JJ-Lurgi rides on rising regional demand

PETALING JAYA, Selangor : JEBSEN & JESSEN (SEA) Pte Ltd (JJSEA) is in a sweet spot, having clinched an influx of jobs to build and upgrade oleochemical plants in Indonesia and Malaysia, following Indonesia's restructure of palm oil taxes.

Since August 2011, the Indonesian government has raised export taxes drastically to boost refining capacity and downstream activities. Crude palm oil (CPO) export tax was set at 22.5 per cent and refined palm olein tax, at 13 per cent. 

This means CPO and crude palm kernel oil are cheaper for oleochemical producers there. What's more, oleochemicals exported from Indonesian shores are tax-free. As expected, the tax incentives have spurred investments in Indonesia's nascent oleochemical industry.

"We see big potential in process engineering, especially when high CPO tax in Indonesia has prompted many plantation companies to invest downstream," said JJSEA chairman Heinrich Jessen.

"The demand to put up more oleochemical plants has doubled from last year. Currently, our order book amounts to S$200 million (RM490 million) but there are still many projects under discussion, particularly in Indonesia," he told Business Times in an interview here recently.

Jessen likens the group's customers to long-term partners, whereby his staff are regularly scheduled to present technological updates to help clients lower their costs and improve product quality.

"In Malaysia, investors are de-bottlenecking and upgrading their fatty acids and fatty alcohol throughput to leverage on economies of scale," said Jessen, adding that his company undertakes these process engineering jobs via JJ-Lurgi Engineering Sdn Bhd.

This joint venture with Lurgi AG, a member of French conglomerate Air Liquide, has delivered more than 230 of these refineries, oleochemical and biofuel plants throughout Southeast Asia.

Indeed, JJ-Lurgi is in the right place and at the right time. The oleochemical industry is experiencing robust growth on increased global demand for eco-friendly soaps and detergents, which are viewed as a sustainable alternative to the petrochemical variants.

Aside from process engineering which brings in fat profits to JJSEA, the privately-held industrial conglomerate is also involved in cable technology, chemicals, communications, material handling and packaging.

Asked if there are potential mergers and acquisitions on the horizon, he replied, "Yes, we're keen on acquiring entities that complement our existing businesses. We've set aside RM600 million from our internal finances." Jessen, who is a member of the founding family, said: "We've always funded our own growth. It is a family business and we intend to keep it that way." 

JJSEA, a 116-year-old conglomerate of Danish origins, is very much entrenched in Southeast Asia. Its businesses in Singapore, Indonesia, Malaysia, Thailand, Vietnam, and the Philippines comprise more than 50 subsidiaries and associates, employing some 3,300 staff.

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