BY
I.M. NASIR & ZURINA ZULKIFFLY

ECERDC’s POIC Study figures prominently in the article below. Located in Kuantan, Pahang; POIC is a unique proposition and it is envisioned to drastically impact the industry in the very near future giving the nation and its people a new sense of confidence and wealth opportunities in its economic mainstay – the Palm Oil Industry.

The general advances in technology, mechanization, and R&D within the industry, beginning with planting management and yield increments onwards through to palm oil-based downstream manufacturing is increasing the competitiveness of the industry vis-à-vis the other oils/fats crops.

In short, the obvious fact is that the value chain multipliers are much bigger downstream, which was why POIC was initiated, and why the recommendations to overcome challenges to the industry centers on expanding downstreaming activities; making diversification downstream, an integral part of initiative.

In the Study which was conducted by the MIGHT/ MPOB team, the sectors identified for inclusion into POIC are Phytonutrients, Oleochemicals, Food, Biomass, Biodiesel, Bio Fertilizer and Animal Feed. The identification was based on the trends, demand/market and performance of each industry that is seen to experience steady increase in production and to be of high value-adds. For instance, in one of the major identified industries – Oleochemicals; these chemicals derived from palm oil are used as the starting materials for the production of surfactants (Functional ingredients). These surfactants are then used to formulate consumer products.

With a current capacity of 2.68 million tones,
Malaysia is recognized as the world’s largest center for Oleochemicals production. The introduction of this sector within the industry has allowed Malaysia to shift from the labor intensive (Plantation) to a capital intensive sector. The potential of the Oleochemicals in the derivatives and further downstream sectors however, have not been fully explored. This is one instance where POIC is predicted to transform and revolutionized the
sector to ensure Malaysia realize the potential and opportunities that comes with it.

In devising its development strategies, steps were taken systematically; beginning with the formulation of the Business Model. The salient aspects of the POIC Business Model include key resources, key activities, partner networks and finance. Among the key resources is Manufacturing Flagship (PalmBiC), Business/Technology Incubation Center, Cluster Brokers Center, Onestop Authorization Center, Palm Oil Financial Investment and Trading Center (ProFIT), Bonded warehouse along with Hub Management Team.

Significant activities in the offering of the Value Proposition concerns Facilities Management and Maintenance as well as Marketing and Promotions.

Main partners for POIC at the initial stage are namely Kuantan Port City, Cargo Companies, SME Corp, R&D Institutions, Training and Academic Institutions, Other Technology/Business/Science Parks and/or Industrial estates and their Affiliates.

In order to safeguard its survival and to continue offering its Value Proposition; and to justify its ultimate existence, POIC requires a source of income. The sources of income in this instance consist of Sales, Leasing Fees, Management Fees, and Facilities/equipment Rentals. The cost structure for POIC on the other hand, deals mainly with the constitution of the expenses; which in this case are, the Hub Management and Maintenance; and Hub Marketing and Promotions. Both activities would consume a bulk of the monetary resources available to the hub.

POIC Key Strategies concerns regular interface between POIC stakeholders, addressing the gap between R&D and commercialization, working with dedicated academic institutions, methodically dispensing customized incentives and grants and creating a platform for “knowledge spillover effects” from large firms to SMEs.

The site earmarked for the proposed POIC covers 246.96 hectares of greenfield land in a major development corridor between Gebeng Bypass and Federal Route 3 (Kuantan/Terengganu). Identified as part of Phase 3 of the Gebeng Industrial Estate, the POIC site is located inside the proposed Kuantan Port City Development. About 5 km north-west of the existing Kuantan Port, the POIC site is regarded as one of the key industrial clusters to be developed over the next twenty (20) years.

The strategic location of the POIC site is further aided by an existing freight rail connection between Kuantan Port and Kerteh. Its locational advantage as an industrial park and accessibility and connectivity by land will be further strengthened when the Gebeng Bypass-East Coast Highway elevated interchange and the 40 m arterial distributor road proposed under the Kuantan Port City Development are completed.

The planning of the POIC is based on the premise of creating a comprehensive and integrated industrial park that is self-sufficient and self-contained and based on the concept of the “5 Integrations” which includes the Integration of Production Projects, Integration of Warehousing, Logistics and Transport System, Integration of Support Facilities, Integration of Public Infrastructure and Utilities and also Integration of Environmental Management and Monitoring Facilities.

It was proposed that POIC’s development is
implemented in two (2) phases due to the physical scale of the development as well as the size of the investment and capital cost involved. Equally important, phased development also allows the State government and its investment partners van opportunity to review the projects and their implementation program to reflect market conditions, market demand and materials supply.

Adapted from the park management model adopted by Sembcorp in Batam and Vietnam, it was proposed that POIC is developed by State in partnership with ECERDC. Regardless of whether POIC is developed solely by State initiative or as a State-Private partnership; it was proposed that the management of the industrial park be assigned to a private limited company.

The establishment of POIC will support the development of a comprehensive downstream
palm oil based cluster; building upon its strength on the availability of vast palm oil plantations hinterland (More than 900,000 Ha); large number of palm oil processing firms (54 firms); and high gross palm oil output of RM 6.25 billion (2005) in the Eastern Region, serving as a catalyst in creating the value chain of palm oil and related supporting industries, as well addressing the leakage of palm oil exports from the region. As a result of the setting up of POIC in and around the Gebeng area, there will be lots of new job opportunities generated by the new industries involved in palm oil products-linked companies.

POIC is also a starting point for a larger notion that would in due course feature as a hub. Since POIC will be the showcase for the Palm Oil Industry, it is essential to ensure its creation is comprehensive and sustainable. As part of ECER, POIC’s success is imperative for the development of the region and nation whilst ensuring that they are ultimately beneficial to the people on the socioeconomic
front; customers/clients with the more extensive product choices; Industry through initiating new sources of growth; stakeholders on the return on investment (ROI); and Nation in terms of wealth and prosperity.

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