43

CHAPTER 3



SITE SELECTION AND PLANT LAYOUT



3.0 INTRODUCTION

Site selection and plant layout plays a very important part in starting up a chemical
plant in order to determine the successful of a business. A strategic location will
improve the performance of production and economic of company. Location which
is near from the source of raw material will be a great factor to reduce the cost of
transportation. Therefore, the best site location and plant layout must be considered
carefully.

3.1 SELECTION CRITERIA

Industrial parks in Malaysia are divided into 5 categories as followed, with some
restriction for chemical manufacturing plant. They are concentrated at integrated
industrial parks such as Gebeng in Pahang, Teluk Kalong and Kerteh in
Terengganu, Shah Alam and Subang in Selangor and Pasir Gudang, Johor. They
are divided into categories which are;

a) Light industrial park,
b) Medium industrial park,
c) Heavy industrial park,
d) Supporting industrial park,
e) Petrochemical industrial park.

Good site location is important in order to reduce cost and increase profit.
Therefore, before starting up any plant, the locations where it will be build must be
choose carefully. A good location is required to optimize the production of the plant.
44

According to (Coulson & Richardsons, 2000), many factors must be considered
when selecting a suitable site, below is the factors that must be consider:


a) Location, with respect to the marketing area.
b) Raw material supply.
c) Transport facilities.
d) Availability of labor.
e) Availability of utilities: water, fuel, power.
f) Availability of suitable land.
g) Environmental impact and effluent disposal.
h) Local community considerations.
i) Climate.
j) Political and strategic considerations.


3.1.1 Raw Material

To produce a good product, best quality of raw material is required. Therefore,
before starting produce product, the raw material must be considered. The location
of raw material gather can help in reducing the transportation cost.

3.1.2 Price of Land

The importance price of land is to reduce the cost. The cost for rent or buy a land
must be suitable with the return of plant later on. The other important is to make
sure profit gain is high.

3.1.3 Workforce

Malaysia offers investors a young, educated and productive workforce at very
competitive costs. Backed by the government's continued support of human
resource development in all sectors, the quality of Malaysia's workforce is one of the
best in the region. In addition, labor productivity has grown steadily.



45

3.1.4 Utilities

A site, fully equipped with infrastructure facilities such as roads, electricity and water
supplies, and telecommunications, are continuously being developed by state
government as well as private developers to meet demand. Water is needed as a
solvent in chemical reaction, for cleaning and cooling processes and electric is
needed to run operations unit, generate heats and a few more tasks. The major
supplier of electricity in Malaysia is the Tenaga National Berhad and its tariff is
uniform for all states.

3.1.5 Transportation

Peninsular Malaysia's network of well-maintained highways is a boon to industries.
These highways link major growth centers to seaports and airports throughout the
peninsular and provide an efficient means of transportation for goods. Shipyard,
railway stations, highways and airports are the place to be taken into account in
selecting the best sites. So, the site selected should have a good transportation
lines to smoothen the production.

3.1.6 Political and Economic Stability

The political climate and stability of social in Malaysia are the criteria that make
those country great attractions to foreign investors. Government policies that
maintain a business environment with opportunities for growth and profits have
made Malaysia an attractive manufacturing and export base in the region. The
private sector in Malaysia has become partners with the public sector in achieving
the nation's development objectives.


3.2 SITE LOCATION SUGGESTED

In any industry, plant location is the most important criteria that must be consider to
setup plant. Therefore, we have few locations that have potential to be developed.
We have chosen to build our plant in the industrial area near priority of raw material,
price of land, transportation, labor, utilities, political and strategic consideration.


