Promoting Trade and Investment between the EU and ASEAN
1. What Germany has to offer Promoting Trade and Investment between the EU and ASEAN Market Information Seminar – EU – EAGA BizTech Partnership Mr. Nikolaus Kraus Project Manager ConnectAsiaEurope e.V.
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6. FDI inflow to ASEAN (Source Countries, 2006) In 2006, Germany invested 1,59 Billion US$ (3,0 %) in the ASEAN region (2005: 478 Million US$)
7. FDI inflow to ASEAN (Target Countries, 2006 ) Tendency: Growing Foreign Direct Investments in the ASEAN region since 2003
With its transition from a subsidiary of the German Association of Chambers of Commerce and Industry to an independent institution, BHK has transferred its know-how and its network resources for the implementation of international co-operation projects to the Association “ConnectAsiaEurope e.V”, of which it is a member. This transfer involves a clear legal, financial and institutional separation, as well as in terms of activities, of the two institutions. Activities: Export promotion, publications, seminars in Germany, delegations to foreign markets, co-operation meetings, leading foreign delegations to Germany
ASEAN investments in Germany: During his Malaysia visit in June 2006 the Minister for Economic Affairs of Germany, Mr. Glos, repeatedly expressed Germanys interest in Malaysian investments in Germany. Perspectives: - Photovoltaic sector - Microelectronics - IT
FDI Flows to ASEAN 2006/Sectors: Manufacturing: 16,1 BN US$ Radio, Television and Communication equipment (6,0 BN. US$) Chemicals and Chemical Products (4,9 BN US$) Mineral Products (3,9 BN. US$) Motor Vehicles amd Transport Equipment (2,6 BN US$) Machinery & Eqoipment (1,8 BN US$) Food $ Beverages (1,6 BN US$) Financial intermediation and services: 12,4 BN US$ Trade/Commerce: 6,8 BN US$ Services: 5 BN US$ Real Estate: 4,2 Bn US$ Mining: 1,4 BN US$ Construction: 0,5 BN US$ Agriculture, Fishery and Forestry: 340 Mio. US$
Trade between Germany and EAGA Trade balance (2000 - 2006) Constantly negative. Very dynamic development of imports and exports. The developments of trade between EAGA and EU reflect the development of trade between Germany and the whole ASEAN region. ASEAN: Germany is by far the most important trade partner for exports with goods valued at 14,52 Billion Euro (2006), which corresponds to a share of almost 30 % of the total EU trade. Considering the imports from ASEAN countries Germany is the third most important country with imports amounting to 18,3 billion Euro (2006), corresponding to a share of more than 20 % of the imports to EU. The proportion of foreign trade with ASEAN countries of the foreign trade between Germany and the Asia/pacific region: 16,8 % (China: 32,3 %, Japan: 14,9 %, Korea: 9,4 %, India: 7,9 %) Most important export goods from Germany (2007): Machines, Vehicle Parts, Chemical Products, Electronics Most important import goods from ASEAN : IT, Radio/Television/Communication Equipment and other electronic equipment, agricultural products, textiles, chemical products, lumber, machinery.
The country is only gradually recovering from the impact of the crisis in 1997; volume of foreign trade with Germany is still below the levels of the 90ies. Germany is the most important trading partner in the EU for Indonesia. The German investments in Indonesia are only small (20 Mio. US$). Problems: national bureaucracy Natural Resources/agriculture: Natural Oil / Palm Oil: the worlds largest producer!(27,2% of German imports (2005: 2,4 BN Euro); biggest producer and exporter of Palm Oil to EZ), others (Coffee, Cacao, rubber (Indonesia is one of the largest rubber producers in the world), German imports: 12,9 %) Food Industry (Im: 5%): Timber/furniture (3,8 % Import from Indinesai): Indonesia is the biggest exporter of Wood among the ASEAN-countries. Ecological problems because of the massive deforestation (ca. 3,8 Mio ha/Year) Textiles/Clothes : Most important branch within the manufacturing sector; Germany is important trading partner (Im: 16,4 %) /shoes (Ex: 5 %) Electrical Industry (Im/Ex: 15 / 17,5 %); Germany exports power generating and distribution equipment and IT Electrical engineering (Im/Ex5,9 / 7,0 %): Steel (Ex: 4,6 %) Chemicals /Plastic (Ex: 4,3/3,8 %): Infrastructure: Very big potential in the area of traffic infrastructure and electricity supply Tourism: app. 5 Million inbounds/year and 4,5 BN profit!
