Chinese company's US$6b investment in Brunei win-win for both sides

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A privately-owned company in east China's Zhejiang province said Wednesday its 6-billion-U.S.-dollar investment in a petrochemical plant in Brunei benefits both sides.

The remarks are meant to dispel the skepticism that often triggers controversy and sometimes blocks overseas investment plans by Chinese companies, researchers said.

Last week, Icelandic authorities rejected a land purchase plan by a privately-owned company in Beijing that would have built a high-end resort with an investment of 200 million U.S. dollars.

Zhejiang Hengyi Group Co., China's largest chemical-fiber supplier for the textile industry, said in a statement it will build a petrochemical plant with a total investment of 6 billion U.S. dollars in the oil- and gas-rich ASEAN member state.

The project, the largest overseas investment by a privately-owned Chinese firm, is designed to process 15 million tonnes of crude oil a year and churn out products such as p-xylene and aromatic hydrocarbon.

Brunei Shell Petroleum Co. signed an agreement with Zhejiang Hengyi to provide crude oil supplies for the project, which has been approved by the Brunei government.

Qiu Jianlin, chairman of Zhejiang Hengyi, said the plant aims to help reduce the company's reliance on imports of petrochemical products. Currently, 60 percent of its consumption of p-xylene comes from imports.

The plant alone can meet 30 percent of Zhejiang Hengyi's demand for petrochemical products, Qiu said. "The safety of production material supplies can affect our international competitiveness," he said.

"Our cooperation with the Brunei government will not only benefit our company but will also be a win-win for both sides," Qiu added.

Qiu said the company was seeking to create opportunities for locals. Nearly 3 million tonnes of diesel, gasoline and jet fuel will be supplied to the local market in Brunei annually, he said.

Brunei authorities have welcomed the project, as the plant is projected to create over 2,000 jobs, mostly for locals, and local organizations and companies can also take a stake of up to 30 percent in it, the Brunei Economic Development Board said in a statement.

The plant will also help to change the extensive growth mode by reducing the economy's long-term reliance on exports of oil and natural gas, it said.

Crude oil and natural gas contribute to 66 percent of Brunei's gross domestic product and 93.6 percent of its exports value, according to the statement.

Overseas investment by Chinese companies is often at the center of controversy, as Chinese motives are questioned.

"Market-oriented moves should be viewed from the vantage point of the market," said Xu Jianfeng, a researcher at the Zhejiang provincial academy of social sciences. "Rational, fair and equal economic cooperation and global trade are not resources grabs."

"More importantly, China's purchase and consumption of resources are two concepts. As 'factory of the world,' China buys resources and exports. This is the international division of labor and reasonable disposition of global resources," Qiu said.

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