munity in 2015 by integrating sabah into the daily mechanics of southeast Asia’s economic strength.

“if you look at the map, sabah is strategically located within Asean itself along major shipping routes. in terms of trade, one of the major ship-ping routes with the highest container throughput in the world is actually between singapore and northeast Asia, and sabah is well positioned along this route,” says Dr Haji Johari. “sabah can serve as a key conduit, a major gateway, linking this sub-region to the northeast Asian economies.”

in a place where cultures mingle and new ventures and partnerships are a way of life, sabah is poised to capitalise on the opportunities that will transform southeast Asia in the coming years.

This is an independent publication by HADDOCK AnD ASSOCiATES4

inLanD revenue bOarD

Happiness is paying your taxesA paradigm shift in how people view tax obligations is boosting returns

and the economic transformation Programme designed to get it there is highly visible.

in short, paying your taxes in Malaysia is for a good cause. Getting the message out, however, and using the right tone, takes some finesse. Dr shukor is managing wonderfully.

“We are now trying to leapfrog from a devel-oping country to developed nation by 2020. this is easily discerned by the number of outstanding public projects being carried out. this develop-ment has to be financed by revenue,” comments the tax boss. “Our contribution is very significant and we want to ensure that the revenue that is needed is collected and delivered.”

over the past three years, since Dr shu-kor was appointed and the agency’s reform process set in motion, there has been a drastic shift in the amount of these revenues collect-ed. in 2010, just RM86 billion was collected. By the following year, this had increased to RM109 billion.

Much of this success is due to a drastic shift in perception. instead of an agency of enforce-ment, the iRBM, since Dr shukor came onboard, has tried to promote voluntary compliance through the transformation of its own image to a more citizen-friendly one. After all, says Dr shukor, paying your taxes is painful enough.

“At iRBM, we have changed our image. there are a lot of new changes being introduced. We are now friendly focused. it is our job to help taxpayers comply, so we help them to help us. We have changed our approach and we have changed our image. i want to build trust between the taxpayer and the tax authority. i do not want for us to be seen as being too tough. it is important to bring the regulator closer to the taxpayer,” he explains.

Dr shukor introduced iRBM’s rebranding the same year he was appointed. Now, the tax authority’s public relations officers are referred to as customer care officers. They are instructed to inform citizens that they are there to assist them. they provide patient support to guide taxpayers through the complexities of a sophisticated tax regime. And they remind them of their responsibility to pay taxes.

n siNCe tan sri Dr Mohd shukor bin hj. Mah-far became Ceo/Director General of Malaysia’s inland Revenue Board (iRBM) in 2011, things have changed in the tax department. Revenues are up and new customers are paying up with a smile. Voluntary compliance and employee satisfaction have formed the cornerstones of a new approach that is seeing big benefits for the Malaysian government.

shortly after his appointment, Dr shukor led the Public Finance sector Reform that has since identified 70,000 new companies for registry, transformed the tax collection agency and reached new levels of compliance that increased the government’s coffers by an additional RM6.2 billion ($1.93 billion) last year alone.

it is an easy sell. Malaysia has a goal of reaching developed country status by 2020

We are different and we want others to see we are different”Tan Sri Dr Mohd Shukor bin Hj. Mahfar, CEO/Director General of the Inland Revenue Board of Malaysia (IRBM)

““it really matters when you can see that the

taxpayer knows their rights. to me it is very important that for compliance, enforcement of the law should be done without creating fear. We should also be seen efficient. if we portray an image of efficiency, the taxpayer will re-spect the system,” says iRBM’s Ceo.

the agency’s efforts to improve efficiency include increasing the number of banks where taxes can be paid, the introduction of mobile filing to complement iRBM’s e-filing options and the launch of ‘pre-fill’ initiatives with public and private sector employees. Auto-reminders and follow-up phone calls from a new call centre have also been introduced and a customer relationship management division has been created. Finally, the agency has also turned to social media to capture the Generation Y and Z citizens in the country, who are beginning, or will begin soon, to pay income tax.

Dr shukor acknowledges that his approach is not typical. he says his agency’s success rate is founded on the time and energy he has spent on creating a positive work atmosphere for his employees. “For the past three years after my appointment, i have emphasised the human aspect. i wanted to make people feel good at work. i focus on happiness, and be-ing a chess player i strategise this happiness. We want our people to be happy about paying taxes to us; they know we are collecting taxes on behalf of the government and our govern-ment will back services for their wellbeing – reduce street crime, have a good education system, solid healthcare,” he says.

