Study on the Highly-Efficient District Heating and Cooling System for

Study on Economic Partnership Projects
in Developing Countries in FY2013
Study on the Highly-Efficient District Heating and Cooling
System for the High-Tech Park in Iskandar, Malaysia
Final Report
February 2014
Prepared for:
The Ministry of Economy, Trade and Industry
Ernst & Young ShinNihon LLC
Japan External Trade Organization
Prepared by:
Pacific Consultants Co., Ltd.
Fuji Electric Co., Ltd.
Oriental Consultants Co., Ltd.
Reproduction Prohibited
Preface
This report is the summary of “Study on the Highly-Efficient District Heating and Cooling System for the
High-Tech Park in Iskandar, Malaysia” which has commissioned from Ministry of Economy, Trade and Industry
in Japan to Pacific Consultants Co., Ltd., Fuji Electric Co., Ltd. and Oriental Consultants Co., Ltd.
This survey was to investigate feasibility of the project which is to install Highly-Efficient District Heating and
Cooling system into the High-Tech Park in Iskandar, Malaysia with 700 million yen (23.5 million RM), to
improve the quality of energy infrastructure and efficiency of energy utilization.
We hope this survey will help to realize the above-mentioned project.
February 2014
Pacific Consultants Co., Ltd.
Fuji Electric Co., Ltd.
Oriental Consultants Co., Ltd.
Project Site Map
Project Area
（Iskandar）
Project Site
（Nusajaya Tech Park）
（Plan（Phasing Plan））
（Birdview）
Source: Compiled by study team based on document provided by IRDA and Ascendas
List of Abbreviation
Abbreviation
ADTEC
Full Name
Advanced Technology Training Center Shah Alam
(PUSAT LATIHAN TEKNOLOGI TINGGI (ADTEC) SHAH ALAM
AFTA
ASEAN Free Trade Area
AOTS
Association for Overseas Technical Scholarship
APEN
Asia Professional Education Network
API
Air Pollutant Index
Ascendas
Ascendas Pte Ltd.
ASEAN
Association of South‐East Asian Nations
BOD
Biochemical Oxygen Demand
BOI
The Board of Investment, Thailand
BPO
Business Process Outsourcing
BRICs
Brazil, Russia, India, China and South Africa
C/F
Cash Flow
CDM
Clean Development Mechanism
CEMD
Confidential Enquiry into Maternal Deaths
CER
Certified Emission Reduction
CHP
Combined Heat and Power
CO2
Carbon Dioxide
COD
Chemical Oxygen Demand
COP
Coefficient Of Performance
COP15
COP18
The 15th Conference of the Parties to
the UN Framework Convention on Climate Change
The 18th Conference of the Parties to
the UN Framework Convention on Climate Change
CRT
Cathode ray tube
DNA
Designated National Authority
DO
Dissolved Oxygen
DOE
Department of Environment
DSCR
Debt Service Coverage Ratio
EC
Energy Commission
EIA
Environmental Impact Assessment
EMS
Energy Management System
EPU
Economic Planning Unit
ETP
Economic Transformation Programme
EV
Electric Vehicle
FC unit
Fan Coil Unit
FCV
Fuel Cell Vehicle
FEMS
Factory Energy. Management System
FINAS
National Film Development Corporation Malaysia
(Perbadanan Kemajuan Filem Nasional Malaysia)
FIRR
Financial Internal Rate of Return
FPD
Flat Pannel Display
FTZ
Free Trade Zone
GDP
Gross Domestic Product
HDC
Halal Industry Development Corporation
HIDA
The Overseas Human Resources and
Industry Development Association
ICT
Information & Communication Technology
IPP
Independent Power Producer
IPS
Independent Power Supply
IPU
Integrated Power Unit
IRDA
Iskandar Regional Development Authority
IRR
Internal Rate of Return
ITI
Industry Training Institute
JAKIM
JABATAN KEMAJUAN ISLAM MALAYSIA
(Department of Islamic Development Malaysia)
JBIC
Japan Bank for International Cooperation
JCM
Joint Crediting Mechanism
JETRO
Japan External Trade Organization
JICA
Japan International Cooperation Agency
JIM
Industrial Training Institute Pasir Gudang
JMTI
Japan-Malaysia Technical Institute
JODC
Japan Overseas Development Corporation
JST
Japan Science and Technology Agency
JV
Joint Venture
KeTTHA
Ministry of Energy, Green Technology and Water, Malaysia
KISMEC
Kedah Industrial Skills and Management Development Centre
KTPC
Kulim Technology Park Corporation
kW
Kilo Watt
LED
Light Emitting Diode
LNG
Liquefied Natural Gas
MATRADE
Malaysia External Trade Development Corporation
MBC
Malaysian Biotechnology Corporation
MDTCC
Ministry of Domestic Trade, Co-operatives & Consumerism
MEGAJANA
Pendinginan Megajana Sdn Bhd
METI
Ministry of Economy, Trade and Industry
MIDA
Malaysian Investment Development Authority
MJIIT
Malaysia-Japan International Institute of Technology
MNRE
Ministry of New and Renewable Energy
MPJBT
Majlis Perbandaran Johor Bahru Tengah
MSC
Multimedia Super Corridor
MWh
Mega Watt per Hour
NCF
Net Cash Flow
NDP
Malaysian National Depletion Policy
NEM
Malaysian New Economic Model
NEP
Malaysian New Economic Policy
NKEAs
Malaysian National Key Economic Areas
NNA
NNA JAPAN CO., LTD.
Nox
Nitrogen oxides
NPP
Malaysian National Physical Plan
NUR
Northern Utility Resources Distribution Sdn Bhd
NVP
Malaysian National Vision Policy
OJT
On-the-Job Training
OTC
Over the Counter
P/L
Proft Loss Statement
PETRONAS
PETRONAS Gas Berhad
PGU
Peninsular Gas Utility Line
PIMS
Pinewood Iskandar Malaysia Studio
PPP
Public Private Partnership
R&D
Research and development
RM
Malaysia Ringgit
RT
Refrigerating Ton
SAJ
Saj Holdings Sdn. Bhd.
SATREPS
Science and Technology Research Partnership for
Sustainable Development
SEB
Sarawak Energy Berhad
SEDA
Sustainable Energy Development Authority of Malaysia
SESB
Sabah Electricity Sdn. Bhd.
SiLC
Southern Industrial and Logistics Cluster
SOx
Sarbanes-Oxley
SPC
Specific Purpose Company
SPEC
Specification
SS
Suspended Solids
TNB
TENAGA NASIONAL Sdn Bhd
UEM Sunrise
UEM Sunrise
UNFCCC
United Nations Framework Convention on Climate Change
UNIDO
United Nations Industrial Development Organization
UPS
Uninterruptible Power Supplies
USRT
United States Refrigerating Ton
VAT
Value Added Tax
WMO
World Meteorological Organization
WQI
Water Quality Index
Table of Contents
Preface
Project Site Map
List of Abbreviations
Table of Contents
Executive Summary
(1) Background and Necessity of the Project················································································ S-1
(2) Basic Policies to Determine Concepts of the Project ·································································· S-2
(3) Project Summary ············································································································ S-4
(4) Implementation Schedule ································································································· S-11
(5) Feasibility of the Project ·································································································· S-12
(6) Technical and Economical Advantages of Japanese Companies to implement this Project·····················S-14
(7) Project Site Map ············································································································ S-16
Chapter 1 Overview of the Host Country and Sector
(1) Economic and Financial Conditions of Malaysia······································································· 1-1
1) Overview of economic and industrial policies ········································································ 1-1
a) Economy, industry and state finance ················································································ 1-1
b) Overview of economic and industrial policies ····································································· 1-4
2) Overview of national land development policy (standing of Iskandar regional development) ················ 1-5
(2) Overview of Project Sector ································································································ 1-6
1) Current Use of Electricity in Malaysia and Projected Future Demand ············································ 1-6
2) Energy Policy of Malaysia ······························································································· 1-9
3) Government Organizations Involved in the Energy Sector ························································ 1-10
4) Overview of the Energy Sector ························································································ 1-11
a) Electricity Sector ······································································································ 1-11
b) Gas Sector ·············································································································· 1-11
5) Environmental Impact and Projections, Environmental Policy···················································· 1-13
a) Projected Environmental Impact on the Area of the Project ···················································· 1-13
b) Environmental Policy································································································· 1-15
(3) Situation of Project Area ·································································································· 1-17
1) Iskandar Malaysia Development Plan ················································································· 1-17
a) Overview of Development ··························································································· 1-17
b) Infrastructure Development ························································································· 1-18
c) Related regulations and laws ························································································ 1-21
2) Development of Nusajaya High-Tech Park ·········································································· 1-23
a) Overview of Development ··························································································· 1-23
b) Tech Park Development Plan ······················································································· 1-25
c) Infrastructure Development ·························································································· 1-28
Chapter 2 Study Methodology
(1) Study contents ··············································································································· 2-1
1) Project overview ·········································································································· 2-1
2) Study Purpose ············································································································· 2-1
3) Study Contents ············································································································ 2-2
(2) Study methodology and structure ························································································· 2-3
1) Methodology ··············································································································· 2-3
2) Structure ···················································································································· 2-4
(3) Study schedule··············································································································· 2-6
1) Overall study schedule ··································································································· 2-6
2) Field study ················································································································· 2-6
Chapter 3 Justification, Objectives and Technical Feasibility of the Project
(1) Background and Necessity of the Project················································································ 3-1
1) Economic growth and energy use efficiency improvement ························································· 3-1
2) Iskandar development plan and energy infrastructure development ··············································· 3-1
3) More efficient energy use in high-tech industrial parks ····························································· 3-2
4) Assistance for entry of Japanese companies through infrastructure and human resources development ····· 3-2
5) Comparative review with other options ················································································ 3-3
(2) More Efficient, Rational Energy Use ···················································································· 3-5
(3) Various Considerations Required to Determine Project Details······················································ 3-9
1) Nusajaya High-Tech Park target industry analysis and measures to attract industry ······················· 3-9
a) Success factor analysis of Kulim Hi-Tech Park (KHTP) ························································· 3-9
b) Trend of the targeting industries in Malaysia and other Asian countries ······················· 3-12
c) Analysis of Japan industry trends ··················································································· 3-21
d) Examination of Target Industries (Car Electronics, Biomedical, Halal Foods and Other Food Processing,
Visual Contents, Data Center, etc.) ················································································· 3-26
e) Energy Demand Assumption Based on the Demand Assumption for Expected Companies ··············· 3-35
f) Infrastructure and Human Resources Development as a Measure for Inviting Industries ········ 3-39
2) Possibility of Technology Promotion in Nusajaya High-Tech Park ·············································· 3-43
a) State of Infrastructure and Implemented Systems in Kulim High-Tech Park
Considered As a Benchmark························································································· 3-43
b) System for Inter-plant Accommodation of Chilled Water Using High-Efficiency Turbo Chillers
The following describes the chilled water accommodation system supplying to ready-built factories
in Phase 1a area of Nusajaya High-Tech Park ···································································· 3-48
c) High-efficiency District Cooling System with Steam Absorption Chillers Using CHP and Waste Heat
(Steam) ················································································································ 3-50
d) Expanded District Cooling System with Area-wide Heat Accommodation Covering
the Nusajaya High-Tech Park and Adjacent Development Areas ·············································· 3-53
e) Total Energy Service System Providing Chilled Air, Heat, and Power to Factories ························ 3-54
(4) Overview of the Project ··································································································· 3-56
1) Basic Policies to Making Concepts of the Project ··································································· 3-56
a) Planning Concept······································································································ 3-56
b) Basic Policies to Making Concepts of This Project ······························································ 3-56
2) Overall Contents of the Project ························································································ 3-58
a) Final Target of the Project ··························································································· 3-58
b) Contents of the Project (Scope of the First-stage Project)······················································· 3-60
3) Future Plan ················································································································ 3-64
Chapter 4 Evaluation of Environmental and Social Impacts
(1) Analysis of the Present States of Society and Environment··························································· 4-1
1) Analysis of Present State ································································································· 4-1
a) Social and Environmental Background ············································································· 4-1
b) Natural Environment ·································································································· 4-1
c) Social Environment ···································································································· 4-5
2) Future Projections (supposing the Project is not implemented) ···················································· 4-6
(2) Positive Environmental Impacts of the Project ········································································· 4-7
1) Environmental improvement effect····················································································· 4-7
2) CDM (Clean Development Mechanism) ·············································································· 4-7
(3) Environmental and Social Impact Due to Project Implementation ·················································· 4-8
1) Determining Environmental and Social Concerns ··································································· 4-8
2) Consideration of Other Options to Further Minimize Environmental and Social Impacts ···················· 4-14
3) Discussions with Implementing Agencies and Information from People and Groups Familiar with
Environmental and Social Conditions of the Local Area ··························································· 4-14
(4) Overview and Actions Required to Satisfy Host Country’s Legislation Concerning
Environmental and Social Considerations ············································································ 4-15
1) Overview of Legislation Concerning Environmental and Social Considerations Related to
Project Implementation ·································································································· 4-15
a) Overview of the Main Administrative Organizations Involved in Environmental and
Social Considerations ································································································· 4-15
b) Overview of Main Legislation Related to Environmental and Social Concerns ····························· 4-16
2) Host Country EIAs Required for Project Implementation ························································· 4-18
a) Industrial Site Suitability Evaluations ·············································································· 4-18
b) EIA Target Operations ································································································ 4-22
c) EIA Procedures ········································································································ 4-24
(5) Host Country (Implementing Agency and Relevant Agencies) Must-Do for the Project ························ 4-27
Chapter 5 Financial and Economic Evaluation
(1) Estimated Project Cost ····································································································· 5-1
(2) Overview of Preliminary Financial and Economic Analysis ························································· 5-1
1) Financial and Economic Analysis ······················································································ 5-1
a) Costs and Revenue ····································································································· 5-1
b) Operation and Management Cost ···················································································· 5-1
c) Financial Internal Rate of Return (FIRR) Calculations ··························································· 5-1
2) Economic Analysis ······································································································· 5-4
a) Power consumption and the result of Co2 reduction ····················································· 5-4
b) Benefit for the factories to be in the industrial park ···················································· 5-4
Chapter 6 Planned Project Schedule ....................................................................................................................... 6-1
(1) Nusajaya High-Tech Park development schedule ····························································· 6-1
(2) Project implementation schedule ··················································································· 6-2
Chapter 7 Implementing Organization ................................................................................................................... 7-1
Chapter 8 Technical Advantages of Japanese Company
(1) Shape of Projected Japanese Company Participation
(Investment, Material and Equipment Procurement, Facility Operation and Management, etc.)8-1
(2) Technical and Economical Advantages of Japanese Companies to implement this Project······················ 8-2
1) Technical ··················································································································· 8-2
2) Economical················································································································· 8-3
(3) Measures Necessary to Promote Orders to Japanese Companies ········································ 8-4
Executive Summary
(1) Background and Necessity of the Project
1) Economic growth and energy use efficiency improvement
Malaysia grew driven by the exportation of primary commodities and then succeeded in export-oriented
industrialization in the 1990s, which led to its remarkable development in Southeast Asia to grow from a
low-income nation to a more developed country.
In 1991, it formulated Vision2020 that aims to become a
member of developed countries in 30 years and promoted development of such infrastructure as electricity and
water supply including industrial park development and preferential tax treatment and made aggressive efforts to
attract foreign capital.
In 1987, the Japanese government, Ministry of International Trade and Industry (current Ministry of Economy,
Trade and Industry) announced the New Aid Plan to promote concerted economic cooperation (trade, investment
and economic cooperation) and assisted industrial sophistication through such cooperation as the compilation of
industrial sector development promotion plan and Kulim Hi-Tech industrial park (hereinafter “KHTP”)
development plan by the ministry and Japan International Cooperation Agency (hereinafter “JICA”).
Recently, the 10th Malaysia Plan (2011-2015) was formulated for further economic growth.
For its realization,
efforts are needed to improve the quality of energy infrastructure, secure maintenance human resources, and
ensure industrial competitiveness through cost reduction by energy use efficiency improvement together with
deregulation for attracting new investment from overseas and domestic industrial human resources development.
2) Iskandar development plan and energy infrastructure development
Comprehensive development that includes finance, administration, education, healthcare, housing and amusement
in addition to hi-tech industrial park is underway, covering an area three times as big as Singapore, in Iskandar
region in southern Johor State.
The population in the region is expected to grow from 1.4 million in 2006 to 3 million in 2025 and Gross
Domestic Product (hereinafter “GDP”) from 20 billion yen to 93 billion yen at an annual growth rate of 8 % in the
same period. The total investment until 2012 reaches 87.56 billion MR (approx. 2.36 trillion yen) according to the
Iskandar Regional Development Authority.
Stable and efficient energy infrastructure development is needed as it is essential for Iskandar development as the
driving force behind further growth.
3) Sophistication of energy use at hi-tech industrial park
Malaysia promotes and develops such value-added industries as automotive electronics, biomedical, halal and
other food processing and visual contents in addition to conventional electrical and electronics industries.
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Establishment of large data center, etc., for the financial sector in addition to the industries above is also expected
as spillover from the neighboring Singapore that is seeking to secure new low-cost human resources and land
because of its geographic and demographic restrictions.
Under such circumstances, industrial parks are expected to provide quality infrastructure service, which includes
proper operation and maintenance and securing human resources for it, in addition to quality power supply,
backup power sources, effective use of waste heat, efficient cooling installations and energy-saving installations
4) Assistance for entry of Japanese companies through infrastructure and human resources development
More than 70 Japanese companies have their factories in industrial parks in Johor State where Iskandar Malaysia
is situated. More than 90 % of companies that have entered into Malaysia have interest in investment in Iskandar,
according to some data (source: NNA News in August, 2012).
Japanese companies have more and more interest in Iskandar development and there are such symbolic projects as
opening of a major shopping center and an amusement park featuring a popular character. Furthermore, in June
2013, one of the biggest Japanese trading companies participated in eco-friendly city development in Medini
development.
Some data also reveals that Japanese companies that entered into Malaysia and Singapore are most interested in
manufacturing Iskandar region, which raises expectation for entry of automotive electronics biomedical, halal and
other food processing and visual contents with growing demand.
Meanwhile, such matters as lagged infrastructure development that includes energy and shortage of human
resources for maintenance are pointed out as concerns and the government and private sector are expected to
tackle the issues urgently concertedly.
(2) Basic Policies to Determine Concepts of the Project
Concepts of this Project which aims for introduction of high-efficiency district cooling system in Nusajaya
High-Tech Park in Iskandar region in Malaysia will be planned based on points described below.
1) Planning Concept
・
Introduction of high-efficiency district cooling system using proven Japanese technology.
・
Create the business model for integrated energy infrastructure service aiming to serve as the model for eco
industrial park in Malaysia.
・
Create the business model considering the sustainability of the project and incorporating not only the
provision of equipment but also human resource development and other factors.
2) Basic Policies on Making Concepts of This Project
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a) Basic Policy 1: Create the project plan which considers the development plan and existing conditions of the
targeted industrial park, Nusajaya High-Tech Park;
Ascendas and UEM Sunrise, the developer of the targeted industrial park, Nusajaya High-Tech Park, is planning
to develop the park, total ground area of 512 acres (approx. 207 ha), in three phases. The contracts with companies
will begin in January 2014, phase 1a (approx. 7.2ha) construction will be completed in 2015, and factory
operation is planned to begin at the end of 2015. Phases 1b (approx. 41.4ha), 2 (approx. 66.8ha), and 3a (approx.
34.4ha) are planned to be completed in March 2016, September 2017, and March 2019, respectively. The
developer has not yet decided the development schedule for other 3b and 3c.
Utility infrastructure, electricity, water, sewer, and gas except gas pipeline, will be prepared by the completion of
Phase 1a. The end point of the gas pipeline is currently at 15km east of the Nusajaya High-Tech Park. The gas
pipeline will be built according to the demand in surrounding area.
Ascendas is planning to have two types of factories in the industrial estate; Ready Build Factory (hereinafter
“RBF”) and Build to Suit (hereinafter “BTS”). In regards to the RBF, Ascendas will design the building and each
company will install air conditioning system to the RBF. As for the BTS, Ascendas will build the building and all
equipment according to the requirements by each company.
Because the site is located near Singapore, tenants are expected to be factories in the fields of data centers, car
electronics, biomedical, bio, and halal foods.
The contents of the Project and plans will be determined based on the above developing schedule and situations.
b) Basic Policy 2: Contents of the Project reflecting the needs of companies
During our interviewing survey, we found that factories operating in Malaysia have a problem that about 40% of
total electric power consumption is consumed for cooling system because of scorching sun and high temperature
throughout the year, and finding a way to cut this cost is a big concern for them. Although many factories use old
air conditioning equipment with low cooling efficiency, they are unable to renew these equipment because of the
high initial cost.
With respect to human resources, factories have difficulty in employment and development of general workers
and shortage of engineer-class workers for the management of infrastructure facilities in factories. Because job
hopping is very common in Malaysia, it is difficult to secure necessary workers.
The contents of the Project will be decided based on the needs of companies considering these findings from
interviewing.
c) Basic policy 3: Contents of the Project with harmonizing with the policies, investment incentives, etc. of the
Malaysian government
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During the 15th Conference of the Parties to the UN Framework Convention on Climate Change (COP 15), the
Malaysian government pledged “40% voluntary reduction of per-GDP CO2 emission by 2020 relative to 2005.” In
response, efforts are being taken in Malaysia aiming at the realization of a low-carbon society.
For Iskandar region, which is covered by this study, Low Carbon Society Blueprint for Iskandar was formulated in
July 2013 by Iskandar Regional Development Authority with the assistance of the Japanese government. It aims to
reduce CO2 emission in 2025 by 40% relative to the business-as-usual level (based on 2005 emission level). This
Project is in accordance with “Green Energy System and Renewable Energy,” one of the 12 action plans listed
here.
With respect to investment incentive schemes in Malaysia, the Malaysian government is promoting “pioneer
status” to projects encouraged based on the national policy. The approved companies can obtain partial exemption
from corporate income tax (70% of statutory income is exempted from taxation and only 30% is taxable) for 5
years.
The contents of this Project will be decided with an understanding of the applicability of incentive schemes
related to environment and investment, and this will greatly contribute to the profitability of this Project.
(3) Project Summary
1) Final Target of the Project
Eventually, it will be aimed to develop businesses as follows based on the cited “Basic Policies on Making
Concepts of the Project”. This Project consists with two categories: energy supply and operation management
project and human resource development project for workers for the maintenance of infrastructure facilities in the
park.
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Figure 1 Descriptions of the Overall Contents of the Project (Final Target of the Project)
Source: Study Team
a) Energy supply for the industrial park
・ High-quality electric power is supplied to factories by means of power generation using high-efficiency gas
combined-cycle cogeneration and collective reception of power from the utility cooperation covering Iskandar
region, TENAGA NATIONAL Sdn Bhd (TNB), as the backup power source. Surplus power is to be sold to
the TNB. In the future, the power generated will also be supplied to adjacent development areas, such as
Gerbang Nusajaya and Medini. In this case, the sold power will not be supplied directly from the generator
over cables but through the power grid of the utility corporation.
・ Planned specifications and capacity.
Generator: Combined-cycle gas turbine.
Power generation capacity: 45 MW.
b) District cooling system using steam accommodation
・ The steam generated in high-efficiency gas combined-cycle cogeneration is accommodated to factories, and
district cooling system with using steam absorption chillers is implemented.
Steam supply capacity: about 6.5 t. (Please add description by Fuji Electric).
c) Energy management of factories in the industrial park
・ Install the smart meters into factories for mutual information exchange.
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・ Cloud-based Factory Energy Management System (FEMS) will be introduced to factories and the service
provider will carry out factory energy management.
d) Consulting service for energy saving
・ Provide diagnostic service and guidance for factory energy saving.
e) Leasing and operation management of high-efficiency energy-saving equipment such as district cooling
equipment
・ Equipment leasing business is conducted to provide district cooling equipment, inverter, electric power meter,
Light Emitting Diode (LED), Uninterruptible Power Supplies (UPS), high-efficiency transformer, high-speed
circuit breaker, etc. Because of this, factories will be able to suppress initial investment cost and lighten tax
burden and other expenditure associated with the possession of equipment asset.
・ The service provider performs maintenance of leased equipment. Because of this, each factory has no need to
have dedicated engineers for the cooling equipment; and also, enables to reduce the maintenance cost.
f) Human resource development of workers for maintenance of infrastructure facilities in the industrial park
・ Develop maintenance workers for the industrial park in collaboration with existing vocational schools and
other institutions.
・ In the future, high-level human resource development will be conducted through joint study and other forms
of collaboration with organizations such as the University of Technology, Malaysia and universities in
EduCity, which is located in the neighborhood.
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2) Contents of the Project
a) Targeting area
The demand will not show soon because the industrial park will be developed in multiple phases, as shown in
Basic policy 1 “Development plan for the targeted industrial park, Nusajaya High-Tech Park.” In addition, the gas
pipeline has not been constructed yet. For these reasons, the first stage of the Project will include only the district
cooling using grid power and chilled water accommodation in Phase 1a area (approx. 7.2 ha), which will be
developed first. We will install a system using gas for power generation and district cooling with steam
accommodation after the construction of the gas pipeline.
Figure 2 Targeting area
Targeting area of this study
Source: Study Team based on materials provided by Ascendas
Figure 3 System image (District cooling system through grid power and chilled water accommodation)
Source: Study Team
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b) Concept Design and Equipment Specification
High-efficiency turbo chillers will be placed in a part of the utility area, and chilled water pipes are led to factories
from there. Pipes are buried underground beneath the roads in front of factories. The bore diameter of chilled
water pipes will be 400 mm near the high-efficiency turbo chillers, 300 mm in midway sections, and 200 mm near
factories. The heat loss of underground pipes, made of materials preventing heat loss, is assumed to be 5%. The
total elongation of pipes is about 1,100 m. As piping can be routed to cross roads in the park, chilled water
accommodation between factories will be designed with piping crossing the road. The piping plan and the
structure beneath a road are shown below.
The present study clarified the equipment installation conditions for high-efficiency turbo chillers and the
conditions for chilled water piping. While we considered the chilled water accommodation system and determined
conditions focusing on RBF, these conditions for equipment installation and chilled water piping can be applied to
not only RBF but also BTS and commercial areas.
If there is at least 500 United States Refrigerating Ton (USRT) of combined cooling load that is expected to persist
for 5-10 years, it is possible to construct a chilled water accommodation system by adjusting the capacity of
high-efficiency turbo chillers and the bore diameters and lengths of chilled water piping.
Figure 4 Location of high-efficiency turbo chillers and underground chilled water piping layout
Location of high-efficiency turbo chillers
Source: Study Team
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Figure 5 Section plan of water piping
Source: Study Team
The capacity of high-efficiency turbo chillers will be 2,500 USRT based on the floor area requiring air
conditioning and demand assumption. The 2,500 USRT high-efficiency turbo chillers will comprise two 1,000
USRT units and a 500 USRT unit, considering efficient operation responding to demand and redundancy. The
equipment layout plan is shown below.
Figure 6 Equipment Layout Plan
(Plan)
(Section)
12m
12000
6000
計器室
Electrical Control
Room
電気室
Ground
(Plants)
Turbo chiller １A
1000USRT
AU-1
ECC-1(A)
24m
CWP-1(A)
CP-1(A)
AU-2
CWP-1(B)
Turbo chiller １B
1000USRT
AU-3
18000
ECC-1(B)
CP-1(B)
Turbo chiller 2
500USRT
ECC-2
CWP-2
CP-2
Source: Study Team
S-9
c) Issues and Solutions towards the utilization of proposed technologies and systems.
Major issues are whether there are an assured cooling load for the adoption of proposed technologies and systems.
Sales of sections in the tech park will start from January 2014, therefore availability of the adoption of proposed
technologies and systems will be considered with reviewing the actual trend of factories’ demands and the amount
of cooling load.
d) Business Scheme for the Proposed Project
In this Project, a special purpose company (SPC) established by the Joint Venture (JV) company among Inter Act,
Fuji Electronic, other Japanese companies, Malaysian companies, and Ascendas will operate the business. The
investing companies will bear 50% of the project cost, and 50% will be loaned from a financial institution.
Because this business complies with the environment promotion policy of the Malaysian government and it will
be the first case of district cooling in an industrial park, it is likely to be eligible for Pioneer Status and other
investment incentives from the Malaysian government, as well as preferential tariff from the utility corporation,
TNB, and other supports.
Each factory contracts with the SPC to receive chilled water supply service and pays the bill. The SPC pays the
cost of power to TNB and the cost of water to the water supply company. The SPC operates the business in
cooperation with the local operation management company and the engineering/construction company.
After the gas pipeline is constructed and it becomes possible to expect sufficient demand with the increase in the
number of factories in the park according to the industrial park development plan, we will add energy supply for
the industrial park, district cooling system using steam accommodation, energy management of factories in the
industrial park, consulting service for energy saving, leasing and operation management of high-efficiency
energy-saving equipment, and human resource development of workers for maintenance of infrastructure facilities
in the industrial park on appropriate timing.
Figure7 Business Scheme for the Service Company
Private Bank
[Investers]
InterAct, Fuji Electric, and other Japanese Companies
or
Malaysian Companies
JICA Loan
Singapore Companies
Government of
Malaysia
TNB
Water Supply
Investment
Loan
Incentives
Servicing
Payment of Electricity tariff
SPC
Factories
(JV Companies)
Payment of tariff
Payment of Water tariff
Company
Operation/Maintenance Contract
Engineering/Construction Contract
Engineering/Construction
Operation/Maintenance
Companies
Companies
Source: Study Team
S-10
(4) Implementation Schedule
The Project can be implemented when the potential customers of cooling systems are figured out. It is difficult to
formulate concrete schedule at this stage.
Meanwhile, if certain companies that use the cooling service will surely establish their business in the tech park,
the economic feasibility of the Project can be examined more specifically based on the scale of the demand,
whether it can be implemented or not can be determined, and the efforts toward its implementation can be
accelerated.
Concrete information on business establishment will be exchanged with Ascendas as needed to examine the
materialization of the Project. The table below shows the schedule of district cooling installations development if
it is judged that there is a sure prospect of sufficient demand.
Table 1 Draft of Project Implementation Schedule with Sure Prospect of Sufficient Demand
Year 0
Year 1
Year 2
Year 3～
Item
1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12
1) Demand Study
2)
Negotiation and adjustment with Ascendas & UEM
Sunrise
3)
Decision making on the implementation of the
district cooling business
★
4) Establishment of the district cooling company
5) Financing
6) F/S, Basic design, EIA survey
7) Apply for the business license
8) Detailed design
9)
Preparation for bidding to decide each
construction and plant
10) Bidding result & Contract
11) Preparation for the construction
12) Construction (Piping, etc.)
13) Plant construction
14) Negotiation for contract with users
15) Preparation for the operation
16) Start operation service
Source: Study Team based on document provided by Ascendas
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1 2 3 4
(5) Feasibility of the Project
1) Estimated Project Cost
We targeted equipment cost (including 3 Electrical Centrifugal Chillers, 3 Cooling Towers, 3 Chilled Pumps, 3
Cooling Pumps, 2 Make-Up Pumps for Cooling Water, 1 Expansion Tank, 1 Water Tank and others.), piping
installation work, electrical installation work, aqueduct construction, installation work of the fire extinguishing
system, installation work of the pneumatic plant and others for the cost estimation. To calculate the construction
cost for the above items, further study with considering several points regarding the aqueduct construction, such
as sectional design of the road, conditions for the construction, future technical innovation, and price fluctuations
due to market expansion is required.
2) Overview of Preliminary Financial and Economic Analysis
The Project’s main source of revenue is expected to be the sale of cold air to the companies located in the
industrial park by SPCs established by Japanese and local corporations.
3) Financial and Economic Analysis
a) Costs and Revenue
Revenue based on the several conditions of the project costs was estimated. Cost (Initial Costs, Running Costs,
Power Purchase Cost and others) and revenue (Cold Air Sales) in each item were assumed according to similar
cases, materials from TNB and others.
b) Operation and Management Cost
We considered operation and management costs for each of the Projects’ operations based on the basic conditions
of financial and economic analysis.
c) Financial Internal Rate of Return (FIRR) Calculations
i) Conditions of Calculations
We calculated Cash Flow and FIRR by the previously mentioned revenue, costs of construction, management fee
and operation cost on the premise of net cash flow (NCF) and assumed a 10 year Project period. We did not
consider the market value of the turbo chiller after 10 year.