46

Below are the locations that have potential:
a) Bukit Labohan, Kerteh in Terengganu
b) Tanjung Kidurong in Sarawak
c) Tanjung Langsat, Johor Bharu


3.2.1 Description of Suggested Location

3.2.1.1 Bukit Labohan, Kerteh in Terengganu

a) Raw material

Raw material is easy to obtain in Terengganu. This is because
Terengganu has one of the largest oil and gas industrial zones in
Peninsular of Malaysia that can supply our raw material such as
Liquefied Propane Gas (LPG). Cost of transportation will be
minimized here as the plant is nearer from the source.

b) Price of land

According to Malaysian Development Authority (MIDA), the sale price
for the development land in Bukit Labohan, Kerteh is about RM30.00
per m
2
. The land availability in Bukit Labohan, Kerteh was 38.33
hectares.

c) Labor

It is expected for young citizens in Terengganu to fill up the
vacancies in our production plant as the location is near to the Kerteh
town and the port.

d) Utilities

In Bukit Labohan, Kerteh, electricity is supplies by the Tenaga
Nasional Berhad. The tariff for electricity depends on class it
categorized. Water falls under the jurisdiction of the state and is
treated and distributed by the Terengganu Water Company (SATU).
47

At the moment, potable water is supplied for both industrial and
domestic use. For industrial and commercial use, the rate for water
price for the first 70m, the cost is RM 0.95, for more than 77m, the
cost is RM 1.15, and minimum charge is RM 15.00. Gas is supplied
by Gas Malaysia or Petronas Gas. Negotiable rates based on the
quantity demanded.
e) Transportation

There are many economic activities was build in Kerteh such as oil
and gas industry. Bukit Labohan, Kerteh provides good
transportation facilities to transfer our product. Kerteh Port is situated
off the East Coast of Peninsular Malaysia in the South China Sea.
Kerteh is connected to Kuala Lumpur via the East Coast Highway
and Karak Highway. The East Coast Highway also links Kuantan to
other major towns in Terengganu although locals still prefer the
conventional road. Kuala Terengganu Airport is located just 15
kmfrom the Kuala Terengganu and is operated by Malaysia Airports
Holdings Berhad.

f) Political and strategic consideration

In political aspect, the state of Terengganu is governed by stable
administration which welcomes inventors to load up their capital in
this state. Growth of potential industry helps the government of
Terengganu to generate the economic income for residence in
Terengganu.


3.2.1.2 Tanjung Kidurong, Bintulu

a) Raw material
Tanjung Kidurong, Bintulu is one of a major industrial centre in
Malaysia, which is located to the east of the main town, hosts the
worlds largest liquefied natural gas production facility on a single
site, Petronas Liquified Natural Gas (LNG) Complex. In view of its
large reserves of natural gas and oil, Bintulu has been selected as
48

one of the locations in the country for petrochemical complexes.
Several types of industries have been identified and promoted for
establishment in Bintulu by the International Consultant appointed by
Federal Government. Therefore, the unlimited source of raw material
is contributed to our plant location.

b) Price of land
According to Bintulu Development Authority (BDA), the latest price
for the industrial development land at Kidurong Industrial Area
(KINDA), one of the developed industrial estates in Tanjung
Kidurong, Bintulu is about RM77.42 per m
2
. The land availability in
KINDA was 97.3 hectares.

c) Labor
Known as one of the main industrial site in Sarawak, the population
in Bintulu is increasing due to job opportunities available here. The
increasing of population will provide more labor to our production
plant.

d) Utilities
In Bintulu, electricity is supplies by the Sarawak Electricity Supply
(SESCO) and the tariff for electricity depends on class it categorized.
While, water is supplied by LAKU Management Sdn. Bhd and for
industrial rate, the minimum charge of water in any one month is RM
24.20. The price of water from 0 - 25000 liters in any one month is
RM 1.21/1000 liters and for uses of exceeding of 25000 liters in any
one month, the price is RM 1.33/1000 liters.

e) Transportation
Bintulu is accessible by air, water and road. Transportation facilities
around Bintulu Industrial area have been fully developed. These
facilities will allow the import export activities to run smoothly without
any major problems. The completion of the Pan Borneo Highway has
connected Bintulu by road to other major towns in Sarawak. Bintulu
is about 650 kilometers from Kuching and about 215 kilometers from
49

either Sibu or Miri. Bintulu Airport is located 25 km away from the
town and served the Bintulu Industrial Area. The Bintulu Port is an
important transhipment point and cover as far North as Limbang and
Lawas in Sarawak and up until the whole Brunei also in Sabah.
Besides, it coverage extend down to Kuching in Sarawak and further
down to Pontianak in Kalimantan, Indonesia. Bintulu Port which is
located at Tanjung Kidurong is an ideal way to export the product to
other places and for the purpose of importing the raw materials.

f) Political and strategic consideration

In political aspect, the state of Sarawak is governed by stable
administration which welcomes inventors to loud up their capital in
this state. Sarawak government is invited to build more industry
especially in petrochemical industry. It also can help Sarawak
government to generate the economic income for residence in
Sarawak.