Malaysia: Germany is the second largest investor in the Malaysian manufacturing sector. Of the European countries, Germany is the largest investor in Malaysia Automotive sector (Export from Germany: 4,2 %): biggest sales market in the in ASEAN (own brands: Proton, Perodua), increasingly liberalized market Electrical industry (Import from Malaysia: 60%, Export from Germany: 53%) : Key industry of Malaysia, strong growth rates; companies like Bosch, Siemens or Infineon have manufacturing units in Malaysia , one of the most important places for the assembly of semiconductors / microelectronics (most important industry in the country), export of passive components / capacitors etc.; export Germany - Malaysia: semiconductors (for assembly in Malaysia). Agriculture/raw materials (%5 of Imports): Palm Oil: Malaysia is the second biggest exporter of palmoil; cacao: Malaysia is an important exporter of cacao to Germany; pepper, rubber/latex: Malaysia is one of the biggest rubber producers in the world (gloves, tyres, etc.); Germany is the biggest importer of rubber in the EU; good opportunities for natural latex (more than 80 % from imports). Biological grown food : important sector in Malaysia Lumber/furniture: Malaysia is an important exporter of wooden products and different kind of timbers to Germany (timber industry: esp. in Sarawak) Chemicals/Plastics Environment: investments needed in recycling technologies, know how in air pollution control, wastewater treatment technologies, good biofuels, BtL Machinery: due to the strong growth of the manufacturing sector in Malaysia a huge increase in the demand for machinery is expected: good opportunities for German invetments! Chemicals (6,9 % of exports)
Philippines: Hoping for a better climate for private investments due to public sector / political reforms (strong interference of politics into private sector investments; Fraport-dispute, high regulation standarts); reforms of infrastructure and legal stability needed) Agriculture: tropical fruits (Mango, Pineapple), sugar Electrical Industry /IT (59 % of imports to Germany: most important branch of industry; highest export and import sector for Germany; assembly of semiconductor / microelectronics generates the biggest part of foreign trade with Germany; due to a drop of the German demand for office machines a small decrease of the imports of electronic equipment can be noted. Allocation: Electronic device (29 % Im, 25. % Ex from Germany), IT (23,4, Radio/TV: 6,3 %) Electrical Engineering (10,5% imports to, 8,2 % Exports from Germany) Textiles and Clothes (3,3 % of imports) Tourism: strong growth; in 2007: 8 %, inbound: 3,4 Million tourists; sustainable tourism is becoming an important sector Environment/Energy: needs for investments in geothermal energy/biomass energy Services: business outsourcing, financial services, telecommunication, Call Centers (German companies have started to outsource their IT-activities to the Philippines; big investments; example: Siemens Call Centre in Manila (2006)) Machinery: constant exports from Germany to the Philippines (16,2 % exports) Infrastructure: Growing demand for investments in infrastructure Chemical Products: 15,2 % exports from Germany
Primary energy supply: 23%: Coal 22,7%: Gas 36%: Oil 12,5 %: Nuclear Energy Important: due to geografical reasons, many of the renewable technologies made in Germany (e.g.: solar energy) are applied in a much greater scale abroad
Solid biomass: The use of solid biomass for generating energy (heat and electricity) has a long tradition in Germany -> German companies are the world leaders in the provision of highly efficient technology in this area a) Heating systems used to supply several homes or houses are generally fed with wood chips from machine-chipped wood. The heat is then distributed via a local heating network. b) Wood is also used directly in larger, combined heat and power (CHP) plants to generate electricity and heat simultaneously (biomass is burned, the heat is used to boil water or oil in a boiler, and the energy in the steam is used to turn turbines and generators). Solid biomass includes agricultural and forestry produce such as forest timber, fast growing tree species, and specially cultivated energy crops or cereal straw, cutting waste from the agriculture / forestry / timber industries, sawmill, sawdust, scrap and waste products from the agricultural industry. -> in Germany wood is the most commonly used for Bio-mass energy. Market Facts: advantage: combusted wood only release the amount of CO2 which it absorbed during its growth growth rates of wood pallet fired heating systems in the last years: up to 100 % 70.000 pallet boilers and ovens in homes 1000 biomass heating plants which supply heat to residential areas 160 electricity plants with an output of 960 MW Problems : to which point can CHP-energy be called bioenergy? (import of Biomass, usage of contaminated wastewood, etc.)