Since Malaysia’s inflation rate currently hovers around 2%, we set the inflation rate at 2%. This project has high
possibility of being applied MIDA Pioneer Status or other preferential measures, however, we did not consider of
such measures in this calculation as conservative case.
Followings are other conditions for the calculations.
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Table 2 Financial Calculation Conditions
Items for calculating income and expenditures
Standard/scale
Construction period
Notes
1 year
Operating period
10 years
Depreciation period
10 years
Interest (commercial banks)
4%
Interest (JICA financing)
3%
Construction fund repayment period
The initial fixed period is five years.
7 years
(commercial banks)
Construction fund repayment period
10 years
Deferment not considered
(JICA financing)
Equity capital ratio(commercial banks)
50%
Equity capital ratio(JICA financing)
30%
Inflation rate
2%
Fixed asset tax
0.3%
Corporate taxes, etc.
25%
Value added tax
5%
Source: Study Team
ii) FIRR Calculations
We used the above conditions to determine the situation with loans from commercial banks or financing from
JICA.
Case 1: Loans from commercial banks (4% interest, LTV50%)
Case 2: Financing from JICA (3% interest, LTV70%)
We calculated non-leverage PIRR and after leverage Equity-IRR on the premise of 10 years calculation period and
the above conditions.
We calculated PIRR and the result shows 13.8% to 13.9% on the non-leverage basis.
The Project PIRR exceeds the roughly 4% interest rate on 10 year Malaysian government bonds, so we believe the
Project can work under the conditions of the above cases. While interest of the JICA financing is 3% comparing to
4% of the commercial banks, LTV is 70% (JICA) and 50% (Commercial banks) each. Therefore, total interest
payments to JICA between 10 years operational period is about 1.45 times as much as loans from private banks.
On the other hand, equity is reduced by 40% because of the difference about Equity-Capital Ratio between 30%
(JICA case) and 50% (Commercial bank case). Consequently, the gap between PIRRs under the cases of loan from
JICA and commercial banks is only 0.1%, however, Equity-IRR of JICA case is about 1.6 times as high as that of
commercial bank case.
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We analyzed the sensitivity analysis with the demand fluctuation and the retail price of cold air under the case of
loans from the commercial banks. Compared to the base case, on the one hand, PIRR is decreased to about 0.7
times in the case of -10% demand and increased to about 1.27times in the case of +10% demand, on the other
hand, Equity-IRR is about 0.66 times in the former case and about 1.27 times in the latter case. In respect to cold
air sales, sales price which able to secure more than 4% PIRR as market rate of interest is considered. The demand
fluctuation and the price fluctuation affect the business profitability. Thus, demand risk reduction with securing
reliable demand and setting reasonable price is required for the implementation of the project.
(6) Technical and Economical Advantages of Japanese Companies to
implement this Project
1) Technical
The Project is expected to introduce integrated management of cooling loads within Iskandar region industrial
parks (district cooling systems), to reduce environmental impact and manage electrical energy for the entire region,
and to further develop the use of heat and electrical energy.
With its high annual average temperature, Malaysia does not have seasons where heating and cooling is used and
seasons in between when it is not used the way Japan does. Cooling is the main air conditioning they do
throughout the year, and they use both Central Heat Source System and individual air conditioning.
When introducing district cooling systems to Iskandar region industrial parks, Central Heat Source System
enables the integrated management of air conditioning heat source facilities, and the main equipment required will
be turbo refrigerators, cooling towers, cold water pumps, cooling water pumps, power receiving and
transformation facilities and control facilities.
Turbo refrigerators are general-purpose equipment manufactured domestically the same way that they are
manufactured outside Malaysia. The coefficient of performance (COP) is used as an indicator of turbo chiller
efficiency, and domestic manufacturers’ COPs of six or greater are not that much different than the COPs of
non-Malaysian manufacturers.
That said, the Top-Runner System in Japan spurred the development of high-efficiency transformers, lighting and
other electrical equipment, and even electrical equipment not subject to the Top-Runner System is influenced by
energy conservation efforts in Japan and is becoming more advanced in various fields such as electrical motors
and high-voltage inverter control. For instance, regarding high efficiency of the electric motor, Japan has
established the premier efficiency (IE3) technology in IE code, the efficiency class of the international standard
“IEC60034-34”. Japanese technology achieved to down the loss factor to approximately 35% than the standard
efficiency (IE1). Also, in respect to invertor technology for controlling the electric motor, Japan has put the high
efficient equipment with power factor over 95% to practical use.
S-14
The improved efficiency of electrical equipment is helping reduce the volume of energy consumed by
manufacturing equipment, cooling facilities and air conditioning heat sources for district cooling systems at
factories that typically use large quantities of power, but it is also vital technology for reducing environmental
impacts across entire regions. Japan’s electric power technology is among the best in the world and is delivered
safely and consistently from its points of generation to its points of use. Thus, when we build a high-standard,
consistent energy infrastructure for Iskandar region industrial parks, we are building an energy system that is
fused with the technology Japanese corporations possess.
Japanese technology is at or above global standards for air conditioning heat source facilities, electrical equipment
and various other fields, and domestic corporations manufacture and develop own technology, therefore, in
technical terms, Japanese corporations are highly advantageous for the implementation of the Project.
2) Economical
Products manufactured by Japanese corporations are high-tech and high-quality, but they tend to be more
expensive than products manufactured in other countries. However, Japan exported 800,000 commercial air
conditioners to Malaysia from 2010 to 2012 and is doing as well as last year with private-sector offices and stores
so far in 2013 (according to data from the Japan Refrigeration and Air Conditioning Industry Association).
The relocation of industrial businesses into Iskandar region industrial parks should boost demand for air
conditioning heat source facilities and electrical equipment, and, given the above conditions, Japanese companies
could be advantageous for this Project in economic terms. Furthermore, installation of Japanese equipment will
help the realization of creating energy system with mitigating the life cycle cost for the regional cooling system.
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(7) Project Site Map
Project Site Map
Project Area
（Iskandar）
Project Site
（Nusajaya Tech Park）
（Birdview）
（Plan（Phasing Plan））
Source:Study Team based on document provided by IRDA and Ascendas
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Chapter 1 Overview of the Host Country and Sector
(1) Economic and Financial Conditions of Malaysia
1) Overview of economic and industrial policies
a) Economy, industry and state finance
Postwar economy of Malaysia has developed driven mainly by the exportation of such primary commodities as
timber, crude rubber, palm oil, tin and crude oil thanks to its abundant natural resources. The primary commodities
accounted for approx. 80 % of export values in the 1960s, and rubber accounted for more than 50 %. However, the
ratio of rubber began to drop sharply in the 1970s and thus the ratio of primary commodities declined although
palm oil secured a certain percentage and the ratio of timber and crude oil fluctuated due to such external factors
as rapid economic growth in Japan. The ratio decreased to approx. 60 % in the 1980s and further to 30 % in the
1990s. It still continues to decline and the relative standing of primary commodities in Malaysian economy has
dropped significantly.
Figure1- 1 Transition of percentages of export amount by item
Rubber
Cotton
Lumber
Palm oil
Crude oil
Other
Source: Current Status and Future Prospect of Malaysian Economy
(Mitsubishi UFJ Research and Consulting Co., Ltd.)
Meanwhile, the Malaysian government promoted industrialization after the 1960s and the nation has been
regarded as a success case of development of a developing country. Particularly, the long administration of the
fourth Prime Minister Mahathir bin Mohamad stabilized the politics and empowered the leadership and Japanese
companies directly invested in the country actively from the later 1980s and early 1990s as a result of promotion
of industrialization policy with emphasis placed on partnership with Japan and other Asian counties, as
symbolized by Look East policy. Particularly, it successfully attracted overseas investment in electric and
electronic sectors, which pulled Malaysian economy.
1-1
Table1- 1 History of Malaysian Industrialization
Time
Overview
Import-substituting industrialization began in the late 1950s after
1960s
Malaysia gained independence, but it stalled at the end of the
Import-substituting industrialization
1960s due to the limited size of the domestic market.
The Free Trade Zone Act of 1971 ushered in the creation of special
1970s
industrial zones in Penang and other places throughout Malaysia,
First export-oriented industrialization
and efforts continued to attract foreign corporations geared toward
exporting that created ample employment opportunities.
The Mahathir administration established national automaker
1980-1984
PROTON in 1983 and continued other heavy industrialization
Heavy industrialization policy
while depending on the introduction of technology from foreign
corporations.
The heavy industrialization of the first half of the 1980s ground to
1985-1989
a halt due to the increasing financial burden and the slumping
Second export-oriented industrialization
global economy, and focus shifted again to export-oriented
industrialization.
Vision 2020 (devised in 1991) became a key development policy
1990s to now
to support industrialization policy aimed at joining the ranks of
Conversion to industrialized country
developed countries.
Source: Current Malaysian Economy and its Challenges (Institute for International Monetary Affairs)
As a result, the real GDP grew at an annual average rate of 9.5 % from 1990 to 1996. Although such external
factors as Asian currency crisis in 1997, IT slump, series of terrorist attacks in the US and SARS outbreak in
China in 2001 hit the Malaysian economy to push down the growth rate, it still continued to grow stably after
2003. Although it market negative growth in 2009 due to the global financial crisis triggered by the subprime loan
crisis in 2009 in the US, it recovered in the following year and has been between 5 to 6 % for the last several
years.
Figure1- 2 Malaysian Real GDP Growth Rate
12
％
10
9.5
9
9.9
9.2
8.9
9.8 10
8.9
8
6
7.3
7.2
6.8
6.1
5.4
5.9
5.8
6.3
5
5.1
4.6
4
5.6
2
0
0.5
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
-4
-6
-8
2008
2009
2010
-1.6
-2
-7.4
-10
Source: Study Team based on various data
1-2
2011
2012
The mid to long term reform visions and plans of the Malaysian government can be largely categorized into long
term (frameworks for long term economic growth, which include Vision 2020 and New Economic Model), mid
term (materialization of long-term frameworks into policies, strategies, programs and projects, which include 10th
Malaysia Plan) and short term (execution of policies, strategies, programs and projects). The federal budget falls
on the category of implementation of short term policy.
The federal budget comprises the budget speech read by the Finance Minister in meetings and the economic report
announced also by the Finance Ministry. The speech focuses on issues and appeal points (including existing
measures) that the administration should tackle and the report provides detailed figures by sector.
The FY2014 budget has 5 pillars of invigorating economic activities, strengthening fiscal management, human
resources development, intensifying urban and rural development, and ensuring the well-being of the people,
aiming to strengthen economic resilience, implement reforms and fulfill public promises. The total expenditures
and it’s details are shown in Figure1- 3. The federal revenues increase by RM 4 billion from FY2013 to 224.1
billion RM aiming to reduce the deficit from 4 % this fiscal year to 3.5 % in relation to GDP.
Figure1- 3 Breakdown of Expenditures Malaysian Budget FY2014
1,000 million RM
*Economic sector: infrastructure development, industry, agriculture, local development, etc.
*Social sector: education and occupational training, health and welfare, housing, and community development
Source: NNA News on October 28, 2013
1-3
b) Overview of economic and industrial policies
As mid to long term development plans, Malaysia set up New Economic Policy (NEP) in 1970, National
Development Plan (NDP) in 1991, National Vision Policy (NVP) in 2001, and New Economic Model (NEM) in
2010. With the long term national economic development plans as guidelines, the Malaysia Plan was formulated
every 5 years as well as Industrialization Master Plan, etc., as more concrete economic policies, to promote
industrialization policy focusing on manufacturing.
In March 1991, in his speech, then Prime Minister Mahathir announced Vision 2020, a national goal that presents
national ground design for the next 30 years. It aims to become a member of developed countries in all aspects
including politics, society and culture with economy as the main target by 2020 with the aim to achieve economic
growth at an anural rate of 7 %; and eight times increase of GDP and four times increase of income by 2020. The
mid to long term plans after the 1990s have been formulated based on the Vision and are prioritized common goal
in Malaysian national policies.
The NEM announced in 2010 promotes improvement of the domestic quality of life by achieving high income,
development of the entire nation, and sustainable development, aiming at the country’s departure from more
developed country and becoming a member of developed countries in 2020. Specifically, it presents 8 strategic
reform initiatives (a: re-energizing the private sector to drive growth, b: developing a quality workforce and
reducing dependency on foreign labor, c: creating a competitive domestic economy, d: strengthening the public
sector, e: transparent and market-friendly affirmative action, f: building the knowledge base and infrastructure, g:
enhancing the sources of growth, and h: ensuring sustainability of growth).
Prime Minister Najib, in June 2010, announced the National Key Economic Areas (NKEAs) comprising 11 key
industrial sectors and one key region that will drive the nation’s economic growth together with the 10th Malaysia
Five-Year Plan. The five-year plan set macroeconomic growth target as well as the scale and distribution of public
sector development plan and it plays a guiding role of investment decision of private sector. Specifically, it aims at
an annual GDP growth rate of 5.8 % and raising per capita GDP to 12,140 dollars by2015. The 11 key sectors of
NKEAs are oil and gas, palm oil and related products, financial services, wholesale and retail, tourism,
information and telecommunication technologies, education, electrical and electronics, business services, private
healthcare, and agriculture with the capital of Kuala Lumpur that accounts for one-third of GDP as the key
location of economic growth.
The 3rd Industrialization Master Plan that is also a national economic policy is formulated almost every decade
and most latest one was announced in August 2006. Although the 1st and 2nd master promoted formation of
industrial clusters, the 3rd master plan promotes realization of innovation and sophistication of manufacturing and
service sectors in order to transform them into internationally competitive industries in view of developed country
status in 2020. The master plan sets the economic growth rate of 6.3 % with service sector at 7.5 % and
manufacturing at 5.6 % by sector during the term.
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2) Overview of national land development policy (standing of Iskandar regional development)
The Malaysian administration system is three-tiered, consisting of the federal government, the state governments
and local authorities. The national land policy plans are also formulated at the 3 levels. The federal government
formulates Malaysian five-year plan and National Physical Plan (NPP) and they are interpreted into state five-year
plans and structure plan. There are 2 types of structure plan, one formulated by each state for itself and the other
formulated as a wider-area development plan by a wider area that has important development issues covering 2 or
more states. The state plans are then incorporated in local plans or special-district plans to serve as the framework
for local development plans.
The NPP is a statutory plan based on the 2001 amendment of the Town and Country Planning Act that was
established in 1976 and is formulated after discussions between the federal and state governments. It is formulated
in reference to the urbanization goals and polices of concerned sectors. The target of the current NPP is limited to
Malay Peninsula and there are other plans for Sabah and Sarawak states. The 1st NPP (2006-2020) approved in
2005 sets up the “selection and concentration” strategy and reveals a plan of promoting growth of key urban zones
that include Kuala Lumpur (Selangor State where the capital is located), George Town (Penang State in west
coast), Johor Bahru (Johor State in which southern Iskandar development region is situated), and Kuantan
(Pahang State in east coast), so they will serve as the driving force behind the national development.
The NPP was revised five years later in August 2010, in which climate change, conservation of biodiversity, green
and new technology, and sustainable tourism are added. As called “concentrated decentralization,” main strategies
are to focus development along potential growth corridors (urban and industrial development, agriculture, tourism,
transportation, infrastructure and urban services), focus urban development in designated urban conurbations and
other key urban areas, spread development to lagging and non-urbanized regions, and provide access to
ecotourism and agricultural resources. It takes over and expands the selective concentration strategy of the 1st
NPP.
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Figure1- 4 Malay Peninsula Development Plan
Source: National Physical Plan 2
Meanwhile, then Prime Minister Abdullah, in March 2006, announced long-term major development plans for
five regions aiming to correct regional gap. It is a development plan up to 2030 at the longest and promotes
foreign capital investment for which the country will provide one-stop service by establishing an independent
supervising agency in each development region and provide investment incentives that include preferential tax
treatment for investors in the focused industrial sector in the designated regions. The Iskandar development plan is
one of the plan and other development plans include the northern corridor economic region whose center is
Penang State, Sarawak Corridor of Renewable Energy that is expected to grow as a renewable energy cluster, East
Coast Economic Region that includes 227 of oil and gas development projects by state-run oil company, Petronas,
and Sabah Development Corridor that focuses on agriculture, tourism and logistics.
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(2) Overview of Project Sector
1) Current Use of Electricity in Malaysia and Projected Future Demand
Malaysia's domestic primary energy production in 2011 was 84.3 million tons of oil equivalent (toe), a drop of 9%
from the 2008 figure of 91.9 million toe. Liquid natural gas accounted for 56.2% of energy produced in 2011, and
oil for 36.4%. These two types of fuel comprised 92.6% of energy produced in Malaysia that year.
Given expected rise in demand for energy in Malaysia, primary energy production is projected to increase by
about 1.7% annually on average, and exceed 1 million toe in 2035. Oil and natural gas currently account for about
90% of all energy produced. Given the amount of untapped oil reserves and issues with developing new oil fields,
oil imports are projected to rise, and a greater percentage of energy will likely be produced from coal, partly
replacing oil.
Figure1- 5 Primary Energy Production in Malaysia by Energy Source
Source: International Energy Agency
Figure1- 6 Projected Production of Primary Energy in Malaysia by Energy Source
Source: APEC Energy Demand and Supply Outlook 5th Edition, 2013
1-7
Electricity in Malaysia is produced by government-owned power companies (Tenaga Nasional Berhad (TNB),
Sabah Electricity Sdn Bhd (SESB), Sarawak Energy Berhad (SEB)) and privately owned utilities (Independent
Power Producers (IPP)). The country's total generation capacity is 24,257 MW.
The 10th Malaysia Plan, citing concerns about globally unstable electricity prices and gas shortages, sets out to
promote renewable energy and clean thermal power generation. Electricity production in Malaysia has risen
steeply since 2008 and is projected to grow at an average annual rate of 5% from 2013 to 2021. The utilities have
announced plans to boost generation capacity by 4,500 MW by 2017.
Table1- 2 Power Generation in Malaysia (as of June 2012)
Net Generation Capacity (A)
Peninsular
Malaysia
21,873 MW
Sabah
1,035 MW
Sarawak
1,349 MW
Peak Load (B)
TNB: 7,096 (32.4%)
IPP: 14,777 (67.6%)
SESB: 410MW (39.6%)
IPP: 625MW (60.4%)
SEB: 1,349 (100%)
Supply Cushion
(A) – (B) / (B)
15,872 MW
38%
843 MW
23%
1,067 MW
26%
Government utilities:
Total
24,257 MW
8,855 MW (36.5%)
－
－
IPP: 15,402 MW (63.5%)
Source: Study Team based on the The Japanese Chamber of Trade & Industry, Malaysia 2014 Malaysia Handbook
Figure1- 7 Power Generation in Malaysia by Energy Source
Source: International Energy Agency
1-8
2) Energy Policy of Malaysia
In 1974, Malaysia enacted the Petroleum Development Act, granting exclusive rights to develop and manage the
country's oil and natural gas supplies to the state-owned company Petronas. Since then, the government has set out
its energy policy in the National Energy Policy Objectives in 1975; the National Energy Policy in 1979; the
National Depletion Policy in 1980; the Four Fuel Diversification Policy in 1981; and the Fifth Fuel Policy in 2000.
The National Energy Policy was an especially important piece of legislation in the energy sector, setting targets
for energy development and consumption and strategies to secure safe and efficient supplies. It promoted efficient
use of electricity, discouraged wasted consumption and unproductive uses and aimed to lessen environmental
impact by developing sustainable energy supplies.
Based on these objectives, Malaysia's five-year plans have included specific strategies to increase energy supply
and efficiency of use, beginning with the Eighth Malaysia Plan (2001–2005). The Tenth Malaysia Plan (2011–
2015) focuses on the following 5 strategic pillars:
Strategic Pillars of Energy Policy in the Tenth Malaysia Plan
●Adoption of Market-Based Energy Pricing
・Reduce subsidies and achieve market-based pricing by 2015 in order to attract new players to the energy
supply chain and increase energy security.
・Gas prices for the power and non-power sectors will be revised every 6 months to gradually
reflect market prices.
●Initiatives to Secure and Manage Reliable Energy Supply
・Energy security will be enhanced through the development of alternative resources, particularly
hydropower as well as importation of coal and liquefied natural gas (LNG) by 2015.
・In the transport sector, blending of bio-fuel will be made mandatory beginning in 2011, further enhancing
fuel security. The application of super critical coal technology will be explored to reduce carbon
emissions.
・In addition, the development of nuclear energy as an option for electricity generation will be considered
to ensure reliable and cost-effective supply in Peninsular Malaysia.
・Development of new coal-based plants will be undertaken to ensure security of supply in Peninsular
Malaysia.
●Measures to Encourage Efficient Use of Energy
・Encourage efficient use of electricity in the industrial, commercial, residential and transportation sectors.
・Set minimum energy performance standards for appliances and develop green technologies.
●Stronger Governance
・Improve governance of the energy sector in order to raise productivity and efficiency.
・Liberalize the gas supply industry to facilitate the entry of new suppliers, and restructure the electricity
supply industry to instill greater market discipline.
・Create separate accounting procedures for generation, transmission and distribution activities; ensure
transparency in contracts for new generation plants.
●Managing Change: An Integrated Approach to Achieve the Target Outcomes
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・There will be a broad range of initiatives, covering pricing, supply-side and demand-side management,
and requiring new oversight mechanisms to ensure optimum benefit.
Figure1- 8 Five Strategic Pillars of the New Energy Strategy (Tenth Malaysia Plan)
Source: Tenth Malaysia Plan 2011–2015
3) Government Organizations Involved in the Energy Sector
The body responsible for creating Malaysia's policies and strategies concerning energy supply is the Ministry of
Energy, Green Technology and Water (KeTTHA). KeTTHA promotes green industries, implements measures for
environmental preservation and creates policies to improve energy efficiency. The Energy Commission (EC), a
branch of KeTTHA, regulates the electricity and gas sectors; its roles include creating guidelines for suppliers,
implementing energy-related regulations and overseeing energy prices. Another body under KeTTHA, the
Sustainable Energy Development Authority (SEDA), manages a program by which electricity produced from
renewable sources can be sold to utilities at fixed prices. The organization responsible for economic development
policies, including the Malaysia Plans, is the Economic Planning Unit (EPU). In the energy and environmental
sectors, the EPU and KeTTHA collaborate to develop energy policy and promote green technology.
1-10
4) Overview of the Energy Sector
a) Electricity Sector
Electricity in Malaysia is produced by government-owned power companies.
As mentioned in the first section of this chapter, while IPPs charge high electricity rates, they are shut out of
electricity distribution, which is handled entirely by government utilities. In Peninsular Malaysia, the target area
of the Project, TNB supplies electricity through transmission networks operating at 500 kV, 275 kV, and 132 kV.
The Johor Bahru area is supplied by transmission lines of 275 kV.
Electricity rates charged by TNB vary by use (residential, commercial, industrial, mining, street lighting,
neon/floodlights, specific agricultural use), voltage, and time of day (for medium or high voltage).
b) Gas Sector
53 % of natural gas consumed in Peninsular Malaysia in 2010 was used to generate power for TNB, while
non-power use (mainly industrial and commercial) accounted for about 40% of consumption. 7 % of the supply
was exported to Singapore. Small-scale industrial customers who use gas for non-power purposes at flow rates of
5 mmscfd or lower are supplied by Gas Malaysia and Petronas, which also delivers directly to customers. Gas
Malaysia distributes gas to industrial, commercial, and residential customers via pipelines connected to the
Peninsular Gas Utility Line (PGU Line), a Y-shaped line on Peninsular Malaysia owned and operated by Petronas.
The estimated cost of gas for this Project is MYR16.07/MBTU (manufacturing rate). The Malaysian government
announced in May 2011 that it would raise natural gas prices by MYR3 every 6 months beginning in July of that
year. However, prices were actually raised only that July, with no further hikes since then.
Figure1- 9 PGU Line（Peninsular Gas Utilization Line）
Source: PETRONAS
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Figure1- 10 Energy Sector Overview (electricity, gas)
Cabinet
Prime Minister's
Office
Economic Planning Unit (EPU)
・Creates strategies and policies
Ministry of Energy, Green Technology and
Collaboration
Water (KeTTHA)
for economic development
・Promotes green industries
・Creates the Malaysia Plans
・Creates policies to improve energy efficiency
Energy Commission (EC)
Sustainable Energy Development Authority
・Creates guidelines for electricity and gas suppliers
(SEDA)
・Implements energy-related regulations
・Manages a fixed-price purchase program for
renewable energy
[Electricity suppliers]
TNB
SES
SEB
IPP
[Gas suppliers]
PETRONAS
Supply
Gas Malaysia
B
※Government
utilities responsible
Electricity
customers
for transmission
Non-power use
Generation use
Major industrial
Minor industrial
(TNB etc.)
customers
customers
(Above 5 mmscfd)
（5 mmscfd and
below)
Source: Study Team
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5) Environmental Impact and Projections, Environmental Policy
a) Projected Environmental Impact on the Area of the Project
In the Iskandar region, where the Project site is located, greenhouse gas emissions are predicted to rise by 175%
from 2005 levels by 2025, based on current trends. The increase is attributable to the region's rapid growth: the
population is expected to double and the GDP increased 4 times by 2025, compared to 2005.
The Iskandar Regional Development Authority (IRDA), with the belief that “without ‘the green,’ there is no
sustainable development,” 1 has developed a green-focused agenda that involves 12 actions to achieve a
low-carbon society.
Implementation of the 12 actions in IRDA's plan would reduce greenhouse gas emissions in the Iskandar region in
2025 by 40%, compared to the amount of emissions projected for that year based on current trends.
The Project was developed in line with the goals described in Action 5 of the plan: Green Energy System and
Renewable Energy.
Figure1- 11 Iskandar Malaysia Green-Focused Agenda
Implement
Observe/Strengthe
Environment
n
Planning/Managing
Monitor/Reconside
Corporations/ind
r
ustry
Federal
Planning/develop
policy
Value added
ing
products/services
Social and
cultural
growth
Blue
Print
Competent personnel
Low-carbon lifestyles
IRDA BP
National Physical Plan
Economic growth
Environmental
Agenda
Green economy
Development
Plan
Comprehensive
Development
Plan
Eco-friendly
public
transportation
system
TOD
Transit
Oriented
Development
Form
Infrastructure
Main arteries
Transportation
FIT EE
building/areas
Rainwater use
RE and
resources
Urban planning
Gradual
development/DC
SWM
Land use
planning
Development/develo
pment processes for
decarbonizing
technology
Reuse
Recycle
Reduce
Compost
Low
Carbon
Society
Solid
Waste
Management
Source: 2nd International Forum on the Future City Initiative
A Green-Focused Agenda for Iskandar Malaysia: Toward Low Carbon Green Growth and Society
1
From the presentation by Ismail Ibrahim, Chief Executive of IRDA, at the 2nd International Forum on the Future
City Initiative
1-13
Figure1- 12 Current and Projected Greenhouse Gas Emissions in Iskandar Malaysia
Source: Low Carbon Society Blueprint for Iskandar Malaysia 2025 Second Edition
Table1- 3
12-Action Plan for a Low Carbon Society
Action
Objective
1
Integrated green transportation
2
Green industry
3
Low-carbon urban governance
4
Green building and construction
5
Green energy system and renewable energy
6
Low-carbon lifestyle
7
Community engagement and consensus building
8
Walkable, safe, livable city design
9
Smart growth
10
Green and blue infrastructure and rural resources
11
Sustainable waste management
12
Clean air environment
Green economy
Green community
Green environment
Source: 2nd International Forum on the FutureCity Initiative
A Green-Focused Agenda for Iskandar Malaysia: Toward Low Carbon Green Growth and Society
1-14
b) Environmental Policy
1.
National Environmental Policy
In 2002, the Malaysian government formulated the National Policy on the Environment, which aimed to integrate
sustainability into all plans for economic development and enhance quality of life, protect ecosystems, and
conserve and ensure responsible use of natural resources. The policy had three main objectives:
i.
A clean, safe, healthy and productive environment for present and future generations.
ii.
Conservation of the country's unique and diverse cultural and natural heritage with effective
participation by all sectors of society.
iii.
Sustainable lifestyles and patterns of consumption and production.
The government laid out eight principles in the policy to support the above objectives, balancing economic
development goals with environmental imperatives.
1. Stewardship of the environment
2. Conservation of nature's vitality and diversity
3. Continuous improvement in the quality of the environment
4. Sustainable use of natural resources
5. Integrated decision-making
6. Role of the private sector
7. Commitment and accountability
8. Active participation in the international community
10th Malaysia Plan (2011–2015)
The Tenth Malaysia Plan sets out to promote energy efficiency, which it cites as key to developing the world-class
infrastructure necessary for economic growth and improved productivity. The plan calls for the industrial sector to
use high-efficiency machinery and technology and promotes a shift toward more energy-efficient, higher
value-added activities.
Green Technology Financing Scheme
In his 2010 budget speech, Prime Minister Najib Tun Razak announced the establishment of the Green
Technology Financing Scheme, which aimed to improve the supply and utilization of environmentally friendly
technology. Under the original scheme, which took effect January 1, 2010, the government bore 2% of total
interest on loans to beneficiaries and guaranteed 60% of each loan, and financial institutions bore the remaining
40% financing risk.
Under the current version of the scheme, which was revised October 11, 2013, the government offers a choice
between a 2% rebate on net interest or a guarantee of 30% of the loan.
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The scheme defines green technology eligible for funding as "the development and application of products,
equipment and systems used to conserve the natural environment and resources, which minimizes and reduces the
negative impact of human activities." Green technology must meet the following criteria:
i.
Minimizes degradation to the environment
ii.
Has zero or low greenhouse gas emission
iii.
Safe for use and promotes healthy and improved environment for all forms of life
iv.
Conserves the use of energy and natural resources
v.
Promotes the use of renewable resources
Figure1- 13 Green Technology Financing Scheme, Revised on October 11, 2013
Source: Green Technology Financing Scheme website
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(3) Situation of Project Area
1) Iskandar Malaysia Development Plan
a) Overview of Development
Since 2006, the Iskandar region of southern Johor State, which at 2,217 square kilometers is about three times the
size of Singapore, has undertaken large-scale, comprehensive development of high-tech industrial parks and areas
including finance, administration, education, health care, housing, and amusement. The development plan is one
of 5 wide-area economic development projects being implemented by the Malaysian federal government. The
population of the region is predicted to rise to 3 million in 2025, compared to 1.4 million in 2006, and the region's
GDP is projected to grow annually by about 8%, reaching 93 billion yen in 2025, compared to 20 billion yen in
2006. The IRDA, which was established in 2007 to oversee development, has reported that up to and including
2012, the region has received RM87.56 billion (approx. 2.36 trillion yen) of investments.
Iskandar Malaysia comprises five flagship zones, labeled A through E, each of which focuses on different types of
economic activities.
Five Flagship Zones
A: Johor Bahru City
・Located in the old urban area of Johor Bahru, which is the capital of Johor and the main gateway to
Singapore via the Causeway.
・Key economic activities include financial services, arts and culture, and urban tourism.
B: Nusajaya
・The development area where the high-tech industrial park that is the site of the Project is located. The state
and federal governments recently moved their offices here (to Kota Iskandar). The developper is also
seeking to attract universities and hospitals.
・Key economic activities include high-tech manufacturing, medical facilities, educational institutions,
tourism, and biotechnology.
C: Western Gate Development
・A regional distribution center with a free trade zone with tax incentives and a major container port in the
Port of Tanjung Pelepas. The zone is also home to the Tanjung Bin Power Plant and is an access point to
Singapore. It also has several nature conservation areas registered as Ramsar Convention sites.
・Key economic activities include warehousing, distribution, marine services, high-tech manufacturing and
food production, sectors that benefit from the free trade zone.
D: Eastern Gate Development
・Contains Pasir Gudang, the manufacturing hub of southern Peninsular Malaysia; Pasir Gudang Port; Pasir
Gudang Industrial Park; Tanjung Langsat Port; and Tanjung Langsat Industrial Complex.
・Key economic activities include electrical and electronics, chemical, and oleochemical-based industries, as
well as ports, logistics and warehousing.
E: Senai-Skudai
・Contains Senai Airport, as well as IT businesses and shopping centers.
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・Key economic activities include airport services, IT, and precision machinery.
Figure1- 14 Iskandar Malaysia and its Five Flagship Zones
Senai-Skudai
E
Eastern Gate
Development
Nusajaya
Western Gate
B
A
D
Development
C
Johor Bahru City
Source: ISKANDAR MALAYSIA
b) Infrastructure Development
Electricity
Iskandar Malaysia's development plan sets out to provide world-class electricity infrastructure by ensuring
sufficient supply, improving reliability and efficiency, and providing a high level of utility service. The plan
describes the following specific steps to achieve those goals.
