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The Green Agenda: Investment opportunities in bio-based materials 7th September 2015 Shangri-La’s Tanjung Aru Resort & Spa, Kota

Kinabalu, Sabah

INVESTMENT OPPORTUNITIES IN PALM-BASED INDUSTRIES IN SABAH : FOCAL POINT POIC LAHAD DATU

Datuk Dr. Pang Teck Wai & Dr Lee Ming Tong

PRESENTATION OUTLINE

• Introduction

• Sabah, Malaysia : Geographical Location And Investment Zones • POIC Lahad Datu : Foundation

• POIC Lahad Datu : Business Model & Investment Opportunities

• Palm-based Biomass Mobilization Strategy

• Concluding Remarks

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INTRODUCTION

INTRODUCTION

1. Objectives:

To introduce the investment opportunities in Natural Resourceful Sabah Development Corridor.

1.1

1.2 Especially the investment opportunities in Palm-Based Industries at POIC Lahad Datu.

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SABAH, MALAYSIA : GEOGRAPHIC LOCATION AND INVESTMENT ZONES

SABAH GEOGRAPHIC LOCATION

SABAH

Lahad Datu

CHINA

KUALA LUMPUR

SINGAPORE

HONG KONG

Manila

Kota Kinabalu

Kota Kinabalu to :

Lahad Datu 55 min

Kuala Lumpur

2 hrs 30 min

Singapore 2 hrs 15 min

Hong Kong 2 hrs 55 min

Manila 2 hrs 05 min

Perth 5 hrs 35 min

Perth

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SABAH INVESTMENT ZONES

2.

3.

5. 4.

8. 7.

10.

9. 11.

6.

1.

1. Northern Agro Forestry Zone

2. Sabah Industrial Zone

3. Tourism & Highland Agri-zone

4. SME Agro-food Zone

5. Interior Agropolitan Zone

6. Agrobio Innovation Zone

7. Integrated Agro-food Commercial

Zone

8. Marine Industry & Tourism Zone

9. Sabah Biodiversity Conservation

Zone

10. Wildlife Sanctuary

11. POIC Lahad Datu

The key investment opportunities are :-

• Tourism • Logistics

• Agriculture • Manufacturing

POIC LAHAD DATU : FOUNDATION

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POIC LAHAD DATU : BACKGROUND AND OBJECTIVES

Background:

• POIC Sabah Sdn Bhd set-up in January 2005.

• Wholly owned by Government of Sabah under the purview of Ministry of Industrial Development (MID).

• As the first and largest comprehensively developed (infrastructure) palm oil industrial cluster in the world.

• Project development : 4,400 acres of integrated Industrial complex designed to cater for light, medium and heavy industries

Objectives:

• To value add to palm oil and palm biomass.

• Development of related industries.

POIC LAHAD DATU LOCATED AT THE CENTRE OF OIL PALM GROWING BELT IN SABAH

At the vicinity of:

1.51 million hectares oil palm plantation (28%) 126 CPO mills (28.6%) 11 palm oil refineries (22%)

Easy access to:

6.05 million tonnes of crude palm oil (CPO) 0.613 million tonnes of crude palm kernel oil (CPKO) (27.5%) 0.70 million tonnes of palm kernel cake (PKC) (27.8%) 30 million dry tonnes of palm-based biomass (30%)

* Figure in parenthesis denotes % of national total.

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ESTIMATED PALM-BASED BIOMASS MATERIAL PRODUCTION IN SABAH

Oil Palm Fronds

Oil Palm Trunks

Empty Fruit Bunches

Mesocarp Fibres

Palm kernel Shells

Palm Oil Mill Effluent

28.1 Total :

16.4

4.5

2.3

2.5

1.4

1.0

Sabah Malaysia

46.0

14.0

7.0

7.0

4.0

3.0

80

Biomass Type Volume (Million Dry Tonnes)

DEEP SEA PORT & LARGE INDUSTRIAL AREA FOR DEVELOPMENT

PHASE 2

PHASE 1 PHASE 3

4,400 acres of industrial land for development

1,600 acres already developed

Deep & sheltered harbour ~ depth up to 20-metres

20,000 acres of land bank along the coast line

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POIC INFRASTRUCTURE

PHASE 1 PHASE 3

4,400 acres of industrial land for development

1,600 acres already developed

Deep & sheltered harbour ~ depth up to 20-metre

20,000 acres of land bank along the coast line

PIPE RACKS

• Pipe rack provided by POIC to connect to investors’

lots within Phase 1 to the liquid jetty

• Investors are required to lay their own pipelines

INTERCHANGE

• Located within our liquid terminal with boiler and air

compressor facility

• Pipelines are provided from interchange to berth

ELECTRICITY

• Double Circuit Underground cabling system

• Electricity supply up to a total of 50MW

• At least one ring of 11kV underground cabling circuit

running along lot frontage

WATER

• 3 Million Gallons (11.35 million litres) in Permastore

Tanks

TELECOMMUNICATIONS

• Underground cabling system

• Provided by Telekom Malaysia (TM) within the whole

POIC area

POIC PORT FACILITIES

PHASE 1 PHASE 3

4,400 acres of industrial land for development

1,600 acres already developed

Deep & sheltered harbour ~ depth up to 20-metre

20,000 acres of land bank along the coast line

Liquid Bulk Terminal

Dry Bulk Terminal

Container Terminal

In Progress

Under Construction – Ready by year 2017

Barge Berth

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POIC LAHAD DATU : STRATEGY GEOGRAPHICAL ADVANTAGES AS AN IDEAL INTERNATIONAL TRANSHIPMENT HUB

