KUALA LUMPUR (Feb 15): Discussions on refineries and petrochemical-related investments in Malaysia is likely to dominate discussions during Saudi Arabia Crown Prince Mohammed bin Salman's maiden visit to Malaysia on Sunday.
MIDF Amanah Investment Bank Bhd head of research Mohd Redza Abdul Rahman said the kingdom has invested heavily in refineries in Asia to lock in demand and fend off rivals, hence there is the likelihood that more investments would be made in the Petronas Refinery and Petrochemical Integrated Development (RAPID) project in Pengerang, Johor.
In 2017, Saudi’s Aramco, which is the biggest energy company in the world, invested a significant US$7 billion (RM28.6 billion US$1=4.089) in RAPID.
The Aramco-Petronas alliance was sealed during Saudi King Salman bin Abdulaziz Al Saud's visit to Malaysia in 2017 and next Monday, the Crown Prince and Prime Minister Tun Dr Mahathir Mohamad are scheduled to jointly inaugurate the Refinery & Petrochemical Complex of Pengerang Refining and Petrochemical (PRefChem) in Kuala Lumpur.
Aramco is reported to be the most valuable company in the world and has a market value of between US$2 trillion and US$10 trillion.
On the other hand, Saudi, which is currently undergoing a transformation to reduce its reliance on oil revenue under its Vision 2030, could tap Malaysia’s expertise which has gone down the same path.
The Crown Prince introduced Vision 2030 with the goal of reducing Saudi Arabia's dependence on oil, diversify its economy and develop public service sectors such as health, education, infrastructure, recreation and tourism.
Vision 2030, which was launched on April 25, 2016, aims to increase non-oil revenue to US$160 billion by 2020.
“Certainly, they can learn a lot from Malaysia’s achievements in reducing our oil reliance to 14 per cent in 2018 from 41 per cent in 2009," he told Bernama when asked to comment on the two-day visit to Malaysia by Mohammed bin Salman, his first after being appointed the kingdom's Crown Prince in June 2017.
In addition, Malaysia is also likely to seek greater collaboration in exporting more palm oil-based products to the kingdom and to obtain a bigger quota for Malaysians to perform the haj.
Mohd Redza said recovering crude oil palm (CPO) prices which was now hovering above RM2,250 per tonne, would greatly contribute to a higher value of palm oil exports to Saudi Arabia.
In addition, he said Malaysia was also a preferred country that has contributed significantly in terms of tourist dollars to the kingdom in the form of umrah and haj pilgrimage.
Saudi Arabia is Malaysia’s second largest trading partner from the Middle East.
In 2018, Malaysia’s exports to Saudi included palm oil, palm oil by-products, electrical & electronics, machinery, equipment and processed food which declined to RM3.8 billion, because of lower CPO prices versus RM4.2 billion recorded in 2017.
Imports from the kingdom which comprised, among others, mineral fuels and oils, nuts, plastics, organic chemical, aluminium, soaps and candles, copper, machinery and dried edible fruits, rose to RM17.9 billion in 2018 from RM10.7 billion the previous year.
Meanwhile, Prof Dr Azmi Hassan, a geo-strategist at Universiti Teknologi Malaysia’s Perdana School said besides focusing on trade and investment, Malaysia-Saudi Arabia diplomatic ties were also set to strengthen further.
“Malaysia will express support for King Salman's leadership and for geopolitical cooperation to be strengthened.
“Perhaps, Riyadh will announce financial assistance for Rohingya refugees and the Bangsamoro peace process, in which Malaysia is heavily involved.
In the past, Malaysia signed RM9.74 billion worth of Memorands of Understanding with the kingdom in the field of construction, halal development, aerospace and haj services.