Volume 89 Issue 13 | p. 28
Issue Date: March 28, 2011

Malaysia Joins Biotech Bandwagon

Country aims to attract manufacturers with smart policies, access to biomass
Department: Business
Keywords: Malaysia, biomass, industrial biotechnology, biofuels
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GREEN GOLD
Malaysia hopes its biomass wealth will draw biotech companies. Shown here is Malaysian palm oil fruit being unloaded.
Credit: Shutterstock
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GREEN GOLD
Malaysia hopes its biomass wealth will draw biotech companies. Shown here is Malaysian palm oil fruit being unloaded.
Credit: Shutterstock

Like numerous other countries, states, and cities around the world, Malaysia is seeking to develop its biotechnology industry. Unlike many others, the country is going about it by encouraging industrial manufacturing rather than R&D.

Malaysia’s emerging biotech industry is taking shape in the southern state of Johor, which adjoins Singapore. In November, the state company BiotechCorp, in partnership with the developer UEM Land Holdings, started the construction of Bio-XCell, an industrial park for biotech manufacturing.

“We’re not planning to shower the companies that come here with financial incentives,” says Ridzwa Abd Aziz, chief executive officer of Bio-XCell. “We basically just build the platforms on which they can operate.”

Infrastructure is a big part of Bio-XCell’s pitch. Companies operating there will have access to the shipping facilities of both southern Malaysia and Singapore. Overseas-based managers can easily access their operations at Bio-XCell through Singa­pore’s airport, which business travelers regularly rank as one of the world’s best.

The park is also touting the abundance of biomass raw materials in Malaysia. The country is a major producer of palm oil, sugar, rice, tapioca, and other agricultural goods. Rice, palm oil, and other crops generate a lot of waste that can be cheap feedstocks for industrial biotech manufacturing.

“Traditional petrochemicals from oil and gas sources are becoming very expensive, which makes renewable feedstock more important,” Aziz says. “Malaysia is positioned to be present at the dawn of the second generation of biofuels,” which come from waste or nonfood materials such as rice husk rather than vegetable oils or sugars.

Although Bio-XCell wants to attract manufacturing of these fuels, Aziz expects that companies will also conduct some R&D, mostly focused on testing and perfecting new manufacturing processes.

Bio-XCell may play down its financial incentives, but it offers some attractive perks. Manufacturers at the park will benefit from common utilities including water, water treatment, and steam. Singapore’s international financial and commercial resources are nearby, but costs in Johor are half of those in Singapore or even less. As for finding skilled manpower, a lot of the people who work in R&D and manufacturing in Singapore actually commute from Johor and may be happy to stay closer to home.

Furthermore, Bio-XCell offers manufacturers the option to minimize capital costs by leasing instead of building their plants. How it works is that a manufacturer can come to the park, build its plant with funds from Bio-XCell, and then pay Bio-XCell rent for its use.

Many governments have built industrial parks only to find few takers, and it’s not clear whether Malaysia will succeed either. So far, however, four companies have committed to setting up at Bio-XCell. The U.S. firm Glycos Biotechnologies will use natural glycerin to produce ethanol and perhaps isoprene, Aziz says. Malaysia is a major producer of isoprene-containing latex gloves used for medical care, he notes.

The French firm Metabolic Explorer will also use glycerin to produce butanediol. Two Indian companies, including Biocon, India’s largest biotechnology firm, will set up pharmaceutical ingredient facilities at Bio-XCell. Together, the four companies will use up one-eighth of the space available at the park. By year’s end, up to one-third of the 200,000 acres of available land will be committed, Aziz predicts.

Biocon will spend at least $160 million to set up a biosimilar insulin facility. It selected the location mostly because of the outstanding infrastructure, says Murali Krishnan, president of Biocon’s finance group. “It’s the reverse of how it’s done in India,” he says. “Malaysian planners have gone ahead and built all this, and now they’re inviting companies.”

One reason that Biocon found Bio-XCell to its liking is that Biocon’s founder and chairman, Kiran Mazumdar-Shaw, was an adviser when the industrial park was planned. “To our surprise, the Malaysians implemented many of her recommendations,” Krishnan says. BiotechCorp later invited Biocon to become an “anchor” investor. The Bangalore-based company had been searching in India for a new manufacturing site, and what Malaysia offered was better, even if the firm has no use for Malaysian biomass, Krishnan adds.

The emergence of Bio-XCell is the result of thorough and systematic planning, Aziz claims. In 2005, Malaysia unveiled a national biotechnology policy and created BiotechCorp. Until 2010, Aziz says, BiotechCorp focused on making detailed plans and developing a business environment attractive to the global biotechnology industry.

A few decades ago, Malaysia developed a thriving electronics industry where industry leaders such as Texas Instruments and Nortel felt at home. The country hopes to achieve the same with industrial biotech. “You always need new growth platforms,” Aziz says.

 
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