・Peak electricity use in Johor in 2010 was 2,000 MW, 65% of which was used by the Iskandar region.
Combined generation capacity of TNB and IPPs in 2010 was 3,219 MW.
・In order to meet future demand, which is projected to increase from 4,410 MW in 2013 to 9,510 MW in 2025,
new transmission lines of 500 kV, 275 kV, and 132 kV and 23 new transformer stations will be developed by
2025.
・The plan aims to improve reliability, reducing average annual outage time per customer from the current 62
minutes to 20 minutes by 2015. The plan also specifies three levels of outage recovery time, and seeks to
provide recovery times of within 15 minutes in 90% of the Iskandar region, and within 5 seconds in special
areas that would constitute two to 3 % of the region.
Gas
Gas in the Iskandar region is supplied by PETRONAS and Gas Malaysia via pipelines connected to the
PETRONAS-operated PGU line. Gas Malaysia supplies areas located near the PGU line, including Pasir Gudang,
TG.Langsat, Tebrau, Tampoi, Larkin, Plentong, Senai, and Kulai. Gas Malaysia supplies gas to 135 manufacturers
in the region. The price of gas for manufacturers is the same as elsewhere in Malaysia: RM16.07/1 MMBTU.
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Figure1- 15 PGU Line (Peninsular Gas Utilization Line)
Thailand
Kerteh
Kemaman
Malay Peninsula
Kuantan
Kuala Lumpur (KLCC)
Putrajaya
Port Klang
Shah Alam
Seremban
Nilai (KLIA)
Gas fields
Gas Malaysia service area
PGU Line
Kluang
Pasir Gudang
Iskandar development
Senai
area
Singapore
Source: Tokyo Gas
Water Supply
Malaysia established the state-owned Water Asset Management Company (WAMCO) in 2006. Since then, the
company has acquired all previously existing water treatment plants and is responsible for construction of new
plants, which it leases to private operators in a concession-based system. In Johor, where Iskandar Malaysia is
located, WAMCO finished purchasing all water treatment plants in 2009. SAJ Holdings manages the region's
water supply under a concession agreement from 2000 to 2029. As of 2011, around 850,000 customers receive
water from the utility.
The table below shows water consumption in the Iskandar region in 2005. Supply was adequate to meet demand.
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Table1- 4 Water Supply in the Iskandar region (2005)
Source: Important facts and details on Nusajaya, IRDA, 2008
Water consumption in Iskandar Malaysia is projected to reach 1,418 million liters per day in 2025; the region
plans to build new treatment plants to meet the growing demand.
Table1- 5 Projection of Water Supply Demand in Iskandar Malaysia
Source: Important facts and details on Nusajaya, IRDA, 2008
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c) Related regulations and laws
Restrictions on Foreign Investment
i) Restricted sectors, prohibited sectors
Foreign equity participation in sectors of national interest (e.g., water, energy, electricity supply, broadcasting,
defense, security) is limited to 30%. Aside from such sectors, most industries are open to private firms.
ii). Restrictions on foreign equity participation
Restrictions are imposed on the proportion of foreign equity investment in private firms, with foreign investors
required to apply for licenses and permits from government agencies. However, the Malaysian government sees
the value of foreign participation in areas where the participation may contribute to economic and industrial
development, and, aside from some minor exceptions, allows 100% ownership of firms in the manufacturing,
distribution and service sectors.
In the manufacturing sector, complete foreign ownership is nearly always permitted, whether for investments in
new businesses or investments to expand or diversify existing concerns.
In non-manufacturing sectors, there have long existed quotas on equity proportions that affect both Malaysian and
foreign investors seeking to acquire shares or buy up firms, but in April 2009 the government announced plans to
liberalize the service industry, and removed the 30% Bumiputera equity requirement on 27 service sub-sectors.
iii) Minimum equity investment
In the manufacturing sector, companies valued at RM25 million or greater, or with 75 or more full-time
employees, are required to apply for a manufacturing license. Manufacturers that do not meet either of those
conditions may receive a certificate of exemption from the license requirement.
In non-manufacturing sectors, the Guidelines on Foreign Participation in the Distributive Trade Services Malaysia
(May 2010), issued by the Ministry of Domestic Trade, Co-operatives & Consumerism (MDTCC), require foreign
investors to invest a minimum of RM10 million.
iv) Land ownership by foreign firms
Foreigners and foreign firms are allowed to purchase land in Malaysia. Land is under the jurisdiction of states, so
prospective land and property owners must gain approval and register their titles at relevant state agencies.
Incentives to foreign investment
The government of Malaysia encourages foreign investment in certain sectors via tax incentives. Promoted sectors
include manufacturing, agriculture, aerospace, biotechnology, tourism, environment-related industries
(environmental conservation, energy efficiency, renewable energy use), distribution, information technology,
research and development, medical devices, vocational training, manufacturing-related services, international
procurement centers and regional distribution centers, financial services, industrial design services, and
1-21
international schooling. Businesses located in the government-designated Multimedia Super Corridor (MSC) also
qualify for incentives. The main types of incentives are as follows.
i) Pioneer Status
Companies with Pioneer Status are given an income tax exemption of 70% for 5 years, beginning the date they
start manufacturing. Dividends paid out of tax-exempt income to shareholders are also exempted from tax.
Furthermore, IDR-status companies that commence operations by 2015 are eligible for a 100% exemption on
statutory income taxes for 10 years.
ii) Investment tax allowance
As an alternative to Pioneer Status, companies may apply for investment tax allowance (ITA). Companies
approved for ITA may receive a 60% tax allowance on expenditures on qualifying plant and equipment, for a
period of 5 years from the date of the initial investment. As with Pioneer Status, IDR-status companies are eligible
for a 100% exemption on statutory income taxes for 10 years.
iii) Exemption of import duty and sales tax on equipment investments
Businesses in the manufacturing sector may apply for exemption of import duty and sales tax on machinery used
directly in manufacturing, spares and consumables, and investments to boost electricity efficiency. The import
duty exemption applies to equipment that cannot be manufactured locally, while the sales tax exemption applies to
locally procured equipment.
iv) Exemption of import duty and sales tax on raw materials
Businesses in the manufacturing sector may also apply for exemption of import duty and sales tax on imported
raw materials for use in manufacturing. The exemption applies to raw materials that are not manufactured in
Malaysia, or even if they are manufactured in the country, do not meet the business's requirements for quality and
price.
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2) Development of Nusajaya High-Tech Park
a) Overview of Development
Nusajaya, the area that hosts the Nusajaya High-Tech Park that is the focus of the Project, is designated as
Flagship B in Iskandar Malaysia. Nusajaya is located west of Johor Bahru, the capital of Johor, and 20 minutes
from Senai Airport and 15 minutes from the Malaysia-Singapore Second Link. The developer of Nusajaya is
actively seeking to attract industries including high-tech manufacturing (High Tech Park), biotech (Southern
Industrial and Logistics Cluster (SiLC), Bio-XCell), creative industries, medicine, (Medical Park, Afiat
Healthpark), education (EduCity) and tourism (Puteri Harbar, International Destination Resort). Nusajaya
encompasses an area of approximately 97.1 square kilometers.
Figure1- 16 Location of Nusajaya
Source: Important facts and details on Nusajaya, IRDA, 2008
Figure1- 17 Important sites in Nusajaya
Source: Progress February 2011–October 2012, IRDA, 2012
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The Nusajaya High-Tech Park is in the western part of Nusajaya; and it has an area of approximately 210 hectares.
The park was developed as a joint venture by UEM Sunrise, the Nusajaya region’s main property development
firm, and Ascendas, a real-estate firm established by Jurong Town Corporation of Singapore.
Nusajaya is engaged in the following efforts around industrial park development, based on the concept of
integrated, international class development, with environmentally friendly infrastructure, design, and facilities.
The developer of Nusajaya seeks to attract a range of industries such as electronics, pharmaceutical and medical
devices, food processing, precision machinery, consumer goods, logistics and warehousing, and engineering and
expects medium-sized firms to move into the park.
・High quality infrastructure
Offer high quality infrastructure to support precision engineering, electronics, light industries, green industries,
warehousing and logistics, food processing, and pharmaceutical and medical devices.
・Software solutions
Utilize support from government institutions to smooth businesses' entry into the zone by designing one-stop
public services for businesses, helping businesses to secure human resources and acquire licenses, etc.
・Service facilities
Provide manufacturers in the park with a range of amenities and supporting facilities
・Quality of life
Develop world-class rail service, F&B, and other facilities
Figure1- 18 Location of the Nusajaya High-Tech Park
Educity
Nusajaya High
Tech Park
Medini development
zone
Gerbang Nusajaya
development zone
Source: Ascendas & UEM Land Joint Venture Tech Park @ Gerbang Nusajaya Iskandar Malaysia (February 2013)
1-24
b) Tech Park Development Plan
Nusajaya High-Tech Park covers a total area of approx. 210ha and the development is planned in multiple phases
as shown below.
Figure1- 19 Nusajaya High-Tech Park Development Plan in Multiple Phases
Phase 3b
68 acres
(27.5ha)
Phase 1a & 1b
120 acres
P
Phase 3C
74 acres
(30ha)
(48.6ha)
Phase 3a
85 acres
Phase 2
165 acres
(34.4ha)
(66.8ha)
Area
Phase 1a & 1b
Phase 2
Phase 3a
Phase 3b
Phase 3c
TOTAL
acre
120.00
165.00
85.00
68.00
74.00
512.00
ha
48.56
66.77
34.40
27.52
29.95
207.20
Source: Study Team based on materials provided by Ascendas
The development schedule of the Nusajaya High-Tech Park is as follows as of November 2013:
Phase 1a & b
Phase 2
Phase 3a
Construction
Operation aimed to begin in 2015
Sep. 2015 to Sep.
March. 2017 to
schedule
～operation begins sequentially until
2017
March. 2019
March 2016
※Development schedule of Phase 3b and Phase 3c are yet to be formulated.
Source: Study Team based on materials provided by Ascendas
1-25
Ascendas is going to develop Phase 1a area, figure1-20, in advance.
Ascendas is planning to have the industrial sites in the inner areas enclosed by blue lines (40 m roads)
as the
RBF, and to construct factories in advance and sold with land. The areas outside of the blue lines (40 m roads) are
developed as the BTS, where the factory owner acquires land and constructs the factory to suit its purpose. The
floor area of each RBF will be in the range from 1,000 to 3,000 m2. It will be a two-story building with a factory
space on the first floor and an office (250-400 m2) on the second floor. The total area of RBF in Phase 1a will be
70,000 m2, in which 43 factories will be plotted. The size of each RBF is smaller than a typical assembling or
processing factory.
Figure1- 20 Development plan of Phase 1a & 1b
Build-to-suit factories
(Commercial)
Phase 1a
Phase 1b
；Ready-built factories
Source: Study Team based on materials provided by Ascendas
1-26
Development planning map of Phase 1a is as follows.
Figure1- 21 Development plan of Phase 1a
Source: Materials provided by Ascendas
1-27
c) Infrastructure Development
1.
Electricity
The table below illustrates projected demand for electricity in Nusajaya. It should be possible to generate enough
electricity to meet projected demand, and utilities plan to build new transformer stations to keep pace with
economic development. Nusajaya has also set the following two goals for reliability of electricity supply.
・Reduce average annual outage time per customer from 105 minutes in 2004 to 20 minutes.
・Reduce average number of outages /y per customer from 1.11 in 2004 to under 0.5.
Figure1- 22 Projection of electricity demand in Nusajaya
Source: Important facts and details on Nusajaya, IRDA, 2008
Gas
The Nusajaya High-Tech Park is not currently supplied with gas. The park is located about 15 km from the PGU
line. In determining whether to build a line to the park, Gas Malaysia will comprehensively consider the following
2 conditions.
・Supply amount (demand)
As a condition to building a new gas supply line, Gas Malaysia requires that it receive profits of at least 9%. If
profits fall below 9%, the customer must pay the difference. Gas Malaysia requires a minimum volume of 15,000
MMBTU/kW x 15kW = 2,250,000MMBTU, or about 90MW.
・Supply period
It will take 8 years for Gas Malaysia to reach to 9% profit level, therefore, long-term demand is a necessary
condition to building a pipeline.
1-28
Figure1- 23 PGU Line of Iskandar Malaysia
About
15km
Nusajaya
High-Tech
: PGU Line
Park
Source: Study Team based on an interview with Gas Malaysia
Water Supply
The Nusajaya High-Tech Park will be supplied with water by SAJ Holdings, as is the rest of Iskandar Malaysia.
Water supply prices of SAJ Holdings are shown in the below table.
Figure1- 24 Water prices by type of demand
Source: SAJ Holdings website
1-29
Chapter 2 Study Methodology
(1) Study contents
1) Project overview
The development project launched in 2006 in Iskandar region in southern Johor State in Malaysia covers an area
three times as big as Singapore and is expected to prime new economic growth in the country by attracting new
investment and industries.
Nusajaya in the development region is an area where comprehensive development that includes commercial and
residential districts and educational, healthcare and amusement facilities in addition to the Nusajaya High-Tech
Park is planned.
The target of the project is the Nusajaya High-Tech Park to be developed by Ascendas and UEM Sunrise in
Nusajaya and it examines the feasibility of introduction of stable and efficient power and heat supply systems
based on their integrated management by using Japanese highly efficient district cooling technologies.
Specifically, KHTP where cooling installations are introduced to all plant is used as benchmark and, as the first
step, highly efficient turbo chillers that efficiently produce the cool water with using electricity from the power
line will be introduced to the phase-1 industrial park (approx. 57 ha) that is expected to be completed in the end of
2014 to examine the cooling system that accommodate cooled water among plants. The target of the second step is
the area of remaining industrial park development (approx. 153 ha) of the Project, it will examine the introduction
of highly efficient district cooling installations by accommodating heat not only within the industrial park where
gas-turbine CHP (combined heat and power) that utilizes the gas supply (to be developed in 2015) and the steam
absorption chiller that uses the waste heat from the CHP but also the entire area including neighboring
development areas.
Furthermore, quality power supply, backup power sources, effective use of waste heat, and installation of
energy-saving installations as well as proper operation and maintenance and human resources development for it
will be combined as packaged energy infrastructure service to establish an independent business model.
It will also examine the use of Research and Development (R&D) facilities of plants and companies in the
industrial park as human resources development center through educational and research exchange with
neighboring science and research cities.
2) Study Purpose
Stable, efficient and quality energy infrastructure development will likely help secure industrial competitiveness
necessary for further economic growth and encourage new investment from overseas in Iskandar development that
serves as the driving force behind it. It is also important to develop human resources for proper operation and
maintenance of the infrastructure system and it is essential to work on both sides as a pair.
2-1
Similarly, key to the success of the industrial park is promptly securing companies that come there. For this,
strategic promotion to attract them by identifying the target industrial sectors and development of infrastructure
and human resources to encourage their entry are needed.
The KHTP that is developed with assistance from the Ministry of International Trade and Industry and JICA of
Japan and cooperation between Japan and Malaysia serves as a success case. It’s been 20 years since its
development and more than 30 global companies and many Japanese companies are located there.
The project approach of identifying target industries to successfully bring them in is very effective and the
knowledge to be gained through the analysis of the factors will be used in the study.
The purpose of the study is to examine development of stable and efficient energy infrastructure and human
resources for its maintenance from technological, environmental and social, and economic and financial
perspectives based on proper demand forecast.
3) Study Contents
Malaysian overall master plans that include economic and industrial policies, national land development policies,
energy and environmental policies (current energy use and environmental impact and their future forecast, energy
and environmental policies and overview of related projects and execution structure, etc.) and such separate
concerned matters as infrastructure development plans of Iskandar development and Nusajaya High-Tech Park
and their current status, legal system and other concerned regulations, and various preferential treatment will be
examined.
The target industries that include automotive electronics, biomedical, halal and other food processing, visual
contents and data center will be analyzed based on the comparative analysis with Thailand, Indonesia, China and
other neighboring countries and analysis of Japanese industrial trend to forecast demand for companies that may
be situated in the industrial park and future energy demand.
Furthermore, development of engineers and technicians to secure human resources for maintenance of energy
facilities as well as researchers who connect industry and science in view of collaboration with universities and
poly-tech centers will be also examined.
Development of infrastructure and human resources, which includes optimal system specifications and
technological feasibility and framework of human resources development, as efforts to attract industries will be
examined based on the results of the study above and feasibility of an independent business model that utilizes the
system will be also examined based on the economic and financial analysis and necessary environmental and
social impacts.
2-2
(2) Study methodology and structure
1) Methodology
Bibliographical survey and field study were conducted on the items below and feasibility was examined based on
technological study and economic and financial analysis.
【Main study items】
1. Overview of economic and industrial policies, national land development policies and energy and
environmental policies of Malaysia
(1) Overview of economic and industrial policies
(2) Overview of national land development policies (status of Iskandar development)
(3) Overview of energy and environmental policies
① Current energy use and its future forecast, energy policies of electricity, gas, etc.: and execution
structure and overview of energy projects
② Environmental impact and future forecast and environmental policies
2. Overview of Iskandar development and Nusajaya High-Tech Park development
(1) Development plan and current status of entire development area and infrastructure, legal system and other
related regulations, various preferential treatment, and future challenges, etc.
(2) Plan and current status of Nusajaya High-Tech Park development and its infrastructure development,
legal system and other related regulations, various preferential treatment, and future challenges, etc.
3. Target industry analysis and examination of measures to attract industry to the Nusajaya High-Tech Park
(1) Factor analysis of success of KHTP
(2) Trend of the targeting industries in Malaysia and other Asian countries
(3) Analysis of industrial trend in Japan
(4) Examination of target industries (automotive electronics, biomedical, halal and other food processing,
visual contents, data center, etc.)
(5) Energy demand forecast based on demand forecast of companies that may come to the industrial park
(6) Infrastructure and human resources development as measures to attract industries
4. Possibilities of popularization of technologies in Nusajaya High-Tech Park
(1) Status of infrastructure and introduction system of KHTP to be used as benchmark
(2) Cooling system of accommodating cooled water among plants by introducing highly efficient turbo
chillers
(3) Highly efficient district cooling installations with steam absorption chiller that uses CHP and waste heat
(steam) from the CHP
(4) Extensive district cooling system that accommodate heat extensively including the Nusajaya High-Tech
Park and neighboring development areas
(5) Total energy service system that includes heat supply, cooling system, quality power supply and
energy-saving management
5. Environmental and social impacts of introduction of system
6. Feasibility of total energy service operation
2-3
(1) Financial and economic feasibility
(2) Project implementation schedule
(3) Technological advantages of Japanese companies
(4) Forecast of Project financing
7. Action plan and challenges for Project implementation
2) Structure
The figure below shows the team structure of the study.
Figure2- 1 Study Team Structure
[Project manager]
Manager, Urban Development and
Transportation dept.,
Overseas Division, KK
[Technology]
Manager, ICT group, Transport
Planning & Communications
Technology dept,
Global Consulting H.Q., OG
[Advisor]
General Manager, Energy and
Environment dept.,
Business Development Division, KK
[Cooperative firms]
Mitsui & Co., Ltd.
Tokyo Electric Power Services Co.,
Ltd.
Osaka Gas Co., Ltd.
InterAct Inc.
Kitakyushu City
[Industrial analysis/demand forecast]
Researcher, Urban Development and
Transportation dept.,
Overseas Division, KK
[Facility planning (1)]
Senior
Manager,
Smart
Factory
technology
dept.,
Industrial
Infrastructure Business Group, FE
[Facility planning (2)]
Manager, general smart communication
technology dept., Power and Social
Infrastructure Business Group, FE
[Energy-saving]
Manager, Energy and Environment dept.,
Business Development Division, KK
[Economic and financial analysis]
Manager, PFI/PPP management
dept.,
Business Development Division,
KK
[Project scheme]
Engineer,
Comprehensive
Project
Planning dept.,
Project Management Division, KK
[Legal system]
Researcher, Urban Development and
Transportation dept.,
Overseas Division, KK
[Measure study]
Researcher, Operation dept.,
Overseas Division, KK
[Environmental and social analysis]
Engineer, ICT group, Transport
Planning & Communications
Technology dept,
Global Consulting H.Q., OG
Notes)
KK: Pacific Consultants Co., Ltd.
FE: Fuji Electric Co., Ltd.
OC: Oriental Consultants Co., Ltd.
Source: Study Team
2-4
[Financing plan/financial analysis]
Researcher, PFI/PPP management dept.,
Business Development Division, KK
The figure below shows the structure of cooperation of Malaysia.
Figure2- 2 Cooperation Structure of Malaysia
Iskandar Regional Development Authority
(IRDA)
VP Strategic Communications
Ascendas Pte Ltd
UEM Sunrise Berhad
South East Asia
Development
Chief Executive Officer
Project Director
Source: Study Team
2-5
(3) Study schedule
1) Overall study schedule
The figure below shows the overall study schedule.
Figure2- 3 Overall study Schedule
Event
2013
Sep
Oct
2014
Nov
Dec
Jan
Feb
(Domestic work)
①Preparation
②Domestic work
(Field survey)
①1st field survey
29 Sep.~8 Oct. (10days)
②2nd field survey
10 Dec.~23 Dec. (14days)
19 Jan.~26 Jan. (8days)
③3rd field survey
(Seminar etc)
①Interim report seminar
▼
②Draft report submission
▼
③Final report seminar
▼
④Final report submission
▼
Source: Study Team
2) Field study
A total of 3 field studies were implemented as mentioned above. Interviewees include government, other related
organizations and private sectors of both countries.
2-6
Chapter 3 Justification, Objectives and Technical
Feasibility of the Project
(1) Background and Necessity of the Project
1) Economic growth and energy use efficiency improvement
Malaysia grew driven by the exportation of primary commodities and then succeeded in export-oriented
industrialization in the 1990s, which led to its remarkable development in Southeast Asia to grow from a
low-income nation to a more developed country. In 1991, it formulated Vision 2020 that aims to become a
member of developed countries in 30 years and promoted development of such infrastructure as electricity and
water supply including industrial park development and preferential tax treatment and made aggressive efforts to
attract foreign capital.
In 1987, the Japanese government, Ministry of International Trade and Industry (current Ministry of Economy,
Trade and Industry) announced the New Aid Plan to promote concerted economic cooperation (trade, investment
and economic cooperation) and assisted industrial sophistication through such cooperation as the compilation of
industrial sector development promotion plan and KHTP development plan by the ministry and JICA.
Recently, the 10th Malaysia Plan (2011-2015) was formulated for further economic growth. For its realization,
efforts are needed to improve the quality of energy infrastructure, secure maintenance human resources, and
ensure industrial competitiveness through cost reduction by energy use efficiency improvement together with
deregulation for attracting new investment from overseas and domestic industrial human resources development
2) Iskandar development plan and energy infrastructure development
The development area in the Iskandar region of southern Johor State is 2,217 km2, which is three times the land of
neighboring Singapore. In addition to the Nusajaya High-Tech Park, comprehensive development that includes
finance, administration, education, healthcare, housing and amusement is underway.
The regional GDP is expected to expand 8 % annually. From 2006 to 2025, the population is projected to increase
from 1.6 million to 3 million, with GDP per capita going from approximately RM 49,000 (USD14,790) to RM
103,000 (USD31,100). As announced by Iskandar Regional Development Authority (IRDA) co-chairman and
Johor Menteri Besar Datuk Seri Mohamed Khaled Nordin, cumulative investment figures from 2006 through
October 2013 have reached RM 129.42 billion. He says they will attract RM 20 to 21 billion in annual investment
towards achieving a cumulative goal of RM 383 billion by 2025.
Notably, RM 49.31 billion of this is foreign investment. By industry, manufacturing received the most investment
at RM 45.68 billion, while government infrastructural development received RM 12.64 billion.
From this, we see that the Iskandar Development Project, anticipated to be the catalyst to further spur growth in
the Malaysian economy, is making steady progress. Manufacturing and other core industries are expected to
expand, and further investment and companies will likely be attracted for stable, efficient energy and other
infrastructural development critical to these industries.
3-1
3) More efficient energy use in high-tech industrial parks
Iskandar Malaysia is divided into 5 flagship zones, A to E. Each of these zones has its own distinctive
development underway, with major logistical infrastructure in Senai Airport, Pasir Gudang Port, Tanjung Pelepas
Port, Tanjung Langsat Port, the Johor-Singapore Causeway, the Malaysia-Singapore Second Link and Johor
Bahru Inner Ring Road.
Each flagship zone also has various investment incentives through free trade zones, tax exemptions and
deregulations, with each using its characteristics to expand and newly establish technology and industrial parks.
Flagship B in particular is conveniently located. Called Nusajaya, this 97 km2 zone has access to Tanjung Pelepas
Port in the west and Senai Airport to the north, in addition to laying claim to the Second Link and Inner Ring
Road. This access has attracted industries and development of industrial parks such as Nusajaya SiLC, Bio-XCell
and other tech parks.
The developer of Nusajaya High-Tech Park is attracting electronics, pharmaceutical and medical devices, food,
precision machinery, logistics and warehousing, and other industries. Not limiting themselves to the typical
electrical and electronics industry,the developer of these park is hoped to attract value-added industries such as
automotive electronics and biomedical, as well as new sectors such as food processing for halal and other
specialty foods and visual contents.
Further, there is some spill-over effect from neighboring Singapore, which requires low cost land, materials,
energy supply and human resources given its geographical and demographic constraints. Other than the
aforementioned industries, this location is thus also expected to be used for large financial sector data centers, call
centers and business process outsourcing (BPO) facilities providing outsourcing for back office operations.
To fulfill these functions, the industrial parks will require a quality power supply, backup power, effective means
of using waste heat and efficient cooling systems. They will also require quality energy infrastructural services,
with proper operation and maintenance, as well as the manpower needed for such services.
4) Assistance for entry of Japanese companies through infrastructure and human resources development
More than 70 Japanese companies are located in industrial parks in Johor State where Iskandar Malaysia is
situated. More than 90 % of companies that have entered into Malaysia have interest in investment in Iskandar,
according to NNA study of August 2012.
Japanese companies have more and more interest in Iskandar development and there are such symbolic projects as
opening of a major shopping center and an amusement park featuring a popular character. Furthermore, in June
2013, one of the biggest Japanese trading company participated in eco-friendly city development in Medini
development.
3-2
Some data also reveals that Japanese companies that entered into Malaysia and Singapore are most interested in
manufacturing Iskandar region, which raises expectation for entry of automotive electronics biomedical, halal and
other food processing and visual contents with growing demand. (See Table 3-1)
Meanwhile, such matters as lagged infrastructure development that includes energy and shortage of human
resources for maintenance are pointed out as concerns and the government and private sector are expected to
tackle the issues urgently concertedly. (See Table 3-2)
Figure 3- 1 Expectations for Iskandar development
Source: NNA study in August, 2012
Figure 3- 2 Concerns in Iskandar development
Source: NNA study in August, 2012
5) Comparative review with other options
Both supply and demand side initiatives are essential to making energy use more efficient. For the supply side,
making power plants more efficient or using renewable energy are options. This Project, however, will focus on
3-3
demand side initiatives. It will promote installation of energy-efficient equipment, proper energy management and
utilization of waste heat and other untapped energies.
Breaking down energy consumption by sector for Malaysia in 2007, industry was highest at 44 %, followed by
transport at 36 % and residential, commercial and other sectors at 20 %. (APEC Energy Overview) This Project
will focus on upgrading energy efficiency by the industrial sector in industrial parks, the most important group in
this case. The results will subsequently be spread throughout the country to maximize effect and help to ease
domestic energy demands.
3-4
(2) More Efficient, Rational Energy Use
Both electric power and cold energy should be considered in discussions of how to make energy use more
efficient and rational in Malaysia, and more specifically the Nusajaya district in Iskandar. Electric power is
supplied to the district by TNB, the Malaysian state-owned power utility company. Cold energy is independently
produced by district consumers. Cold energy is produced from electric power, natural gas, heavy oil or coal.
Nusajaya demand for cold energy generally translates to cold air demand given the tropical climate. This study
focuses on energy efficiency for cold air production, evaluating feasibility and project viability.
With large, central air conditioning systems being the norm, there is room for improvement in terms of energy
efficiency. Central air conditioning is also used in large commercial establishments and urban development in
Japan. In Japan, developers are taking another look at CHP with the goal of making more effective use of primary
energy. CHP uses natural gas and petroleum-based fuels as primary energy to supply electric power, steam and
cold air.
This study will investigate the effect on both consumers and businesses of supplying Nusajaya High-Tech Park
with energy-efficient cold air.
Commercial air conditioning equipment can be divided into single room and central systems. Within single room
systems, there are single unit packaged air conditioning systems for offices and multiple unit systems. Within
central systems, there are turbo air refrigerators, absorption refrigerators and chillers. Additionally, central
systems have been developed into CHP systems to supply heat and electric power.
Individual room cooling systems are suited to air conditioning for smaller businesses. They can be installed in
offices and plant facilities as needed. Their energy source is electric power.
Central systems are suited to air conditioning for larger applications. These systems are planned for installation in
the plant design phase. Generally, plants with larger cooling needs will use central air conditioning systems. Their
energy source is electric power or steam (thermal).
CHP systems generally use natural gas as their primary energy, making a continuous supply of natural gas a
requirement for combined heat and power.
In terms of energy efficiency, CHP is most efficient, followed by central air conditioning and finally individual air
conditioning systems.
In terms of handling fluctuations in demand, of course, individual air conditioning systems are the more rational
investment. They can be incrementally installed as needed to fill cold air demands.
3-5
In terms of rationally handling fluctuations in demand, individual air conditioning systems are most efficient,
followed by central air conditioning and finally CHP systems.
Thus, energy efficiency is relative to rational investment in demand changes. Recently, more and more plants are
foregoing installation of commercial air conditioning systems and relying on on-site air conditioning services,
receiving their cold air from air conditioning outsourcers.
Businesses in Malaysia are also making efficient use of overnight power to provide district cooling services as a
means of increasing energy efficiency. These cold air supply services make things more efficient by centralizing
air conditioning and installing air conditioning units in step with the demands of specific areas and commercial
facilities. According to our calculation and interview surveys to the companies which have enjoyed the district
cooling services in Malaysia, the district cooling system reduces electricity cost 15% less than the individual air
conditioning system. The district cooling services which we interviewed focuses on production and sales of cool
air with using nighttime electric power and thermal storage tank. If production and sales of cool air with using
CHP with gas has been started, energy efficiency will increase more. We calculated and estimated that the
companies which exploit the cool air service may reduce the electricity cost 20% reasonable than the individual
cooling system. (See Table 3-3)
The key to implementing district cooling services as a business is ensuring constant demand in the target region,
24 hours a day, 365 days a year. A typical cooling system and the comparison are shown below.
3-6
Figure 3-3 typical cooling system
Conventional Cooling System
Method
Cooing System
Fan coil unit
Outdoor unit
Factory A
Multi-unit
system
【Installation】
Cooing tower
Fan coil unit
Cold water
chiller
Factory A
Chiller
system
（Cold water）
【Installation】
Recent Technology Cooling System
Method
Cooing System
Cooing
tower
Fan coil unit
【Installation】
Factory A
Factory B Factory C
Turbo chiller
Turbo chiller
Energy control
center
Bulk receiving of electricity
【Installation】
Power Sale to
Tenaga and Factory
Combined
Heat and
Power +
Absorption
chiller
Fan coil unit
Power Line
Factory A
Factory B
Factory C
Absorption
chiller
Cooing tower
Power
Sale
ＣＨＰ
Source: Study Team
3-7
Energy
control
center
Table 3-1 Comparison among typical air conditioning systems
Power
Heat Supply
Method
Life Cycle
Cost of the
Cooling
System
(Factory)
Ownership
of the
Facilities
(Factory)
Type
Method
Energy
Efficiency of
the Facilities
(COP)
Individual
Cooling System
Multi-Unit
System
3.0
Electric Power
Cool Air
100%
Need
Central Cooling
System
Turbo Chiller
6.0
Electric Power
Cool Water
85%
No Need
CHP
Cogeneration +
Absorption
Refrigerating
Chiller
－
Gas
Steam
80%
No Need
Source: Study Team
3-8
(3) Various Considerations Required to Decide Project Details
1) Nusajaya High-Tech Park target industry analysis and measures to attract industry
a) Success factor analysis of Kulim Hi-Tech Park (KHTP)
KHTP finds itself in the state of Kedah, a prominent grain-producing region. Kedah is located north of Penang,
whose capital of Georgetown is the second largest city in Malaysia. Kedah produces one third of Malaysian rice,
also producing plenty rubber, palm oil and tobacco. It is also known as the home of Malaysia's first Prime
Minister Tunku Abdul Rahman and more recently Mahathir bin Mohamad. Kedah is dwarfed by Penang in
numbers with only 7 industrial parks, but has had these parks for 20 to 30 years. Malaysia's first high-tech park,
KHTP, lies at the core of this group of Kedah parks with a complex of motorcycle parts and foreign electronics
manufacturers. For motorcycle parts, it has Malaysian manufacturer Modenas in addition to Japanese Honda and
Suzuki outfits.
