Petaling Jaya (The Star/ANN) - Malaysia is throwing down the gauntlet to Singapore in its bid to emerge as Asia¿s go-to commodity trading hub, according to the Financial Times (FT).
The move, according to the paper¿s Singapore-based Asia correspondent Jeremy Grant in an article published on Wednesday, is being spearheaded by a unit in Prime Minister Najib Tun Razak¿s office as part of an ambitious push to position the country as South-East Asia¿s centre for oil, gas and petrochemicals.
The FT quoted Malaysia Petroleum Resources Corp (MPRC) executive director Syahrilazli Mahammad as saying Malaysia was embarking on an aggressive plan to attract oil-storage operators by offering zero tax rates as an incentive for companies to build millions of barrels of storage capacity in Johor.
MPRC was set up in April last year to attract foreign investment and help domestic players become regional champions in order to make the country a regional oil and gas hub in five years.
Its target was to triple the current storage capacity based mostly in Johor to 10 million barrels by 2017, Syahrilazli had said.
This comes as Singapore, currently Asia¿s largest hub for petrochemicals refining and the region¿s largest bunkering port, runs short on land to further expand oil-storage facilities.
However, Syahrilazli pointed out that the aim was to ¿create the kind of relationship (with Singapore) where the two locations can coexist,¿ similar to what was taking place in the ports of Amsterdam, Rotterdam and Antwerp in Europe.
The FT also reported that MPRC had since last year been in talks with physical oil trading companies about moving their trading desks to Malaysia.
While Singapore, where some 350 commodities trading firms are operating, had a corporate tax rate of 5 per cent, Malaysia was offering an even better 3 per cent rate, Syahrilazli told the FT.
The Global Incentives for Trading scheme, introduced in 2011 by MPRC and the Labuan Financial Services Authority, aim to attract 20 companies to its shores by 2017.
Vitol, the world¿s largest independent oil trader, had already signed up for the scheme and would move an unspecified number of traders to Malaysia, according to Syahrilazli.
In addition, MPRC has successfully courted the return of local trading companies¿ operations back to Kuala Lumpur from Singapore, including traders from Petroliam Nasional Bhd.
¿It¿s more cost effective to do business in Malaysia. The costs in Singapore are escalating, especially rental,¿ Syahrilazli was quoted as saying.