Rejected Taiwan Kuokuang petrochemical transferred to Pengerang, Johor

New tipping point
Opinion by Lim Sue Goan
Translated by Soong Phui Jee
Sin Chew Daily 15 May 12;

The rejected Kuokuang petrochemical investment project will be transferred to Pengerang, Johor. It is another controversial project after the Lynas rare-earth refinery plant project in Kuantan. It is believed to become an election issue, too.

Malaysia is an oil-producing country and oil has been listed as one of the national key economic sector. Therefore, it is a logical move to enter the refining and petrochemical industry, which is believed to bring huge economic benefits.

However, does it mean that the people must pay the costs of health and environment to develop petrochemical industry and gain economic wealth? Do all countries in the middle-income trap have to make sacrifices and bring in high-pollution industries?

Like the Lynas rare-earth refinery plant, people are having the same doubts over the RM36 billion petrochemical investment project. Why are we treasuring something that has been rejected by others?

The Kuokuang Petrochemical Technology Co proposed a huge petrochemical investment project in Taiwan in 2005, to build petrochemical plants in Yunlin. However, the location changed to the coast of central Zhanghua County in 2008 after failing the environment assessment. On April 22 2011, President Ma Ying-jeou announced his withdrawal of support for the project.

The Kuokuang petrochemical investment was accused of high water consumption, consuming about 400,000 tons per day, which would dry the largest wetlands of Taiwan and threaten food safety. In addition, it was estimated that 339 to 565 people would die of cardiovascular diseases and lung cancer, while patients of respiratory diseases would also increase due to the PM2.5 pollutants released into the air.

The project could create 20,000 job opportunities, but it was estimated to cost more than NT$100 billion of social cost yearly.

Eventually, political leaders listened to the public opinion and shelved the project under the strong opposition from the people, as well as environmental and ecological protection organisations.

Deputy Minister of International Trade and Industry Datuk Mukhriz Tun Dr Mahathir has expressed interest in the project since April last year after the project was shelved in Taiwan. Taiwan Economic Minister Shi Yanxiang also confirmed that the Kuokuang Petrochemical Technology Co does have contact with Malaysia.

It is believed that the two parties have negotiated details of the investment project since then, but the government did not consult the people and local experts. Like the Lynas rare-earth refinery plant, it lacks transparency. It could lead to a strong rebound from the civil society when the people are informed only after what is done cannot be undone.

The project had consulted public opinion and in-depth study were conducted for six years in Taiwan. As for us, isn't it too hasty to accept it without any prior studies is conducted and even before the release of the environmental assessment report?

We feel baffled if it is true that Malaysia is offering 10 years of tax-free concession as reported by Taiwan media. Why should we treat such a high-risk investment so well? The Lynas rare-earth plant enjoys 12 years of tax-free concession while the Kuokuang petrochemical plants enjoy 10 years of tax-free concession. It will not worth the candle if the country has to spend huge sums of money to repair the environment in the future.

The authorities do not seem to have learned a lesson from the Lynas rare-earth refinery plant controversy. The anti-petrochemical plant issue is expected to continue fermenting and once the forces opposing the rare-earth and petrochemical plants combine, it would be a trouble for the BN.

From a positive point of view, however, the rare-earth plant and petrochemical plant issues would raise civil awareness, which might help accelerate the country's political transformation.

Shelved Kuokuang petrochemical project may be revived in Malaysia
Focus Taiwan 14 May 12;

Taipei, May 14 (CNA) Minister of Economic Affairs Shih Yen-shiang confirmed Monday that a controversial petrochemical investment project that was scrapped in Taiwan may be revived in Malaysia.

According to local media reports, Malaysian Prime Minister Najib Razak announced Sunday that his country will work with a Taiwanese petrochemical company to launch a US$120 billion investment project for oil refining, naphtha cracking and petrochemical production.

Fielding questions at a legislative committee meeting, Shih said the company Razak referred to was Kuokuang Petrochemical Technology Co., in which Taiwan's state-owned oil refiner CPC Corp. has a large stake.

Kuokuang had planned to build a naphtha cracking and petrochemical complex in coastal wetlands in central Taiwan's Changhua County.

