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Sabah, Sarawak to position Malaysia as premier biomass processing hub

With the recent launch of the Sabah and Sarawak Biomass Industry Development Plan, the two East Malaysia states on the island of Borneo are set to take the lead in high-value biomass industries and poised to position Malaysia as the premier biomass processing hub for South East Asia (SEA).

According to figures from the Malaysian Palm Oil Council (MPOC), the country currently accounts for 39 percent of world palm oil production, second only to its neighbour Indonesia. The country is also rich in forest resources and in 2005 the Ministry of Plantation Industries and Commodities (MPIC) embarked on establishing 25 000 ha of plantation forest per annum through to 2020 in a bid to alleviate pressure on the country’s natural forests. The aim of the Forest Plantation Development Programme is to have 375 000 ha planation forest by 2020 and, according to the Malaysian Timber Council (MTC), over 97 000 ha had been established at the end of 2014. The climate and soil conditions are highly conducive for fast tree growth and MTC forecasts that each 25 000 ha lot of mature forest plantation could yield up to 5 million m³ of timber with the first plantation lots expected to mature in 2021.

100 million tonne biomass strategy

Malaysia is expected to produce between 80 and 100 million dry tonnes of biomass annually from 2011 till 2020. Against this backdrop of abundant biomass residues and resources coming on stream a National Biomass Strategy 2020 (NBS2020) was launched by the Prime Minister in 2011. The NBS2020 was developed by Agensi Inovasi Malaysia (AIM), a statutory body created by the Government through an Act of Parliament to “jump start” wealth creation through knowledge, technology and innovation and stimulate and develop the “innovation eco-system” in Malaysia. Together with key stakeholders from the Government, industry and academia, the NBS stresses a “balanced development” of the biomass industry across a portfolio of downstream activities ranging from bioenergy, pellets, biofuels, biochemicals and its end products.

The primary objective is to maximise sustainable Gross National Income (GNI) impact from biomass through innovation in the 2020 timeframe. It is anticipated to contribute an additional MYR30 billion (≈US$7.48 billion) to the nation’s GNI through sustainable utilisation of biomass by higher value-added downstream activities in the palm oil sector. Since the launch of NBS2020 in 2011, the country has fast gained momentum by global players as one of the region’s most exciting and promising locations for investments in biomass based industries.

50 percent of resources in Sabah and Sarawak

According to Mark Rozario, CEO for AIM, the palm oil sector in the East Malaysia states of Sabah and Sarawak has more than 50 percent of the biomass resources in Malaysia. Furthermore the biomass industry has been acknowledged as one of the key economic areas for new wealth creation for the country beyond 2020. As part of the NBS2020 initiative AIM engaged both the Ministry of Industrial Development Sabah (MIDS) and the Sarawak State Planning Unit  (SPU) to customise a plan that is unique for both States as far as biomass is concerned.

At the end of February both states jointly launched its regional Biomass Industry Development Plan that transposes the NBS2020 into tangible regional action plans. Based on the plan, Sabah State can capture MYR 3.2 billion (≈US$0.8 billion) in additional revenue per year, 25 000 new jobs and MYR13.5 billion (≈US$3.36 billion) in investments leveraging 4.8 million dry tonnes of its biomass feedstock from the oil palm sector. The identified Biomass Development would be focused in three main clusters namely Lahad Datu, Sandakan and Tawau.

For Sarawak the potential lies in becoming a multi feedstock biomass hub with its proposed commercial-scale biomass plantation on marginal land, existing forestry activities and growing palm oil plantation, providing 6 million dry tonnes of biomass to support multiple biofuels, biochemical and bioenergy plants. The key biomass clusters identified were Bintulu, Miri, Tanjung Manis and Kuching.

– This could help Sarawak capture MYR4.8 billion (≈US$1.2 billion) additional revenue per year; 35 000 new green jobs, and MYR18 billion (≈US$4.48 billion) in investments, said Rozario.

Landing investments

The path to realising the potential outlined in the NBS2020 has though not been without its challenges simply because biomass aggregation was not foreseen as challenge a few years ago.

– Since 2011, three studies in Sabah were undertaken to determine how these vast potentials could be realised, and the Sabah Biomass Industry Development Plan (SBIDP) is the outcome of the most recent study funded by AIM. For the first time, we can say with certainty that some serious biomass investments are coming into Sabah, and one or two of them should start sometime within this year, said Datuk Seri Musa Haji Aman, Chief Minister of Sabah in a statement.

He stressed that Sabah is ready to be the “biorefining hub” of Malaysia citing that POIC Lahad Datu is ready with the land and the infrastructure, and has been ready since the Genting Group and its US-based partner, Elevance Renewables signed up to build a MYR2 billion (≈US$0.49 billion) biorefinery.

– Compared to oil and gas, oil palm has greater potential in anchoring a stable and healthy economy and it has longevity because it’s renewable, he said.

Chief Minister of Sarawak Datuk Patinggi Tan Sri Adenan Satem said that Sarawak will integrate biomass as a new promoted industry under Sarawak Corridor of Renewable Energy (SCORE) guided by a detailed roadmap and an action plan that will be implemented by a Federal-State Taskforce led by SPU and facilitated by AIM.

– The AIM study helped us gauge the real biomass volumes available, the cost and eventually the mix of potential sustainable downstream activities that benefit the people of the State creating social and economic impact, he said.

He added that Sarawak can host 10 biofuels or biochemical plants in various stages of development, mobilising six out of the 19 million dry tonnes of biomass in four specific clusters of Bintulu, Miri, Tanjung Manis and Kuching in the next 10 to 15 years.

– We understand that capturing this opportunity is by no means easy but we are in the best position to realise our potential and support Malaysia’s aspiration in NBS2020, he said.


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