Figure3-4 Positional relation of KHTP
Source: KTPC website
Located 30 km from Penang Island and 106 km from the state capital of Alos Setar, KHTP has 1,450 ha in total
development area. Of this, the full 250 ha of Phase I was sold, along with nearly all 226 ha of Phase II. The 175 ha
of Phase III are steadily attracting prospects, and construction on Phase IV is currently being planned. Since 1992,
more than 30 multinational corporations have entered the park, most of them from the electrical and electronic
3-9
sector. Other industries include fabricated metal products, chemicals and chemical products, machinery and
equipment, and petroleum products. Park residents include western companies such as Intel and First Solar, as
well as Japanese companies such as Fuji Electric and Panasonic.
Japan participated in drafting the master plan for KHTP construction. Project history is as follows:
・ In the 6th Malaysia Plan (1991-1995), the Malaysian government plans on training for value-added industries
and attracting high-tech industries.
・ Based on the New Aid Plan announced by MITI in 1987, a three-year study for the Malaysia Industrial
Development Plan is conducted from 1987 to 1990 with technical cooperation from MITI, JICA and JETRO.
・ In the above development plan, Malaysia expresses a desire to build a high-tech industrial park in Kulim,
Kedah and requests cooperation from the Japanese government.
・ Through the MITI study scheme, a United Nations Industrial Development Organization (UNIDO) study
team submits a concept plan report in 1991.
・ In 1992, a JICA study team revises the concept plan and drafts a basic plan for the industrial zone and
baseline design with MITI support.
・ Also with MITI support, JICA sends a study team to build a master plan for the overall project for the tech
park complex with industrial, research and development, housing, urban and amenities zones.
The master plan gave the following recommendations for attracting companies. First, the target industries for
Phase I were high-tech electronics industries and their supporting industries and manufacturing. High-tech
electronics here included semiconductors, computer-related equipment, video equipment, LCD displays,
electronic components, audio equipment and color TV CRTs, and supporting industries and manufacturing included
bearings, moldings, plastic processing machinery, plating and heat treatment, metal machining tools and metal
stamping.
The plan also indicated that attractive investment incentives such as preferential tax treatment, research and
development, and training were essential to attracting tenant companies. It recommended establishing a selection
committee to create a list of target companies and dispatch a foreign investment promotion mission, a
development promotion organization through a public-private partnership between the Kedah Regional
Development Authority and private developers, and a technical development center to handle education and
training of member company employees.
In addition, the plan said that the KHTP would need to attract personnel with high-level education and good
engineers to be successful. To make it more attractive as an industrial park, the plan suggested more than just an
industrial development zone. It recommended a development complex with a luxury residential area, medical
facilities, a university, polytechnic school or other industrial personnel training facilities, a research and
development zone, police, fire department and other community infrastructure, and golf courses and other leisure
facilities.
3-10
Based on the advice of the master plan, 12 target industries were selected, wafers, semiconductors, solar
cells/clean energy, high-tech electronics, medical and scientific instruments, process control and automation
equipment, optical equipment, optoelectronics, biotechnology, high-tech materials, R&D and new technologies.
This has since been expanded to include multimedia, space and other industries through the Multimedia Super
Corridor (MSC) Malaysia Cybercity certification.
The managing company for the park, Kulim Technology Park Corporation (KTPC), is a private entity with federal
and state government officials on its board. KTPC works on the national level to attract companies to the park,
with a focus on MIDA and state government. With government backing, KTPC grants corporate tax exemption
and 60 % reduced investment tax for 5 years, flexible employment for foreign skilled workers, foreign exchange
accounts and other investment incentives to companies granted pioneer status. Land prices are also controlled with
MIDA support and have become more stable than when development began.
The KHTP grounds consist of six zones, industry, R&D and human resource development, amenities, residential
and commercial, urban functions, and schools and education. Residential areas and a hospital are situated around
the golf course located in the middle of the park, along with police and fire stations and a special area government
office. To ensure higher quality, more stable electric power for the area, Malaysia’s only power generating /
transmitting service company (Independent Power Supply: IPS) other than TNB was established, supplying power
with gas co-generation.
In terms of securing human resources, KTPC has various ways of supplying quality personnel for tenant
companies. It attracts candidates from polytechnic schools and engineering departments in region universities, and
it also supports education at the KTPC-supported KHTP Techno Center and the Kulim branch of the Kedah
Industrial Skills and Management Development Center (KISMEC).
As described above, soundly acting upon the recommendations included in the master plan has made KHTP a
model tech park for all of Asia, not just Malaysia. It has successfully attracted leading global companies and
ensured long-term continuous and stable operation. With many companies still inquiring, there are plans
underway to expand the industrial zone.
Currently, JICA is helping to develop an industrial development strategy in Zambia utilizing its experiences in
Asia. It is pushing initiatives to spread the successes in Malaysia across the globe, currently conducting a
feasibility study in collaboration with KHTP on complex special economic zones (industrial parks) as one of the
12 investment promotions specified in the strategy.
3-11
b) Trend of the targeting industries in Malaysia and other Asian countries
1.
Malaysia’s recent trends in industrial clusters
<Foreign direct investments in manufacturing>
・ Malaysia has formed a cluster base for the electronics industry. Its government has offers preferential tax
treatment to the manufacturing industries, including the electrical and electronics industry, as part of its
foreign investment policy. In 2012, the electrical and electronics industry scored the highest number of
foreign direct investments with 112, or 13.9 % of all FDIs. It was second in terms of FDI amounts.
・ Still, FDI in the electrical and electronics industry are down 82.6 % from 2011. Looking at the number of
FDIs by industry, investments are diversifying, with more investments going to transport equipment at 10.6 %,
machinery manufacturing at 10.4 %, chemicals and chemical manufacturing at 9.1 %, and food manufacturing
at 8.3 %.
・ Malaysian industrial clusters are changing. Investment in Malaysia is in the process of converting from
low-value-added industries, such as assembly and labor-intensive industries, to high value-added industries
with promise for new growth.
<Work environment trends>
・ Malaysia has already attained the income levels of a more developed country GDP per capita in 2012 reached
$10,304, putting it above $10,000 for the first time. Thus, wage levels are rising. Worker’s wages are
relatively higher than in other ASEAN countries.
<Investments in solar power>
・ As described above regarding changes in Malaysia industrial clusters and work environments, Malaysia is
aiming for new clusters in high value-added product areas. One new industrial cluster making progress is the
renewable energy sector, including solar panels. The Malaysian government is developing policies to attract
companies, introducing time-limited incentives such as corporate tax exemptions. With Japanese, American
and European companies establishing production bases one after another, the cluster base is taking form.
Once investment case is Panasonic, who has operated a partial production plant for solar cells in northern
Kedah since December 2012.
3-12
Table3-2 Number of FDIs to manufacturing in Malaysia (left)
and FDI amounts to manufacturing in Malaysia (right) (based on approved FDI)
Chart 13 - Number of Cases of Direct Foreign Investment in the Manufacturing Sector in Malaysia (Based on Approval) (Units: Cases, %)
2011
2012
2010
Chart 14 - Amount of Direct Foreign Investment in the Manufacturing Sector in Malaysia (Based on Approval) (Units: Million Ringgit, %)
2011
2012
2010
Cases
Cases
Growth rate
Electric & electronic products
85
129
51.8
Transport machinery
34
110
223.5
Machinery production
47
74
57.4
Chemicals & chemical derivatives
46
69
50
Food production
33
64
93.9
Metal products
26
63
142.3
Plastic products
37
55
48.6
Furniture & related products
12
60
400
Base metal products
22
38
72.7
Wood & wood products
13
45
246.2
Textiles & textile products
16
14
-12.5
Paper, printing, & publishing
10
37
270
Non-metallic mineral products
18
25
38.9
Rubber products
20
19
-5
Scientific & measuring devices
26
11
-57.7
Petroleum & petrochemicals
9
15
66.7
Other
9
14
55.6
Beverage & tobacco
2
4
100
Leather & leather products
Total
465
846
81.9
(Note) Figures may not sum to total due to rounding.
(Source) Prepared from Malaysian Investment Development Authority (MIDA)
Chemicals & chemical derivatives
1735.6
3220.6
Electric & electronic products
11842.3
18703.7
Base metal products
3595.5
3587.4
Transport machinery
745.4
1065.3
Petroleum & petrochemicals
1089.4
968.5
Machinery production
1019.4
251.4
Rubber products
172.7
91.2
Food production
1215.5
2567.9
Plastic products
255.8
271
Metal products
1524.3
804.7
Paper, printing, & publishing
70
318.7
Textiles & textile products
500.5
236.1
Non-metallic mineral products
2237.4
1464
Beverage & tobacco
2.1
25.4
Scientific & measuring devices
2179.8
356.4
Wood & wood products
49.3
83.4
Furniture & related products
241.2
54.6
Other
580.5
77.7
Leather & leather products
Total
29056.7
34149
(Note) Figures may not sum to total due to rounding.
(Source) Prepared from Malaysian Investment Development Authority (MIDA)
Cases
Growth rate
112
85
84
73
67
61
57
53
37
34
31
27
21
20
16
14
5
4
3
804
-13.2
-22.7
13.5
5.8
4.7
-3.2
3.6
-11.7
-2.6
-24.4
121.4
-27
-16
5.3
45.5
-6.7
-64.3
0
-5
%
Amount
13.9
10.6
10.4
9.1
8.3
7.6
7.1
6.6
4.6
4.2
3.9
3.4
2.6
2.5
2
1.7
0.6
0.5
0.4
100
Source: MIDA
3-13
Amount
Growth rate
85.6
57.9
-0.2
43.1
-11.1
-75.6
-47.2
111.3
5.9
-47.2
355.3
-52.8
-34.6
1109.5
-83.6
69.2
-77.4
-86.6
17.5
Amount
5671.2
3252
1934
1848.7
1376.8
1243.1
1218.6
1118
707.3
605.4
597.4
328
310
220.6
177.1
149.8
81.4
5.7
0.3
20845.4
Growth rate
76.1
-82.6
-46.1
73.4
42.2
394.5
1236.2
-56.5
161
-24.8
87.4
38.9
-78.8
768.5
-50.3
79.6
49.1
-92.7
-39
%
27.2
15.6
9.3
8.9
6.6
6
5.8
5.4
3.4
2.9
2.9
1.6
1.5
1.1
0.8
0.7
0.4
0
0
100
2.
Target industry trends in recent years
[Automotive electronics]
＜Significant trends in the next-generation automobile industry＞
・ Looking at the global automotive market, North America, Europe and Japan accounted for most of the market
until the mid-1980s, however, by 2008 emerging markets had come to account for nearly half, at 46 %. Due to
this type of expanding demand in emerging countries, in more and more cases companies are finding the need
to respond by developing cars optimized to regional markets.
・ Meanwhile in Japan and Europe where there is high environmental awareness, user preference for
fuel-economic small vehicles is growing. The scale of the world market for automotive electronics is expected
to reach $314.4 trillion dollars by 2020; this is equivalent to an annual average growth rate of 7.3% between
2012 and 2020.
・ In Japan, a major issue for the automotive industry in terms of next-generation automobile strategies today in
the 2010’s, is striking a balance between promoting next-generation vehicles and maintaining global
competitiveness. However, considering that income levels in emerging economies will rise in the future and
motorization will continue to progress, there is a good possibility that these fuel-efficient cars may become a
trump card for industry, seeing that automakers should continue to gain market share in emerging markets.
<Target industry trends in Asian countries>
・ In Asia, in addition to Bangkok and China, trends to set up new production bases in Jakarta are still going
strong. Automobile production in Indonesia and Thailand (in 2012) totaled 3.52 million units, accounting for
83.0% of the total production of ASEAN regions. This showed that automotive industry agglomerations in
both countries are progressing compared with other countries.
・ This was also against the backdrop of time-limited programs which raised prominence in both countries, such
as the first-car program introduced in Thailand in December of 2012 and the low price eco-car incentives
introduced in Indonesia in May of 2013, however, the breadth of the automotive industry is on the increase.
・ While the large-scale investments, such as new plants, stand out in Indonesia and Thailand, other
manufacturers have also been making inroads. These include automotive research and development facilities
in China, semiconductor and measurement equipment manufacturers created based on increased demand in
the automotive industry in Malaysia.
3-14
Table3-3 Sales and Production of vehicles in major Asian cities
Chart 7 - Automobile Production and Sales in Major Asian Countries (Unit: 10,000 automobiles, %)
2006
2012
Production/
Production/
Domestic
Production
domestic Production
domestic
sales
sales
sales
Japan
1148
574
200.1
994
537
185.2
China
719
722
99.6
1927
1931
99.8
S. Korea
384
116
329.8
456
141
323.3
ASEAN
208
163
127.3
424
342
124
Thailand
119
68
174.2
245
144
170.8
Indonesia
30
32
92.8
107
112
96.5
Malaysia
50
49
102.5
57
63
90.7
Philippines
5.6
9.9
56.3
7.5
15.7
48.1
Vietnam
3.5
4.1
85.3
7.4
8
91.5
India
196
175
111.8
418
359
116.5
Pakistan
19
19
103
16
16
100
(Source) Prepared from CEIC, ASEAN Automotive Federation, Malaysia Automotive Association,
and OICA
Domestic
sales
Source: “New industrial cluster trends in Asia”, JETRO
Figure3-5 Worldwide forecasts for hybrid vehicles and system structure
(10,000 cars)
Market Projections and System Composition of Hybrid
Cars in the World
Other
India
China
Years of hardship
Japan
Accumulation of
manufacturers’ plan
EU
US
Year
Note: Cars with ISS (idle stop system) are not included in projections.
Source: "The auto industry since 2010," Nomura Research Institute
3-15
[Bio-Medical]
<Significant trends in the pharmaceutical industry>
・ The scale of the worldwide pharmaceutical industry expanded to 86 trillion yen in 2010, and has been
growing steadily at about 6% annually. Looking at the growth rate of the pharmaceutical industry by region,
significantly higher growth rate is anticipated for emerging regions such as Asia and Africa due to the growth
of population and incomes.
・ Looking at the trend of the world's leading companies shows that amidst the increasing difficulties of creating
new drugs, an increasing number of companies have been diversifying revenue sources by distributing
business resources to marketed drugs and generic drugs while being mindful of their own product pipeline.
・ The markets of Japan, the U.S. and Europe are fully mature due to the global expansion of pharmaceutical
companies. And while they continue to compete over market share, markets in Brazil, Russia, India, China
and South Africa (BRICS) countries and emerging economies in Asia have become new targets. Amidst this,
some western companies have already been aggressively developing sales offices and development bases in
emerging countries.
・ In addition, in emerging economies in Asia such as China, Korea, and Singapore, companies have been
creating bio-clusters and the like in their own countries as research and development facilities. Also, moves to
continue supporting the pharmaceutical industry and drug development as a matter of national policy have
been gathering momentum.
<Target industry trends in Asian countries>
・ In Asia, bio-medical industrial agglomerations built up by Singapore are becoming more prominent. Behind
this is the Singapore government, which has been proactively fostering these measures as one of the pillars to
drive the country's economy since 2000. They have provided "Biopolis" as a bio research base, instituted a
variety of tax incentives, and operate 11 multinational pharmaceutical and biotechnology-related companies
in 25 manufacturing facilities.
・ A pharmaceutical company, Astellas, has been taking advantage of the rich resources of Malaysia to carry out
joint research and drug discovery with Malaysian state-owned enterprise SIRIM, and others.
・ In addition, according to the Asia Pacific Ocean Region Pharmaceutical R & D Fact-book, India is the
number one developer of new drugs, compared with other generic companies in the world in most recent
years, displaying remarkable growth.
・ Not only is the Asia-Pacific region an attractive market for pharmaceutical manufacturers with its large
potential patient population, but the number of patients that register to clinical trials is in the process of
shifting from the United States to the Asia-Pacific region.
・ Expansion into Thailand and Malaysia can be seen by the establishment of medical facilities such as a Cancer
Institute and a Medical Center partnered with China, Japan and Singapore,
3-16
Figure3-6 Changes in the scale of the global pharmaceutical industry (left) and Growth rates by region (right)
(Trillion yen)
Chart 1-1 Changes in the Size of Pharmaceutical
Industry in the World
Chart 1-2 Growth Rate in Regions
World total
107 trillion yen
World total
86 trillion yen
Region
Latin America
2006-2010 annual
average growth rate
2011-2015 projected
annual average growth
rate
North America
Europe
World total
67 trillion yen
Asia, Africa,
Australia
Japan
Asia,
Africa,
Australia
Europe
Japan
North America
Latin America
World total
Source: Development Bank of Japan, "Current state of the drug industry, focused on drug discovery and towards
development of bio-ventures "
[Visual contents]
<Major trends in visual contents industries>
・ The U.S., Europe, and Japan will still account for 80% of the global content market in 2020. Meanwhile, the
scale of the market in Asia is continuing at a high growth rate of 7% per year, surpassing Japan. In particular,
the future content market size is expected grow in China, India, and Russia, while Southeast Asia, France and
the United States are showing higher receptivity to Japanese content
<Target industry trends in Asian countries>
・ In October of 2013, Malaysia expressed to the world its intention to function as a hub for the Asian visual
contents industry. By 2020 the industry will create a GDP of 1 billion dollars with an added goal of expanding
employment to 10,000 people. Also, the government is providing incentives in an effort to attract video
content companies from around the world.
・ A high level of activity is being seen, including: the opening of a new representative office by U.S. Google, a
series of licensing business expansions by the likes of Mitsui & Co., Ltd. and Itochu Corporation in
Indonesia; the signing of a five-year deal between Fox International Channel and a local television provider in
Thailand; and Walt Disney's decision to establish a JV company in China.
3-17
Figure3-7 Worldwide content industry forecast
Based on final consumption amount (1)
Total of all countries analyzed
Total of Europe (2)
Total of Asia (3)
(1) Income from consumers except for the following cases: If advertising is the source of income, the amount of payment
from advertising agencies. Market size for TV and anime programs is calculated as the amount of secondary use program
sales, that for character goods the licensing income of right holders.
(2) France, Germany, Spain, Italy, UK, and Russia. (3) China, South Korea, India, Indonesia, Thailand, Singapore, and
Hong Kong.
Source: Global Entertainment and Media Outlook (PwC), various other trade materials, analysis by A. T. Kearney
Anime & character
Music
TV
Game
Movie
Publication
Source: Ministry of Economy, Trade and Industry, "Cool Japan Festival 2010"
[Food processing (halal food)]
<Significant trends in the halal food industry>
・ The halal food industry is a massive business with a market of 1.9 billion people, which accounts for about
one-quarter of the world's population. The market scale has been speculated to be 2.1 trillion dollars, with 580
billion dollars in food alone. In the U.S. and Europe, big-box supermarkets are already competing in the halal
food business, including McDonald's, Carrefour, and Tesco.
・ Companies expanding their meat food business in Brazil, Australia, and New Zealand are benefiting greatly
by the introduction of halal. Malaysia is one country which has been positioned as an early developer of halal
industry-related business, achieving exports of 1.0157 trillion dollars in 2011, which accounted for 5% of the
country's total export value.
・ This sort of background has led to Malaysia being used as a halal business hub for Asia. Since the 1980's,
Nestlé has converted 20% of their factories, including those which produce products Nescafe and Kit-Kat to
halal production, and Wal-Mart has begun handling halal products in 77 stores from 2008. McDonalds and
other fast food chains have also been extending their businesses into the halal food industry.
<Target industry trends in Asian countries>
・ Brunei and Malaysia are the only locations in the world performing halal certification publicly. There is a
variation in reliability in other countries since it is entrusted to religious institutions or non-specializing
businesses.
・ Dubai is attempting to become a distribution hub for halal industry in the Middle East, and has also hosted the
Halal Trade Fair since 2008.
・ In Malaysia, they have mapped out a three stage industry master plan for the halal industry since 1998, and
this background has allowed it to grow into a distribution hub for the halal industry in Asia. In addition, they
3-18
have been working on aggressively expanding the industry through measures such as providing incentive
plans relating to halal food production for foreign capital backed agricultural sectors.
3.
Malaysia's advantages in target industries
[Fundamental advantages]
・ Malaysia is thought to be well equipped with the basic foundation needed to attract foreign capital, including:
a low occurrence of natural disasters and stable political system; a stable infrastructure, including power
distribution; workers with a high level of technical capability; an advanced level of English communication;
and, inexpensive purchase cost into the industrial estate in comparison with all four countries.
・ In addition, they are adopting an aggressive stance by, for instance, providing incentives for foreign capital
investment into precision machinery industries such automotive electronics - a target industry, the biomedical
industry, video and other content industries, and food industries such as halal food.
[Advantages in the automotive electronics industry]
・ According to automotive industry trends, owing to the relatively inexpensive labor force and large population,
expansion trends of large-scale factories in Indonesia and Thailand are solid, forming a core for the
automotive industry in the ASEAN region. Further, in China it's likely there may be that a shift to even higher
value-added automotive research and development based on rising labor wages and other factors.
・ Although extensive automotive industry agglomerations and proximity to large-scale markets is important in
the automotive electronics field, it is believed that Malaysia, which has high technological capabilities, holds
advantages due to anticipated demand for eco-cars that is being brought about by increased environmental
awareness in Asia as a whole. This is in addition to strengths in electronics and other precision machinery
industries in the central ASEAN region.
[Advantages in the bio-medical industry]
・ Malaysia is a world-leading exporter of medical gloves and catheters, and produces a wide variety of medical
equipment such as orthopedic surgical products and surgical equipment. Most of these types of medical
devices produced in Malaysia meet international quality standards on a voluntary basis from the producers.
The manufacturing sector and service industry associated with such medical device manufacturers is
concentrated domestically, forming a structure that supports the medical device industry.
・ The agglomerations in Singapore are remarkable in today's biomedical industry. However, it's believed
Malaysia is highly superior since it is conceivable to create a business structure in such a way that takes
advantage of its proximity with Singapore and the fact that the medical device industry infrastructure is
already established - making it possible to carry out research and development in Singapore, and factory
production in Malaysia.
[Advantages in the visual contents industry]
・ The visual contents industry in Malaysia has provided incentives for foreign capital participation. It has set a
goal to create jobs for 10,000 people domestically, and carry out 1 billion dollars of production by 2020. The
3-19
National Film Development Corporation of Malaysia (FINAS), which was established in 1981, has taken on
the responsibility of promoting these initiatives.
・ In addition, both the shooting and airing of movies domestically is thriving, since works certified as domestic
movies are mandated to be screened twice a week in Malaysian theaters. Further, Malaysia is regarded as
superior from the fact that there are a large number of studios fully equipped with state-of-the-art equipment,
and the production base for visual contents have been put in place.
[Advantages for food processing (halal food)]
・ Brunei and Malaysia are the only countries carrying out certification of halal by public institutions, and their
halal standards are said to by amongst the most rigorous in the world. Because of this, halal products that are
able to obtain certification in Malaysia have built up great trust in the Islamic world.
・ For this reason, some businesses can be seen engaging in export to the Islamic market, including the Middle
East, by producing halal in Malaysia and acquiring certification, thus demonstrating the high advantages of
the halal food industry.
3-20
c) Analysis of Japan industry trends
Five years have passed since the collapse of Lehman Brothers in September 2008, however, the economy has
begun picking up in 2013. Exchange rates hovered around a weak yen, and a period of high stock prices continued
due to expectations towards the economic policy of the new cabinet since the fall of 2012. After reinstatement of
the LDP in a House of Representatives election in December, Abe's Cabinet launched a policy consisting of: a
bold monetary policy; an agile fiscal policy; and, a policy to stimulate growth from private investment. Under this
concerted effort policy, known as the "Three Arrows" agenda for economic revival, an upwards correction of the
yen and an increase in stock values has continued, growing fiscal 2012 real GDP to +1.2% year-on-year. The real
GDP for 2013 is also expected to grow 2.7%, with focus on an improvement in consumer confidence of
individuals through rising stock prices, and returning foreign consumption. (Mizuho industry survey, Vol. 43)
Looking at manufacturing sector activities, the price competitiveness of Japanese products has increased against
the backdrop of excessive upwards correction of the yen, and exports have remained strong. (Table 36)
Figure3-8 Changes in Japan's total exports
Source: Trade Statistics of Japan, Ministry of Finance
According to the results of JETRO’s FY2012 Survey on the International Operations of Japanese Firms, answers
concerning export business plan for the future (3 years or so) showed that 53.4% (1,046 companies) intended
“further expansion” and 12.3% (240 companies) “were not currently engaged in export business but intended to
start it.” The Survey of Japanese companies in Asia and Oceania conducted by JETRO in December 2012, in the
question about the directions for business development in the next 1-2 years in manufacturing industries, found
that the % of companies considering expansion was the highest in the industry categories of motor
vehicles/Motorcycles (67.7%), precision machinery (65.3%), food (64.6%), and chemical/pharmaceutical
(61.1%).
The business prospects for FY 2013 in each of these industry categories are discussed blow. In the automobile
industry, domestic markets are expected to shrink by 6% relative to the previous year due to negative factors such
as population aging and falling birth rate, the tendency of young people to avoid the use of cars, as well as the
3-21
impact of the termination of eco-car subsidies, although there will be last-minute purchases before the planned
increase in the consumption tax in April 2014. As for overseas markets, while U.S. markets will be robust thanks
to the continued recovery of personal consumption, the decelerating growth of Asian markets and the stagnation
of European markets are expected to cause a slowdown of the growth rate. In this respect, export from Japan is
expected to remain nearly unchanged with a small increase of 0.2%. On the other hand, overseas production is
expected to grow by 3.5% as a result of construction of new factories and reinforcement of production capacity in
the context of demand expansion in emerging countries (China and ASEAN) and North America (Mizuho
Industry Survey Vo. 43).
Figure3-9 Trends of Overseas Production and Export of Automobiles by Japanese Automobile Industry
Source: Mizuho Industry Survey Vol. 43 (Trends of Japanese Industries in FY 2013 (Automobiles))
The growth strategies proposed by Premier Abe’s administration features “next-generation automobiles” as a key
element in the strategic market creation plan. In view of the tightening of fuel efficiency regulations in many
developed countries (Japan, Europe, and the U.S.) and energy security issues in emerging countries, the key to
further growth is the development of next-generation technologies, such as hybrid cars, electric vehicles, and fuel
cell vehicles, that can achieve better fuel efficiency than the improvement of efficiency of conventional motors, as
well as the spread of such technologies through international unification of specifications and standards.
Figure3-10 Flow to the Development and Spread of Next-generation Automobiles
Idle stop
Regenerative brake
Hybrid car
Plug-in hybrid car
Source: Study Team
3-22
Electric Vehicle
Fuel cell car
In the field of electronics, the major driving force in 2012 was smart phones both in domestic and international
markets, while the shipment of flat panel TV and personal computers, which had long been supporting the
markets, turned to a decrease from the previous year. This tendency is expected to become stronger in 2013. In
contrast to the sluggish sales in developed countries, the share of emerging countries in the shipment of various
products increased to levels in the range from approx. 50% to approx. 70%. Future market growth is expected to
occur mainly in emerging countries such as Asia and South America. In consequence, the demands for flat panel
displays will continue to grow, mainly in medium and small sizes for smart phones, tablets, car navigation
systems, etc. Similarly, semiconductors and general electronic parts for smart phones are growing, while those for
personal computers are decreasing dramatically. Industrial power semiconductors and memories, on the other
hand, are expected to grow steadily. The global shipping amount of general electronic parts from major Japanese
companies is projected to be 3.679 trillion yen (a 3.8% increase from the previous year) (Mizuho Industry Survey
Vol. 43).
On the other hand, Japanese companies are losing share in the sluggish markets for flat panel TV and personal
computers but also staying at a low share in the growing smart phone markets. It is difficult for them to expect
large growth in the fields of these digital products. In this situation, they are trying to survive relying on the
demand growth in new business fields, such as the spread of next-generation automobiles containing more
electronic parts than conventional cars, solar power generation and other renewable energy technologies, and
advanced medical devices.
In the field of medical devices, the market size in 2012 marked the all-time high at 2.6 trillion yen, owing to the
aging of the Japanese population and the development of new products, as well as the increase in capital
investment reflecting equipment renewal. The markets for medical devices are broadly classified into three
categories; therapeutic devices such as artificial joints and catheters, diagnostic devices such as endoscopes and
other diagnostic imaging devices and various testing devices, and other devices including sphygmomanometers
and contact lenses. The popularization of “minimally invasive medicine,” which endeavors to minimize pain,
fever, bleeding, etc. in surgery and testing procedures to reduce the burden on patients and facilitate recovery, and
the revision of medical treatment fees to raise the national insurance reimbursement points for diagnostic imaging
procedures were among the factors that expanded the demands for therapeutic and diagnostic devices and drove
the markets. The growth of market size is expected to continue in 2013 at a similar rate of 8% (Mizuho Industry
Survey Vol. 43).
As for overseas markets, the economic crisis in Europe caused a cut of medical expenditures in some countries
such as Italy and Spain, resulting in a 3% negative growth in 2012 and little expected changes in 2013. On the
other hand, the market in the U.S. grew by about 4% due to the introduction of the substantially mandatory health
insurance system by the Affordable Care Act of 2010. A demand increase of about 6% is expected for 2013 due to
economic recovery and the spread of minimally invasive medicine. In Asia, the markets for medical devices have
been growing at high rates in the context of continuing population growth, the progression of population aging,
and the improvement of citizens’ income levels. In particular, China has been showing growth at the rates above
3-23
20%, reflecting the progress in health care reforms and the rapid development of healthcare infrastructures. In
Asia as a whole, the markets grew by 13% in 2012, and similar growth is expected for 2013.
A problem of the medical device industry in Japan is the heavy dependence on imports for the supply of products
in relation to the market expansion reflecting the world-wide progression of population aging, the spread of
minimally invasive medicine, and the high economic growth of emerging countries in Asia and elsewhere.
Medical devices need small-lot multiple-variety production, and investment costs must be recovered on a global
basis. In this respect, Japan is not a preferred location of development and production centers, because the
Pharmaceutical Affairs Law regulates development and production in Japan more stringently than the practice in
many other countries and long time is required before applications are approved. However, this situation can be
seen from a different angle. The “import” in statistics includes the articles manufactured by Japanese companies at
overseas production centers and imported to Japan, and as suggested by this fact, there are increasing
opportunities for development and production in Asian countries counting on the demands in Japan and other
Asian countries, which offer big markets for Japanese companies and other foreign companies.
Although pharmaceuticals are in a generally similar market situation to medical devices, European and American
markets occupy about 60% of the pharmaceutical business in the world. Although there are large potential
demands due to population aging, the impact of medical cost reduction as a result of economic crisis in Europe
and the low occurrence of influenza and allergy epidemics in the U.S. caused a negative growth in 2012. The
growth in 2013 is expected to be about 2%, because prices are going down due to the entry of generic medicines
following the patent expiration of major products. On the other hand, emerging markets in BRICS and ASEAN
countries recorded growths of about 10% in 2012, led by the 20% growth in China. This tendency is expected to
continue in 2013.
The domestic production of processed foods has remained nearly constant at 22 to 23 trillion yen for several years.
The production amount is expected to increase by 1.1% in 2013, as a result of price rises reflecting the rises in
fuel and raw material prices, approaching the level before the Lehman shock in 2008.
3-24
Figure3-11 Trends in Domestic Production of Processed Foods
Source: Monthly Report on Liquor and Food Statistics
In this situation, the top eight food company groups with the consolidate sales of 700 million yen or more (Asahi
Group, Ajinomoto, Kirin, Suntory Foods, Nippon Ham, Maruha Nichiro, Meiji, and Yamazaki Baking) reported
increase in revenue and increase in profit. Strong overseas business has been the main factor pushing up sales and
operating profit. Among the top 8 publicly-listed food companies, those with the highest % of overseas sales in
2012 were Ajinomoto at 41%, Suntory at 30%, and Kirin at 27% (Survey by Study Team).
