M'sian budget incentives give oil & gas sector a boost

[hyenergix]

More O&G investments in JB. Doesn't look good for Singapore. EDB is really sleeping.

http://www.businesstimes.com.sg/prem...boost-20121003

Tax holiday for LNG trading companies among moves to draw investors
BY PAULINE NG IN KUALA LUMPUR

ADDITIONAL tax and non-tax incentives announced by the Malaysian government, including generous tax holidays, will boost new investments in the oil and gas sector and benefit existing players, analysts say. One example is the Dialog Group, which is set to commission the first phase of a liquefied natural gas (LNG) storage terminal in Pengerang, Johor by early 2014.

A mainstay of the economy, the oil and gas sector has proved particularly attractive to investors in the last two years because of sweeteners to encourage participation. Things are about to get even sweeter, as Malaysia has signalled its plan to build a global integrated trading hub for oil and gas.

Tabling Budget 2013 last week, Prime Minister Najib Razak talked about providing "an ecosystem to support the development of the chain of refining, storage and trading" by players, including private operators.

Official support would take the form of, for example, the cost of land acquisition and financial assistance as a tipping point for public-private partnership projects, 100 per cent income tax exemption for 10 years and exemption from withholding tax and stamp duty.

Mr Najib also announced full income tax exemption on statutory income for the first three years of operations for LNG trading companies under the Global Incentive for Trading (GIFT) programme, which accords petroleum and petroleum-related trading companies a flat corporate tax rate of 3 per cent on chargeable income. These firms also receive full exemption on fees paid to non-Malaysian directors.

Commodity trading approved under the 10-month-old GIFT has now been extended to include commodities such as refined raw materials, base minerals and chemicals.

Describing the enhanced GIFT programme as "positive", OSK Investment Bank said it would stimulate trading, which would, in turn, increase demand for storage space and logistics facilities. "Dialog would be the key beneficiary if the consortium (comprising Dialog, Vopak NV and Johor state) firms up its investment in the RM4.1 billion (S$1.6 billion) LNG terminal project in Pengerang," it said.

In a report, HwangDBS-Vickers pointed out Dialog's Phase 1 is now 15 per cent completed; at its commissioning in early 2014, its storage capacity would be bumped up 124 per cent to 2.3 million cu m.

More importantly, however, the tax incentives are expected to pave the way for new players - local and foreign - in refining, storage and trading.

Dialog's project will come under the mooted US$20 billion Refinery And Petrochemical Integrated Development (RAPID) project by national oil company Petronas; this has already attracted interest from other oil players including BASF, Versalis SpA and PTT Global Chemicals Public Company Ltd.

One possible impediment to RAPID's implementation is resistance by the villagers of Pengerang; federal opposition coalition Pakatan Rakyat has since declared it will terminate the project should it come to power in the next general election.

At the launch of GIFT last year, inaugural licences were awarded to Petronas subsidiary Petco, Dialog, YTL Power International, Greece's BB Energy and Switzerland's Vitol Grou, giving them immediate access to the incentives.

In order to qualify for these perks, companies need a minimum annual turnover of US$100 million and business spending of at least RM3 million yearly; they are also to employ at least three professional traders and use and engage local support services.

[Nman]

this sector need worker, that why Spore mst bring in more contract worker, if too much listen to people gov cannot proceed the normal duty.

[hyenergix]

this sector need worker, that why Spore mst bring in more contract worker, if too much listen to people gov cannot proceed the normal duty.

Once the new JB refineries are in place (which already have committed investments), the sector will take off by itself. This is troubling for Singapore. Our graduates may have to find manufacturing jobs overseas in near future.

[HP65]

Once the new JB refineries are in place (which already have committed investments), the sector will take off by itself. This is troubling for Singapore. Our graduates may have to find manufacturing jobs overseas in near future.

Its already happening.....a buddy of mine is staying in KL and returns to Sg during the weekend. He is the GM of a company that oversee the planning and design of storage containers for O&G products.

[Nman]

Once the new JB refineries are in place (which already have committed investments), the sector will take off by itself. This is troubling for Singapore. Our graduates may have to find manufacturing jobs overseas in near future.

totally agreed, Spore w/o nature resources we need strong gov or edb team to promote and encourage such investor here, give them more privillage, let our new generation have more choice to work in Spore.
What we need is strong and capable gov, othrwise Spore very difficult.

[Arcachon]

totally agreed, Spore w/o nature resources we need strong gov or edb team to promote and encourage such investor here, give them more privillage, let our new generation have more choice to work in Spore.
What we need is strong and capable gov, othrwise Spore very difficult.

Why more choice to work? We should be thinking of how to make use of others to do the work, like what the America is doing QE1, QE2, operation twister, QE3 unlimited.