The development of Malaysian petrochemical complexes of the East-Coast industrial corridor

Ishak, Sallehuddin (2008) The development of Malaysian petrochemical complexes of the East-Coast industrial corridor. PhD thesis, University of Glasgow.

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Petrochemical industrial (PTCI) sites may be considered a niche in the property market. Mainstream economics, industrial development and real estate studies related literatures treat it as the same as others. By prescribing the New Institutional Economics (NIE) approach, this research seeks to find a definitive line to divide between this sub-sector with other industrial activities. In particular, from the real estate perspective. The key research question is on the effect of formal institutions on industrial land supply.

The empirical research was carried out in Kerteh and Gebeng in the Malaysian East Coast region. Despite being isolated from nation’s mainstream economic activities as well as politically distinctive, the tiny townships managed to be host to global petroleum, gas and chemical giants, believed to have received the highest concentration of foreign direct investment (FDI) in Malaysia. Data were gathered on the physical development on the industrial sites, through official records investigation at the government offices as well as interviews with key figures both in the government and firms. Qualitative and descriptive quantitative data analyses were applied.

Within the studied area, it was found that the two State Governments, Terengganu and Pahang are the only land suppliers for PTCI use. Results from the analyses indicate that formal institutions have a substantial influence on supply-side behavior. The key findings suggest that due to the complexity of the government decision making process, government supply of industrial sites for PTCI use is timely, uncertain, and not flexible according to demand. To arrive at a decision, on land in particular, the authorities have to consult a massive set of information, dozens of public offices, hundreds of standards and a wide range of expertises. In addition, a structured decision making process is strictly observed.

The findings indicate that in the PTCI sector, where the investment is vulnerable to various forms of risks, the property transaction mode is slightly distinctive. The deadliest threat is unexpected changes in prices and supply of the chemical feedstock. As natural gas derivatives, especially butane, ethane and propane, the supply is dictated by the global market. Anticipating a threat, new sites must be sought. The authority’s inability to respond to the immediate firms’ needs invites additional risks. In addition, where the risk is very high, land prices are not imperative in industrial locating.

The findings also signify that the government decision making process which is framed out by the social institutions which has been inherited since generations has hardly changed. The firms however, without touching the institutional arrangements, through a unique clustering process find ways on how to beat the red tape to secure a site together with the chemical feedstock.

Item Type: Thesis (PhD)
Qualification Level: Doctoral
Keywords: natural gas, petroleum, petrochemical, petrochemical industry, petrochemical industrial land, land, industrial land, industrial location, public administration, Petronas, Malaysia, Terengganu, Kemaman, Kerteh, Pahang, Kuantan, Gebeng, Petronas, Land Office, land law, National Land Code, land coversion, planning permission, Eastern Corridor Economic Region, ECER,industrial location, qualitative, new institional economics, risk, uncertainty, institutions, institutional change, Oliver Williamson, Douglass North
Subjects: H Social Sciences > HD Industries. Land use. Labor
Colleges/Schools: College of Social Sciences > School of Social and Political Sciences > Urban Studies
Supervisor's Name: Adams, Professor David
Date of Award: 2008
Depositing User: Mr Sallehuddin Ishak
Unique ID: glathesis:2008-337
Copyright: Copyright of this thesis is held by the author.
Date Deposited: 17 Jul 2008
Last Modified: 09 Oct 2018 08:46

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