The Abe administration in its growth strategy called “Strategic Market Creation Plan” pledges to increase Japan’s
export of agricultural, forestry, and fisheries products and foods from 449.7 billion yen (including 173.1 billion
yen in processed foods) to 1 trillion yen in 2020. To achieve this goal, the plan aims to acquire global food
markets targeting at rich and middle-income populations in neighboring Asian countries through the three
interrelated actions of “promotion of the use of Japanese food materials in foreign cuisine,” “overseas expansion
of Japanese food culture and food industry,” and “export of Japanese agricultural, forestry, and fisheries products
and foods.”
3-25
d) Examination of Target Industries (Car Electronics, Biomedical, Halal Foods and Other Food Processing, Visual
Contents, Data Center, etc.)
As pointed out in “C) Analysis of Factors for Success of Kulim High-Tech Park,” an important factor for the
success of the industrial park is the strategic measures for inviting companies, which include identifying target
industries and providing the best possible incentives such as preferential tax treatment and deregulation in
cooperation with federal and state governments and administrative organs.
In this respect, our discussion in “d) Analysis of Trends in Japanese Industries” identified a number of fields
where future business expansion is highly expected: transportation machinery and equipment (automobiles),
precision machinery/apparatus and chemicals/pharmaceuticals (electronics, medical devices/pharmaceuticals), and
foods (food processing). These fields need to achieve continuous growth based on not only the expansion of
domestic markets but also overseas production and the expansion of overseas sales assimilating the demands in
emerging markets such as rapidly prospering Asian countries around Japan.
On the other hand, Japan is the leading country in terms of the direct investment in Malaysia from overseas. The
amount of Japanese investment in Malaysia in the period of 2 years and 7 months from January 2007 to July 2009
totals to approximately RM 17.7 billion (5.34 billion dollars), being way ahead of approximately RM 14.5 billion
from Australia in the second place and approximately RM 11.6 billion from the U.S. in the third place. When we
look at the data for the nearest year, the amount of direct investment from Japan in 2012 was approximately RM
2.8 billion, holding the top ranking over Singapore (approx. RM 2.2 billion) in the second place and China
(approx. RM 2.0 billion) in the third place. Many Japanese companies recognize the importance of Malaysia as a
base for international division of work, while Malaysia continues to consider Japan as an important business
partner.
The good trade relationship between Japan and Malaysia has been nurtured through past interactions. Prompted by
the start of the Mahathir administration in the 1980s and the announcement of the “Look east policy” in 1982,
about 15,000 people learned technologies and management methods from Japan through overseas student
programs and professional training, and the presence of these people supporting the development of business
environment contributed greatly to the present situation. It was also important that Japan supported sophistication
of industries through inter-government cooperation in various forms based on the New Aid Plan proposed by the
(then-called) Ministry of International Trade and Industry in 1987. The New Aid Plan, featuring the “trinity
economic cooperation,” facilitated the growth of individual target industries and supported the advancement of
Japanese companies through (1) technical cooperation projects conducted by JICA such as developmental studies
using the dispatch of experts to governmental organizations, reception of trainees, and establishment of training
centers; (2) dispatch of experts and reception of trainees for the private sector conducted by Japan Overseas
Development Corporation (JODC) and Association for Overseas Technical Scholarship (AOTS); and (3)
economic cooperation tools provided by JETRO such as trade and investment promotion and yen loans by
Overseas Economic Cooperation Fund (OECF) for the development of the necessary economic infrastructures for
the development of industry.
3-26
Figure3-12 Target Industries of New Aid Plan in Malaysia (from 1987 to 1990)
・1st year: Dies, metal parts for automobiles, ceramics, glass products
・2nd year: Office electronic device CRT, ceramic IC package, rubber footwear
・3rd year: Cast products, computers and peripheral devices
Source: Excerpted from the materials from Institute of Developing Economies
The efforts toward industrialization that started with import substitution industrialization in the latter half of the
1950s, shortly after the nation’s independence, has established the presence of Malaysia as a base for international
division of work in the ASEAN region pursuing the export-oriented economic development model. In the field of
electric and electronic industries, in particular, the country is a major center of export in ASEAN and is serving as
a core of the supply chain of electronic parts going to China.
Table3-4 Major Export Items of Malaysia (Top 5 Items) <Based on customs clearance>
Electric & electronic products
Palm oil and its derivatives
Liquified natural gas (LNG)
Petroleum products
Crude oil
Total (including other categories)
2010
Amount
249907.3
62222.7
38741.6
25542.1
30764.7
638822.5
(Units: Million Ringgit, %)
Export (FOB)
2011
Amount
236534.9
83395.5
49963.4
33037.7
31982
694548.5
%
Source: Excerpted from the materials from JETRO
3-27
34.1
12
7.2
4.8
4.6
100
Growth rate
-5.4
34
29
29.3
4
8.7
Table3-5 Major Export and Import Counterparts of Malaysia <Based on customs clearance>
China
Japan
US
Hong Kong
S. Korea
Taiwan
ASEAN
Singapore
Thailand
Indonesia
Philippines
EU25
Netherlands
Germany
UK
Total (including others)
2010
Amount
80104.6
66763.1
60950.9
32407.9
24330.5
20208.9
162159.7
85253.1
34136.2
18090.2
9968.4
68688.3
20216
17346.4
7194.6
638822.5
Export (FOB)
2011
Amount
91246.8
79965.6
57577.7
31241.9
25819.5
22706.5
171536
88160.7
35719.9
20820.8
10940.6
71946.8
19298.3
18409
7154.6
694548.5
%
13.1
11.5
8.3
4.5
3.7
3.3
24.7
12.7
5.1
3
1.6
10.4
2.8
2.7
1
100
Growth rate
13.9
19.8
-5.5
-3.6
6.1
12.4
5.8
3.4
4.6
15.1
9.8
4.7
-4.5
6.1
-0.6
8.7
2010
Amount
66429.8
66534.8
56258.9
12680.7
28686.7
23828.8
143636
60277.8
32972.3
29390.1
11308.1
54122.3
3395.8
21331.8
5825.6
528828.2
(Units: Million Ringgit, %)
Import (CIF)
2011
Amount
75612.6
65321.9
55405.3
13588.6
23175.5
27069.2
159390.1
73515.1
34506.5
35097.7
4779
59967.6
3612.3
21960.8
6140.8
574234.1
%
13.2
11.4
9.6
2.4
4
4.7
27.8
12.8
6
6.1
0.8
10.4
0.6
3.8
1.1
100
Growth rate
13.8
-1.8
-1.5
7.2
-19.2
13.6
11
22
4.7
19.4
-57.7
10.8
6.4
2.9
5.4
8.6
Source: Excerpted from the materials from JETRO
With this success in export-oriented development, Malaysia grew from a developing country to a more developed
country, and aspires to achieve developed nation status in 2020. On the other hand, there is a concern that the
country falls behind less developed countries in cost competitiveness because of the cost increase associated with
growth and the Bumiputera policy privileging the people with Malay ethnicity, the nation’s abilities in technology
and development have not become a match for those of developed countries, and economic growth rate may be
held down in such situation. However, “Malaysia Investment Climate” by JBIC in July, 2009 and the company
hearing conducted in this study found that Malaysia has more stable social conditions than other emerging
countries, its financial and foreign exchange policies are discreet and sound, and economic management gives a
sense of stability and reliability. Japanese companies operating in Malaysia highly evaluate the government’s
willingness to support foreign capitals, the stability of infrastructures, and the quality of workforce.
Tariffs on virtually all items in the ASEAN Free Trade Area (AFTA) will be abolished by 2015, and the shift to
free trade is expected to greatly boost the international competitiveness of Malaysia. In the future, the country is
expected to serve as a hub for Islamic finance and halal foods, making use of the advantage of being an Islamic
country in Asia, to develop high-efficiency energy infrastructures making use of the experience in electric and
electronic industries accumulated by the country as a key player in this field, and to increase the level of industrial
workforce, aiming at the sophistication and diversification of new industries with high value added.
In addition, talks between Malaysia and Singapore concerning the Iskandar development project began in July
2007. The meeting between Prime Minister Najib Razak of Malaysia and Prime Minster Lee Hsien Loong of
Singapore in September 2010 resolved the issue around the ownership of land in Singapore by the Malaysian
3-28
national railroad system. In January 2012, a joint task force was established for the promotion of industrial
collaboration relating to this project. A series of events in this line have been stimulating cooperation and
complementation between the 2 countries pivoted on the railway project that would strengthen the connectivity
between the countries. As a consequence, there is an increasing possibility for the companies in Singapore, which
suffer from increases in various costs and shortage of land and workforce, to use the Iskandar Malaysia as part of
an expanded economic area. In particular, a spillover effect to the Iskandar Malaysia is expected in the fields such
as data centers and BPO, where the reduction of land and energy costs can be very effective.
Therefore, we specifically examine the possibilities of target industries, including car electronics, biomedical,
halal foods and other food processing, visual contents, and data centers.
With respect to car electronics, we have already seen that a recent trend in the automobile industry is the
popularization of next-generation cars based on the development of next-generation technologies, such as hybrid
cars, electric vehicles, and fuel cell vehicles, that can achieve better fuel efficiency than the improvement of
efficiency of conventional motors. This causes the use of more electric parts in a car, or so-called shift to car
electronics. The types of parts used in a car change dramatically. The comparison of the % of electronic parts by
car type shows that hybrid cars and high grade cars have more car electronic parts than conventional cars. As
much as 47% of the total cost of parts in a hybrid car is occupied by car electronics. Even among conventional
gasoline-powered cars, cars with idle-stop and regenerative brake systems have more electric parts. The
automobile industry must respond to this change occurring everywhere in the world.
Figure3-13 Percentage of Car Electronic Parts
0%
20%
60%
47
Hybrid Car
ハイブリッドカー
80%
100%
53
28
Luxury
Car
高級車
コンパクトカー
Compact
Car
40%
72
15
85
エレクトロニクス部品
Electronic Parts
その他
Others
Source: Materials provided by Hiroshima Industrial Promotion Organization
3-29
Table3-6 Product Classification in 5 Major Categories in Car Electronics
Car electronics product
category
Power train
Chassis
Body
Passive safety
Active safety
Product types included in summation
Electronic fuel injection, electronic diesel engine control (common rail), electronic
automatic transmission, electronic CVT
Electronic suspension, electronic power steering, cruise control, ABS, electronic stability
control (ESC)
Automatic air controller, separate control air conditioner, keyless entry system, smart entry
system, drive recorder, microcomputer power seat, shock sensor-controlled door lock
release, liquid crystal digital meter, head-up display, raindrop sensing windshield wiper,
automatic light
Airbag system, side airbag system, smart airbag with occupant detection
ACC/pre-crash system, rear monitor system, intelligent parking assist, rear sonar, lane
keeping system, doze driving prevention system, blind spot warning system, night vision,
adaptive headlight, low air pressure warning system, automatic parking brake
Source: “2009 Survey Results on the State and Future of Car Electrics Markets,” Yano Research Institute
Table3-7 Electric Technology Elements and Power Electronic Parts
Motors
Inverters &
Converters
Batteries
Other
Component Technology and
Commercialized Component
Electric water pump for air
conditioning
Electric water pump for engine
cooling
Electric water pump for motor
and inverter cooling
Vacuum pump for negative
pressure on brake
Generator
Vehicle drive motor
DC-DC Converter
Inverter for vehicle drive motor
Battery charger (wireless)
In-vehicle AV 100V power
source
Secondary cell
Fuel cell
Power cable
No Idling
Deceleration
Regeneration
HV
PHV
EV
FCV
○
○
○
○
◎
◎
○
○
○
○
◎
◎
◎
◎
◎
◎
◎
◎
◎
◎
◎
◎
◎
◎
◎
◎
◎
◎
◎
◎
◎
◎
△
◎
○
◎
○
○
○
○
○
○
△
◎
◎
◎
◎
△
◎
◎
◎
◎
◎
◎
△: Specialized alternator, Lead battery, or power cable conventionally used
○: Helps improve fuel efficiency
◎: Necessary
Source: Materials provided by Hiroshima Industrial Promotion Organization
The automobile market in Malaysia has been growing steadily, marking the all-time high of 628,000 vehicles in
2012. The improvement of purchasing power associated with economic growth, the well-developed highway
network, the government’s subsidy to fuel costs, and the political promotion of affordable cars for citizens
3-30
continue to drive motorization in the country, and the market is expected to grow to least 800,000 vehicles in 2020.
As a consequence, there are nearly 700 companies manufacturing automobile parts in Malaysia, and many of the
nearly 5,000 types of automobile parts are produced starting from early processes of work. The annual amounts of
export and import respectively showed an 18% increase during three years. Many manufacturers are collaborating
with Japanese parts makers, and are endeavoring to assimilate state-of-the-art technologies. The interviews with a
Japanese parts maker showed that Malaysia became the hub of the supply of electronic parts to the entire ASEAN
region after it began operation in 1980. The company produces computer for engine control, for air conditioner
control, for power steering, for air bags, etc.
In this respect, Malaysia has already achieved industrial agglomeration in the field of electric and electronics
industries including supporting industries, owing to the operation of foreign- companies, and there are necessary
infrastructures and workforce. It is therefore possible to expect the production of car electronics by electric and
electronic manufacturers. According to the interviews with a Japanese- electric and electronic manufacturer, they
consider it possible to have an operation in the Iskandar Malaysia, operations in 4 locations were to be
consolidated to one site through selection and concentration. The companies, including the above-mentioned
Japanese- car parts maker and another Japanese electric and electronic manufacturer, indicated that air
conditioning systems represented 40 to 50% of total electricity cost, and therefore were highly interested in the
introduction of high-efficiency air conditioning systems.
The biomedical industry is one of the most promising industries in terms of future expansion, owing to the global
progression of population aging and spread of minimally invasive medicine, as well as the rapid economic growth
of Asian and other emerging countries driving the expansion of markets for medical devices and pharmaceuticals.
In this respect, medical devices are part of the electric and electronic industry, where Malaysia has a competing
power. Similarly to the case of car electronics, Malaysia already has the foundations for the growth in this field.
The Economic Transformation Program ETP), in which the Malaysian government actively tries to encourage
foreign investment by specifying the key areas of economy, lists the development of private healthcare as one of
the 12 key areas of economy.
In particular, according to the interview with MIDA, it lists ten areas with future investment potential that are
characterized by the key words of high technology, high value added, knowledge, skill, and capital-intensive
production, and six of these areas (high-tech materials, high-tech devices, optical/light technologies, medical
devices, pharmaceuticals, and biotechnology) listed with the other areas (alternative energy, aerospace industry,
ICT, and petrochemical products) are related to biomedical. Strong support of the government can be expected in
these areas.
Since Malaysia set the aim of creating the bio industry as a national policy in the 8th National Plan in 2001, the
government has been continuously developing a system to support this industry. Malaysia Biotechnology
Corporation (MBC) was created for the purpose of unification of various authorities concerned, and concrete
support schemes were developed, including the provision of investment incentives through biotechnology status
certification in the BioNexus program, which is a package of support measures.
3-31
In fact, Bio-Excel Industrial Park in the Nusajaya area in the Iskandar Malaysia is now in the process of
development aiming at the clustering of biotechnology and healthcare companies. Several foreign-affiliated
companies from the U.S., France, India, Korea, etc. have decided to move in, and have become eligible to tax
exemption and subsidies by obtaining the BioNexus status. BioSingapore, the trade organization of bio and life
science industries in Singapore, and Bio-Excel Industrial Park are collaborating together in inviting companies
and personal exchanges. Singaporean companies moving into the park are given incentives such as the ten-year
exemption from income tax and tax reduction for investment.
According to the interview with a Japanese medical device manufacturer operating in Singapore, the company is
currently performing equipment maintenance, mainly functioning as the regional headquarters for the sales of
medical device in Asia. By the time when the Iskandar Malaysia will have substantial industrial agglomeration in
biomedical fields and there will be many healthcare-related establishments, it will be possible for the company to
operate a maintenance base and necessary back office in locations near the equipment requiring servicing. In this
case, the facility and the office will not be of the size of a factory, but a business floor in an office building.
Therefore, it will not be suitable to the location in a factory lot in this high-tech park. However, the plan of
Ascendas includes office lots intended for functioning as a business park, and location in this site may be possible.
Food processing basically does not belong to an industrial category characterized by high-technology, high value
added, knowledge, skill, and capital-intensive production, which the Malaysian government wants to invite. It is
often regarded as a conventional industry that is labor-intensive and produces less value added. In fact, a Japanese
food processing company in Singapore commented during an interview that it is difficult to gain value added in
this field, but the company was trying to have distinction and competitive power by early introduction of
eco-friendly production processes such as those featuring energy conservation and waste water treatment.
However, the food processing industry has a special meaning in Malaysia because it is an Islamic country. The
Islamic law defines the foods that Muslims can eat legally as halal foods. In the case of meat, it must be obtained
using a special method of slaughter and must be prepared, processed, transported, and stored in designated lines
separate from non-halal foods.
In this respect, the Malaysian government promotes the “halal hub policy” and is working to establish the status of
the country as a center for production and distribution of articles and services directed to Islamic countries in the
Middle East and Africa. According to MIDA, the global market size for halal-certified foods is estimated to be
4,862.28 billion yen a year. As part of active efforts in this field, Halal Development Corporation (HDC), which is
the government organization promoting the global expansion of halal markets, and the official halal certification
organization of the government have established Jabatan Kemajuan Islam Malaysia (JAKIM), which can issue
halal certification marks that are honored in most Islamic countries. In fact, halal is applied not only to foods but
also to cosmetics and medicines. The growth potential of halal markets is considered very large.
For Japanese food processing companies, production in Malaysia and obtaining halal certificates for their products
is a good way not only to expand sales to Islamic consumers in Malaysia but also to operate in the center for
market expansion targeting at about 1.8 billion people in Islamic countries and Islamic consumers in more than
3-32
160 countries in Asia, the Middle East, Africa, and elsewhere in the world. In July 2013, a trade and investment
envoy led by Minister of International Trade and Industry Mustapa visited Japan, and stated that manufacturers of
beef, pastes, sauces, cosmetics, pharmaceuticals, etc. had plans for entry into halal industries. It was also stated
that Malaysia External Trade Development Corporation (MATRADE) conducted a survey on the possibility of
Japanese companies in halal markets and the benefit to Malaysia.
In fact, according to MIDA, the investment by Japanese companies in the field of food processing in 2011 was
about RM 7400 million in 50 cases, and all of these cases received halal certificates from JAKIM. Construction of
“halal parks” for companies operating in the production of halal foods and related services is planned in 20
locations, and 10 of them have already begun operation. Selangor Halal Park, the largest of these parks located in
the suburb of Kuala Lumpur, is very popular, and 90% of lots have already been sold.
A Japanese- food processing company starting business in Singapore stated in an interview that the company is
now constructing a new factory in an industrial park near Senai Airport. About 50% of the products will be
supplied to Singapore, where is in short distance from the factory, where the company can benefit from price
differences, and the rest will be exported to neighboring countries and Middle East countries.
As for data centers, it should be first noted that Malaysia has “Vision 2020,” which plans for a breakaway from
the dependence on manufacturing that continued until the 1990s and then transform Malaysia into a
knowledge-economy and achieve developed nation status in 2020. As the core policy for the realization of this
plan, the country has been promoting the MSC. It consists of various measures including the construction of a city
for information industries called Cyberjaya and a city for administration called Putrajaya in Kuala Lumpur
suburbs, installation of high-speed communications network in the area, enactment of cyberlaws to provide
preferential tax treatment and other incentives to companies participating in MSC (MSC status), and human
resource development through establishment of a specialist college.
The development of this program started as a center for application development modeled after the Silicon Valley
in the U.S. Thanks to the low occurrence of natural disasters and low operating costs, Malaysia is now attracting
much attention as a good place for global data centers. The government is also eager for capacity expansion to
accommodate data centers, and has committed to provide 5 million square meters, ten times the current area, by
2020.
According to the interview with a Japanese communications company that has the main data center in Singapore
and is constructing a data center in Cyberjaya in Maraysia, this company was the first foreign-affiliated company
to obtain MSC status. The company highly appreciates the stable supply of electric power in Malaysia, as well as
the supply of water for water cooling. Regarding the location in Iskandar Malaysia, the company finds it attractive
that there is a cluster of IT-related facilities in the development area around Senai Airport. Other companies, such
as a Japanese car parts manufacturer having a data server in Singapore and branching out into Malaysia and a
medical device manufacturer branching out into Singapore, also confirmed the possibility of moving their servers
to Iskandar Malaysia depending on costs, infrastructure development, and other conditions.
3-33
In addition, although this study did not collect information from related Japanese companies, there is a plan for the
construction of Pinewood Iskandar Malaysia Studios (PIMS) in Nusajaya area, which contains some target project
sites for the main study in Iskandar Malaysia. PIMS will be a world standard studio for visual contents production.
The oversize facility will also contain a 100,000 square feet pond for filming, post production facility, and a
studio with a water tank for underwater filming. This project will cause the investment of about RM 200 million
by 2020 and will create 11,000 new jobs.
When completed, the area is expected to accommodate agglomeration of industries related to the project, and
there also will be foreign- film and TV communities moving into the area. As a concrete project, construction of a
14-hectar creative village “Media @ Medini” is planned near the studios. Related businesses such as film-making
equipment rental will also be situated.
Perbadan Kemajuan Filem Nasional Malaysia (FINAS) announced in March 2012 that 30% of the cost of film
production in Malaysia will be reimbursed in cash, and this stimulated the interest in film making in Malaysia.
This incentive is applicable to the production of a Malaysian film with a project cost of RM 2.5 million or more
and a foreign film with a projected cost of RM 4.85 million or more.
3-34
e) Energy Demand Assumption Based on the Demand Assumption for Expected Companies
1.
Projection of the General Demand of Whole Nusajaya High-Tech Park
The following table shows the land use plan of whole Nusajaya High-Tech park.
Table3-8 Nusajaya High-Tech Park Land Use Plan
Area
(ha)
Use
Commercial area
7.4
(Commercial facilities, residence for employees, etc.)
Industrial area
95.1
Others (road, etc.)
52.8
Total
155.3
※Excluding Phase 3b and 3c
Source: Study Team based on materials provided by Ascendas
Approximation of the maximum cooling load is estimated as follows on the assumption that all factories in the
tech park belong to targeted industries and they need air conditioning for each work space.
Cooling load=Site area×Building-to-land ratio×Cooling load consumption par unit area
＝95.1ha×60％×500USRT/ha
≒28,000USRT
The developer planned to develop the Nusajaya High-Tech Park in 3 gradual phases; Phase1, Phase 2 and Phase 3.
In this development plan, land construction, installation of infrastructure facilities, attraction to factories, tenant
occupancy, starting operation will be started in the period from 2013 to 2020. Details of the development plan for
each phase (development schedule, period, scale, number of factories by industry category and cooling load) are
shown in below.
Table 3-9 Cool Air Demand by Phase
Operation
Development
Development Phase
From
Scale
Number of Factories
Cooling Load
52 factories（RBF:36,BTS:16）
9,084USRT
Schedule
(Tentative)
Phase1
2013-2018
2015
48.6ha
Phase2
2016-2022
2018
66.8ha
160 factories
12,486USRT
（RBF:100,BTS:60）
Phase3
2020-2024
2022
34.4ha
3-35
42 factories（RBF:16,BTS:26）
6,430USRT
Note: We calculated the cool air demand with estimating whole demand based on the development scale.
Source: Study Team based on Ascendas information
In addition, demand for each year is shown below. The demand in below figure shows the maximum cool load in
case Ascendas develops the park according to the development schedule and gets assumed factories in the park.
Thus, the business type of the factories in the park may impact on this estimation.
Figure 3- 14 Demand for each year
30,000
23,499
冷房負荷（USRT）
25,000
25,428
28,000
28,000
18,449
20,000
15,327
15,000
Phase3
12,206
9,084
10,000
Phase2
5,450
Phase1
2,725
5,000
0
0
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
年次
Phase1
Phase2
Phase3
0
30%
2016
2,725
TOTAL
0
2,725
年次
2013
2014
2015
60%
2017
5,450
5,450
2018
9,084
0
25%
2019
9,084
3,122
50%
2020
9,084
6,243
9,084
12,206
15,327
75%
2021
9,084
9,365
0
18,449
30%
2022
9,084
12,486
1,929
23,499
60%
2023
9,084
12,486
3,858
25,428
2024
9,084
12,486
6,430
28,000
2025
9,084
12,486
6,430
28,000
Note: We calculated the figure with estimating the demand by each development phase.
Source: Study Team
2.
Projection of cooling load in Phase 1a
Detailed cooling load of phase 1a that is planning to start up by 2015 will be assumed.
The factories to situate here are assumed to be those of high-tech-related industries. Because high-tech-related
factories need air conditioning of factory work spaces, we assume the energy demand from cooling load assuming
a floor area of 70,000 m2. Assuming that factories do not operate on Sundays, the number of working days in a
year will be 298 days and there will be 67 holidays. The daily cooling load pattern in 43 factories is drawn
assuming factory operation from 7:00 to 18:00.
The assumptions concerning demand and the cooling load pattern estimated from the floor area of RBF are
shown below.
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Figure3-15 Calculation of total floor area of Phase 1a
11816m2
U
P
SEMI-DETACHED TYPE 2
1535m2
3087m2
1419m2
2467m2
9136m2
DETACHED
TYPE 2
1142m2
2533m2
SEMI-DETACHED TYPE 1B
DETACHED
TYPE 1
2467m2
7992m2
SEMI-DETACHED TYPE 1A
2533m2
15684m2
13163m2
2659m2
2467m2
999m2
2361m2
2533m2
SEMI-DETACHED TYPE 2
2905m2
12048m2
MAIN
ENTRANCE
CENTRAL
PARK
2835m2
FOOD CENTRE
Phase 1a Total floor area 69,839m2
Source: Study Team based on materials provided by Ascendas
【Calculation of Cooling demand for Phase 1a】
・
Required Chilled Water Rate
;0.05USRT/m2 (=151.2Kcal/m2=633MJ/m2)
・
Total Floor Area
; 69,839m2(assume that all area needs AC)
・
Cooling Load
・
Working Day（298days/year）
; 2,095USRT
Sunday (67 days/year)
; 314USRT
Maximum Cooling Load
; 2,410USRT(= 2,095USRT×1.15)
（Supply Temperature: 7°C, Return Temperature: 12°C）
・ Cooling load pattern (shown in the below figure)
Figure3-16 Cooling load pattern
Cooling load (USRT)
Time（hrs）
Source: Study Team
3-37
3.
Demand in the area of Phase 1b
BTS are custom built factories assuming the use as data centers and food processing-related factories. The cooling
load in these factories is considered to be larger than that of RBF high-tech-related factories. In particular, cooling
is the key factor in the operation of data centers. They need high-quality cold air supply with a backup capacity
ensuring, say, 99.9999% reliability.
Although RBF are built for sale, air conditioning systems are not included in the factory facilities to be sold.
Basically, these systems are provided by the purchaser of the factory. In order to realize a cold air supply service
of district cooling type, there must be a certain number of factories in a limited area so that the collective cooling
load can be handled as a whole.
BTS with relatively large cooling loads can be served either by on-site cold air supply using a cooling system
installed in each factory or by a district cooling-type service. The choice between these methods depends on
several factors such as the timing of factory construction and the contract with the factory concerning the period
of cold air supply.
Commercial spaces are planned for the construction of commercial facilities and offices. After buildings are built,
cooling load is expected to occur from 7:00 to 17:00 on work days.
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f) Infrastructure and Human Resources Development as a Measure for Inviting Industries
The interview survey at factories in Malaysia indicated that the percentage of air conditioning cost in total energy
cost is as high as about 40%. In particular, high-tech-related industries reported high percentages of air
conditioning cost. Although factory operators strongly want the reduction of air conditioning cost, such reduction
has not been realized because of the need for certain investment in plant and equipment.
Therefore, it is necessary that the new industrial park can provide air conditioning, which is needed for high-tech
industries, at a lower cost as an additional service. As discussed in “(2) More Efficient, Rational Energy Use ,”
there are 3 types of air conditioning systems: individual air conditioning, central air conditioning, and CHP, which
is an extension of central air conditioning aiming at the effective use of primary energy. Although the installation
of air conditioning systems greatly depends on demand situations, it is important to support (1) sale or leasing of
individual air conditioning equipment, (2) on-site air conditioning service as a form of central air conditioning,
and (3) district cooling service as a form of central air conditioning in combinations depending on the demand in
the industrial park, so that cold air can be supplied to users at a low cost and also the operator of the cold air
supply service can establish a certain amount of performance figures.
Malaysia has been promoting industrialization as a national policy and inviting foreign capital by means of the
provision of investment incentives and the development of necessary infrastructures. As a result, the country
established its status as the industrial hub in the ASEAN region in the field of electric and electronic industries. As
a semi-developed country, Malaysia has become the front runner in economic growth among ASEAN countries.
Financial merits such as preferential tax treatment and infrastructure development are a necessary but not
sufficient condition for the invitation of foreign companies, which has supported economic growth through the
success in industrialization. Even if there are adequate hardware facilities, industries cannot be invited if the
companies establishing and operating factories cannot employ people with necessary skills in needed numbers. If
the employment and income of people cannot be secured in this way, it is impossible to continue economic
growth.
The Malaysian government has been placing great emphasis on education policies since the independence of the
country. All past and present prime ministers except for the first had experienced the post of Minister of
Education. Several education reforms have been implemented, based on the belief that education is the main way
to obtain human capital supporting the development of the country.
The National Higher Education Strategic Plan (2007-2020) was formulated in 2007. Asserting that economic
development needs nurturing of human capital with first-class mentality, construction of a knowledge-based
economy, and creativity and innovation, the plan identified promotion of higher research and development,
expansion of higher education, internationalization of universities, etc. as key strategies.
Starting from 1966, education was placed in the five-year plan, which is the comprehensive long-term national
development plan prepared at five-year intervals. The 10th Five-year Plan (2011-2015) included the establishment
3-39
of Malaysia-Japan International Institute of Technology (MJIIT) within University of Technology, Malaysia to
provide higher-quality education responding to the needs of industries. This school was planned to teach
state-of-the-art technological knowledge and work ethics using Japanese-style education. In response, Japan
signed a roughly 6.7 billion yen loan contract for the purpose of providing educational and research equipment
and consulting service to MJIIT.
At the present, MJIIT is receiving support from 25 universities in Japan and collaborate with them in the dispatch
of teachers and acceptance of overseas students. More than 40 Japanese teachers at the maximum are planned to
be sent in the future to teach 550 students, and students are obliged to work in internship at Japanese companies
for 12 weeks, receiving scholarship from the government. There are four programs consisting of electronic system
engineering, mechanical precision engineering, environmental green technology, and technical management
engineering. Emphasizing basic engineering education in the fields of semiconductors, LED, solar energy,
industrial electronic devices, etc., the school is also making effort at promotion of green technology and training
of people to support it.
Ministry of Higher Education is responsible for higher education at universities and other institutions. In addition,
Ministry of Human Resources has 27 vocational training schools in the country. These include, in decreasing
order of skill level, Japan-Malaysia Technical Institute (JMTI) in Penang State, four Advance Technology
Training Centres (ADTECs), and 22 Industrial Training Institutes (ITI. ADTECs are for the people who have
some work experience after graduation. New graduates enter ITI and then are employed by companies. For this
reason, there are close relationships between ITI in a region and companies operating there concerning the supply
of workforce. Actually, the employment rate of graduates from vocational training schools is 100%. Graduates
receive 3-month On-The-Job Training (OJT) at companies, and thereafter, nearly 90% of them are employed by
the same companies.
The ITI in the Iskandar Malaysia is located in Pasir Gudang. About 80% of graduates join companies in Johor
Bahru State. Local companies are providing fund and teaching materials relating to the lectures in various
programs and educational and experiment facilities, and there is a lot of industry-academia collaboration. For
example, Petronas, an oil company, is working in cooperation concerning the welding technology for oil piping,
and a Japanese- precision machine manufacturer has cooperative relationship in instrument technology.
Pasir Guang ITI in Zone D, located to the east of the Iskandar Malaysia has not offered courses on air
conditioning and heat technologies because there have been no requests for such courses from companies in the
vicinity. Such courses are offered only at ITI Mersing on the eastern coast at the distance of 100 km from Johor
and at ADTEC in Shah Alam, the capital of Selangor State, where Kuala Lumpur is located. However, with the
progress of the development works in the Iskandar Malaysia and the increase in companies situated in industrial
parks such as Nusajaya High-Tech Park, the ITI in this region will receive more requests regarding the supply of
human resources. The demand for engineers in air conditioning and heat technology at factories is also expected
to increase.
