Could you introduce Evyap Sabun Malaysia?

Evyap is a Turkish multinational employing over 3,000 people worldwide. Evyap’s core business is the manufacturing of personal care items like soaps, shaving products, diapers and other personal washes with brands like Duru and Arko. In Malaysia, we operate one of the largest oleo-complexes, making high-grade oleochemicals and bar soaps. The facility is located in Johor and has been active since 2014. The reason why Evyap made this greenfield investment in Malaysia is quite simple: Traditionally, soap manufacturers were using tallow as a raw material, but tallow production stagnated at around 8 million t/y for the past 20 years, while palm oil production grew steadily from about 20 million t/y to around 80 million t/y over the same period. Seizing the supply reliability enabled by palm oil, but also the competitive advantage of being located close to the feedstock, Evyap decided to invest in Malaysia and make soap from a palm base. The facility became operational in 2014. Today, we export all over the world.

How have Evyap’s production capabilities evolved?

Volume-wise, we doubled our total capacity from 200,000 to 400,000 t/y. Moreover, we started to produce fatty acids as an intermediate product; although soaps can be made directly from oil, going through a fatty acid process affords a higher quality to the product. Therefore, we decided to invest in a full-scale oleochemical plant to sell chemicals, besides soaps. Later, in 2021, we began making specialty chemicals for personal care, food, and industrial applications, with two plants in operation. We are currently investing in a third plant, expanding our specialty chemicals production from 15,000 t/y to 22,000 t/y this year. Our intention is to continue to invest in downstream products by leveraging the expertise built in personal care. Finally, we also have a contract manufacturing unit for consumer goods like liquid or bar soaps. We offer tailor-made, specialty oleochemical solutions backed up by strong R&D capabilities.

How has the business performed over the last year and how do you anticipate demand in 2023?

2022 was a bumper year for most chemical and chemical-related companies. Congestion in the oceans and at the ports created a sense that demand was very hot. But in the second half of last year, we started seeing a global slowdown, recession fears, and weak Chinese demand, which brought the shipping industry back to normal. Demand for essential consumer goods like personal care products will always be there, recession or not. However, the industrial sector or B2B segment will be under pressure in 2023 because we are sitting on the tip of a global recession.

What growth opportunities do you identify in Southeast Asia?

With a CAGR growth of a minimum of 4-5% every year, the potential in Southeast Asia is high, but the region is still very much in the infancy of its economic development, which means that demand is mostly predilected for low to mid-end products. As we start to see the shift of manufacturing away from China, Southeast Asia could benefit, especially for lithium-ion factories, but also mid-to-lower-end goods like sporting and apparel products (which attract commensurate investment in Vietnam and Indonesia).

The competition for feedstocks between the food & feed and chemicals & energy sectors has been raising some concerns. What do you make of that?

The biggest dilemma is the usage of high-quality palm oil to make biodiesel. This has put pressure on palm oil supply; in Malaysia itself, it has occasionally become more difficult to access feedstocks, while Indonesia enacted tax levies on palm oil exports, creating cost disparities of up to US$500 between a local buyer (from Indonesia) and a foreign, importing buyer (from Malaysia, for instance). This government-driven difference in the price of feedstocks between Indonesia and Malaysia is a challenge for our country. As a result, raw materials supply to make oleochemicals is more limited in Malaysia compared to Indonesia. Biofuels should not be produced from food, but from waste or other non edible sources, to be the path forward towards a green and sustainable future.

Do you have a final message?

Our priority is to consolidate the business around specialty chemicals, and potentially invest in a new factory in Indonesia. As a consumer goods company, we always put our customers at the center of everything we do.