POIC Lahad Datu

POIC Lahad Datu:

• Deep sea port

• Proximity to resourceful

BIMP-EAGA Region

• Potential International

Transhipment Hub

• Untapped shipping route

POIC LAHAD DATU : BUSINESS MODEL AND INVESTMENT OPPORTUNITIES

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BUSINESS MODEL : INDUSTRIAL CLUSTERING CONCEPT

Palm Oil Industrial Clusters & other

related Industries

VALUE ADDING OPPORTUNITIES IN PALM OIL-BASED DOWNSTREAM INDUSTRIES

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VALUE ADDING OPPORTUNITIES IN PALM-BASED BIOMASS DOWNSTREAM INDUSTRIES

Feedstocks Currently Underutilised

Oil Palm Fronds

16.4 million dry tonnes

Oil Palm Trunks

4.5 million dry tonnes

Empty Fruit

Bunches

2.3 million dry tonnes

Downstream Opportunities

Bio-Pellets Bioethanol Biobased Chemicals

Biofuels

Wood Plastic Composite Plywood Furniture from Oil Palm Lumber

Pulp & paper MDF Particle Board / Moulded

Particle Board Finished Paper Products

Animal Feed from Oil Palm Fronds Fibre Compost/fertilizer

Current Focus

at POIC Lahad

Datu:

• Bio-refinery

• Bio-fuels

• Bio-pellets

• Bio-

chemicals

PALM-BASED BIOMASS MOBILIZATION MODEL

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PALM-BASED BIOMASS MOBILIZATION MODEL

Models:

1. POIC Biomass Collection and Processing Centre model.

2. Biomass Joint Venture cluster model.

2

POIC BIOMASS COLLECTION AND PROCESSING CENTRE MODEL

Biomass Investor

(Purchaser & User)

POIC Lahad Datu/Govt

Invest in infrastructural

development of the centre

Other Biomass

End users

Biomass Feedstock*

from palm oil mills,

plantations

& other sources

Biomass

Collection

&

Processing

Centre

Govt as Facilitator:

Sabah State Govt

initiative, Malaysia

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DISTRIBUTION PATTERN OF PALM OIL MILLS TO POIC BIOMASS COLLECTION CENTRE AND SUB CENTRES

50km Radius 100km Radius

POIC Main Collection Centre

Palm Oil Mills

Collection sub centres

150km Radius

Note:

a) Distance roughly to

scale.

b) 37 mills within 50 km

radius of POIC

c) 85 mills within 100

km radius of POIC.

d) 113 mills within 150

km radius of POIC

Legend

BIOMASS JOINT VENTURE CLUSTER MODEL

Biomass Owners

(Mills, Plantations)

Contribution of biomass*

JV Cluster (Board of Director)

[Management Team]

Govt Agencies

for support & advice

(e.g POIC Lahad Datu)

Biomass Downstream

Investments

(biopellet, bioethanol,

bio-chemicals etc)

(Op

tio

n f

or

cap

ital

inve

stm

ent)

[* To start with Empty Fruit Bunches (EFB)]

Govt as Facilitator:

Agensi Inovasi Malaysia

(Prime Minister’s Dept,

Malaysia)

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WHAT DOES A BIOMASS JV CLUSTER LOOK LIKE

Portfolio JV

Biomass supply:

600,000 MT (Dry)

Biomass supply:

120,000 MT

Pellets

Biomass supply:

240,000 MT

Bioethanol

Mill owner #1

Biomass supply:

240,000 MT

Mill owner #2 Mill owner #3

20% stake

40% stake 40% stake

10% JV stake 15% JV stake

through value of

biomass

90% Partner stake 85% Partner stake

Partner #1

Capacity: 100,000 MT

Feedstock required:

100,000 MT

Capacity: 100,000 MT

Feedstock required:

500,000 MT

Partner #2

Source: Agensi Inovasi Malaysia (AIM), 2013

CONCLUDING REMARKS

1. Sabah is the largest oil palm growing State in Malaysia, producing large amount of palm oil and palm biomass for downstream industries.

2. POIC Lahad Datu offers a wide range of investment opportunities in palm oil and palm-based biomass downstream industries, especially in the biochemical sector as the major focus.

3. POIC Lahad Datu provides the needed policy support, basic and specialized infrastructure.

4. A key present focus of POIC is in determining the most efficient way to aggregate large amounts of biomass as feedstock for downstreaming.

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COME AND DISCOVER POIC YOUR GLOBAL INVESTMENT HUB.

We invite individuals and corporations to explore the

various business opportunities in POIC especially in

Palm oil downstream activities, Oil, Gas &

Petrochemical, Manufacturing, Ship Building,

Education, Commercial Development, etc

For more information please contact : POIC Sabah Sdn Bhd 17th Floor, Wisma Perindustrian, Jalan Istiadat, Teluk Likas 88400 Kota Kinabalu Tel : (6088) 272 261 / 230 196 Fax: (6088) 272 580 / 272 581 Webpage: www.poic.com.my