3.2.1.3 Tanjung Langsat, Johor Bharu

a) Raw material
Johor Bharu is the largest industrial area in country of Johor. Johor
produce tonnage of oil palm for consumer in Malaysia. Therefore, the
unlimited source of raw material is contributed to our plant location.

b) Price of land
According to Malaysian Industrial Development Authority (MIDA) it
stated that, the price for the development land in Tanjung Langsat ,
Johor Bahru is about RM160 per m
2


c) Labor
The capacity of resident in Johor Bharu is high. This is because, this
town was become the centered of the job vacancies in Johor.
50

d) Utilities
In Tanjung Langsat, electricity is supplies by the Tenaga Nasional
Berhad Johor Bahru. The Pasir Gudang Water Supply Treatment
Plant has a designed capacity of 88 million liters per day. Water also
supplied by Jabatan Bekalan Air Johor.

e) Transportation
Tanjung Langsat located near to Johor Bharu town and Singapore. It
is just 20 kilometers to Singapore. Biodiesel can be exported through
Johor Port which is near to Tanjung Langsat and is the most
important transportation through sea. Besides that, Tanjung Langsat
also can link to Kuala Lumpur by PLUS expressway and to other
places by alternative road.

f) Political and strategic consideration
The political in Johor is stable and the state government is warmly
welcome any investors to come to Johor to invest in their state. It can
increase their economic activities thus creates much profits to them.
It also can help their residences to generate their economic income.











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B
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-
f
u
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l


55

3.3 SITE LOCATION SELECTED

The selection of the best site selection has been done by using the weightage
method. This method is important and suitable to use as a weighting factor assigned
to compensate for apperceived disadvantage.

Table 3.3 shows the weightage method in determining the best site for our
plant of Acrylonitrile production. As the result, the best site for our plan is in Bukit
Labohan, Kerteh in Terengganu. In Kerteh, there are main sources of the raw
material of propane. Thus, it is easy to attract worker and nearest with sources of
our main material. The advantages of Bukit Labohan, Kerteh instead of Tanjung
Kidurong are their price of land and their transportation. Since there are many
economic activities in Kerteh, such as oil and gas industries, Bukit Labohan Kertih
provide good facilities to transfer our product. Besides, the prices of land in Bukit
Labohan are RM30 per m
3
compared to bintulu which is RM77.42 per m
3
.

Figure 3.1: Site selected in Bukit Labohan, Kertih Terengganu

(Sources: www.terengganu .gov.my)
5
6


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2
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(
0
.
0
5
)
(
7
0
)

=

3
.
5

(
0
.
0
5
)
(
8
0
)

=

4

T
o
t
a
l

S
c
o
r
e

1
0
0




8
0
.
2
5

7
3
.
7
5

7
2
.
2
5

57

3.4 PLANT LAYOUT

In this section, the layout of the acrylonitrile production plant will be planned
and drawn. The process units and buildings will be laid out to give the most
economical flow of materials (giving the maximum efficiency and minimize the
operation cost) and personnel around the site. The site layout considers 3 main
factors:
i. Process operation
ii. Safety and comfortable
iii. Economic consideration

Among the buildings and specified areas required in the plant are:
i. Administration office
ii. Guard house
iii. Parking site
iv. Maintenance Room
v. Fire station and emergency room
vi. Canteen and surau
vii. Storage area
viii. Uploading area
ix. Research and development lab
x. Training room
xi. Waste water treatment facility
xii. Future expansion
xiii. Acrylonitrile production plant area
5
8



F
i
g
u
r
e

3
.
2
:

P
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a
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