HRH Princess Astrid of Belgium inaugurates Oleon’s expansion in Greater KL - Europe

HRH Princess Astrid of Belgium inaugurates Oleon’s expansion in Greater Kuala Lumpur

Oleon expands in Greater KL with a Regional Operational Headquarters and Oleochemicals Production

4 December 2014 - The recent visit by 300-strong Belgian economic delegation to Greater Kuala Lumpur (KL) led by Her Royal Highness Princess Astrid of Belgium has further strengthened the business relationship between Belgium and Malaysia. It’s a testament to the confidence Belgian multinationals have in the region to grow their presence in Greater KL by exploring business opportunities for manufacturing, research and development (R&D) and distribution.

Today, Malaysia is already home to a few Belgian multinationals namely Promat, Lhoist, Knauf Insulation, Emulco and Oleon. The economic delegation was present to witness two important events in Greater KL - the joint venture of UniOleon Sdn Bhd inaugurated by HRH Princess Astrid of Belgium and the expansion of Oleon through its innovative R&D centre with an investment of between 4.5 million to 5 million euros.

Oleon is Europe’s largest oleochemical producer that converts vegetable oils into fatty acids and then into esters which are used in cosmetics, homecare and food additives such detergents, lubricants, hydraulic oils, solvents, coatings, paint and others. Oleon’s operation in Greater KL makes up 30% to 40% of the group’s derivatives segment.

Oleon’s regional operational headquarters located in Port Klang

The latter, meanwhile, makes up about half of the group’s total revenue. Back-of the-envelope calculations show that the operation in Greater KL will contribute €105 million to €140 million in revenue every year.

“Most of our products are exported. There’s only a small amount that remains here,” said James De Caluwe, Managing Director of Oleon Malaysia said when asked about the company’s contribution to Malaysia’s export sector.

However, he said, Oleon’s biggest contribution was to add value to Malaysia’s oleochemical industry and become a trailblazer of sorts. “When we came, Malaysia was already number one in oleochemical production. We specialised in the palm-based oleochemical product, being glycerin, and fatty acids and these derivatives production in Malaysia was very small, particularly when we talk about industrial fatty acids,” De Caluwe explained. “There were a few (production of) esters but that was purely in food, but lubricants, personal care esters were very small,” added De Caluwe.

Since then, Oleon introduced the production of non-food based esters activity in Malaysia and have seen many new ventures starting in this derivatives business as well. “We came in and had a kind of semi-pioneering role to bring this downstream activity to Malaysia,” said De Caluwe.

Enabling Local Partnerships

The joint venture between Oleon and United Plantations Bhd came about to develop green, renewal and sustainable products which are environmentally friendly. This has been a major concern for the European market and an upward trend globally. Palm oil based products need to be RSPO (Roundtable on Sustainable Palm Oil) certified to go to market in Europe.

" We looked for a partner to have that link with RSPO and at that point, we reached out to United Plantations Bhd to see if they were interested to join us in this project. United Plantations is not only the oldest oil palm plantation group in Malaysia, it is also by far one of the best-managed plantation groups in the country and was the first to be fully RSPO-certified. In 2012, the joint venture of UniOleon Sdn Bhd was created. "

James De Caluwe, Managing Director of Oleon Malaysia

The food emulsifier plant has a capacity of 15,000 metric tonnes a month and produces predominantly palm oil-based products in powdered form. The products, which are marketed under the Radia and Nouracid brand names, are shipped to Asia-Pacific, the Americas and Europe. The state-of-the-art factory, which was built with a capital expenditure of US$20 million, is fully automated and run by only 30 high skilled employees. UniOleon’s plant has ramped up the Greater KL operations’ production capacity to up to 50,000 metric tonnes a month. Plans to increase production to another 10,000 metric tonnes have already been laid out.

Among other partnerships, Oleon also worked with numerous universities and research centre since 2008 including University Putra Malaysia and University Malaya to jointly carry out research work on a project for ester based bio lubricants for refrigerant applications.

