Towards a common goal


  • Business
  • Saturday, 29 Jun 2013

The Bioeconomy Transformation Programme is tasked with aligning all the various initiatives and strategies for the nation’s bio-based economy, of which the palm oil industry is a key player

 

IN the quest to make Malaysia a fully developed nation by 2020, there is a need to pair innovation with commercialisation strategies. Towards this end, the Bioeconomy Transformation Programme (BTP) was mooted last year – as the driving force for the National Biotechnology Policy (NBP) as well as the platform to boost commercialisation opportunities in biotechnology.

“The NBP has laid the foundation for a bio-based economy, but the lack of alignment in numerous policies, strategies and initiatives make it a challenge to coordinate implementation,” Roland Berger Strategy Consultants partner John Low shares with StarBizWeek.

The NBP had set a target for the biotechnology sector to contribute 5% to the country’s gross domestic product (GDP) and create 280,000 jobs by 2020 via three strategic phases; phase one was 2005- 2009, phase two 2010-2015, and phase three 2016-2020.

“Currently we are in the middle of phase two, but there is a need to review the initiatives and thrusts to see if they are still relevant because the NBP was planned back in 2004,” Low says.

“There are so many other initiatives going on in both public and private sectors, hence an integrated bioeconomy plan is needed to drive the whole nation towards one goal.”

Roland Berger, which offers customised management consulting services for a wide range of industries and competency areas, was hired by the Government to help develop the BTP (formerly known as the Bio-economy Initiatives Malaysia launched in 2011 to coordinate and intensify national efforts to exploit the potential economic benefits of bioeconomy).

The BTP’s three key focus areas are tropical agro-biotechnology, renewable bio-resources, and, innovative healthcare products and services. It has identified 10 entry point projects (EPPs) covering agriculture, healthcare and industrial biotechnology activities – all intended to contribute RM3.6bil to our gross national income (GNI) and create 13,600 jobs by 2020.

 

Malaysia is the second country in the Asia Pacific region after China to announce bio-based economy initiatives.

 
John Low, partner at Roland Berger strategy consultants

“The global evolution towards a bio-based economy is facilitated by an increased commercialisation of biotechnology research,” says Low.

“A bio-based economy is basically about anything that sustainably produces biomass, and converts it in two ways, either through biochemical conversion or biothermal conversion (heat).

“The biomass is then used to produce bio-based products such as fuel, power, heat, specialty chemicals, food and feed, and, chemicals and materials.”

Malaysia’s palm oil industry is one of the major players in the Bioeconomy Transformation Programme under one of its focus areas – agriculture biotechnology. This is because of the oil palm trees’ capability to produce significant amounts of biomass, Low notes.

Despite the abundant supply of biomass in the country and its proven capability to be converted into higher value-added products, Low says the main challenge is in securing a constant supply of biomass feedstock.

Oil palm biomass can be extracted from the tree trunks, empty fruit bunches (EFB) and fronds.

However, most of the oil palm biomass supply comes from EFB, as biomass from the trunks can only be extracted during the replanting process.

“Trying to secure a constant supply of EFB feedstock is the main issue. A lot of people (suppliers) think that the value of biomass could be much higher in a few years’ time, which is true though. Some of them also believe that in several years time they can come up with their own technology to utilise their EFB, thus giving them more value than just selling the EFB.

“Right now, everyone is playing ‘wait and see’,” he says.

Low suggests that security in feedstock supply can be ensured through collaboration.

“Through collaboration, palm oil players can share their biomass, rather than contributing a huge chunk of their biomass to a project that may not work out,” he says.

“It is important to develop an accurate understanding of how underlying economic factors influence the demand and supply of palm oil, because this can help with anticipating risks and identifying strategies to achieve the best sustainable outcomes.”

 

Call to share resources

Competition among players in the palm oil industry may be healthy, but Low calls on them to work together and share their resources to extract maximum value through further sustainable investments in the downstream activities.

“The biotechnology industry requires a diverse supporting ecosystem – from companies, suppliers to service providers as well as research institutions and other related organisations – to promote effective collaboration.

“Partnership and collaboration are ideal for intensifying R&D without driving up costs too much,” he explains.

“The situation right now is, there is duplication in terms of funding to enforce R&D in the downstream activities.

“It is better if they pull all their resources together and when they find anything big, they can share it because at the end of the day, it is about competing globally.”

Low points to China’s recent announcement of the usage of palm oil and used cooking oil to power an 85-minute flight of China Eastern Airlines’ Airbus A320. The biofuel was produced by China Petroleum & Chemical Corporation or Sinopec.

This shows that global competition is “so fierce” it is important for Malaysia to further invest downstream to extract maximum value of our resources, he reiterates.

However, Low notes that Malaysia is progressing well in forming collaborations to convert oil palm biomass into high value products.

“For example, the oil palm biomass joint venture cluster – the first of its kind – that was established by the Palm Oil Industrial Cluster in Lahad Datu that will be the centre point to receive EFB around the area,” he says.

 

Education is the key

Besides having a clear bioeconomy roadmap and greater collaborations, Low says education also plays a crucial role in ensuring the success of a bio-based economy.

“It is important to build awareness among Malaysian especially those who are unfamiliar with bio-based product substitutes and their benefits,” he says.

He cites Malaysia’s biodiesel B10 programme that is set to go nationwide next year.

“Not many people drive diesel engine cars in Malaysia. Thus, even if the biodiesel programme goes nationwide, there is a risk as the consumer base for diesel engine vehicles in Malaysia is low,” he says.

 

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