Biofuels: German companies have many years of experience in the field of biofuel manufacturing, offer globally tried and tested systems engineering as well as expertise along the entire value added chain. The same companies are also working on the development of new production procedures to increase the efficiency of manufacturing processes and thereby the yield per hectare of cultivable land. An area of emphasis in this field is the optimization of the biomass to liquid process (BtL). First generation biofuels The biofuels used in large quantities these days are biodiesel and bioethanol, the so-called. Both are manufactured from high-grade natural products (oils, sugar, starch) and are for the most part mixed with traditional fuels. Biodiesel can be used as a replacement for conventional diesel. The majority of diesel vehicles can be fuelled by pure biodiesel (B100). Development of motors which are especially made for the combustion of vegetable oils (e. g. Elsbett motor; vegetable oil has different cumbustion characteristics, e.g. high viscosity). Furthermore, biodiesel can also be added to conventional diesel. In Europe a typical mixture ratio amounts to 7 %, the level to which the diesel fuel does not have to be specifically marked. Biodiesel is manufactured from vegetable oils; primarily rapeseed oil in Germany, but it can also be produced from palm, soya and sunflower oil. Bioethanol is mostly produced from sugar cane or maize, but can also be manufactured from sugar beet, grain or potatoes. The starch extracted from the latter is broken down via enzymes into glucose and subsequently fermented with saccharomycetes like the sugar from sugar-containing plants – as in the production of wine or beer. The extracted bioethanol is used in vehicles both in the pure form E100 and in specific mixtures with traditional petrol (E85, E10). So-called flexible-fuel vehicles, already widely used throughout Brazil and the USA, enable the use of different petrol-ethanol mixtures, whereby the vehicle is adjusted to the fuel by the push of a button or through automatic detection by one or more sensors.
Biomass to liquid Eespecially interesting for the usage in ASEAN-countries using the residues which remain at the palm oil production : Biomass to liquid is one of the most promising processes available in the fuel sector. Germany leads the way in these technologies ( Fischer-Tropsch ): Solid biomass (lumber, straw, agricultural residuals (e.g. from the palm oil production) is transformed into synthesis gas in a gasifier (autothermic fluidized bed method or entrained-flow method), by means of high pressure and high temperature. Syntetic fuels such as diesel can be reconstructed through further process steps. Therefore, the Fischer-Tropsch synthesis is used, after which the resulting hydrocarbon is refined. The German company Choren Industries already produces BtL for Volkswagen ( SunFuel/SunDiesel ) and Daimler ( Biotrol ). It inaugurated the first “refinery of second generation" biofuels in Freiberg in April 2008 (production of 18 million litres). Many bigger plants are already planned in Germany. Technology of the future! BtL can definitely compete with first-generation biofuels. -> Shell has the only GtL (gas to liquid) refinery in the world in Malaysia a country -> BtL would be a great opportunity for the country. Recommended: Integration of the BTL-Plants into existing refineries / chemical plants with the objective to lower investment costs and to make use of numerous synergy effects -> integration to the Biofuel-refineries in ASEAN-countries? Advantages: 4000 liters bio-fuel/hectar reduction of CO2 emissions by over 90 % (CO2 reduction twice as high compared with first-generation bio-fuels) high quality possibility to produce all sorts of Biomass The large scale production of BtL is technologically feasible costs of 1 l of BtL could drop to 0,60 €/l