3-40
As mentioned above, the questionnaire to Japanese companies in Malaysia and Singapore indicated that a cause of
concern about operation in the Iskandar Malaysia is the lack of infrastructure including energy and the lack of
human resources including those for infrastructure maintenance. While this Project will provide hardware
facilities for high-efficiency energy infrastructure, its implementation will require invitation of industries to the
high-tech park, and the business development of a total energy service will be a part of this Project. From this
perspective, it is necessary to consider measures for stable supply and qualitative improvement of human
resources.
For this reason, the total energy service company planned in this Project should serve as a human resource
development center supporting the training of maintenance personnel for energy facilities for companies and R&D
establishments chiefly in the high-tech park. As the first step of concrete measures for this purpose, we consider
cooperation with ITI Pasir Gudang in the training of engineers and technical specialists in the maintenance of
energy facilities. This cooperation aims to start training programs in air conditioning and heat technologies using
JICA’s technical cooperation project combining “dispatch of experts,” “acceptance of trainees,” “provision of
equipment,” etc. and the scheme for overseas expansion of technical college curriculums provided by Asia
Professional Education Network (APEN), which is an organization formed by Advanced Institute of Industrial
Technology in Japan and universities in the ASEAN region. In this undertaking, we consider the use of not only
lectures at ITI but also OJT with internship and the use of remote and correspondence education systems using
network-based systems and multimedia teaching materials.
Further for the future, we aim to create a business model in which we provide educational and training facilities
and programs for the development of industrial human resources to support energy infrastructure for factories and
R&D establishments in the Nusajaya High-Tech park, and also provide educational courses for the continued
maintenance and improvement of skills.
On the other hand, the contact point of APEN in Malaysia is University of Technology, Malaysia, which has the
Johor Bahru campus in the Iskandar Malaysia in addition to the Kuala Lumpur campus. As mentioned before,
MJIIT is hosted in the Kuala Lumpur campus. There is a possibility of cooperation with MJIIT regarding the
acceptance of students in internship and researcher training through possible joint studies in the future. This is
expected to be effective in technical examination of future business expansion in Malaysia and neighboring
countries. Although we also considered the cooperation with EduCity, which is planned across the street from the
Nusajaya High-Tech park, EduCity is currently planned as a liberal arts university providing mostly lecture-based
general education as a branch campus of a university in a Western country, and such cooperation is considered
difficult at the present, as pointed out by a JICA expert participating in the blueprint preparation concerning CO2
emission reduction in Iskandar development at the Johor Bahru campus of University of Technology, Malaysia.
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Figure3-17 Proposed Cooperation Scheme Regarding Development of Industrial Human Resources
Source: Study Team
3-42
2) Possibility of Technology Promotion in Nusajaya High-Tech Park
a) State of Infrastructure and Implemented Systems in Kulim High-Tech Park Considered As a Benchmark
1.
Background to Construction of KHTP
KHTP was opened in 1996 as the first high-tech industrial park in Malaysia. The development of this KHTP was
supported by many Japanese cooperation projects, as summarized below.
1987-1990
1991-1995
1991
1992
Study for “Malaysia Industrial Development and Promotion Plan” is conducted through
technical cooperation of MITI, JICA, and JETRO
Following “Malaysia Industrial Development and Promotion Plan,” the country desires
construction of a high-tech industrial park in Kulim Province, Kedah State and requests
cooperation from the Japanese government
Nurturing of high value added industries and invitation of high-tech industries are planned in
the 6th Malaysia Plan
Following MITI study scheme, UNIDO study team submits “Concept Plan Report”
Supported by MITI, JICA study team reviews “Concept Plan Report” and conducts basic
planning and basic design of industry zone
Supported by MITI, JICA study team develops the master plan for the entirety of the composite
high-tech park project consisting of industrial, R&D, residential, urban, and amenity zones
Financial support by JBIC concerning the export of production facilities to semiconductor
factory
2001
The development of KHTP was promoted comprehensively as a combination of the following six areas.
Figure3-18 Development Areas of KHTP
1.
Industry
2.
R&D
3.
Amusement & recreation
4.
Residence
5.
Urban functions
6.
Education
Source: Kulim Technology Park Corporation Website
3-43
Figure3-19 Status of Development of KHTP (Layout Map in 2012)
Source: Kulim Technology Park Website
3-44
2.
State of Infrastructure Implementation
[Electricity]
Starting form 1997, an IPS called Northern Utility Resources Distribution Sdn Bhd (NUR) has been providing
electricity to KHTP. In addition to the companies situated in the park, electricity is also supplied to residential and
commercial areas. However, electricity is not supplied to the areas outside of the industrial park. Apart from TNB,
NUR is the only IPS supplying electricity in Malaysia.
NUR ensures non-interrupting supply of electricity using power generation by a 220 MW combined-cycle gas
power generator and system interconnection with TNB. This stable power supply infrastructure is an essential
element for the operation of high-tech industries in the park.
Although some of the Japanese companies in KHTP have uninterruptible power supply systems, they say
interruption of power supply from NUR is extremely unlikely.
Figure3-20 NUR Power Station
A View Inside NUR Power Station
Overall View of NUR Power Station
Source: Photo by Study Team
Source: Materials from ESBI (O&M Company)
[Gas]
Gas for industrial use is supplied by Air Products STB Sdn Bhd via the gas pipeline buried in factory premises.
Figure3-21 Industrial Gas Supply Facility
Source: Kulim Technology Park Corporation Website
3-45
[Information Communications]
The companies in the park are served by fiber optics cables of Telecom Malaysia, and the operation of services
are conducted within the park. Residences are provided with an internet connection service called UniFi.
Figure3-22 IT Center
Source: Kulim Technology Park Corporation Website
[Educational Institutions]
In addition to primary and secondary schools, there are higher education facilities, University Kuala Lumpur
Malaysian Spanish Institute, KISMEC, and other educational institutions. In particular, KISMEC provides human
resource development based on the syllabus related to industry. According to the interview with KHTP, it is now
considering a plan to invite multiple study fields of a university in a building.
Figure3-23 Educational Institutions
Primary & Secondary Schools
Higher Education Facility
Source: Kulim Technology Park Corporation Website
[Targeted Industries]
KHTP invites companies in the following 12 areas:
1.
Wafer Fabrication & Related Activities
2.
Semiconductor & Related Activities
3.
Green Energy (Solar Cell / Fuel Cell / Polymer Battery / Renewable Energy)
4.
Advanced Electronic Industries
5.
Medical and Scientific Instruments
6.
Process Control and Automation Equipment
7.
Optical and Electro-optical Application
8.
Optoelectronics
3-46
9.
Biotechnology
10. Advanced Materials
11. Contract R&D Services
12. New and Emerging Technologies
3-47
b) System for Inter-plant Accommodation of Chilled Water Using High-Efficiency Turbo Chillers
The following describes the chilled water accommodation system supplying to ready-built factories in Phase 1a
area of Nusajaya High-Tech Park.
The capacity of high-efficiency turbo chillers will be 2,500 USRT based on the floor area requiring air
conditioning and demand assumption. The 2,500 USRT high-efficiency turbo chillers will comprise two 1,000
USRT units and a 500 USRT unit, considering efficient operation responding to demand and redundancy. The
equipment layout plan is shown below.
Figure3-24 Equipment Layout Plan
(Plan)
(Section)
12m
12000
6000
計器室
Electrical Control
Room
電気室
Ground
(Plants)
Turbo chiller １A
1000USRT
AU-1
ECC-1(A)
24m
CWP-1(A)
CP-1(A)
AU-2
CWP-1(B)
Turbo chiller １B
1000USRT
AU-3
18000
ECC-1(B)
CP-1(B)
Turbo chiller 2
500USRT
ECC-2
CWP-2
CP-2
Source: Study Team
High-efficiency turbo chillers will be placed in a part of the utility area, and chilled water pipes are led to factories
from there. Pipes are buried underground beneath the roads in front of factories. The bore diameter of chilled
water pipes will be 400 mm near the high-efficiency turbo chillers, 300 mm in midway sections, and 200 mm near
factories. The heat loss of underground pipes, made of materials preventing heat loss, is assumed to be 5%. The
total elongation of pipes is about 1,100 m. As piping can be routed to cross roads in the park, chilled water
accommodation between factories will be designed with piping crossing the road. The piping plan and the
structure beneath a road are shown below.
The present study clarified the equipment installation conditions for high-efficiency turbo chillers and the
conditions for chilled water piping. While we considered the chilled water accommodation system and determined
conditions focusing on RBF, these conditions for equipment installation and chilled water piping can be applied to
not only RBF but also BTS and commercial areas.
3-48
If there is at least 500 USRT of combined cooling load that is expected to persist for 5-10 years, it is possible to
construct a chilled water accommodation system by adjusting the capacity of high-efficiency turbo chillers and the
bore diameters and lengths of chilled water piping.
Figure3-25 Location of high-efficiency turbo chillers and underground chilled water piping layout
Location of high-efficiency turbo chillers
Source: Study Team
Figure3-26 Section plan of water piping
Source: Study Team
3-49
c) High-efficiency District Cooling System with Steam Absorption Chillers Using CHP and Waste Heat (Steam)
Companies in the Nusajaya High-Tech Park potentially or manifestly need a stable supply of electricity. This need
is particularly high with high-tech industries, and the stable supply of electricity is a factor for a company to
choose an industrial park. Assurance of a stable supply of electricity represents a value of an industrial park, and
gives it an edge over other industrial parks.
The most energy efficient type of a district cooling system is a system that supplies not only heat but also
electricity by means of CHP. While this system can supply electricity stably to its service area by using CHP, the
security of electric power can be enhanced further by duplication of power source using the grid system of TNB
as a backup. In the context of energy supply business, CHP provides a great advantage because it brings a profit
from power supply in addition to the profit from heat supply. However, CHP can be used only when low-cost
natural gas is available. At the present, Nusajaya High-Tech Park is not served by a natural gas pipeline, but
information obtained in this study indicated a possibility of a natural gas pipeline in the future. The following
shows the system configuration assuming the use of CHP in district cooling under a certain set of conditions.
1.
Assumed the heat and power service areas
The system discussed here assumes the heat and power service areas shown in the figure below.
Figure3-27 Heat and Power Service Areas
Source: Study Team
3-50
2.
Demand assumption
Because companies are invited to the park in phases of areas, the following analysis is based on demand
assumption in Phase 1a, which Ascendas plans to offer first among the areas of Nusajaya High-Tech Park. While
the supply of electric power covers the entire area, heat (chilled water) covers half of the entire area. Heat is
assumed to be needed by some companies and not needed by others, depending on business categories and
operation patterns. In addition, because factories may have areas that do not require cooling, such as warehouses,
the area with cooling is assumed to be 60% of the factory floor area.
Power and heat demands are calculated from factory floor area and assumed per-unit values.
・ Total floor area receiving power: 69,839 m2
・ Factory per-unit power demand: 500 kW/1,000 m2 (500 W/m2)
・ Total floor area receiving heat: 34,920 m2 × 60% = 20,952 m2
・ Factory per-unit heat demand: 1,000 USRT/20,000 m2 (0.05 USRT/m2)
From the above, the demands for power and heat are respectively assumed to be:
・ Power demand: 34,920 kW
・ Heat demand: 1,048 USRT
3.
System Overview
The figure below shows the overview of the CHP system providing power and heat.
Figure3-28 Overview of System with CHP
Source: Study Team
3-51
Because power is supplied to the entire Phase 1a area, it is received collectively from the power grid. Any surplus
power will be sold and deficiency will be made up for by purchase of power. However, because the CHP power
supply capacity should be sufficient to cover the entire Phase 1a area, the system is designed so that there will be
the sale of surplus power but no purchase of power in normal situations.
With respect to the supply of heat, chilled water is supplied only to the factories in the area where both heat and
power are supplied. The heat (steam and hot water) generated during CHP power generation is used in chilling
facilities to make chilled water, which is sent to factories via pipelines. Factories use the supplied chilled water for
air conditioning (cooling).
4.
CHP Configuration
The configuration of the CHP system to supply heat and power is shown in the figure below.
Figure3-29 CHP Configuration
Source: Study Team
Because the demand for heat (chilled water) is smaller than the demand for power, the system is configured based
on a combination of a combined-cycle gas turbine power generator and a gas engine power generator. To achieve
efficient utilization of waste heat from the gas engine for the supply of heat, chilled water is produced from steam
using an absorption chiller and from hot water using a Gene-Link. The CHP system is designed for
power-controlled operation, in which power is generated depending on the power load in the area. Because of this
operation method, any surplus steam relative to heat (chilled water) load will be discarded, and any deficiency
will be supplemented by steam back-up using a once-through boiler. The following shows a list of CHP
components.
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Table3-10 List of Main CHP Components
№
Equipment
Spec.
1 Gas engine generator + waste heat boiler
5,200kW
2 Gas turbine generator + waste heat boiler
28,350kW
3 Condensing steam turbine generator
Units
Notes
1
1 Total 42,050 kW
8,500Kw
1
4 Gene-Link
630RT
1
5 Absorption chiller
250RT
3
6 Once-through boiler
1.77t/h
2
Total 1,380 RT
7 Supply steam header
-
1
8 Chilled water header
-
1
9 Gas compressor
-
1
Source: Study Team
d) Expanded District Cooling System with Area-wide Heat Accommodation Covering the Nusajaya High-Tech
Park and Adjacent Development Areas
As of December 2013, Gas Malaysia is not providing gas to Nusajaya area. Gas Malaysia considers that
elongation of the gas pipeline becomes possible if Nusajaya area had a demand for gas corresponding to the power
generation capacity of approximately 90 MW.
TNB is promoting the construction of the high-voltage grid network to Nusajaya area. In view of the electric
power policy of Malaysia, it is considered very difficult for a private business company to obtain the right to
generate power using a gas fuel and sell the power to factories in a specific area like the power generation/sale
company in KHTP. The power generation/sale business in KHTP was realized under the strong leadership of the
Malaysian government. TNB offers a special power tariff for district cooling for the purpose of effective use of
nighttime power.
Considering these situations, a district cooling system with CHP in Nusajaya area is possible in the following 2
cases: (1) power generation and steam supply using 90 MW distributed power sources are planned under the
strong leadership of the Malaysian government, or (2) factories that collectively need 90 MW power and factories
that collectively have sufficient heat and chilled air demands are constructed. In both cases, realization as a project
will require long time for the negotiation with TNB, securing of power and heat demands, etc.
On the other hand, there are several plans in Nusajaya area such as the building cooling of Kota Iskandar (local
government building), district cooling of EduCity (a university campus complex), and district cooling and heat
supply for bio factories by Bio-Xcell utility company. It is clear that potential demand for chilled air exists.
When we consider short-term business development, it is considered better to supply chilled air in a distributed
manner according to the clustering of demand for chilled air than to implement district cooling with area-wide
3-53
heat accommodation covering a wider area. In this case, the energy source will be the electric power provided by
TNB, and the power rate applied to this case will be that for district cooling.
MEGAJANA, a subsidiary of TNB, is providing a district cooling service in Cyberjaya in Kuala Lumpur using
the power rate for district cooling, and this business is producing good track records owing to the demand for
chilled air for use by IT-related companies, including data centers, in Cyberjaya.
Because the rate for electric power as the energy source has been set clearly as the rate for district cooling, the
business basically starts with bringing together collective demand that is large enough to support business
operation and taking advantage of the power rate for district cooling. Then, we should conduct a chilled air supply
service in a distributed manner so that the users in the service area can receive chilled air at a reasonable cost and
the business operator can gain profit.
The development in Iskandar and the development of Nusajaya area will continue for more than 10 years from
now. On a short term basis, we should consider distributed district cooling using electric power as the energy
source. On a long term basis, we should consider the possibility of gas supply to Nusajaya area, the possibility of
selling power to TNB, the possibility of selling power to factories in specific areas, and the introduction of CHP
depending on the heat and chilled air demand of factories.
e) Total Energy Service System Providing Chilled Air, Heat, and Power to Factories
A chilled air supply system can be implemented in three forms: (1) conventional model, in which each factory
installs its own air conditioning system; (2) on-site cooling model, in which a chilled air supply service provider
installs air conditioning systems in factories and provides chilled air to factories; and (3) district cooling model, in
which the chilled air supply service provider supplies chilled air to multiple factories from its central air
conditioning system. In (2) on-site cooling model and (3) district cooling model, factories do not own air
conditioning systems and they are freed from the maintenance of air conditioning systems, payment of power
charges for air conditioning, and payment of water charges for air conditioning. Therefore, the use of service in
model (2) or (3) enables factories to reduce the lifecycle cost of factory air conditioning (about 15% reduction
according to the estimation by Study Team). It is necessary to choose form models (1), (2), and (3) according to
the air conditioning needs of the factory, and consider the efficient method of chilled air supply. The following
shows the conceptual images of (2) on-site cooling model and (3) district cooling model.
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Figure3-30 Image of system configuration of District Cooling and On-site Cooling
y
g
【District Cooling Model 】
Factory A
Factory B Factory C
Turbo chiller
(for Phase 1A only)
1000USRT X 2
500USRT X 1
Electrical Control Room
【On-site Cooling Model】
Factory Space
Fan coil unit
Cooing
tower
Turbo chiller
or
Air Conditioning
Source: Study Team
Generally speaking, approximately 40% of the energy consumption of factories in Malaysia is used by air
conditioning systems. Factory can reduce energy use by choosing high-efficiency individual air conditioning
systems (multi-split air conditioners for buildings, package air conditioners for offices, etc.) or high-efficiency
central air conditioning systems (such as turbo chillers).
The chilled air supply service provider can have a contact with each factory through “the service in supplying
chilled air.” This contact can provide a starting point for interactions, such as a proposal for factory energy saving
that is not related to air conditioning and a proposal of technical solutions to a problem in factory operation. For
example, we can expect a proposal concerning energy saving in a factory power system and a proposal concerning
heat demand in a food factory. In the case of a RBF, the occupant must provide the electric facilities at and
beyond the transformer. Starting from the chilled air supply service to a RBF, one can make proposals targeting at
the electric facilities at and beyond the transformer, such as a high-efficiency transformer and a UPS system
aiming at more stable power supply.
In this way, by getting hold of air conditioning, which occupies the largest % in energy consumption, in the form
of “service in providing chilled air,” the provider can be involved in the energy use in the factory and provide total
energy service for the factory covering chilled air, heat, electric power, etc. as a business.
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(4) Overview of the Project
1) Basic Policies to Making Concepts of the Project
Concepts of this Project which aims for introduction of high-efficiency district cooling in Nusajaya High-Tech
Park in Iskandar region in Malaysia will be planned based on points described below.
a) Planning Concept
・ Introduction of high-efficiency district cooling using proven Japanese technology.
・ Construction of the business model for integrated energy infrastructure service aiming to serve as the model
for eco industrial park in Malaysia.
・ Construction of a business model considering the sustainability of the project and incorporating not only the
provision of equipment but also human resource development and other factors.
b) Basic Policies to Making Concepts of This Project
1.
Basic Policy 1: Project plan which concerns the development plan and existing conditions of the
targeted industrial park, Nusajaya High-Tech Park;
Ascendas and UEM Sunrise, the developer of the targeted industrial park, Nusajaya High-Tech Park, is planning
to develop the park,
total ground area of 512 acres (approx. 207 ha),
in three phases. The contracts with
companies will begin in January 2014, phase 1a (approx. 7.2ha) construction will be completed in 2015, and
factory operation is planned to begin at the end of 2015. Phases 1b (approx. 41.4ha), 2 (approx. 66.8ha), and 3a
(approx. 34.4ha) are planned to be completed in March 2016, September 2017, and March 2019, respectively.
Development schedule of Phase 3b and Phase 3c are yet to be formulated.
Except for the gas pipeline, infrastructure in the park including electric power, water, and sewerage will be put
into service before the completion of phase 1a. The gas pipeline has its end point at a distance of 15 km to the east
from Nusajaya High-Tech Park, and will be extended after confirmation of demand in the surrounding areas.
Two types of factories will be constructed in the park: semi-order type, in which a building designed by Ascendas
will be provided and the occupant will install air conditioning and other facilities, and order type, in which the
building and all facilities will be built to order of the occupant.
Because the site is located near Singapore, expected tenants and factories are data centers, car electronics,
biomedical, bio, and halal foods.
The contents of the Project and plans will be determined based on the above developing schedule and situations.
2.
Basic Policy 2: Contents of the Project reflecting the needs of companies
During our interview survey, we found that the factories operating in Malaysia have a problem that approximately
40% of total electric power consumption is consumed because of scorching sun and high temperature throughout
the year, and finding a way to cut this cost is a big concern for them. Although many factories use old air
3-56
conditioning equipment with low cooling efficiency, they are unable to renew these equipment because of the
high initial cost.
With respect to human resources, factories have difficulty in employment and development of general workers
and shortage of engineer-class workers for the management of infrastructure facilities in factories. Because job
hopping is very common in Malaysia, it is difficult to secure necessary workers.
The contents of the Project will be decided according to the needs of companies considering these findings from
interview survey.
3.
Basic policy 3: Contents of the Project with harmonizing with the policies, investment incentives, etc. of
the Malaysian government
During the 15th Conference of the Parties to the UN Framework Convention on Climate Change (COP 15), the
Malaysian government pledged “40% voluntary reduction of per-GDP CO2 emission by 2020 relative to 2005.” In
response, efforts are being taken in Malaysia aiming at the realization of a low-carbon society.
For Iskandar region, which is covered by this study, Low Carbon Society Blueprint for Iskandar was formulated
in July 2013 by Iskandar Regional Development Authority with the assistance of the Japanese government. It
aims to reduce CO2 emission in 2025 by 40% relative to the business-as-usual level (based on 2005 emission
level). This Project is in accordance with “Green Energy System and Renewable Energy”, one of the 12 action
plans listed here.:
With respect to investment incentive schemes in Malaysia, the Malaysian government is promoting “pioneer
status” to projects encouraged based on the national policy. The approved companies can obtain partial exemption
from corporate income tax (70% of statutory income is exempted from taxation and only 30% is taxable) for 5
years.
The contents of this Project will be decided on the premise of the applicability of incentive schemes related to
environment and investment, and this will greatly contribute to the profitability of this Project.
3-57
2) Overall Contents of the Project
a) Final Target of the Project
Eventually, it will be aimed to develop businesses as follows based on the cited “Basic Policies to Decide
Concepts of the Project”. Tis Project consists of 2 categories: energy supply and operation management project
and human resource development project for workers for the maintenance of infrastructure facilities in the park.
Figure3-31 Descriptions of the Overall Contents of the Project (Final Target of the Project)
Source: Study Team
1.
Energy supply for the industrial park
・ High-quality electric power is supplied to factories by means of power generation using high-efficiency gas
combined-cycle cogeneration and collective reception of power from the utility cooperation covering Iskandar
region, TNB, as the backup power source. Surplus power is to be sold to TNB. In the future, the power
generated will also be supplied to adjacent development areas, such as Gerbang Nusajaya and Medini. In this
case, the sold power will not be supplied directly from the generator over cables but through the power grid of
the utility corporation.
・ Planned specifications and capacity.
Generator: Combined-cycle gas turbine.
Power generation capacity: 45 MW.
2.
District cooling system using steam accommodation
・ The steam generated in high-efficiency gas combined-cycle cogeneration is accommodated to factories, and
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district cooling system with using steam absorption chillers is implemented.
Steam supply capacity: about 6.5 t. (Please add description by Fuji Electric).
3.
Energy management of factories in the industrial park
・ Install the smart meters into factories for mutual information exchange.
・ Cloud-based FEMS will be introduced to factories and the service provider will carry out factory energy
management.
4.
Consulting service for energy saving
・ Provide diagnostic service and guidance for factory energy saving.
5.
Leasing and operation management of high-efficiency energy-saving equipment such as district cooling
equipment
・ Equipment leasing business is conducted to provide district cooling equipment, inverter, electric power meter,
LED, UPS, high-efficiency transformer, high-speed circuit breaker, etc. Because of this, factories will be able
to suppress initial investment cost and lighten tax burden and other expenditure associated with the possession
of equipment asset.
・ The service provider performs maintenance of leased equipment. Because of this, each factory has no need to
have dedicated engineers for the cooling equipment; and also, enables to reduce the maintenance cost.
6.
Human resource development of workers for maintenance of infrastructure facilities in the industrial
park
・ Develop maintenance workers for the industrial park in collaboration with existing vocational schools and
other institutions.
・ In the future, high-level human resource development will be conducted through joint study and other forms
of collaboration with organizations such as the university in EduCity, which is located in the neighborhood.
3-59
b) Contents of the Project (Scope of the First-stage Project)
1.
Targeting area
The demand will not show soon because the industrial park will be developed in phases, as shown in Basic policy
1 “Development plan for the targeted industrial park, Nusajaya High-Tech Park.” In addition, the gas pipeline has
not been constructed yet. For these reasons, the first stage of the Project will include only the district cooling
using grid power and chilled water accommodation in Phase 1a area (approx. 7.2 ha), which will be developed
first. We will install a system using gas for power generation and district cooling with steam accommodation after
the construction of the gas pipeline.
Figure3-32 Targeting area
Targeting area of this study
Source: Study Team based on materials provided by Ascendas
Figure3-33 System image (District cooling system through grid power and chilled water accommodation)
Source: Study Team
3-60
2.
Concept Design and Equipment Specification
High-efficiency turbo chillers will be placed in a part of the utility area, and chilled water pipes are led to factories
from there. Pipes are buried underground beneath the roads in front of factories. The bore diameter of chilled
water pipes will be 400 mm near the high-efficiency turbo chillers, 300 mm in midway sections, and 200 mm near
factories. The heat loss of underground pipes, made of materials preventing heat loss, is assumed to be 5%. The
total elongation of pipes is approximately 1,100 m. As piping can be routed to cross roads in the park, chilled
water accommodation between factories will be designed with piping crossing the road. The piping plan and the
structure beneath a road are shown below.
The present study clarified the equipment installation conditions for high-efficiency turbo chillers and the
conditions for chilled water piping. While we considered the chilled water accommodation system and determined
conditions focusing on RBF, these conditions for equipment installation and chilled water piping can be applied to
not only RBF but also BTS and commercial areas.
If there is at least 500 USRT of combined cooling load that is expected to persist for 5-10 years, it is possible to
construct a chilled water accommodation system by adjusting the capacity of high-efficiency turbo chillers and the
bore diameters and lengths of chilled water piping.
Figure3-34 Location of high-efficiency turbo chillers and underground chilled water piping layout
Location of high-efficiency turbo chillers
Source: Study Team
3-61
Figure3-35 Section plan of water piping
Source: Study Team
The capacity of high-efficiency turbo chillers will be 2,500 USRT based on the floor area requiring air
conditioning and demand assumption. The 2,500 USRT high-efficiency turbo chillers will comprise two 1,000
USRT units and a 500 USRT unit, considering efficient operation responding to demand and redundancy. The
equipment layout plan is shown below.
Figure3-36 Equipment Layout Plan
(Plan)
(Section)
12m
12000
6000
計器室
Electrical Control
Room
電気室
Ground
(Plants)
Turbo chiller １A
1000USRT
AU-1
ECC-1(A)
24m
CWP-1(A)
CP-1(A)
AU-2
CWP-1(B)
Turbo chiller １B
1000USRT
AU-3
18000
ECC-1(B)
CP-1(B)
Turbo chiller 2
500USRT
ECC-2
CWP-2
CP-2
Source: Study Team
3-62
3.
Issues and Solutions towards the utilization of proposed technologies and systems.
Major issues are whether there are an assured cooling load for the adoption of proposed technologies and systems.
Sales of sections in the tech park will start from January 2014, therefore availability of the adoption of proposed
technologies and systems will be considered with reviewing the actual trend of factories’ demands and the amount
of cooling load.
4.
Business Scheme for the Proposed Project
In this Project, a SPC established by JV among Inter Act, Fuji Electronic, other Japanese companies, Malaysian
companies, and Ascendas will operate the business. The investing companies will bear 50% of the project cost,
and 50% will be loaned from a financial institution. Because this business complies with the environment
promotion policy of the Malaysian government and it will be the first case of district cooling in an industrial park,
it is likely to be eligible for Pioneer Status and other investment incentives from the Malaysian government, as
well as preferential tariff from TNB and other supports.
Each factory contracts with the SPC to receive chilled water supply service and pays the bill. The SPC pays the
cost of power to TNB and the cost of water to the water supply company. The SPC operates the business in
cooperation with the local operation management company and the engineering/construction company.
Figure3-37 Business Scheme for the Service Company
Private Bank
[Investers]
InterAct, Fuji Electric, and other Japanese Companies
or
Malaysian Companies
JICA Loan
Singapore Companies
Government of
Malaysia
TNB
Water Supply
Equity
Loan
Incentives
Servicing
Payment of Electricity tariff
SPC
Factories
(JV Companies)
Payment of Water tariff
Payment of Tariff
Company
Engineering/Construction Contract
Operation/Maintenance Contract
Engineering/Construction
Operation/Maintenance
Companies
Companies
Source: Study Team
3-63
3) Future Plan
After the gas pipeline is constructed and it becomes possible to expect sufficient demand with the increase in the
number of factories in the park according to the industrial park development plan, we will start energy supply for
the industrial park, district cooling using steam accommodation, energy management of factories in the industrial
park, consulting service for energy saving, leasing and operation management of high-efficiency energy-saving
equipment, and human resource development of workers for maintenance of infrastructure facilities in the
industrial park on appropriate timing.
Figure3-38 Future image of system installation
(District Heating and Cooling System with distributing power and heating steam)
Source: Study Team
3-64
Chapter 4 Evaluation of Environmental and Social Impacts
(1) Analysis of the Present States of Society and Environment
1) Analysis of Present State
a) Social and Environmental Background
The rapid development of tin mines in Malaysia from the beginning of the 20th century resulted in polluted water
and sludge flowing into Malaysia’s rivers, and natural rubber and palm oil production added industrial effluent to
rivers and the ocean to exacerbate Malaysia’s environmental problems. The country quickly industrialized with
the introduction of foreign capital, and increased industrial effluent and waste made environmental problems even
worse in the 1970s. The Environmental Quality Act, 1974 was enacted to counter these problems and established
restrictions on effluent and atmospheric emissions. That same year, the Department of Environment (DOE) was
established to take care of environmental administration.
An environmental impact assessment (EIA) system to prevent environmental destruction due to large-scale
development was introduced in 1985.
Malaysia ratified the United Nations Framework Convention on Climate Change (UNFCCC) in July 1994 and the
Kyoto Protocol in September 2002 in response to global environmental problems.
b) Natural Environment
1.
Climate
Malaysia is made up of West Malaysia, which occupies the southern half of the Malay Peninsula, and East
Malaysia, which occupies the northern third of the island of Borneo. Both halves are located between latitudes
2ºN and 7ºN and have a tropical rainforest climate, where it is warm and humid throughout the year. West
Malaysia has monsoons (seasonal winds) that blow to the southwest from May to September and to the northeast
from November to March. The temperature in Johor Bahru, where the Project site is located, stays largely between
22ºC and 33ºC and is at its hottest from March to May.
Figure4- 1 Johor Bahru Climate
℃
35
350
30
300
25
250
20
200
15
150
10
100
5
50
0
1
2
3
4
5
6
7
8
mm
Average
平均降水量rainfall
Mean maximum temperature
平均最高気温
Mean minimum temperature
平均最低気温
0
9 10 11 12 月
Month
Source: Study Team based on World Meteorological Organization (WMO) data
(average values from 1974–2000)
4-1
2.
Air
Over 70 percent of air pollutants in Malaysia come from emissions from automobiles, motorcycles and other
mobile sources. The southern part of Johor Bahru is one place in Malaysia where rain acidification has progressed
significantly.
Malaysia uses an air pollutant index (API) to publicize the state of air pollution. Malaysia’s API consists of five
levels (Good, Moderate, Unhealthy, Very Unhealthy and Hazardous) determined by 5 parameters (PM10, CO,
NO2, SO2 and O3).
According to data from 2008 to 2011, Johor Bahru had some years and areas with an Unhealthy API over 101.
Figure4- 2 Air Pollutant Emissions Breakdown
Factories
power plants,
etc. (27.3%)
Other (3.3%)
Automobiles,
motorcycles
(69.4%)
Source: Compendium of Environment Statistics 2012 Malaysia (Malaysian Department of Statistics)
Figure4- 3 Acid Rain Level by Region
Source: Annual Air Quality Report (2005) (Malaysian Meteorological Department)
Table4- 1 Air Pollutant Index (API) and Air Pollution Levels
API
0–50
51–100
101–200
201–300
300 or above
Air Pollution Level
Good
Moderate
Unhealthy
Very Unhealthy
Hazardous
Source: Study Team based on information from the Embassy of Japan in Malaysia website
4-2
Table4- 2 API by Region (2008–2011)
2008
2009
2010
2011
Minimum Maximum Minimum Maximum Minimum Maximum Minimum Maximum
Larkin (Johor Bahru)
5
101
2
99
15
111
3
84
Cheras (Kuala Lumpur)
Bandaraya (Malacca)
Seberang Jaya
Kuching
Miri
Kota Kinabalu
8
3
6
5
6
1
135
80
99
72
76
55
4
4
5
10
6
1
168
137
106
114
179
78
26
22
28
16
17
10
169
139
93
54
89
68
11
12
6
4
4
2
150
97
98
100
96
61
Source: Study Team based on the Compendium of Environment Statistics 2012 Malaysia
(Malaysian Department of Statistics)
3.
