Teck Wai Pang and Ming Tong Lee

Abstract Agriculture has long been a mainstay of the economy of Sabah with relatively little contribution from industrial activity. At 1.4 million hectares, Sabah is the largest oil palm growing state in Malaysia. With the abundant oil palm raw materials for value adding, the Sabah State Government established the Palm Oil Industrial Cluster (POIC) Lahad Datu in 2005 as the catalyst in spearheading the state industrial drive through provision of appropriate physical infrastructure and policies. POIC thus serves as the center for integration of investment in upstream and downstream industries. The development of other industrial clusters such as logistics and oil and gas will follow in stages. The National Biomass Strategy 2020 mentioned in this chapter aims not only to generate a gross national income (GNI) of RM30 billion to the national economy by 2020 but also to meet the nation’s renewable energy target, reduce emission, and create about 66,000 jobs by 2020.

Keywords Palm oil • Lahad Datu • POIC • Biomass strategy

2.1 Introduction

Endowed with favorable climate and rich soils, agriculture has always been the mainstay of economy of the State of Sabah. However, there is relatively little con­tribution of industrial activity to the state economy.

The rapid development of the oil palm planting industry in recent decades has made Sabah the largest oil palm growing state in Malaysia with 1.4 million hectares of oil palm planting area and a production of 5.84 million tonnes of crude palm oil, representing about 30% of national total in 2011 (MPOB 2012). Seeing the potential advantage of the abundant oil palm raw materials for value-adding downstream

T. W. Pang (*) • M. T. Lee

POIC Sabah Sdn Bhd, Kota kinabalu 88400, Sabah, Malaysia e-mail: ptw@poic. com. my

R. Pogaku and R. Hj. Sarbatly (eds.), Advances in Biofuels,

DOI 10.1007/978-1-4614-6249-1_2, © Springer Science+Business Media New York 2013 industrial activities, the State Government of Sabah established the Palm Oil Industrial Cluster Lahad Datu (POIC Lahad Datu) as the catalyst in spearheading the state industrial efforts to drive the economy of the state.

The announcement of the Malaysian National Biomass Strategy 2020 in November 2011 signified the government’s determination to turn the available large quantity of agricultural waste, namely, oil palm biomass residue, into new sources of energy and material resources for high-value-added uses such as bioenergy, bio­based chemicals, and biofuels (Agensi Inovasi Malaysia 2011). This strategic move provides additional avenues of investment opportunity at POIC Lahad Datu.

This chapter gives an overview of POIC Lahad Datu and its link to biofuel devel­opment. It also highlights the Malaysian National Biomass Strategy 2020, the investment opportunities in biofuels, and how POIC could participate in the busi­ness development of the biofuel sector.