Akbar Thayoob President
MALAYSIAN PETROCHEMICALS ASSOCIATION (MPA)
"The dynamics of competition are highly fluid today, and I believe the industry will find success in well-defined, specifically targeted products rather than by competing with the same undifferentiated products."
Could you introduce MPA to our international audience?
MPA was created in 1997, at a time when the Malaysian petrochemicals industry was transitioning from basic chemicals to value-added derivatives. As Malaysia was beginning to raise its profile as a significant player in the petrochemicals space, a growing need for a unified voice to represent both local and international investors emerged. That is why MPA was born. Today, MPA counts for 27 selected members representing 100% of the traditional petrochemicals industry in the country. If, up until now, we have limited the membership to Petrochemicals manufacturers of the likes of Petronas Chemicals Group, Lotte Chemicals, BASF, Reliance, Idemitsu and Kaneka, we are now opening up the organization to a broader universe of chemical companies, including service & technology providers, downstream SMEs, and other industry enablers. Fundamentally, the distinction between petrochemicals and other chemicals is blurring as the industry is becoming more integrated and diversified.
Could you elaborate on how is MPA’s role in the industry evolving?
MPA’s main roles are to promote the growth of the petrochemicals industry in Malaysia, advocate for the interests of its members and provide a platform for collaboration and knowledge sharing among industry players. Its roles are indeed evolving as the industry and economic landscape change, especially towards a more sustainable development. To this end, MPA is putting more efforts to encourage the adoption of new technologies and sustainable practices among its members and the players in the petrochemicals value chain. Furthermore, we also act as a promoter of Responsible Care, connecting the industry in the country to global practices. “Future-ready petrochemicals” was the central theme of our 2022 Petrochemicals Sustainability Conference (PSC) and a fundamental, ongoing premise of our role at MPA.
Within this topic of “future-ready petrochemicals,” how prepared is the Malaysian industry for the green transition?
The Petrochemicals Industry is essential for the energy transition. As an example, the renewable energies rely on petrochemicals to provide the advance materials for the solar panels and wind turbines. But we need to make sure the industry seizes the opportunity. We also need to prioritize as we cannot do everything at once. With proper planning, collaboration, and the right commitment, the industry will prove itself as an indispensable part of the solution for the energy transition.
What will the industry require in order to contribute to the energy transition? And what are the barriers it faces?
Petrochemical players in Malaysia as much as elsewhere require a data-driven baseline to be able to systematically measure and chart their net-zero journeys. To build capability, the industry will not only need software but also the right talent and empowering government regulations. The government is preparing an industry roadmap, supported by key industry players, to provide a blueprint for the future growth of the sector. Finally, we must not forget financing. The IEA estimated that the costs of the net-zero transition for the petrochemicals industry alone is in the range of tens of trillions of dollars. To attract green financing, the industry needs to be accredited. Here, we go back to the importance of a benchmark and the right KPIs.
What are the main opportunities for the Malaysian chemicals industry?
In Malaysia, specifically, investments over the past five to 10 years have mostly been driven in the downstream space, as well as in plastic recycling facilities. While the domestic market does not provide enough opportunity for scale, the over 600 million people ASEAN block is the third largest population in the world after China and India. This is a booming, educated, middle-class society. Besides tapping into this market, Malaysia also has an opportunity to develop increasingly more complex, specialized formulations. Everybody is talking about designing customer-driven solutions, but to do so, chemical companies will need to share knowledge and co-develop rather than just relying on in-house capabilities. The dynamics of competition are highly fluid today, and I believe the industry will find success in well-defined, specifically targeted products rather than by competing with the same undifferentiated products.
Do you have a final message?
To be able to meet the targets established in the Paris Agreement, the world would have had to reach at least 20% of its 2050 sustainability targets by 2030. The first leg is the hardest, but with the right fundamentals in place, the progress curve will accelerate exponentially in the next decades.