The project was scrapped, however, after some local residents andenvironmental impact assessment teams raised concerns that it would consume too much water and generate high levels of pollution in the ecologically sensitive area.

"Kuokuang has since been seeking a suitable overseas destination for its investment project, and Malaysia is a possible option," Shih said.

Asked about the possible impact of such a move on Taiwan's petrochemical industry, Shih said industry executives have agreed to focus on producing high-quality petrochemicals at home and other petrochemical intermediaries abroad.

He admitted that Kuokuang's decision to launch its new investment project abroad will definitely have an adverse impact on Taiwan's petrochemical production value.

"But since our people have made a choice against the Kuokuang project, the Ministry of Economic Affairs must uphold this policy line," Shih said.

He promised that the ministry will step up efforts to help upgrade technology in the domestic petrochemical industry so as to minimize any negative impact of overseas investment projects.

(By Lin Meng-ju and Sofia Wu)

Kuokuang project may be revived in Malaysia
SHARING:The shelved petrochemical project, formerly planned for Changhua County, would share amenities and infrastructure with a state oil and gas company
Staff Writer, with CNA Taipei Times 15 May 12;

Minister of Economic Affairs Shih Yen-shiang (施顏祥) confirmed yesterday that a controversial petrochemical investment project that was scrapped in Taiwan may be revived in Malaysia.

According to local media reports, Malaysian Prime Minister Najib Razak announced on Sunday that his country would work with a Taiwanese petrochemical company to launch a multibillion-dollar investment project for oil refining, naphtha cracking and petrochemical production.

Fielding questions at a legislative committee meeting, Shih said the company Najib referred to was Kuokuang Petrochemical Technology Co (國光石化), in which Taiwan’s state-owned oil refiner CPC Corp, Taiwan (CPC, 台灣中油), has a large stake.

CPC media liaison officer Jessica Tang (唐苑莉) said Kuokuang may build a refinery, naphtha cracker and other plants.

“We are evaluating the feasibility of the proposed investment” and the company may make a decision by the middle of next year, depending on government approval, she said.

Kuokuang may invest between US$10 billion and US$12 billion in the project, if the Taiwan government approves the investment, Tang said.

The project may share amenities and infrastructure with a US$20 billion refinery and petrochemicals complex planned by Malaysian state oil and gas company Petroliam Nasional BHD, according to Najib. It would be located in Pengerang, which is in the Southeast Asian nation’s southernmost state of Johor, which Malaysia wants to transform into an oil hub to compete with Singapore.

Kuokuang was incorporated in January 2006, with major investors also including Ho Tung Chemical Corp (和桐化學), Oriental Union Chemical Corp (東聯化學) and China Man-Made Fiber Corp (中國人纖), according to the ministry. It had planned to build a naphtha cracking and petrochemical complex on coastal wetlands in Changhua County.

The project was scrapped, however, after local residents and environmental impact assessment teams raised concerns that the complex would consume too much water and generate high levels of pollution in the ecologically sensitive area.

“Kuokuang has since been seeking a suitable overseas destination for its investment project, and Malaysia is a possible option,” Shih said.

Asked about the possible impact of such a move on Taiwan’s petrochemical industry, Shih said industry executives had agreed to focus on producing higher-quality petrochemicals at home and other petrochemical intermediaries abroad.

He said that Kuokuang’s decision to launch its new investment project abroad would definitely have an adverse impact on Taiwan’s petrochemical production value.

“However, since our people have made a choice against the Kuokuang project, the Ministry of Economic Affairs must uphold this policy line,” Shih said.

Separately, Formosa Plastics Group (台塑集團, FPG), which faces investment obstacles in Taiwan and is seeking a breakthrough in a large ethylene plant it operates in China, said it had invested a further US$2 billion in production expansion at its Texas plant after FPG chairman William Wong (王文淵) visited it earlier this month.

However, the industrial conglomerate said its new investment in the US was simply recapitalization of its US subsidiary and was not an indication that the company is pulling out of Taiwan.

On Monday, FPG confirmed that Wong met with Texas Governor Rick Perry during his visit and that the investment was mentioned in that meeting. New ethylene and propylene plants will be built in Texas, where energy costs are low thanks to abundant shale oil resources, it added.