Biogas: F ermentation of organic material under anaerobic conditions; the gas mixture produced at this process contains methan and can be used for energy generation (natural gas / transport sector). Materials used (2005): Animal excrements (50 %), organic municipal waste (11%), industrial and agricultural residues (16%, decreasing), energy plants (22 %, strong growth) German companies are the leader in the field of biogas technology. Power generation from gaseous biomass has greatly expanded in Germany in recent years to become an independent sector within the fast growing bioenergy industry. Their range of products and services spans from designing and building biogas-systems to operating and maintaining them. Market facts 2006: 650 new systems installed, increasing the number of systems to 3.500 Electrical capacity: 1.100 MW Sharp increase expected in 2008
Wind energy made in Germany Germany is a pioneer developing technology and is the largest manufacturer of wind turbines and components in the world. German wind technologies are exported to countries all over the world. In the medium term, wind power has the greatest potential for increasing the share of renewable energy in electricity generation in Germany. The Global Wind Energy Council (GWEC ) estimates that wind energy can meet more than 34 % of the world’s electricity demand by 2050 and 37 % of the world’s wind turbines and their components are made in Germany, world leader now and shaping the market in the future. German maufacturers have developed two different systems to efficiently convert wind energy into electricity: generators with gear units and gearless generators (type of generators depend on the usable wind speeds and the location of the turbine). The German wind industry is increasingly focussing on the usage of wind turbines at sea (so called offshore wind turbines ); for this usage wind turbines with a capacity of up to five MW are being developed. Such turbines produced by German manufacturers are already used in offshore wind-parks in Denmark, Sweden, UK, Ireland and the Netherlands. The German industry provides technology for manufacturing, installing and servicing offshore wind turbines and their components (maintainance of offshore wind turbines is quite labour-intensive. Market facts: Turnover 2006: 7,2 billion Euro 37 % of the worlds wind turbines and their components are made in Germany 1208 new turbines with a capacity of 2.233 MW were installed (corresponds to a growth of 23,5 % to the previous year) By the end of 2006: 18.685 turbines installed, producing 20.622 MW (Germany world leader) Worldwide in 2006: USA: 2.800 MW installed, India: 1.500 MW, China: 1.000 (strong growth in Asia!); many of this wind turbines and / or their parts are made in Germany (it is estimated, that until 2050 34% of the worlds electricity demand could be met by wind energy). The largest German turbines have a nominal capacity of 4 to 6 megawatts (MW), their height can reach up to 200 meters with a hub height of 120 meters and the individual rotor blades about 65 meters long.
As the oldest technology for generating power, more then one fifth of the worlds electricity is generated from hydropower (run-of-river, impoundment and pumped storage power plant). Facts 2006 : hydropower meets 3,5 % of the gross electricity demand in Germany After wind energy, it generates the largest proportion of electricity from renewable sources. - 4.700 MW installed, 7.500 plants+ - 1/3 of the worldwide installed capacity works with German technology (Germany = most important producer of hydropower technologies): Export quota: 80%!!! - German companies have a long-lasting experience in consulting, planning, construction and finance.
