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DRAWING INVESTORS: Residents will reap huge benefits from numerous projects under way there
PENGERANG, once a sleepy corner of Johor, is fast turning into a boom town for petroleum investors as the government steps up efforts to turn Malaysia into a regional oil and gas hub, rivalling Singapore.
Located south of Desaru, on the southeastern tip of Johor facing Singapore, Pengerang became the British army's "Waterloo" in 1936 when they paid the price for underestimating their biggest nemesis then -- the Japanese army.
The Japanese captured Malaya without firing a single shot from the Pengerang battery (a fort where weapons such as guns and cannon were stationed) when they surprised the British by landing in Kota Baru instead of Singapore. (The battery was part of the "Singapore fortress", aimed at defending Singapore from a sea attack.)
Decades later, by some strange turn of events, Pengerang is being touted as Asia's latest beacon for global oil and gas investors and a cornerstone in Malaysia's ambitious plan to rival Singapore as a vibrant petroleum hub in Asia.
As we are all aware, Singapore has positioned itself as Southeast Asia's hub for downstream petroleum activities, ranging from oil trading, oil storage, oil refining and petrochemical manufacturing to bunkering (the act or process of supplying fuel to ships).
As part of the government's Economic Transformation Plan, where oil and gas is one of 12 National Key Economic Areas, Malaysia is eager to capture a bigger slice of the global oil trading and storage business to boost the country's key petroleum sector, where Petronas is a big player.
Malaysia has challenged Singapore's oil and gas stronghold by approving a myriad of petroleum-related projects worth more than US$20 billion (RM60.4 billion) in Pengerang.
Once completed, Pengerang could play a bigger role than Rotterdam, which for decades has been the European hub for the trading of crude oil, oil products and coal.
The government's move to draw petroleum investments away from Singapore has caught the attention of the foreign media. The Financial Times reported last week that Malaysia was planning to attract aggressively oil storage operators to Malaysia by offering zero-tax rates as a major incentive. The aim is to triple independent storage capacity based in Johor to 10 million cubic metres by 2017 to match Singapore's current capacity.
In the report, Sushant Gupta, a senior downstream analyst at energy consultancy Wood Mackenzie, said: "The need for storage in Asia is growing because we do see increased trade flows and a lot of new refining capacity is coming from Southeast Asia, not just China and India."
The heart of Pengerang's development is Petronas' RM60 billion Refinery and Petrochemical Integrated Development, due to begin by middle of next year and operational in 2016.
The other project is Pengerang's RM5 billion deep-water oil terminal, a joint venture between Dialog Group Bhd, Rotterdam-based Royal Vopak N.V. and the Johor government.
Dialog and its partners last week announced their commitment to invest a further RM4.08 billion to develop the Pengerang liquefied natural gas (LNG) terminal, which will be Asia's first independent LNG trading terminal. The project will include an LNG storage, loading and regasification terminal to import LNG for trading purposes and domestic use.
Johor officials, in a briefing to editors last week, forecast that the total investments could double to US$41 billion from more than US$20 billion committed so far.
The Pengerang development plans, when fully implemented, will be a major turning point for not only Johor but also the country. There will be huge economic spin-offs, including the creation of thousands of new jobs and business opportunities, big or small.
There are, of course, issues related to these development plans, including the relocation of villages, schools and even cemeteries. The opposition, including DAP, is making a big issue over moving the dead.
The Johor government has been engaging the affected people on the relocation and compensation, based on legal provisions. Most villagers have no objections about being relocated but, naturally, they want a bigger compensation. As usual, there is a legal recourse for them.
However, many are happy to take up the state government's compensation offer. Those involved in the Taman Bayu Permai resettlement, for example, will be entitled to new landed properties worth RM245,000 each if their current holding is worth RM95,001 and above. The new house value includes RM140,000 in government subsidy.
Pengerang member of parliament Datuk Azalina Othman Said has claimed that the DAP-backed group represented only a fraction of the Pengerang population. She also alleged that "foreign quarters" were "inciting hatred towards the project".
Those issues aside, the Pengerang development plan is too big to fail. Otherwise, it will send a wrong message to foreign investors on Malaysia's seriousness as a major investment destination.