“that is why i said the first and foremost thing to do to put our house in order is to have people smile at work and have people smile when they pay their taxes. the men-tal shift on how people view taxes is key. Certainly it is our duty to collect taxes, but we want people to do it voluntarily by seeing the benefits of paying taxes in a community that we all form part of. And this happiness starts with our own organisation. We are different and we want others to see we are different.”

In 2010, RM86 billion was collected by the IRBM, but reforms increased this by more than 26 per cent to RM109 billion just one year later

tax incentives drive growth in new business areasiRBM’s tax exemptions are offered to new companies with up to 100 per cent foreign capital setting up in government promoted sectors: high technology, biotechnology, green technology, iCt and R&D activities. • Partial or full tax exemption: 5 or 10 years • investment tax allowance: rate of 60 or 100 per cent for a period of 5 or 10 years• Research expenditure qualifies for double deduction • Capital reinvestment on factory, machines and equipment for expansion of existing production capacity, modernisation or automation of the production facilities, or diversification into related fields, qualifies for 60 per cent reinvesment allowance

This is an independent publication by HADDOCK AnD ASSOCiATES6

Labuan

A sea change for LabuanDiversity emerges as the territory flourishesn Is LABuAN a land of opportunities? Datuk Rozman Bin Datuk haji isli, Chair-man of the Labuan Corporation, certainly thinks so. he says this island territory 9.5 kilometres northwest of Borneo offers attractive incentives in its growth indus-tries – oil and gas, international business finance and tourism – and is now promot-ing spillover sectors such as property and industrial development.

There is no doubt Labuan has much to offer, which bodes well for the corpo-ration’s mission to see its continued development as an attractive destination for business and pleasure. it has, after all, been an international offshore finan-cial centre since 1994 and a duty-free port since 1956. it is a centrally located transhipment hub in the east Asia Growth Area and boasts Malaysia’s only deep-water anchorage at the mouth of Brunei Bay. Furthermore, its unique blend of nature, culture and history gives it great tourism potential.

Its oil and gas sector is booming

indeed, there are now more than 150 oil and gas companies on the island, thanks in part to new offshore findings, includ-ing foreign companies like talisman and halliburton, and local authorities are actively encouraging new exploration and production.

key development area. it is paying par-ticular attention to the need for infrastruc-ture in property development, roads and top quality hotels, as well as in its actual tourism offerings.

“In our effort to make Labuan a pre-ferred destination, we are enhancing our existing offer and also introducing new products,” Labuan Corporation’s CEO, Dato’ Mohd Nadzri Bin osman, says. “We will organise more international events focusing on sports tourism that we will also use as a vehicle to strengthen rela-tionships with Japan, Australia and other Asean countries.”

eco-tourism is another segment up for promotion. Labuan’s Marine Park, two kilometres off the southern tip of the main island, boasts a cluster of three coral-rimmed islands within 10 kilometres of protected marine area. there, pristine waters reveal a wealth of marine life, including species like barracudas, lionfish and batfish, as well as four shipwrecks resting on the seabed.

Mr Haji Isli says that Labuan, as the financial centre and logistical hub for the oil and gas sector, has long had a special relationship with the uK. As of August 31, 2013, there were 641 financial institutions based in the island’s international Busi-ness Finance Centre (iBFC), which contin-ues to register growth, in particular in its insurance sector and in Islamic finance. indeed, the iBFC now is an important competitor for singapore and hong Kong.

“Malaysia, via Labuan, is certainly on the right track,” he concludes.

The next big step is an oil refinery, farm tanks, a marina city and a bridge connecting to the mainland” Datuk Rozman Bin Datuk Haji Isli, Chairman of the Labuan Corporation

“

the sector has come a long way since sabah Gas industries was set up in the mid-1980s. since then, Labuan has seen the development of the Asian supply Base, a fully integrated logistics hub, and the growth of shipyard engineering ser-vices for rigs, platforms and vessels that serve the industry. Downstream indus-tries are also growing: Petronas recently constructed Asia’s largest methanol plant on the island.

Consequently, oil and gas is now the prime mover of Labuan’s economy. Gov-ernment revenues from the sector last year exceeded $161 million. the sector has also been the main driver of infra-structure development in recent years and it is showing no signs of slowing down.