Water
Malaysia uses a water quality index (WQI) to publicize the state of water pollution. Malaysia’s WQI consists of
three pollution levels (Clean, Slightly Polluted, Polluted) determined by 6 parameters (pH, dissolved oxygen (DO),
biochemical oxygen demand (BOD), chemical oxygen demand (COD), ammonia nitrogen and suspended solids
(SS)) that also affect the assignment of five WQI classes.
The WQI of the Pulai River, which is near the Project site, was 80 in 2010 and 74 in 2011, resulting in a Slightly
Polluted pollution level and its assignment into Class III, which means that its water requires special treatment
before it can be supplied.
Figure4- 4 Pulai River Area Near Project Site
Pulai River
Source: Study Team based on maps from the Iskandar Regional Development Authority
4-3
Table4- 3 Water Quality Index (WQI)
WQI
81–100
60–80
0–59
Water Pollution Level
Clean
Slightly Polluted
Polluted
Source: Compendium of Environment Statistics 2012 Malaysia (Malaysian Department of Statistics)
Table4- 4 WQI Classes
Class
Evaluation Based on Intended Use
WQI
I
Water Supply
92.7 or higher Treatment not required
Fishery-Related
Existence of aquatic organisms extremely
sensitive to water quality
Existence of aquatic organisms sensitive to
water quality
General commercial fishery zones, drinking
water for livestock
II
76.5–92.7
Requires standard treatment
III
51.9–76.5
Requires special treatment
IV
V
31.0–51.9
31.0 or lower
Irrigation
Water for uses other than the above
Source: Compendium of Environment Statistics 2012 Malaysia (Malaysian Department of Statistics)
4.
Waste
Waste is defined in Malaysia’s Environmental Quality Act as “all materials designated as ‘scheduled waste,’ or
anything in solid, semi-solid, liquid, gaseous or vaporous form whose volume, structure or methodology causes
pollution and is emitted, discharged or can be measured in the environment” (quoted from Article 2) and includes
a wide array of waste including harmful and hazardous waste as well as sludge from regular manufacturing
operations and discharge treatment.
Though the volume of scheduled waste within Malaysia decreased from 2010 to 2011, it has showed a tendency to
increase in recent years. Furthermore, Johor Bahru produced the highest volume of waste of any Malaysian state
in 2011.
Figure4- 5 Annual Waste Volume in Malaysia
Source: Compendium of Environment Statistics 2012 Malaysia (Malaysian Department of Statistics)
4-4
Figure4- 6 Waste Volume by State (2011)
Waste volume (Unit: 1,000
tons)
Source: Compendium of Environment Statistics 2012 Malaysia (Malaysian Department of Statistics)
c) Social Environment
Development is progressing in the financial, political, education, medical, residential and amusement industries in
the general area around the Project site. Malaysia continues to attract high-tech corporations to the site under
consideration as well; heavy industries are not expected to locate there.
The Gerbang Nusajaya region includes the Project site, and the Sungai Pulai Forest Reserve sits to the west of the
area of Gerbang Nusajaya being developed. According to the designated national authority (DNA) about the
submission of EIAs, a detailed environmental impact evaluation that included the Sungai Pulai Forest Reserve, a
registered Ramsar Convention (Convention on Wetlands of International Importance, especially as Waterfowl
Habitat) site, has been done during the development of Gerbang Nusajaya. In addition to the usual 10% of
residents of the area, nearly 200 indigenous people who live traditional lifestyles in places like the Sungai Pulai
Forest Reserve have also been interviewed and briefed on the development project during this EIA. The local
stakeholders have been briefed and given their understanding.
DOE evaluation for a preliminary environmental impact was also done in 2013 in the course of developing
Nusajaya High-Tech Park, in which the Project site is located. The developer of the park has already had the
authorization for the project implementation.
4-5
Figure4- 7 Registered Ramsar Convention Site
Registered Ramsar
Convention site
Source: Sstudy Team based on Iskandar Regional Development Authority maps
2) Future Projections (supposing the Project is not implemented)
As explained in Chapter 3, plans call for the development of the 512 acres (roughly 207 ha) occupied by Nusajaya
High-Tech Park, the industrial park targeted by the Project, to be divided into three phases. Corporations that will
move into the industrial park will begin concluding contracts in January 2014, and Phase 1a (RBF construction)
should be complete by 2015 so that factories can begin operating by the end of 2015.
If the Project is not implemented, each RBF from Phase 1a would probably install its own individual air
conditioning system.
In that case, the estimated amount of electricity consumed per year would be 10,499 MWh (7,537 MWh during
the day, 2,962 MWh at night) based on hypothetical demand and cold air demand curves from “Chapter 3 (3)
Various Considerations Required to Determine Project Details,
Demand Assumption for Expected Companies.”
4-6
e) Energy Demand Assumption Based on the
(2) Positive Environmental Impacts of the Project
1) Environmental improvement effect
The required electricity and generated greenhouse gas (CO2) can be reduced by implementing a highly efficient
device, the turbo refrigerator. The turbo refrigerator requires only approximately 50% of the electrical power of
existing individual air conditioners and emits 50% of the CO2. A calculation of the reduction in CO2 emissions is
provided in Chapter 5 Financial and Economic Evaluation.
The energy consumption with the constructing cooling water pipe into the project site is curtailed by
implementing that facility during the Nusajaya High-Tech Park developing period.
2) CDM (Clean Development Mechanism)
Even though Japan will not participate in a second commitment period of the Kyoto Protocol after 2013, Japan is
still entitled to participate in CDM projects based on the Decision of COP18/CMP8. However, it is our view that
this project is not suited for CDM. Some of the reasons for this are that CDM has complicated procedures and
requires a long time for registration of the project and certification of emission reduction (CER). In addition,
according to the European Climate Exchange, the current CER contract trading is below €1/tCO2, so this has little
crediting benefit to the project.
In order to effectively address climate change, the Government of Japan has proposed the establishment of the
Joint Crediting Mechanism (JCM). The basic concepts for the JCM are:
Facilitating the propagation of leading low carbon technologies, products, systems, services, and
infrastructures as well as the implementation of mitigation actions, and contributing to the sustainable
development of developing countries.
Appropriately evaluate the contributions to GHG emission reductions or removals of mitigation actions
implemented in developing countries and use those emission reductions or removals to achieve emission
reduction targets of the developed countries.
Contributing to the ultimate objective of the UNFCCC by facilitating global actions for emission reductions
or removals.
The IRDA has drawn up the Low Carbon Society Blueprint 2025 for developing the Iskandar area, where includes
the Nusajaya High-Tech Park. The plan aims to reduce CO2 emissions by 40% of 2005 levels by 2025. JICA and
Japan Science and Technology Agency (JST) supported the establishment of the plan through the Japanese
government program, Science and Technology Research Partnership for Sustainable Development (SATREPS).
JCM is more flexible than CDM and potentially more useful for the Nusajaya High-Tech Park development,
which will continue for several more years.
4-7
(3) Environmental and Social Impact Due to Project Implementation
1) Determining Environmental and Social Concerns
Detailed EIA is to be applied to the project which has large impact to the environment. Such detailed EIA has
already been implemented as part of the development of the Gerbang Nusajaya region, which includes the Project
site, and the report has already been approved. The Project is implemented for the purpose of improving the
environment; high-efficiency district cooling services for the industrial park have been considered as part of the
Project.
There is no need to perform further EIAs for the high-efficiency district cooling services for the industrial park
within the development area like those from the Project for which such assessments have already been
implemented, but the Department of Environment (DOE) that has jurisdiction over Johor Bahru requires that they
be compared with industrial site suitability evaluations. We have confirmed the fact that further EIAs are not
required through interviews with the environmental consulting company, DNA involved in EIA submission, and
the Majlis Perbandaran Johor Bahru Tengah (MPJBT).
We used JICA’s Basics of Environmental and Social Considerations and the Japan Bank for International
Cooperation (JBIC) Guidelines for Confirmation of Environmental and Social Considerations to determine
environmental matters likely to be impacted by the Project and other matters that should be considered. We also
referred to lists of thermal power generation and other infrastructure facilities because the Project will introduce
high-efficiency district cooling to the industrial park.
Table4- 5 Environmental and Social Considerations
Class
Environmental
Matters
Main Items to Check
1. Permits, Licenses and Explanation
(a) Have EIA reports, etc. been
prepared?
(b) Have EIA reports, etc. been
approved by the government of the host
country?
(1) EIA and
(c) Does that approval come with any
environmental conditions? If so, have those conditions
permits and
been satisfied?
licenses
(d) Other than the above, have any
required licenses or permits related to
the environment been obtained from
local governing agencies?
(2) Briefing
local
stakeholders
(a) Have local stakeholders been
properly briefed about details and
impacts of the Project or otherwise
provided with public information, and
have they granted their understanding?
(b) Has the Project been made to reflect
comments from residents and other
local stakeholders?
4-8
Specific Environmental and Social
Yes: Y
Considerations (Reasons/basis for answers,
No: N
ways to alleviate problems, etc.)
(a) Y
(a) EIA reports covering the development
(b) Y
of the Gerbang Nusajaya region, which
(c) N
includes sites under consideration for the
(d) N
Project, have already been prepared.
However, the implementation of the Project
is outside the scope of EIA.
(b) The aforementioned EIA reports have
been approved.
(c) (d) Since the implementation of the
Project is outside the scope of EIA, there
are no EIA conditions regarding the Project,
but we do need to refer industrial site
suitability evaluations to the Johor Bahru
DOE.
(a) N
(a) The Project is outside the scope of EIA,
(b) N
but as an industrial park, the site must go
through the procedure of industrial site
suitability evaluations.
(b) The Project will introduce
high-efficiency cooling equipment to an
industrial park, so it will not have much of
an impact on residents in the area. Thus,
Class
Environmental
Matters
Specific Environmental and Social
Yes: Y
Considerations (Reasons/basis for answers,
No: N
ways to alleviate problems, etc.)
there is little need to incorporate their
opinions.
Main Items to Check
2. Pollution Control Measures
(a) Have multiple alternative proposals (a) Y
(3) Considering
for project plans been considered (and
alternative
have environmental and social matters
proposals
also been considered as part of them) ?
(a) Will air pollutants emitted from
(a) YN
target infrastructure facilities, auxiliary (b) facilities, etc. (sulfur oxides (SOx),
nitrogen oxides (NOx), particulate
matter, etc.) satisfy the host country’s
emissions standards and environmental
standards? Will anything be done to
(1) Air quality maintain air quality?
(b) If coal-fired power plants are
involved, is there any concern that coal
dust blown from storage yards, coal
transporting facilities or coal ash
landfills could pollute the air? Will
anything be done to prevent such
pollution?
(a) Will effluent or seepage from
(a) YN
infrastructure facilities, auxiliary
(b) –
facilities, etc. satisfy the host country’s (c) Y
emissions standards and environmental
standards?
(2) Water
(b) If coal-fired power plants are
quality
involved, does seepage from storage
yards or coal ash landfills satisfy the
host country’s emissions standards?
(c) Will anything be done to prevent this
effluent from polluting surface water,
soil, groundwater or the ocean?
(a) Will waste from infrastructure
(a) Y
facilities and auxiliary facilities
(3) Waste
properly treated or disposed of in line
with the host country’s regulations?
(a) Will anything be done to prevent
(a) Y
effluent and seepage from infrastructure
(4) Soil
facilities, auxiliary facilities, etc. from
contamination
polluting soil and groundwater?
(5) Noise and
vibrations
(a) Will noise and vibrations satisfy the (a) host country’s standards?
(a) If pumping large quantities of
(a) N
groundwater, is there cause for concern
about ground settlement?
(a) Will anything cause foul odors? Will (a) N
(7) Foul odors anything be done to prevent foul odors
from occurring?
(6) Ground
settlement
4-9
(a) Alternate proposals that use
conventional technology have been
considered.
(a) We are still in the initial stages of
considering the Project, so this has not been
examined in detail, but we will employ
technology to ensure that emissions
standards are met.
(b) There are no plans to use coal.
(a) We are still in the initial stages of
considering the Project, so this has not been
examined in detail, but we will employ
technology to ensure that emissions
standards are met.
(b) There are no plans to use coal.
(c) We will take preventative measures as
necessary after examining the necessary
information during the detailed planning
stage.
(a) We are still in the initial stages of
considering the Project, so this has not been
examined in detail, but we will treat and
dispose of waste in line with Malaysia’s
regulations.
(a) We are still in the initial stages of
considering the Project, so this has not been
examined in detail, but we will treat and
dispose of waste in line with Malaysia’s
regulations.
(a) Malaysia does not have environmental
standards for industrial noise or vibration,
but we will take preventative measures for
the sources of noise and vibration during
the detailed planning stage.
(a) We are thinking of using municipal
water; there should be no cause for concern
about ground settlement.
(a) The Project does not include anything
that produces foul odors.
Class
3. Natural Environment
4. Social Environment
Specific Environmental and Social
Yes: Y
Considerations (Reasons/basis for answers,
No: N
ways to alleviate problems, etc.)
(a) Is the site located within a protected (a) N
(a) Nothing qualifies as a protected zone as
(1) Protected zone as defined by host country law or
defined by law or international treaty.
zones
international treaty? Will the Project
impact any protected zones?
(a) Does the site include virgin forest, (a) N
(a) The target area for the Project does not
natural rainforest or ecologically
(b) N
include any such areas.
important habitats (coral reefs,
(c) N
(b) The target area for the Project does not
mangrove wetlands, tidal flats, etc.)?
(d) NY include habitats for rare species.
(b) Does the site include habitats for rare (e) N
(c) Nothing qualifies as a habitat for rare
species that require protection under
species, so there should be no cause for
host country law or international treaty?
concern about significant impacts.
(c) If there is cause for concern about
(d) (e) We are still in the initial stages of
significant impacts on ecosystems, will
considering the Project, so this has not been
anything be done to reduce those
examined in detail, but we will take
impacts?
measures as necessary after considering the
(2) Ecosystems
(d) Will use of surface water or
necessary information during the detailed
groundwater for the Project have any
planning stage.
impact on rivers or other aquatic
environments? Will anything be done to
reduce any impact on aquatic
organisms?
(e) Will the discharge of thermal
effluent or seepage or the intake of large
quantities of cooling water have any
negative impact on ecosystems in the
surrounding watersheds?
(a) Will changes to the water system
(a) N
(a) We are thinking of using municipal
because of the Project have any negative
water; there should be no cause for concern
impact on the flow of surface water or
about ground settlement. As for discharge,
(3)
groundwater?
we are still in the initial stages of
Hydrometeorol
considering the Project, so it has not been
ogy
examined in detail, but we will take
measures as necessary after considering the
necessary information during the detailed
planning stage.
(a) Will the Project significantly
(a) N
(a) The Project will not significantly
(4) Geography transform the geography or soil
transform the geography or soil structure of
and soil
structure of the site or the surrounding
the site or the surrounding area.
area?
(a) Will the implementation of the
(a) N
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j) The
Project cause any involuntary
(b) N
Project does not call for anyone to be
resettlement? If so, will efforts be made (c) N
resettled.
to minimize the impact of resettlement? (d) N
(b) Before residents are resettled, will (e) N
they receive proper briefing on
(f) N
compensation and measures for starting (g) N
(1)
new lives?
(h) N
Resettlement (c) Will resettlement studies be done, (i) N
and will resettlement plans include
(j) N
compensation through a reacquisition
payment and lifestyle recovery
following resettlement?
(d) Will compensation be paid prior to
the resettlement?
(e) Is the policy for compensation put
Environmental
Matters
Main Items to Check
4-10
Class
Environmental
Matters
Specific Environmental and Social
Yes: Y
Considerations (Reasons/basis for answers,
No: N
ways to alleviate problems, etc.)
Main Items to Check
out in writing?
(f) Will resettlement plans give proper
consideration for women, children,
elderly people, poor people, minorities,
indigenous peoples and other socially
vulnerable people?
(g) Will you get residents’ consent
before resettling them?
(h) Will a proper system for the
resettlement be established? Will
sufficient implementation capabilities
and budget measures be carried out?
(i) Will the monitoring of the impact of
resettlement be planned?
(j) Will a system for dealing with
complaints be built?
(a) Will the Project have a negative
(a) N
impact on the livelihoods of residents? (b) N
If necessary, will you consider how to (c) N
alleviate that impact?
(d) N
(b) Does the Project have the sufficient (e) YN
social infrastructure it requires
(hospitals, schools, roads, etc.)? If not,
are there plans to build it?
(c) Will the driving of large vehicles for
the Project have an impact on road
traffic in the surrounding area? If
(2) Life and
necessary, will you consider how to
livelihoods
alleviate that impact?
(d) Is there any risk of disease (HIV and
other communicable diseases) occurring
due to the influx of workers doing
Project work? If necessary, will you
make proper considerations for public
health?
(e) Will the intake of surface water or
groundwater and the discharge of
thermal effluent have an impact on the
current use of water or the surrounding
watersheds (especially on fishing)?
(a) Does the Project produce cause for (a) N
concern about losing archaeologically,
(3) Cultural
historically, culturally, religiously
heritage
significant heritage or landmarks? Will
measures determined by host country
law be considered?
(a) Will the Project negatively impact (a) N
any scenery that requires particular
(4) Scenery
consideration? If so, will necessary
measures be taken to mitigate that
impact?
(a) Have you considered reducing the (a) –
(5) Minorities
Project’s impact on the cultures and
(b) –
and indigenous
lifestyles of minorities and indigenous
peoples
peoples?
4-11
(a) The Project will introduce
high-efficiency cooling equipment to an
industrial park, so it will not have much of
an impact on residents in the area.
(b) The area surrounding the Project site
already has a steady social infrastructure.
(c) We are still in the initial stages of
considering the Project, so this has not been
examined in detail, but we will take
measures as necessary after considering the
necessary information during the detailed
planning stage.
(d) The area surrounding the Project site
already has a steady social infrastructure,
and we are considering a district cooling
service within the industrial park, so there
should be little risk of infection.
(e) We are still in the initial stages of
considering the Project, so this has not been
examined in detail, but we will take
measures as necessary after considering the
necessary information during the detailed
planning stage.
(a) The area in question does not include
any such heritage.
(a) The Project will introduce district
cooling services to an industrial park, so
there is no scenery that requires particular
consideration.
(a) (b) The area in question does not include
any such people.
Class
Environmental
Matters
Specific Environmental and Social
Yes: Y
Considerations (Reasons/basis for answers,
No: N
ways to alleviate problems, etc.)
Main Items to Check
5. Other
(b) Will the rights of minorities and
indigenous people to their land and
resources be respected?
(a) Will host country laws related to
(a) Y
working environments be observed as (b) Y
they should be for the Project?
(c) Y
(b) Will you install safety equipment, (d) Y
manage hazardous materials and make
other safety considerations for Project
personnel on the technical aspect for
preventing work-related accidents?
(6) Working
(c) Will you create health and safety
environment
plans, implement safety education
(including traffic safety and public
health) for workers and plan and make
other safety considerations for Project
personnel on the non-technical aspect?
(d) Will security personnel related to the
Project take proper measures to
maintain the safety of Project personnel
and residents of the surrounding area?
(a) Have measures to alleviate pollution (a) Y
from construction (noise, vibrations,
(b) Y
turbid water, dust, exhaust, waste, etc.) (c) Y
been taken?
(b) Will construction have a negative
(1) Impact
impact on the natural environment
during
(ecosystems)? Have measures to
construction
alleviate that impact been taken?
(c) Will construction have a negative
impact on the social environment? Have
measures to alleviate that impact been
taken?
(a) If coal-fired power is to be used,
(a) –
have measures to prevent spontaneous
(2) Preventative fires from breaking out in storage yards
measures
been taken (sprinkler facilities, etc.)?
(a) Will monitoring by technicians of
matters above that will have an impact
on the environment be planned and
implemented?
(b) How will items to be planned,
methodology and frequency be
determined?
(3) Monitoring (c) Will a system for monitoring by
technicians (organization, personnel,
machinery and equipment, budget and
their sustainability) be established?
(d) Will there be regulations for the
methodology and frequency of
technicians’ reporting to local
governing agencies?
4-12
(a) Y
(b) –
(c) Y
(d) Y
(a) (b) (c) (d) Malaysian Occupational
Safety and Health Act 1994 will be
observed as Project services are
implemented.
(a) (b) (c) The Project will introduce district
cooling systems to an industrial park, so the
scale of construction work will be small,
and the impact of construction on the
environment will be minor. However, we
will consider measure to alleviate these
impacts during the detailed planning stage.
(a) There are no plans to use coal.
(a) (b) (c) (d) We are still in the initial
stages of considering the Project, so this has
not been examined in detail, but monitoring
of the discharge of water used for cooling
may be necessary. We will check with the
Johor DOE during the stage in detailed
planning when we examine the amount of
effluent, and, if necessary, we will establish
a monitoring system, monitor by required
methodologies and frequencies, and report
as required.
Class
6. Important Points
Specific Environmental and Social
Yes: Y
Considerations (Reasons/basis for answers,
No: N
ways to alleviate problems, etc.)
(a) (a) No access roads, etc. are planned for the
(b) N
Project, so this does not apply.
(b) We will use existing power transmission
facilities.
Environmental
Matters
(a) If necessary, add items from
checklists for roads, railways and
bridges and evaluate those items to be
checked (when access roads for
Referring to
infrastructure facilities, etc. will be
other
built).
environmental (b) If necessary, add items from
checklists
checklists for power transmission,
transformation and distribution and
evaluate those items to be checked for
power line laying, pylons and submarine
cables.
(a) If necessary, verify the impact on
(a) Y
neighboring countries and global
Cautions when
environmental issues (when considering
using
disposing of waste in neighboring
environmental
countries or using elements related to
checklists
acid rain, ozone layer destruction or
global warming).
Main Items to Check
(a) We will seek to reduce carbon dioxide
emissions.
Source: Study team JICA’s Basics of Environmental and Social Considerations, Environmental Checklist,
Thermal Power Generation and Other Infrastructure Facilities, Environmental Checklists
4-13
2) Consideration of Other Options to Further Minimize Environmental and Social Impacts
CHP, which uses natural gas as its primary energy source, is a more environmentally friendly option than the
chilled water accommodation system, which uses high-efficiency turbo chillers, from the latest proposal. District
cooling systems that use CHP would make more efficient use of their primary energy source than they would with
the proposed chilled water accommodation system, resulting in greater energy conservation and CO2 reduction.
However, as explained in Chapter 3 (3) Various Considerations Required to Determine Project Details, district
cooling systems that use CHP cannot be built because natural gas is not supplied to the Project site.
We believe the use of CHP should be considered as part of the long-term, sustainable development of the
Nusajaya High-Tech Park.
3) Discussions with Implementing Agencies and Information from People and Groups Familiar with
Environmental and Social Conditions of the Local Area
During our consideration of the Project, we interviewed local government-affiliated agencies, Japanese companies
in the Malaysian market, the developer Ascendas and the environmental consulting company, which is DNA to
which we submit EIAs. Below are their views on the environmental and social aspects of the Project.
Malaysia has very strict environmental standards for effluent. Potassium dichromate is the oxidizing agent
used to determine COD in Malaysia, so their standards are stricter than those of Japan, in which potassium
permanganate is used.
If monthly water quality tests reveal that effluent fails to meet environmental standards, factory operations
must be suspended. Reservoirs in the industrial park will also be tested once monthly, and if they fail to meet
environmental standards, factory operations must be suspended.
The consultant that serves as the DNA must prepare documents related to EIAs.
There are earthquakes, typhoons and other natural disasters. Those are characteristic points of Malaysia’s
natural environment
Most Japanese companies tin the Malaysian market have introduced water recycling facilities, solar power
generation facilities and other environmentally friendly machinery and equipment. This is indicative of their
corporate culture of taking steps to reduce the environmental burden of building new factories. They have
also set their sights on reducing CO2 emissions and are trying to conserve energy by doing things such as
using fluorescent lights with inverters. Some corporations have gotten results through non-technical efforts to
conserve energy, such as turning lights off when leaving the room or setting air-conditioning to high
temperatures.
Some Japanese companies are considering using heat reflective coatings on their roofs to reduce the expense
of air-conditioning, and many companies are talking about the environmentally friendly impacts of efforts to
save on heating and cooling costs.
4-14
(4) Overview and Actions Required to Satisfy Host Country’s Legislation
Concerning Environmental and Social Considerations
1) Overview of Legislation Concerning Environmental and Social Considerations Related to Project
Implementation
a) Overview of the Main Administrative Organizations Involved in Environmental and Social Considerations
1.
Department of Environment (DOE) (environmental administration oversight organization)
The Environmental Quality Act (EQA) was established in 1974 to prevent, alleviate and regulate pollution and
provide regulations for environmental improvement. The DOE was established in 1975 to oversee environmental
administration based on the EQA.
The DOE is part of the Ministry of Natural Resources & Environment, which was established in 2004. The
Ministry of Natural Resources & Environment is a lateral integration of the four ministries that had jurisdiction
over such matters until 2004.
There are federal government and local administrative organization in Malaysia. Local administrative
organizations in Malaysia include states, districts within states called “daerah” and towns called “mukim”. State
governments have authority over land, agriculture and forestry, the fishing industry and water resources, but the
federal government has authority over environmental administration. Thus, state governments generally do not
handle environmental issues; DOE state offices located in each region handle environmental regulations and other
environmental administration. However, in Sarawak Division, there is an environmental department bureau and
this handles the environmental issues only on agriculture. Local authorities are responsible for the collection,
treatment and disposal of general waste.
Table4- 6 Departments Under Jurisdiction of the Ministry of Natural Resources & Environment
Departments Under Jurisdiction of the Ministry of Natural Resources &
Environment
Department of Director General of Lands and Mines
Department of Survey & Mapping Malaysia
National Institute of Land and Survey
Forestry Department Peninsular Malaysia
Forest Research Institute Malaysia
Minerals and Geoscience Department Malaysia
Department of Environment (DOE)
Department of Wildlife & National Parks Peninsular Malaysia
Department of Irrigation and Drainage
National Hydraulic Research Institute of Malaysia
Ministry in Control Prior to 2004
Ministry of Land and Co-operative
Development
Ministry of Primary Industries
Ministry of Science Technology and
Environment
Ministry of Agriculture
Source: Study Team based on the Ministry of Natural Resources & Environment homepage
4-15
2.
Conservation and Environment Management Division (CEMD) (Organization in Charge of Global
Warming)
Malaysia ratified the UNFCC in July 1994 and the Kyoto Protocol in September 2002. The CEMD is Malaysia’s
DNA based on the Marrakech Accords, which are operating agreements and bylaws of the Kyoto Protocol.
The National Steering Committee of Climate Change investigates climate change issues under the CEMD.
3.
Sustainable Energy Development Authority (SEDA) (Organization in Charge of Renewable Energy)
The SEDA was established in April 2009 under the KeTTHA, which was born of the Ministry of Energy, Water
and Communications, based on the Sustainable Energy Development Authority Act 2011.
SEDA’s main role is to manage and operate feed-in tariffs in place based on the Renewable Energy Act 2011.
b) Overview of Main Legislation Related to Environmental and Social Concerns
Malaysia’s environmental legislation is based on the EQA, which was enacted in 1974 and became effective in
1975. The EQA gives the head of the DOE the authority to propose the implementation of monitoring and
legislation related to overall environmental regulations, issue all types of permits and licenses to prevent effluent
from polluting the environment, and monitor and expose violations of regulations.
Rules and orders for each regulation are set forth based on the EQA.
Table4- 7 Main Regulations and Orders Related to Environmental and Social Considerations in Malaysia
Control of Motor Vehicle Emissions
Environmental Quality (Control of Lead Concentration in Motor Gasoline) Regulations 1985
Environmental Quality (Motor Vehicle Noise) Regulations 1987
Environmental Quality (Control of Emission from Diesel Engines) Regulations 1996
Environmental Quality (Control of Emission from Petrol Engines) Regulations 1996
Integration of Environment and Development
Environmental Quality (Prescribed Activities) (Environmental Impact Assessment) Order 1987
(Amendment) 1995
Environmental Quality (Prescribed Premises) (Crude Palm Oil) Order 1977 (Amendment) 1982
Environmental Quality (Prescribed Premises) (Crude Palm Oil) Regulations 1977
Environmental Quality (Licensing) Regulations 1977
Environmental Quality (Prescribed Premises) (Raw Natural Rubber) Order 1978 (Amendment)1980
Control of Municipal and Industrial Waste Water Pollution
Environmental Quality (Sewage and Industrial Effluents) Regulations 1979 (Amendment) 1997
Control of Toxic and Hazardous Waste
4-16
Environmental Quality (Scheduled Wastes) regulations 1989 (Amendment)2005
Environmental Quality (Prescribed Premises) (Scheduled Wastes Treatment and Disposal Facilities) Order
1989
Environmental Quality (Prescribed Premises) (Scheduled Wastes Treatment and Disposal Facilities)
Regulations 1989
Promotion of Investments (Promoted Activities and Products) (Amendment)(No.10) Order 1990 (made under
the Promotion of Investments Act, 1986)
Control of Industrial Emissions
Environmental Quality (Clean Air) Regulations 1978
Environmental Quality (Compounding of Offences) Rules 1978
Environmental Quality (Delegation of Powers on Marine Pollution Control) Order 1993 (Amendment) 1994
Environmental Quality (Prohibition on the Use of Chlorofluorocarbons and other Gases as Propellents and
Blowing Agents) Order 1993
Environmental Quality (Prohibition on the Use of Controlled Substance in Soap, Synthetic Detergent and
Other Cleaning Agents) Order 1995
Renewable Energy
The Sustainable Energy Development Authority Act 2011
The Renewable Energy Act 2011
Occupational Safety and Health
Occupational Safety and Health Act 1994
Factories and Machinery Act 1967
Source: Study Team based on the DOE’s Environmental Measures Japanese Corporations Take When Operating
Outside Japan (Malaysia Version) and the homepages of environmental administration organizations in Malaysia
4-17
2) Host Country EIAs Required for Project Implementation
a) Industrial Site Suitability Evaluations
In Malaysia, land newly zoned for industrial or residential use must undergo industrial site suitability evaluations
to determine site suitability and sufficient buffer zones, even if the industries are outside the scope of EIA. The
main point of EIAs is to prevent large-scale development projects from impacting the environment; industrial site
suitability evaluations serve to reduce environmental impacts on residents in areas surrounding those planned for
industrial development and are set forth by the DOE in ”Guidelines for the Siting and Zoning of Industries”.
These guidelines contain the sizes of buffer zones between the following four types of industries and residential
zones.
i. Light Industries
ii. Medium industries
iii. Heavy industries
iv. Special industries
The Project will introduce high-efficiency heating and cooling equipment to an industrial park, and while the
industries are outside the scope of EIA, the Johor DOE must be provided with industrial site suitability
evaluations. These evaluations are a type of manufacturing license condition, and the Johor DOE issues licenses
upon fully understanding the nature of operations, effluent, noise, waste and other factors.
The following operations require applications for additional permits, licenses and registration.
[Written Authorization for Effluent Treatment Facilities and Designated Facilities ]
The construction of effluent treatment facilities, designated facilities (namely, crude palm oil factories and natural
rubber factories) and waste treatment facilities must be authorized with a written permit from the DOE.
[Authorization for Building/Installing Incinerators and Smokestacks]
Building and/or installing incinerators, combustion facilities and smokestacks must be authorized in advance by
the DOE.
[Registration and Notification Regarding Scheduled Waste Discharge]
Corporations that discharge waste must submit notification that they are a Waste Generator and observe waste
regulations.
4-18
Figure4- 8 Procedure for Environmental Requirements in Malaysia
Source: DOE’s Environmental Measures Japanese Corporations Take When Operating Outside Japan
(Malaysia Version)
4-19
Table4- 8 Guidelines for the Siting and Zoning of Industries: Target Operations and Scales, and Buffer Zone Sizes
Industry Type
Light Industry A
Industry Characteristics and Requirements
Buffer Zone Size
30 m
Does not produce noise.
