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Asian Petroleum Review : Jan-March 2011
25 The Singapore government says chemical com- panies in the city-state serve not just China but other growth markets like India and North Asia. They remain confident that Singapore's devel- oped supporting infrastructure will continue to attract companies to set up bases here to serve the Asian market. "Hence, notwithstanding future supply expansion plans in China, we are confident that Singapore will continue to play an important role in serving growing needs in China," said Liang Ting Wee, director of energy and chemicals at Singapore's Economic Development Board (EDB). Singapore's intellectual property protection, its support for research and development and cor- porate tax incentives remain attractive to new investors. But analysts argue that Singapore needs to look further ahead and farther afield into new niche areas of specialties to counter the Chinese threat. CHINA EXPANSION Many multinational firms are already building or expanding their plants in China to be nearer their customer base. German firm BASF has near $2.8 billion allotted for Asia investment from 2009- 2013, its most important being the expansion of its joint venture plant with Sinopec in Nanjing, China. The $1.4 billion BASF-YPC expansion will allow it to produce specialty chemicals for the Chinese construction, electronics, pharmaceutical and automotive markets. "The biggest part (of the expansion) will come on-stream at the end of 2011," said Albert Heuser, BASF's president for market and devel- opment for Asia Pacific. BASF, which owns 124 production sites in Asia includ- ing Singapore, has a new Shanghai site for its auto- motive spring aids coming up by first half of 2011. Production at a new dispersions plant in Huizhou is set for first-quarter 2012. Companies with links to the two national firms - - Pet- roChina and Sinopec - - can easily tap into China's growing commoditised feedstock capacity. China's ethylene production is estimated at 15-16 mil- lion tonnes per year (tpy) versus Singapore's 3 million tpy, which is growing to 4 million tpy in 2011 with the startup of ExxonMobil's new cracker. "Within a decade, it is possible to see China's share of the global specialty chemical industry pie growing to about one third from about 10-20 percent now, " said Tyagarajan. The growth will be driven by domestic demand, al- though many of the specialty chemicals will go into high-end consumer products which would be ex- ported. Strategic collaborations and alliances is the way for- ward, said Tyagarajan. "Rather than seeing the Mid- dle East as a threat, Singapore has to work together so that both the regions can leverage their advan- tages, " she said. "Some of the areas for co-operation could also be in investing in R&D on oilfield chemical, performance chemicals and water treatment solutions, " Tyagara- jan added. ($1=S$1.291) (Editing by Ramthan Hussain) Thomson Reuters Asia Petroleum Review