The inception of the 'Sarawak Corridor of Renewable Energy' (SCORE) in 2008 has transformed the state. As a major initiative to develop the state's central region, SCORE aims to propel the state's ambition to become a developed state by 2020. Its goal is to accelerate the state's economic growth as well as improve its people's quality of life by capitalising on renewable energy. Last week (5-7 Sept 2012), we brought 18 clients on a trip to 'Ground Zero' ' Bintulu in Sarawak ' as well as Samalaju Industrial Park. The visit was an eye-opener as we witnessed the region's rapid development, confirming our view that opportunities abound in the energy-rich state, particularly in renewable energy.
What is SCORE? The 'Sarawak Corridor of Renewable Energy', or simply known as SCORE, was launched on 11 Feb 2008 as one of the five regional development corridors initiated throughout Malaysia. It is targeted at accelerating the state's economic growth and development, as well as improving the quality of life of its people. The core of the corridor is the abundance its energy resources in the central region of Sarawak, particularly hydropower (20,000 MW), coal (1.46bn tonnes), and natural gas (40.9 trn sq cubic feet). This initiative will enable Sarawak to price its energy competitively and stimulate investments in the power generation and energy-intensive industries, consequently turning them into vibrant industries in the Corridor. By capitalising on renewable energy, SCORE targets to transform Sarawak into a developed state by 2020.
![](https://research.osk188.com/images/89/qqSB960606573504ffe049d5e2.jpg)
A focus on private investment. Private investments in priority industries and their associated downstream value-added economic activities will be the driving force behind SCORE's growth and development. Chief among these are the energy-intensive industries, which will spur investments from an early stage to become an advanced industrial base in the Corridor. Ten priority industries have been indentified, namely aluminium, glass, steel, oil-based, palm oil, fishing & aquaculture, livestock, timber-based, marine, and tourism.
Five growth nodes. Tanjung Manis, Mukah, Samalaju, Baram and Tunoh have been selected as the five New Growth Nodes with different focus areas:
i. The Mukah Node will be developed into a Smart City and serve as the nerve centre for the Corridor.
ii. The Tanjung Manis Node will be developed into an Industrial Port City and Halal Hub.
iii. The Samalaju Node will become the new Heavy Industry Centre.
iv. Baram and Tunoh will focus on the tourism and resource-based industries.
The spatial development of the entire region, as well as the development of these New Growth Nodes, will also benefit the Corridor's Secondary Growth Centres, such as Semop, Balingian, Selangau, Samarakan, Bakun and Ng. Merit.
Bintulu central to our event. The once sleepy fishing village of Bintulu has swiftly transformed into a booming industrial centre and a soon-to-be capital for energy-intensive industries in Malaysia. The Samalaju Industrial Park, being only an hour and a half's drive away from Bintulu Airport, led us to decide to host our SCORE corporate event there.
Day 1: The journey begins
A three-day excursion to Bintulu. Inspired by SCORE's prospects and eager that the investment community witnesses Sarawak's abundant energy resources, particularly in renewable energy, we took 18 of OSK's clients on a three-day excursion to 'Ground Zero', i.e. Bintulu, in Sarawak. The following chronicles our journey through the 5-7 Sept outing, as well as the new discoveries we made during the trip.
Samalaju, here we come. On 5 Sept 2012, we left for Bintulu, which took 2 hours of flight time from the Kuala Lumpur International Airport. We were greeted by an OSK East Malaysia representative and boarded a coach towards Samalaju Industrial Park. Our ride which passed through oil palm estates was on reasonably well-paved two-lane tar roads. Although telecommunications reception was intermittent, we were amazed with the strength of our 3G connection as we approached the industrial park.
