Saturday, July 28, 2012

Outsourcing Pollution to Malaysia?

Taiwan outsourcing Pollution to Malaysia?

A long-running saga has come to the end for a US$12.8 billion attempt by the Kuokuang petrochemical company , which is owned by Taiwan's 43 oercebt state-controlled CPC Group, to build a refinery for the production of petrochemical products such as ethylene, benzene, toluene and xylene. It is the victim of environmental protest. The government instead is now seeking to export its environmental problem to Malaysia.

In early July, the state-run oil refiner CPC Corp, without fanfare, signed an investment agreement with Malaysia's Johor state government to build the integrated refinery and petrochemical plant in the village of Pengerang, Johor. Preceding the move was close to a decade of fierce environmental protest in Taiwan, forcing the island's government to choose between major business interests on the one side and nature and health on the other.

In April 2011, Taiwanese President Ma Ying-jeou opted for the latter, and last month an obviously upbeat Malaysian Prime Minister Najib Tun Razak announced that an undisclosed Taiwan-based petrochemicals firm had agreed to invest in a new integrated complex in the south of the country.

But for Taiwan's manufacturing industries, which need the plant to ensure smooth supply for the production chain, the Malaysia twist augurs the emergence of an acceptable solution. But it may be another case for Malaysia, where equally fierce environmental protest has stalled a US$850 million rare earth processing plant being built by Australia’s Lynas Corp. near the east coast city of Kuantan and made the plant a potent political issue.
There is little doubt that Kuokuang's implementation would help drive the Malaysian economy and aid in Najib’s effort to build a regional petrochemical hub in its quest to compete with Singapore.  However, the Taiwanese must ask themselves whether their economy can cope with the precedent of environmentalists driving out a major infrastructure operation that is clearly needed by the rest of the island’s business community. 

According to interviews with analysts in Taipei, confidence is the prevailing mood, along with a certain amount of satisfaction at having cleaned up what was previously one of Asia’s most polluted environments.Ta

“It won't hurt. Taiwan is now still a developing country but is well on its way to becoming like a member state of the EU,” said Winston Dang, former minister of the Environmental Protection Administration (EPA). “Taiwan must invest in the people's brains in this transitional period, not in high-polluting industries.” Read more.

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