No smokestacks; does not produce exhaust.
Does not discharge industrial effluent other than sewage, household
effluent and non-hazardous solid waste.
Does not use harmful or hazardous raw materials; does not produce
scheduled industrial waste.
Satisfies height restrictions determined by local municipal authorities.
Uses electricity and gas as fuel.
Does not use radioactive materials or scheduled industrial waste.
Note: Light Industry A corporations do not produce any type of industrial
exhaust or large amounts of waste.
Light Industry B
50 m
Does not produce noise.
No smokestacks; does not produce exhaust.
Does not use or produce scheduled industrial waste.
Satisfies height restrictions determined by local municipal authorities.
Depending on the location, treats sewage and industrial effluent onsite
before discharging it so that 1979 environmental regulation standard A
or B is satisfied.
Features multiple operations (e.g., foodstuff production and leather
production).
Does not use radioactive materials or scheduled industrial waste.
Note: The industrial effluent and exhaust emissions of Light Industry B
corporations satisfy relevant environmental regulations based on the
regulations of the 1974 EQA.
Medium Industry
Machinery, power generators and such produce quite a bit of noise, but
throughout the day and the night, the noise is controlled such that it
stays below 65 db at the boundaries of the factory and 45–55 db at the
boundaries of neighborhoods and buffer zones.
Produces some exhaust but controls emissions such that they satisfy
1978 environmental regulations related to preventing air pollution.
Is able to treat sewage and industrial effluent onsite before discharging
it so that 1979 environmental regulation standard A or B is satisfied.
Uses harmful or hazardous raw materials during the production process.
Produces scheduled industrial waste but can treat it onsite or transport it
away from facilities or offices for treatment in such a way that satisfies
1989 environmental regulations for scheduled industrial waste.
4-20
250 m
Industry Type
Industry Characteristics and Requirements
Buffer Zone Size
Produces smoke or foul odors that impact the health of workers or the
area surrounding industrial facilities but have valid ideas to resolve or
prevent the smoke and odors in line with 1978 environmental
regulations related to preventing air pollution.
Smokestack heights are approved by the DOE as consistent with the
specific production capabilities of industrial facilities based on
atmospheric modeling and simulations.
Is located in the same designated industrial park or industrial zone as
differing, yet coherent industries.
Does not use radioactive materials.
Note: All effluent and exhaust emissions must satisfy relevant environmental
regulations set forth in the 1974 EQA.
Heavy Industry
Must be located in an industrial park or in a designated industrial park
built a sufficient distance away from residential zones, livestock farms,
agricultural farms, recreation areas and designated tourism areas.
Factory fences must be located at least 500 meters away the nearest
residential zone. Details must be included in EIA reports.
Operation produces noise, but proper, advanced technology is
employed day and night to reduce noise at levels recommended by
WHO (75 db or lower at the boundaries of the factory and 45–55 db at
the boundaries of neighborhoods and buffer zones).
Produces gases of a content, volume or density that requires detailed,
technical designs that include operations and control mechanisms to
reduce exhaust emissions and measures to alleviate exhaust emissions
in line with the 1978 environmental regulations related to preventing air
pollution.
Smokestack heights must be determined by detailed atmospheric
monitoring and simulations from EIA reports.
Produces industrial effluent of a content, volume or density that requires
detailed, technical designs that include operations and control
mechanisms for central
treatment facilities
to
satisfy 1979
environmental regulations related to sewage and industrial effluent.
Uses harmful or hazardous radioactive materials and/or scheduled
industrial waste. Have acquired necessary authorization for pollution
control technology and planned measures to resolve or alleviate
pollution.
Produces scheduled industrial waste that cannot be treated onsite or
fails to satisfy levels recommended by 1989 environmental regulations
4-21
500 m
Industry Type
Industry Characteristics and Requirements
Buffer Zone Size
related to scheduled industrial waste.
Must include technology required to reduce levels of scheduled
industrial waste to acceptable levels in response to the aforementioned
regulation, or must treat scheduled industrial waste at collection and
treatment facilities, or must reuse it at another facility, or must sell it off
to another business so that it can be reused.
Must consider coherence with differing industries if located within an
industrial park or industrial zone.
Thermal effluent must be grounded on thermal plume modeling and
simulations and clearly written on EIA reports.
Note: Must use appropriate control procedures for all effluent and exhaust
emissions and satisfy relevant environmental regulations based on the 1974
EQA.
Special Industry
Manufactures products using advanced technology.
200 m
Uses advanced, clean technology for its manufacturing process and
control mechanisms that is clearly written out in EIA reports, and has a
parent factory or is similar to an existing, working factory.
Reduces and minimizes exhaust emissions, effluent and scheduled
industrial waste with plenty of leeway to satisfy relevant environmental
regulations based on the 1974 EQA.
Is coherent with neighboring factories and is located in a designated
special industrial zone. Has also been designed in an environmentally
friendly manner.
Note: Using clean technology much produce close to zero waste.
Sources: DOE Environmental Measures Japanese Corporations Take When Operating Outside Japan (Malaysia
Version); and DOE/MNRE Guidelines for the Siting and Zoning of Industries
b) EIA Target Operations
The scale and range of EIA target operations across 19 fields are described in the 1987 environmental order
related to EIA, and such operations require that Preliminary Assessments are conducted.
Table4- 9 EIA Target Operations (operations that require Preliminary Assessments)
Field
1. Agriculture
2. Airports
3. Drainage and
irrigation
Target Operations
(a) Land development plans for turning 500 ha or more of forest into farmland
(b) Agricultural programs that require resettlement of 100 or more families
(c) Developing 500 ha or more of farmland (including conversion to different types of farming)
(a) Constructing airports (with runways 2,500 m or more)
(b) Developing runways within state/national parks
(a) Constructing dams or man-made lakes or expanding man-made lakes 200 ha or more in area
(b) Draining 100 ha or more of wetland, wildlife habitat or virgin forest
(c) Irrigating 5,000 ha or more of land
4-22
Field
4. Reclamation
5. Fishery
Target Operations
Reclaiming 50 ha or more of shoreline
(a) Constructing fishing ports
(b) Port or harbor expansion that includes a 50% or higher increase in annual fishing capacity
(c) Dry land aquaculture projects that involve the clearing of 50 ha or more of mangrove
wetlands
6. Forestry
(a) Rezoning 50 ha or more of hillside forest
(b) Clearing or rezoning forests located within municipal water supply, irrigation or
hydropower reservoirs or intake areas or within state/national parks or land abutting national
marine parks
(c) Clearing 500 ha or more of forest
(d) Rezoning 50 ha or more of mangrove wetlands to industrial, residential or agricultural
zones
(e) Clearing mangrove wetlands on islands within national marine parks
7. Residential
Developing residential zones of 50 ha or more
8. Industrial
(a) Chemical: Production capacity for a single product or multiple products of 100 tons or more
per day
(b) Petrochemical: All scales
(c) Non-ferrous (primary smelting)
Aluminum: All scales
Copper: All scales
Others: Production capacity of 50 tons or more per day
(d) Non-metal
Cement: Consecutive load capacity of 30 tons or more of clinkers per hour
Lime: 100 tons or more per day in quicklime rotary kilns; 50 tons or more per day in smelting
furnaces
(e) Iron and steel: 100 tons or more per day for operations requiring raw iron ore; 200 tons or
more per day for operations requiring scrap iron
(f) Shipbuilding: Ships 5,000 tons or more
(g) Pulp and paper: Production capacity of 50 tons or more per day
9. Infrastructure
(a) Constructing hospitals that drain into shoreline recreation areas
(b) Developing industrial parks for medium/heavy industries of 50 ha or more
(c) Constructing expressways
(d) Constructing national highways
(e) Construction new cities
10. Port and harbors (a) Constructing ports and harbors
(b) Expansion of ports and harbors that includes a 50% or higher increase in annual cargo
handling capacity
11. Mining
(a) Mining minerals under new mining rights that apply to 250 ha or more
(b) Ore processing that includes sorting of aluminum, copper, gold or tantalum
(c) Dredging sand from 50ha or more of land
12. Petroleum
(a) Developing petroleum or gas fields
(b) Constructing pipelines over land or water of total length 50 km or more
(c) Facilities for separating, processing, handling or storing petroleum or gas
(d) Constructing petroleum refineries
(e) Constructing storage areas (excluding gas stations) for petroleum, gas or diesel fuel with
storage capacity of 60,000 or more barrels within 3 km of commercial, industrial or residential
zones Petroleum, gas or diesel fuel storage
13. Power
(a) Constructing thermal power plants that burn fossil fuels with the capacity to generate 10
generation and
MW or more
transmission
(b) Planning dams or hydropower generation that satisfy one or both of the following
conditions:
(i) Dams and supplementary buildings 15 or more meters tall covering an area of 40 ha or more
(ii) Reservoirs 400 ha or more in area
(c) Constructing combined cycle power plants
(d) Constructing nuclear power plants
14. Quarrying
Plans to quarry admixture materials, limestone, silica, quartz, sandstone, marble or decorative
4-23
Field
Target Operations
building stone within three kilometers of existing residential, commercial or industrial zones or
planned development zones that have already been granted permits and approval
15. Railways
(a) Constructing new railways
(b) Constructing feeder lines
16. Transportation Construction on mass rapid transit projects
17. Resorts and
(a) Constructing coastal resort facilities or hotels containing 80 or more rooms
recreation
(b) Constructing mountaintop resorts or hotels that mark out 50 ha or more of land
(c) Developing tourism or recreational facilities within national parks
(d) Developing tourism or recreational facilities on islands in ocean waters officially claimed as
part of national marine parks
18. Waste treatment (a) Poisonous/hazardous waste
and disposal
(i) Constructing incineration plants
(ii) Constructing (outdoor) collection plants
(iii) Constructing (outdoor) effluent treatment plants
(iv) Constructing landfill disposal facilities
(v) Constructing (outdoor) storage facilities
(b) Municipal solid waste
(i) Constructing incineration plants
(ii) Constructing compost plants
(iii) Constructing collection/recycling plants
(iv) Constructing municipal solid waste landfill disposal facilities
(c) Municipal wastewater
(i) Constructing wastewater treatment plants
(ii) Constructing drainage to the ocean
19. Water supply (a) Dams and reservoirs 200 ha or more in area
(b) Pumping 4,500 m3 or more of groundwater per day for industrial or agricultural use or for
an urban water supply
Sources: DOE Environmental Measures Japanese Corporations Take When Operating Outside Japan (Malaysia
Version); and DOE/MNRE Environmental Requirement: A Guide for Investors 2010
c) EIA Procedures
A committee made up of the DOE and ministries or agencies related to the target operation screen the Preliminary
EIAs submitted to the DOE by the entities who proposed the target operations. If there are no problems, the
committee approves the Preliminary EIAs, and industrial development agencies are cleared to implement
operations.
Detailed EIA reports must also be prepared and submitted to the DOE when it is deemed from the nature of the
operation and the Preliminary EIAs that the operation will have a significant impact on the environment.
4-24
Figure4- 9 EIA Procedures
Source: DOE Environmental Measures Japanese Corporations Take When Operating Outside Japan
(Malaysia Version)
4-25
Table4- 10 Detailed EIA Target Operations
1
2
3
4
5
6
7
8
9
10
11
12
13
14
Target Operations
Iron and steel Industry
Pulp and paper mills
Cement plant
Construction of coal fired power plant
Construction of dams and hydroelectric power schemes
Land reclamation
Incineration plant (scheduled waste & solid waste)
Sanitary landfill
Project involving land clearing where 50% of the area or more having slopes exceeding 25% degrees
(except quarry)
Logging involving an area exceeding 500 hectares
Development of tourist or recreational facilities on island in surrounding waters which are gazetted as
national marine parks
Construction of recovery plant (off-site) for lead-acid battery wastes
Scheduled wastes recovery or treatment facility generating significant amount of wastewater which is
located upstream of public water supply intake
Nonferrous metals- primary smelting
Source: DOE/MNRE Environmental Requirement: A Guide for Investors 2010
4-26
(5) Host Country (Implementing Agency and Relevant Agencies) Must-Do
for the Project
The Project is an environmental and social consideration project and does not require EIAs to be implemented.
Once the corporations that will move to the industrial park under consideration are determined, we must do a
detailed design of the systems to be introduced and conduct industrial site suitability evaluations. During these
evaluations, it would be best to discuss matters for monitoring related to environmental and social considerations.
Since we will also consider introducing power supply operations via CHP in the future, it will be important to
continuously hold discussions with the tenant corporations, residents and suppliers in the surrounding area and
other stakeholders.
Below are items that will have environmental and social impacts in the future that we need to consider for the
implementation of the Project.
Table4- 11 Requirements for Project Implementation
Requirements for Project Implementation
Related Organizations
Detailed design of systems to be introduced and industrial site suitability Johor DOE
evaluation process
Determining matters to monitor and their frequency
Johor DOE
Continuous discussions with stakeholders
Tenant corporations
Residents and suppliers in the
surrounding area
Iskandar
Regional
Development
Authority (IRDA)
Majlis Perbandaran Johor Bahru Tengah
(MPJBT)
Tenaga Nasional Berhad (TNB)
Source: Study Team
4-27
Chapter 5 Financial and Economic Evaluation
(1) Estimated Project Cost
We targeted equipment cost (including 3 Electrical Centrifugal Chillers, 3 Cooling Towers, 3 Chilled Pumps, 3
Cooling Pumps, 2 Make-Up Pumps for Cooling Water, 1 Expansion Tank, 1 Water Tank and others.), piping
installation work, electrical installation work, aqueduct construction, installation work of the fire extinguishing
system, installation work of the pneumatic plant and others for the cost estimation. To calculate the construction
cost for the above items, further study with considering several points regarding the aqueduct construction, such
as sectional design of the road, conditions for the construction, future technical innovation, and price fluctuations
due to market expansion is required.
(2) Overview of Preliminary Financial and Economic Analysis
The Project’s main source of revenue is expected to be the sale of cold air to the companies in the industrial park
by SPC established by Japanese and local corporations.
1) Financial and Economic Analysis
a) Costs and Revenue
Revenue based on the several conditions of the project costs was estimated. Cost (Initial Costs, Running Costs,
Power Purchase Cost and others) and revenue (Cold Air Sales) in each item were assumed according to similar
cases, materials from TNB and others.
b) Operation and Management Cost
We considered operation and management costs for each of the Projects’ operations based on the basic
conditions of financial and economic analysis.
c) Financial Internal Rate of Return (FIRR) Calculations
1.
Conditions of Calculations
We calculated Cash Flow and FIRR by the previously mentioned revenue, costs of construction, management fee
and operation cost. On the premise of net cash flow (NCF) and assumed a 10 year Project period. We did not
consider the market value of the turbo chiller after 10 year.
Since Malaysia’s inflation rate currently hovers around 2%, we set the inflation rate at 2%. This project has high
possibility of being applied MIDA Pioneer Status or other preferential measures, however, we did not consider the
implementation of such measures in this calculation as conservative basis.
We set the factory occupancy ratio; 62.5% for the 1st year, 75.0% for the 2nd year, 87.5% for the 3rd year and 100%
for after 4 year.
Followings are the other conditions for the calculations.
5-1
Table5- 1 Other Conditions
Items for calculating income and expenditures
Standard/scale
Construction period
Notes
1 year
Operating period
10 years
Depreciation period
10 years
Interest (commercial banks)
4%
Interest (JICA financing)
3%
Construction fund repayment period
The initial fixed period is five years.
7 years
(commercial banks)
Construction fund repayment period
10 years
Deferment not considered
(JICA financing)
Equity capital ratio(commercial banks)
50%
Equity capital ratio(JICA financing)
30%
Inflation rate
2%
Fixed asset tax
0.3%
Corporate taxes, etc.
25%
Value added tax
5%
Source: Study team
2.
FIRR Calculations
We used the above conditions to determine the situation with loans from commercial banks or financing from
JICA.
Case 1: Loans from commercial banks (4% Interest, LTV50%)
Case 2: Financing from JICA (3% Interest, LTV70%)
We calculated non-leverage PIRR and after leverage Equity-IRR as the FIRR for the entire Project on the premise
of 10 years calculation period and the above conditions.
・Calculation formula for PIRR
I: Investment in factories and equipment
Cn：After tax net loss in “n” year + Installment Cost + Interest payment
r：Discount Rate (PIRR)
5-2
・Calculation formula for Equity-IRR
CapI: Capital Investment
Cen: After tax net loss in “n” year + Installment Cost – Reimbursement amount for the principal loan
Re: Discount Rate (EIRR)
The Project PIRR exceeds the roughly 4% interest rate on 10 year Malaysian government bonds, so it seems to be
possible to loan from commercial banks and we consider the project feasible under the conditions of the above
cases. While interest of the JICA financing is 3% comparing to 4% of the commercial banks, LTV is 70% (JICA)
and 50% (Commercial banks) each. Therefore, total interest payments to JICA between 10 years operational
period is about 1.45 times as much as loans from private banks. On the other hand, equity is reduced by 40%
because of the difference about Equity-Capital Ratio between 30% (JICA case) and 50% (Commercial bank case).
Consequently, the gap between PIRRs under the cases of loan from JICA and commercial banks is only 0.1%,
however, Equity-IRR of JICA case is about 1.6 times as high as that of commercial bank case.
We analyzed the sensitivity analysis with the demand fluctuation and the retail price of cold air under the case of
loans from the commercial banks. Compared to the base case, on the one hand, PIRR is decreased to about 0.7
times in the case of -10% demand and increased to about 1.27times in the case of +10% demand, on the other
hand, Equity-IRR is about 0.66 times in the former case and about 1.27 times in the latter case. In respect to cold
air sales, sales price which able to secure more than 4% PIRR as market rate of interest is considered. The demand
fluctuation and the price fluctuation affect the business profitability. Thus, demand risk reduction with securing
reliable demand and setting reasonable price is required for the implementation of the project.
5-3
2) Economic Analysis
We performed economic analysis to verify the relevance of implementing the proposed Project in economic
terms. However, due to the nature of the Project that is not becoming a implementing body of tech-park
development but a provider of advanced cooling system, we calculated the amount of power consumption and
CO2 reduced rather than EIRR.
a) Power consumption and the result of Co2 reduction
We verified the amount of power consumption and CO2 reduced supposing the Project was implemented.
Supposing the Project was not implemented, each factory would use its own individual cooling system, so it was a
matter of comparing the two situations.
The table below shows that implementing the Project would reduce power consumption 32.14% to
4,849,650kWh.
If we convert the amount of power consumption reduced into CO2, we arrive at 4,849,650kWh×
0.689=3,341(t-CO2).
Comparing with the individual cooling system, we believe that installation of the regional cooling system is much
helpful project for prevention of global warming.
Table 5-2: Power Consumption Reduced Per Year if Project is Implemented
Unit
System COP
Power consumed
Power costs
-
Turbo
Individual
Refrigerator
Systems
(A)
(B)
Savings
Notes
(B) – (A)
1.47
1
-
kWh
10,235,800
15,085,450
4,849,650
RM/year
3,686,406
6,491,182
2,804,776
Applied Tariff C2
Source: Study Team
b) Benefit for the factories to be in the industrial park
The factories can treat the initial cost for installation of the cooling system as the off balance. Factories can reduce
the risk with neglecting the maintenance and management cost for the equipment. This will increase their benefit
for the factories to be advanced into the industrial park.
5-4
Chapter 6 Planned Project Schedule
(1) Nusajaya High-Tech Park development schedule
Nusajaya High-Tech Park covers a total area of approx. 210ha and the development is planned in multiple phases
as shown below.
Figure6- 1 Nusajaya High-Tech Park Development Plan in Multiple Phases
Phase 3b
68 acres
(27.5ha)
Phase 1a & 1b
120 acres
P
Phase 3C
74 acres
(30ha)
(48.6ha)
Phase 3a
85 acres
Phase 2
165 acres
(34.4ha)
(66.8ha)
Area
Phase 1a & 1b
Phase 2
Phase 3a
Phase 3b
Phase 3c
TOTAL
acre
120.00
165.00
85.00
68.00
74.00
512.00
ha
48.56
66.77
34.40
27.52
29.95
207.20
Source: Study team based on materials provided by Ascendas
The development schedule is as follows as of November 2013:
Phase 1a & b
Phase 2
Phase 3a
Construction
Operation aimed to begin in 2015
Sep. 2015 to Sep.
March 2017 to
Schedule
～operation begins sequentially until
2017
March 2019
March 2016
Note: Development schedule of Phase 3b and Phase 3c are yet to be formulated.
Source: Study team based on materials provided by Ascendas
Detailed schedule will likely change significantly in accordance with the demand for the industrial park.
6-1
(2) Project implementation schedule
The Project can be implemented when the potential customers of cooling systems are figured out. It is difficult to
formulate concrete schedule at this stage.
Meanwhile, if certain companies that use the cooling service will surely establish their business in the tech park,
the economic feasibility of the Project can be examined more specifically based on the scale of the demand,
whether it can be implemented or not can be determined, and the efforts toward its implementation can be
accelerated.
(Project implementation schedule for Phase 1a)
The table below shows the tech park development schedule of Phase 1a as of November 2013. The sales activities
of the tech park will start in January 2014. It will be the schedule of district cooling installations development if it
is judged that there is a sure prospect of sufficient demand in February 2014. Concrete information on business
establishment will be communicated with Ascendas as needed to examine the materialization of the Project.
Table6- 1 Project Implementation Schedule with Sure Prospect of Sufficient Demand in Phase 1a(draft)
Year
Month
Land Clearance
& Earth works
Building
Infrastructure
2013
2014
10 11 12 1 2 3 4 5 6 7
▲ ▲
▲
Docs submission
Complete
Start construction
▲
▲
BP Submission BP aporoval
Start Construction
▲
IP Submission
8
9 10 11 12
1
2
3
4
5
2015
6 7
8
9 10 11 12
▲
Complete
▲
▲
IP approval
Start construction
▲
complete
▲
▲
CCC Submisison
CCC approval
Customer
District
Cooling
System
▲
Contract companies
▲
handover
Business Start
▲
Confirm demand
Confirm feasibility
(if enough demand expected)
△
D/D
Document submission, construction
△
△
complete Plant implementation
Start operation
Source: Study team based on materials provided by Ascendas
6-2
（Detailed project implementation schedule after the demand shows）
Ascendas started land sales of the industrial park in January, 2014, however, we have not been received detailed
company information which would locate in the industrial park. This is because they have just started to sales
promotion. We are planning to proceed this study in order to materialize this project with exchanging information
about companies’ trend with Ascendas. Our detailed project implementation schedule for the district cooling after
the demand shows, as below table.
Table 6- 1 Detailed project implementation schedule after the demand shows (Tentative)
Item
Year 0
Year 1
Year 2
1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12
1) Demand Study
2)
Negotiation and adjustment with Ascendas & UEM
Sunrise
3)
Decision making on the implementation of the
district cooling business
★
4) Establishment of the district cooling company
5) Financing
6) F/S, Basic design, EIA survey
7) Apply for the business license
8) Detailed design
9)
Preparation for bidding to decide each
construction and plant
10) Bidding result & Contract
11) Preparation for the construction
12) Construction (Piping, etc.)
13) Plant construction
14) Negotiation for contract with users
15) Preparation for the operation
16) Start operation service
Source: Study Team
6-3
Year 3～
1 2 3 4
Chapter 7 Implementing Organizations
Table 7-1 shows the main work, authorities and operational capacities of the host country’s organizations relevant
to the implementation of the Project. Each organization has sufficient operational capacity.
Table 7-1 Implementation ability of the relevant agency of Host Country
Relevant Agency
Ascendas
Main Work, Authorities and Operational Capacity
・ The master developer of the Nusajaya High-Tech Park, the project’s target site.
Develops the park in a JV with UEM Sunrise
・ Engaged in the development and operation of over 5.4 million square meters of
industrial parks, etc. across Asia, its local company, Ascendas Malaysia, is in
charge of the Project for Tech Park.
UEN Sunrise
・ The master developer of all development in the Nusajaya region within the
Iskandar B region. Develops Nusajaya High-Tech Park in a JV with Ascendas.
・ A Malaysian government-owned group company that engages in real estate
investment and land development and the most valuable land developer on
Bursa Malaysia whose operations include infrastructure facility management.
IRDA
・ A government-run corporation that promotes Iskandar Malaysia’s development
plan to attract investors and is in charge of granting beneficial investment
conditions within the region.
・ Leads efforts to achieve a low-carbon society within the region and devised
plans expected to reduce CO2 emissions 40% from 2005 to 2025 in the Low
Carbon Society Blueprint 2025.
MIDA
・ Established in 1967 by the Malaysia Industrial Development Authority
(Incorporation) Act.
・ The organization that performs screening and evaluations when foreign capital
is invested in the manufacturing or service sectors.
TNB
・ Malaysia’s government-run power company privatized by the National
Electricity Board, its predecessor, in 1990.
・ Will receive power from the implementation of the Project.
KeTTHA
・ In charge of drafting and implementing the Malaysian government’s energy
policy.
DOE
・ The licensing authority for the Project’s EIAs.
MPJBT
・ The state government of Johor, in which the Project will be implemented, that
installed the one-stop service center to serve as the licensing authority for
industrial park development.
Gas Malaysia
・ A corporation funded by PETRONAS (Malaysia’s government-run petroleum
and gas supplier) and established in 1992 that provides gas to Peninsular
Malaysia.
・ A gas supply network has not yet been organized in the Nusajaya region, but
the future supply of gas should continue to be considered based on demand.
Source: Study team
7-1
Chapter 8 Technical Advantages of Japanese Companies
(1) Shape of Projected Japanese Company Participation (Investment,
Material and Equipment Procurement, Facility Operation and Management,
etc.)
Within this project, it was planned for InterAct, Fuji Electric, other Japanese corporations, local enterprises and
Ascendes to establish a SPC and conduct business operations. Regarding business investment, the plan was for
50% of the costs to be borne by the aforementioned investment companies and the other 50% to be borrowed from
lending institutions. It is assumed that JICA will function as the loan financial institution.
Considered business viability with regard to procurement, it would be difficult to buy Japanese products only.
However, it would be possible for Japanese manufacture as a prime contractor to construct and install whole
system procuring Japanese products and the third country’s products as well as Malaysian’s. Those Japanese
manufacturers will assume responsibility for the warranty of that system.
As for the operation and management of facilities, materials and equipment, the Japanese manufacturers that
supplied the equipment will enter into maintenance agreements to perform scheduled inspections and other items
that require special technology, and daily operations and maintenance will be outsourced to local companies with
which they can collaborate on a subcontract basis.
In addition, along with the increase of tenant companies in accordance with the development of the gas pipeline
and the industrial park development plan, as soon as demand can be expected and depending on the industrial park
energy supply business and steam accommodation business, various services are planned to be implemented when
the demands arises. These include regional cooling services, industrial park plant energy management services,
energy conservation consulting services, highly-efficient energy saving equipment leasing services, operational
management services, and training services for industrial park infrastructure maintenance personnel. Depending
on the service in question, the further participation of Japanese companies is expected..
Figure 8-1: Project Implementation System
[Investment companies]
InterAct, Fuji Electoric, and other Japanese companies
Malaysia companies
Singapore companies
Equity
Private Bank or
JICA loan
Loan
SPC
(JV Company)
Incentives
Engineering/construction
Contract
Malaysia
Government
Operation/Maintenance
Contract
Engineering
/Construction
Companies
Operation
/Maintenance
Companies
Source; Compiled by study team
8-1
(2) Technical and Economical Advantages of Japanese Companies to
implement this Project
1) Technical
The Project is expected to introduce integrated management of cooling loads within Iskandar region industrial
parks (district cooling systems), to reduce environmental impact and manage electrical energy for the entire region,
and to further develop the use of heat and electrical energy.
Malaysia, with its high average annual temperature, differs from Japan in that it does not have cooling, heating
and interim periods where air conditioning operations changeover. Air conditioning systems are mainly used for
cooling throughout the year, while central heat source system and individual air conditioning systems are
adopted.
When introducing district cooling systems to Iskandar region industrial parks, central heat source system
enables the integrated management of air conditioning heat source facilities, and the main equipment required are
turbo refrigerators, cooling towers, cold water pumps, cooling water pumps, power receiving and transformation
facilities and control facilities.
Turbo chillers are general purpose equipment that are manufactured in Malaysia as well as by overseas
manufacturers. The COP is used as an indicator of turbo chiller efficiency and, with the COP of Malaysian
manufacturers being 6 or over, the COPs within Malaysia tend not to vary much with those abroad.
That said, the Top-Runner System in Japan spurred the development of high-efficiency transformers, lighting and
other electrical equipment, and even electrical equipment not subject to the Top-Runner System is influenced by
energy conservation efforts in Japan and is becoming more advanced in various fields such as electrical motors
and high-voltage inverter control. For instance, focusing on high efficiency of the electric motor, Japan has
established the premier efficiency (IE3) technology in IE code, in the category of efficiency class of the
international standard “IEC60034-34”. Japanese technology achieved to down the ratio of loss factor to
approximately 35% comparing with the standard efficiency (IE1). Also, in invertor technology for controlling the
electric motor, Japan has put the high efficient equipment with power factor over 95% to practical use.
The improved efficiency of electrical equipment contributes to reductions in the volume of energy consumed by
manufacturing equipment, cooling facilities and air conditioning heat sources for district cooling systems at
factories that typically use large quantities of power, and it is also vital technology for reducing environmental
impacts across entire regions.
Japan’s electric power technology is among the best in the world and is delivered safely and consistently from its
points of generation to its points of use. Thus, to build a high-standard, consistent energy infrastructure in
Iskandar region industrial parks, the form that the energy system should take is one that integrates the technology
possessed by Japanese companies.
8-2
Japanese technology is at or above global standards for air conditioning heat source facilities, electrical equipment
and in various other fields, and Japanese corporations have own technology to product and develop those facilities
by themselves, therefore, in technical terms, Japanese corporations are highly advantageous for the
implementation of the Project.
2) Economical
Products manufactured by Japanese corporations are high-tech and high-quality, but they tend to be more
expensive than products manufactured in other countries. However, Japan exported 800,000 commercial air
conditioners to Malaysia from 2010 to 2012 and in 2013 also, with units for private sector offices and stores
showing strong sales, exports have achieved the same status as the previous year. (according to data from the
Japan Refrigeration and Air Conditioning Industry Association).
The relocation of industrial businesses into Iskandar region industrial parks should boost demand for air
conditioning heat source facilities and electrical equipment, and, in economic terms, Japanese companies could
take a commanding role in this Project.
Furthermore, installation of Japanese equipment will help the realization of energy system with mitigating the life
cycle cost for the regional cooling system.
8-3
(3) Measures Necessary to Promote Orders to Japanese Companies
We have worked together with the Singaporean company Ascendas, which has development experience with
Singapore Science Park and International Tech Park, Bangalore in India, to implement this study of Nusajaya
High-Tech Park, which was developed by Malaysian company UEM Sunrise, the main developer of Iskandar. It
would be extremely beneficial to have Japanese governmental support, from the study stage to the implementation
stage, while performing strategic alliances with local enterprises, in order to deepen a trusting relationship with an
aim to promoting orders to Japanese companies.
Ascendas and UEM Sunrise are government funded investment organizations and have an abundance of capital.
Japanese corporations, on the other hand, do not have as much financial clout despite possessing superior
technology and human resources.
One reason Japanese corporations are not making progress in receiving orders is that, while specs for Japanese
products are high, their prices are also high. Further, despite the fact that the specs of products from China, Korea
and other third countries are inferior to Japanese products, they still meet the minimum requirements in Malaysia
and are inexpensive and thus are ultimately chosen over Japanese products. On the other hand, Japanese
companies have been implementing corporate efforts to increase their competitiveness, such as shifting the
production of non-core technology to countries with low labor costs and increasing production efficiency through
creating products by combining components made in Japan, Malaysia and third countries. However, there is a
limit to what can be achieved by Japanese companies which have high labor costs.
Japanese companies’ business activities for sales promotion, technology introduction, and technology transfer has
high needs in line with investment. However, there are some difficulties; such as securing human resources and
the cost for HRD.
Under these circumstances, we suggest the following policies to increase orders to Japanese companies.
Use Japanese government associated funds, expand low-interest, local-currency financing and enhance
guarantee functions to finance the investments of Japanese corporations outside of Japan.
At early stage of business, companies tend to dispatch Japanese human resources who have skills and
knowledge of advanced technologies. Japanese government should give monetary support not only for such
mid-term consecutive dispatch but also for repetitious short-term dispatch for several weeks or 1 month.
We are hoping for financial support for the project from the Japanese government including JICA financing.
8-4