![](https://research.osk188.com/images/90/tT5B465389075504ffe0513d74.jpg)
Two nearly ready, two still in progress. As we entered Samalaju Industrial Park, we were surprised to find that the first phase of Tokuyama Corp's polycrystalline plant producing silicon for solar panels was almost complete though it is only scheduled for commissioning in 2Q13. Moreover, structural works on the second phase of the plant seemed to have begun. Tokuyama is the Park's first foreign investor. We also caught sight of Press Metal's aluminium smelting plant, which also looked ready judging from the outer facade though a source on the ground told us that it is only scheduled for commissioning next year. Aside from these, the Australian Securities Exchange-listed OM Holdings Ltd (OMH) and Asia Mineral Ltd have each separately planned to set up a manganese smelter under the SCORE initiative. As we passed by two adjacent sites, we noticed that land clearing was well in progress on both and structural works could commence soon. Meanwhile, we also understand that the water supply and power grids connecting Bakun Dam to Samalaju are now ready.
![](https://research.osk188.com/images/91/nSzy1601839876504ffe0586fbc.jpg)
![](https://research.osk188.com/images/92/H78h1350756137504ffe05afcb9.jpg)
Quick tour of Cahya Mata Sarawak (CMS) Workers' camp. Our first stop was at Samalaju Property Development's (SPD) Samalaju Workers Camp. Its General Manager Mr. Goh Chii Yew showed us around the RM40m site, touted as the best of its kind in Malaysia. It accommodates about 5,000 people, with a majority working for Tokuyama. Accommodation costs vary from RM1,000 per month to as high as RM5,000 per month. According to management, expansion plans are already in place to cope with rising demand from Tokuyama, which will require 8,000 site workers at the peak of its construction cycle. Meanwhile, we understand that the OM Materials and AML manganese ferro alloy plants were currently in its land-clearing stage. We were impressed by the facilities and services provided at this camp, notwithstanding the temporary unpaved road linking the site to the main road as proper road connections are supposed to provided by the Government.
![](https://research.osk188.com/images/93/BUNS1815848297504ffe0621d51.jpg)
Samalaju Port. The opportunities in broadening the Corridor's industrial and economic base are in the resource-based industries and the provision of modern services. Samalaju Port SB was established to facilitate the cargo handling needs of Samalaju's industrial development, which may give rise to demand for 13m-14m in tonnage by 2015. The visit kicked off with a briefing from Samalaju Port, followed by a tour of the actual prospective site, on which some dredging works are currently being carried out.
![](https://research.osk188.com/images/94/MMdB979368490504ffe0660d94.jpg)
End of Day 1. Our road trip back to Bintulu town was rather smooth, taking slightly more than an hour. There were numerous vehicles, including some buses, travelling in the same direction. We believe the buses may be ferrying workers returning to Bintulu. We think it is just a matter of time before the Government is forced to upgrade the road. The expansion of the Kidurong-Samalaju road is already in the pipeline, with four new 'no overtaking' lanes (each stretching 1km and located at every 5km interval), at a total estimated cost of RM20m. Finally, after a long and tiring day, the entire party checked into the New World Suites Hotel for a quick change of clothes before proceeding to a seafood dinner near the hotel.
Day 2: The SCORE conference
A successful conference. On the second day, we held a conference at New World Suites Hotel. We were deeply appreciative of the participation from RECODA CEO Datuk Amar Wilson Baya Dandot, who gave our clients first-hand insights into SCORE, including its latest developments and challenges. Six public corporations directly or indirectly involved in SCORE also made presentations at our conference. These included Cahya Mata Sarawak, Sarawak Oil Palms (SOP), Sarawak Cable and Shin Yang Shipping. Our party asked questions relating to business opportunities, SCORE's viability and its implications on the corporates showcased at the conference. The key takeaways from the companies' presentations are included in the last section of this report.
Day 3: The adventure continues
Visit to Bintulu Port. Day 3 (7 Sep 2012) began with us checking out from our hotel. Our visit to Bintulu Port kicked off with a quick presentation and Q&A session hosted by the company secretary of Bintulu Port Holdings En. Nik Abd Rahman Nik Ismail, who briefed us on the group's operations, its future expansion plans and latest corporate developments.
