PetChem looking to ‘fertilise’ growth in new markets


By LIZ LEE
  • Business
  • Wednesday, 19 Dec 2012

Hapiz: ‘It’s no secret that the European crisis has had a trickling effect on the economies in China and India this year. Our outlook going into next year is dependent on how fast the Asia-Pacific picks up from that.’

KUALA LUMPUR: The petrochemical industry should see moderate growth in 2013, much dependent on how quickly China, India and the Asia-Pacific economies recover from the global crisis.

While product prices had been on an uptrend, Petronas Chemicals Group Bhd (PetChem) president and chief executive officer Abd Hapiz Abdullah said that business was still very dependent on market cyclicality.

“Prices look to be firming up. It is a good sign, but then we have to take into context the bigger orders we take in prior to the lunar new year,” he said of PetChem's performance at the post-CICM Responsible Care Awards media briefing.

Hapiz said it was difficult to generalise the performance in specific markets as PetChem exports cyclical products to various markets.

However, he hoped the economy will maintain its recovery well into 2013.

“It's no secret that the European crisis has had a trickling effect on the economies in China and India this year. Our outlook going into next year is dependent on how fast the Asia-Pacific picks up from that,” he said.

“At the same time, the emergence of Asean countries (will be key, especially) with the opening up of Myanmar,” he said, calling it a presentation of new opportunities that were not there before.

“Players like us need to figure out a way to participate,” he said, “We have an edge because we are at the centre of all that is happening here, in comparison to companies in Latin American or North America, for example.”

Hapiz said petrochemical players had not established their presence in the newly opened Asean economies because they did not know to whom to go in the markets, and also perhaps the industry was not mature enough yet. That said, PetChem is looking to expand overseas as its exporting markets are focused around the Asia-Pacific.

For Cambodia and Myanmar, he believed there is a market for fertilisers.

“Cambodia and Myanmar, in my view, are agriculture-based economies like Malaysia 20 years ago. Fertilisers must be an opportunity and we are looking into that,” he said.

Hapiz said PetChem would only consider entering the markets if there was business potential and if the group could conduct its business safely in respect to the local community.

“We would love to go in, but we must make sure we can do it safely. Otherwise, it will hurt the industry because they would lose trust in us and not welcome us in the future,” he elaborated.

Hapiz cited the early days of foreign investments in Malaysia when foreign companies set up facilities here without much thought for the locals.

“When we first opened up and investments were coming in, (the companies) purely wanted to capitalise on the low-cost labour here. They did not care about how they dumped their waste,” he said, noting that Malaysians were facing the consequences now.

Hapiz said PetChem could look into Myanmar as a new market as soon as next year. Asean is currently the group's largest revenue contributor at 70% of its average revenue of RM16bil. Malaysia alone contributes the largest share at 40%.

On a separate note, he said PetChem might be involved in the Petrochemical Integrated Development (Rapid) project in Pengerang, Johor, as it went into a final investment decision (FID) some time next year.

“Depending on the outcome of the FID, PetChem might be the one coming on board,” he said, “Whatever the result, I have to take it to my board and get it to agree first.”

At the CICM Responsible Care Awards yesterday, meanwhile, the group won six gold, four silver and 13 merit awards under the corporate awards category for the six codes of management practice through its subsidiaries, joint company and jointly controlled company.

In a statement, Hapiz said: “For eight consecutive years, the Petronas Chemicals group of companies have participated in the CICM Responsible Care Awards and won numerous accolades.”

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