Solar energy: The solar industry in Germany is booming. There has been investment in Germany in recent years both in state-of-the-art factories for manufacturing crystalline solar cells and modules , and in factories for manufacturing thin-film modules. More than 50 factories are producing all the pre-products, from silicon, ingots, wafers and solar cells, to solar modules, thin-film modules and inverters; and all to the highest quality. German solar firms are currently building large production sites at home and abroad in order to satisfy the globally expanding photovoltaics market. In 2007 and 2008 alone, 15 new solar factories are created in Germany, along with up to 10,000 new jobs in the solar technology industry, including manufacturing, sales and installation. S olar thermal collectors absorb sunlight, convert it into thermal energy and pass it on to a heat transfer fluid. In systems with forced circulation, the fluid is pumped into the hot water tank via a pipe system. For this purpose, a circulation pump is activated by the controller as soon as the temperature exceeds that of the storage tank. The solar heat is transferred to the water tank via a heat exchanger. The cooled liquid flows back to the collector, where it is reheated. In the winter, conventional energy sources provide additional heat. In Germany these tend to be gas or oil boilers. Solar thermal power plants The solar array of a parabolic trough power plant consists of several rows of collectors, 20 to 150 metres in length, which are made of parabolically curved reflectors. These concentrate the sunlight onto an absorber tube that runs along a caustic line. The solar radiation concentrated in the absorber tubes heats water via a heat exchanger to temperatures of around 400 degrees Celsius. The resulting water vapour drives a generator, as with conventional steam or gas turbine power plants. The first European plant, in Andalusia in the south of Spain, will go into operation in 2009. Three power generation units, each with a 50 megawatt capacity and a collector surface area of 512,000 square metres, will supply environmentally-friendly electricity to 200,000 people. Several German firms are instrumental in planning and implementing the project. Facts: about 5 % of the German households use solar energy 1,3 million solar power systems in operation in Germany installed capacity 2006: 5750 megawatts investments in solar systems over the next five years: 10 billion Euro 2006: market growth of 60 %, sales of 3,8 Billion, 20.000 people working in the sector The total capacity of solar cells produced in Germany in 2006 amounted to roughly 500 megawatts, equating to an annual growth of around 50 %. More than 50 factories are producing high quality silicon, ingots, wafers and solar cells and modules German solar firms have created 15 new solar factories in 2007/2008 Solar thermal market: Germany has a 50 % market share! High potential for EAGA!!! Investments in the solar sector in Germany: Attractivness by investments in the sector of renewable energies: The Renewable Energy Source Act (EEG) guarantees operators a fixed compensation for 20 years, which means that the operators of big photovoltaic systems / biomass plants get a minimum price per kilowatt hour of solar energy fed into the grid for 20 years!!! (e.g. 50 cents in the case of photovoltaic energy).
Geothermal sources could supply Germany's electricity needs 600 times over (Werner Bussmann, CEO, German Geothermal Association) Electricity from geothermal sources is soaring in Germany due to tax-advantages for this kind of energy -> After a renewable energy law that introduced a tariff scheme of EU €0.15 [US $0.23] per kilowatt-hour (kWh) for electricity produced from geothermal sources came into effect that year, a construction boom was sparked and the new power plants are now starting to come online In 2005, only 0,23 MW of the electric energy (and 630 MW of thermal energy, less than 0,4 % of the total primary energy supply) came from geothermal energy. Only four small geothermal power plants are successfully operating in Germany, albeit supplying only a tiny amount of electricity. About 150 geothermal power plant projects are in the pipeline representing an investment of 4 billion euros. Germany's manufacturing sector is now gearing up to produce more drills for geothermal energy plants cost of building geothermal plants could fall in the next few years as more efficient technology is developed in 2005 13250 heat pumps were installed turnover in the sector of geothermal energies in 2006: 580 Mio. Euro, 4100 people working in this sector in Germany innovative technologies from Germany because Germany doesn’t have volcanic activity or the associated dry steam reservoirs that can be used to produce electricity directly.
Renewable energies in Asia: Due to the dynamic development of the Asian economies entail an increasing energy demand in the whole region. Together with increasing oil-prices and long term scarceness of oil and gas, this leads to a growing demand of renewable energies and biofuels in the whole region. As renewable energies are relatively cheap and easy to install, to increase the proportion of renewable energies in the energy mix of many Asian countries is getting more and more attractive. Further advantages of renewable energies in ASEAN-countries: - decentralized energy supply (rural development) Governments in ASEAN are becoming more and more aware of the need to promote renewable energies and have taken first steps to open for foreign investments in the area of renewable energies (including biofuels) establishing specific renewable energy policy frameworks (fiscal incentives, pioneer status, investment tax allowance and import duty and sales tax exemption) Biomass fuels available in ASEAN: Rice husk, palm oil, lumber, sugar bagasse (Philippines), pulp and paper
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