Getting up close by boat. In order to experience and view the port operation up-close, Bintulu Port graciously arranged a ride on the company's tug boat. From the vessel, we watched the loading of LNG onto a MISC-owned vessel while being served light refreshments. Before the tour ended, our boat took us close to the general cargo terminal, where we saw a few cargo container vessels berthed at the wharf.
![](https://research.osk188.com/images/98/zHwY117283538504ffe07bb14b.jpg)
Last stop - a palm oil refinery. Our group also visited SOP's palm oil refinery plant located almost adjacent to Bintulu Port. SOP's general plant manager and his crew brought us around the company's 1,500 tonne-per-day refinery and 500 tonne-per-day kernel crushing plant. Although the refinery was under maintenance, the plant manager gave us a good description of the refining process ' from CPO to refined palm oil, refined palm olein and palm stearin. At the crushing plant, we saw palm kernels being transported on a conveyor belt for processing into crude palm kernel oil and palm kernel meal, which are used as substitutes for coconut oil and feedstock respectively.
RECODA
Bringing it together. RECODA's role is defined by the Regional Corridors Development Authorities Ordinance 2006, which was passed by the Sarawak State Legislative Assembly on 11 Dec 2006. It is tasked to manage, facilitate and promote SCORE's development and service investors. We felt honoured indeed that RECODA's management graciously delivered the conference's keynote address.
A clear role. RECODA is organised and managed with a clear commercial mindset focused on providing world-class customer service by minimising public service bureaucracy. It operates as a one-stop agency for investors. Its role includes:-
- Managing and promoting the development of SCORE.
- Ensuring more expeditious and efficient mobilisation of the State's natural resources, which include water and hydro power, and optimising the use of these resources to facilitate the development of SCORE.
- Planning SCORE's development and implementing the corridor's plans and projects.
- Servicing investor clients.
Strong commitment and vision. Datuk Amar Wilson is proud of the approximate RM24.6bn worth of private investments that SCORE has attracted despite having only RM1.8bn of total public funding spent to date. This represents a private:public investment ratio of 94:6, on top of the 14,000 jobs it has created. According to Datuk Amar Wilson, by 2030 the central region of SCORE Corridor is envisioned become the state's primary economic powerhouse and Sarawak will have achieved the level of development and quality of life of a developed country. However, his presentation focused on the medium term, with 2008- 2015 as the foundation-laying phase for the corridor. RECODA will focus on building critical mass and momentum to stimulate development, implementing high-priority infrastructure projects and attracting high-priority trigger projects. Meanwhile, the Government is committed to upgrading existing infrastructure, utilities and amenities as well as constructing new ones to meet the needs and requirements of investors within the Corridor.
The Tanjung Manis Halal Hub ' another area of development. RECODA also highlighted that some 77,000 ha of landbank in Tanjung Manis have been earmarked for upstream and downstream aquaculture and agriculture investments, a development that we find interesting. This delta region is suitable for a wide range of aquacultural and agricultural activities throughout the year, due to its moderate, warm climate with minimal seasonal changes. There is also sufficient area to expand into or build a new port to ship produce. Some 13 bridges have been built, cutting the Sibu-Tanjung Manis road travelling time from many hours previously to only 45 minutes. Thus, we expect to see a hive of economic activity emerge in the upcoming years.
No fancy investment incentives, only cheaper power! We were stunned, and believed that many of our clients felt the same way, when Datuk Amar Wilson said there are no specific incentives lined up for SCORE. Nevertheless, applications for general incentives such as the Investment Tax Allowance (ITA) and Pioneer Status (PS) can be sought from the Malaysia Industrial Development Authority (MIDA). Besides that, we believe the cheap renewable energy made available to investors is competitive and compelling enough to attract investments from heavy industry players to Sarawak.