SINGAPORE-JAPAN PETROCHEMICAL PROJECT

[Mr Speaker in the Chair]

Mr Ang Nam Piau asked the Prime Minister if he will make a statement on his recent discussion with the Japanese Prime Minister on the proposed $2 billion petrochemical project in the Republic.

The Prime Minister: Mr Speaker, Sir, when I met Mr Fukuda, the Prime Minister of Japan, on Monday, 30th May, this year, all issues regarding the Singapore-Japan Petrochemical project in Singapore had already been resolved by officials of both Governments. Mr Fukuda confirmed that the project had been agreed to by, and will receive the support of, the Japanese Government. This endorsement and support was repeated by all the Japanese Ministers concerned, i.e., the Ministers for International Trade and Industry, Foreign Affairs and Finance.

The following are the main points of the Agreement. The joint venture "upstream" company of the project will be owned on an equal basis by the Singapore Government and Japanese participants.

Japanese participation in the "upstream" company will be through an investment company being set up in Japan The Overseas Economic Co-operation Fund (OECF), which is a Japanese Government institution for overseas development assistance, will invest three billion yen (about $27 million), equivalent to 30% of the equity of the investment company. The remaining 70% equity will be taken up by private Japanese companies, including Sumitomo Chemical, Mitsubishi Petrochemical, Mitsui Petrochemical, Asahi Chemical, Showa Denko, Idemitsu and other Japanese petrochemical companies. In addition, long-term loans for the project would be provided by the Export-Import Bank of Japan both for equity participation by Japanese companies as well as for the purchase of machinery and equipment from Japan.

The Singapore project will be the first petrochemical complex to receive OECF equity participation. The project has the support of both the Japanese Government and the Japanese petrochemical industry. It goes without saying that continuing cooperation between Singapore and Japan is a key factor in the success of the project.

The petrochemical complex when completed in 1981 will consist of an "upstream" company and initially three "downstream" companies. The "upstream" company will own the naphtha/gas oil cracker, which is the core of the complex and other common-user facilities. The "downstream" companies will purchase ethylene and propylene from the "upstream" company for conversion into plastic resins and other end products.

This project will make a significant contribution to our economy, both during construction and during operation. Much of the engineering, plant fabrication and construction work will be done locally. The project will require about 4,000 direct workers during the peak of the construction period and about 2,000 employees for the operation of the complex. Engineering companies, plant manufacturers, plastic fabricators and other end-product users are likely to be attracted to set up in Singapore. The multiplier effects of this project will therefore be considerable.