Greater KL as the Operational Headquarters offering Fluid Business Ecosystem

Oleon had long wanted Greater KL to be the home of its Asian operations. Oleon was first set up in Malaysia 13 years ago and then grew to expand its activities ranging from marketing, information technology support, research and development, regional procurement and application in 2012 with an operational headquarters in the city with the assistance of InvestKL. “We had a few locations in mind, but Greater KL for sure has the best position considering our history in Malaysia” said De Caluwe.

De Caluwe emphasised the importance of having an operation in Southeast Asia as one-third of its product’s raw materials are palm oil-based. He added that establishing an operational headquarters in Greater KL was a necessity for Oleon, as it would complete and complement Oleon’s activities in Asia-Pacific.

Although neighbouring Indonesia has a larger market and produces more palm oil than any other countries. De Caluwe said “There is a lot offered here and I can give you a multitude of positive factors that has influenced our decision to move our operation headquarters to Greater KL such as good logistic infrastructure, competitive cost of doing business and connectivity.”

“Doing business in Greater KL is very affordable and the connectivity is great. You can fly anywhere you want in a relatively within the region in short time span,” added De Caluwe.

High Skilled Talent Availability

As oleochemicals production requires highly skilled labour and technology, knowledge becomes imperative for Oleon. Apart from providing its employees with training, the group has been working with universities and research centres since 2008. “We employ highly-skilled workers. The pay brackets that we have here are relatively elevated. So, in that sense, we do have an immediate impact on the economy here,” De Caluwe elaborated.

Greater KL offers corporations access to a skilled, multi lingual and customer oriented talent base. The talent available here has the best English language skill in Asia, as commended by Education first in 2013. Malaysia is also ranked as a top five countries in the world in developing, attracting and retaining talent according to IMD World Competitiveness Talent Report 2014.

Oleon has 100 employees in its fully automated and highly advanced operational headquarters. De Caluwe said most of the employees are 30 years old and below. “We have a lot of Gen Y employees here. Many people have complained about Gen Y, but I don’t,” he said. “The motivation is there, the will is there.”

De Caluwe said the talent’s positive and vibrant attitude overcomes any of their shortcomings and they are motivated to improve themselves. “We provide extensive training programmes internally to bring our talent to a European Continental level of expertise. We also have here an extremely well-motivated group of young people who are willing to learn.”

Facilitating Oleon’s OHQ in Greater KL

Oleon’s operational headquarters in Greater KL materialised when the company approached InvestKL and expressed its intention to make Port Klang as Oleon’s Asia-Pacific regional headquarters. “InvestKL has the ambition of making Greater KL a centre for multinational corporations (MNCs) to set up their headquarters, hence they are the right agency to go to,” said De Caluwe.

InvestKL is a government-owned entity which has been mandated to attract 100 large multinationals to set up their regional headquarters in Greater KL by 2020. CEO Zainal Amanshah said in just over three years, InvestKL has brought in 42 large multinationals and is on track to close the year with 45.

Zainal said InvestKL’s relationship with Oleon began 18 months ago and it took 12 months to realise the group’s plan. “We had to understand what their plans were, to assist and match their eligibility of the incentives, getting the application right and ensuring there was real substance.” The process took that long,” he recalled.

Zainal said he hoped that the relationship with Oleon will be long term in nature. “Moving forward, we will continue to encourage further partnerships with local entities and the usage of ancillary services. This will strengthen the local business ecosystem for the mutual benefit of MNCs and local partners.”

“InvestKL has been instrumental in achieving this (making Malaysia Oleon’s operational headquarters). They are an important partner and have been a driving force towards establishing our regional operations successfully,” De Caluwe opined.

When asked to comment on the number of new Belgian companies looking to invest in Greater KL, “There is definitely an interest and a few that are already looking at Greater KL as a potential location for the Asian business.”