“Oil and gas activity in Labuan is expected to prevail for the next 40 years and will continue to have a positive impact on its economy,” Mr haji isli says. “the next big step to complete the indus-try’s facilities is an oil refinery, farm tanks, a marina city and a bridge connecting the island city to the mainland of sabah.” Representing an investment of $5 billion, construction on these facilities began earlier this year.

other plans include upgrading trans-port infrastructure – a new port, improved roads and upgraded public facilities – as well as supporting the local airlines and cruise companies to help improve acces-sibility to Labuan both via air and water.

this in turn will help with the corpora-tion’s focus on the tourism sector as a

This is an independent publication by HADDOCK AnD ASSOCiATES 7

agricuLture anD agribusiness

n theRe ARe old oils and new oils. there are oils that have been used for thou-sands of years, and some that have been used for less than a hundred. traces of some oils have been found in ancient egyptian tombs dating back about 5,000 years ago. some were de-signed in labs in the 1930s.

Palm oil, like olive oil, has been around for thousands of years. Like olive oil and avocado oil, it comes from the fruit of the tree rather than the seed; in this case Elaeis Guineensis Jacq., a species of oil palm tree that originates from West Africa. The oil palm trees flourish in heat and rain; not surprisingly, Malaysia is one of its biggest producers, generating about 34 per cent of global production.

All fruit-based oils share similar health ben-efits. Comparative studies of the benefits of olive oil and palm oil on humans show similar positive results on cholesterol levels. other studies comparing the dry growing conditions of the olive with the wet tropical conditions of the palm (which forced it to develop high levels of antioxidants to protect its fruit) show palm oil as offering even greater benefits to human health.

Not only do these antioxidants protect hu-man life, but they also provide a longer shelf life. Palm oil, the world’s most popular edible

The amazing oil palmA life-giving economic mainstay

record. oil palm produces more vegetable oil per hectare per year than any other crop and therefore requires the least area of land to produce the same tonnage of oil as produced by any competing oil crop. he argues that the global livestock industry has deforested 400 times more than the area that oil palm cultiva-tion has, and that uN-FAo studies point to the commercial cultivation of crops like soybean as posing a much more significant deforesta-tion threat. oil World data also show that of the four major oil crops, soybean, sunflower, rapeseed and oil palm, soybean tops the list of land utilisation with a global planted area of 109.6 million ha.

indeed, Malaysia has dedicated 50 per cent of its total land area to permanent forest conservation – a commitment made at the 1992 Rio earth summit which is still intact. the oil palm occupies about 16 per cent of the country’s land area. Malaysia’s oil palm in-

The global livestock industry has deforested 400 times the area palm oil cultivation has affected and Malaysia has dedicated 50 per cent of its territory to preserving its permanent forests as part of its ongoing sustainability drive

We have never faced any sustainability issues”“

dustry has also established a fund for wildlife and biodiversity conservation, and Dr Basiron says that the orangutan population in east Malaysia is actually on the rise. Yet, in order to prove its sustainability, the industry has, in recent years, been forced to jump through certification hoops not demanded of others in order to protect its valuable export industry. And although Malaysian farmers have now certified over 50 per cent of their production, it has been a costly endeavour given that stand-ards are often a moving goal post.

in order to address the issue of this “free-for-all introduction of standards,” the Malay-sian Palm oil Council has proposed a set of national standards that will place the industry back in the driver’s seat, and help convince the world what Dr Basiron says Malaysia has always known – that “the Malaysian palm oil industry was developed with sustainability in mind right from the start, because we inherited the industry and technology from the British planters, who started this business. they wanted it to be as sustainable as pos-sible. We have never faced any sustainability issues. But, of course, the question is, how do we prove this?”

oil, can be found as an ingre-dient in nearly 50 per cent of the products sold in our su-permarkets, including food, cleaning agents, cosmetics and toiletries. Palm oil is also gaining traction as a reliable source for biofuel.

Yet in recent years, the palm oil industry has taken a beating in the international press, where accusations of deforestation, unsustain-able farming practices, and damage to native orangutan habitats have hampered what is one of Malaysia’s

largest employers and economic mainstays – the industry contributes 10 per cent of the country’s total export earnings. oil palm plan-tations are essentially reforestation activities.

the cultivation of oil palm spread in the mid 70s and 80s as a result of the decline of the rubber industry in Malaysia. since then, “the country has come to view it as one of its main sectors for revenue generation. it is one of the 12 national key economic areas promoted under the economic transforma-tion Programme,” says Dr Yusof Basiron, Ceo of the Malaysian Palm oil Council, “and i believe it is ranked number two now, so it is very important in terms of priority for future development.”

Dr Basiron, who feels Malaysia’s oil palm industry has been unfairly singled out by critics, defends its excellent sustainability

Dr Yusof Basiron, CEO of the Malaysian Palm Oil Council