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There are many factors that must be considered when selecting a suitable site for a new plant. The
principal factors considered are:

1. Plant location accordance to marketing area

The production cost against the transportation cost are among the main aspect in determining
the suitability and sustainability of a new plant. In the industries, production cost of most
petrochemical process plant is higher compared to the cost for bulk transportation if the distance
is within a certain range. And to save time and further operational cost, most plant are built near
to transportation hub be it sea port or railway station to ease the delivery and exportation of the
product to customer. Not only that, transferring process from supply to the plant will take
shorter time hence increase the efficiency of productions. To conclude, there are three possible
site location which are preferable with minimal drawback and located strategically. The
locations are:

Bukit Rambai, Melaka

Gebeng, Pahang
Pasir Gudang, Johor

2. Raw material supply

The supply of raw material is one of the most important factor especially when the usage is in
huge quantity involved. It leads to savings of the storage facilities since supply of raw material
is constantly available as well as transportation are faster due to availability of raw materials
around the plant location. Raw material supply and price of a specific raw material will become
the determining factor in the plant location study.

3. Transport facilities
Transportation aspects serve to be a cost determining factor since a reachability of a plant
ensures smooth process throughout. The best site should be selected that is close to at least two
major forms of transportation, such as on land, sea, or air transport. Land transport such as
highways is suitable for local distribution of products and plants miscellaneous whereas rail
transport will be a cost saving mode of transport especially if products are imported from
somewhere far or in bulk. Air transport is definitely the fastest mode of transport, very
convenient and efficient, however cost more and the loading will not be as much as land and
sea mode of transport.

4. Availability of labour
There is no doubt that the automation system took huge part in the industry nowadays, however
the need of human labour should not be undermined. A reasonably large labour force is still
needed for many industries regardless skilled or non-skilled worker to ensure the smooth
operation of plant. There should be an adequate pool of labour where the non-skilled worker
will be provided with training and to the skilled worker, so they can familiarize themselves with
the whole new working environment and the new system. In addition, local trade union customs
and restrictive practices will have to be considered when assessing the availability and
suitability of the local labour for recruitment and training.

5. Availability of utilities
Utilities are one of the main elements needed to run a plant. Industries mainly chemical
industries involved lots of complex processes consumes huge amount of water for cooling and
general purposes. A good plant must be located near a source of water of suitable quality. Apart
from reducing the cost, free water supplied from natural resources such as river and lake should
also be considered. Besides water supply, electrical power will also be needed throughout the
whole plant. Sources of electricity can be obtained from a local authority or in an economical
way: the power can be generated within the plant itself, however cost plays an important factor

6. Availability of suitable land

The land should be reasonable in price rates either for purchase or hire purpose, where
depending on how developed a certain location is, price of a land might differ between one
another. The person in charge may approach the local council office to figure out the
possibilities of setting up a plant in a certain area.

7. Environmental impact and effluent disposal

In the process of designing and building a chemical process plant, the environmental impact
should be assessed, and this assessment must be done to study the effect of the neighbouring
area before a plant can be built. In normal cases, environmental impact assessment study will
be conducted prior to project approval by the local council.

8. Local municipal contemplation

A plant must not be built within a housing area regardless how small the population are. This
is done to reduce as much hazard and risk as possible to the people around the plant. And the
area around the plant should be habitable as well, since it will be homed for workers and their

9. Climate
Climate can have an important bearing on the economic operation of the process because
climate, weather, and natural ruins should be kept in mind since it will determine the economic
analysis of the plant, where protective building and facilities together with their utilities will be
10. Politic and strategic conditions
Countries with stable politic situations and less turbulence in their democratic nation is needed
as there will not only be lesser disturbance, financial incentives provided by governments, tax
policy and financial facilities by local business attracts more workers and investors to invest in
a certain company.
Comparison Bukit Rambai, Gebeng, Pahang Pasir Gudang, Johor
characteristic Melaka
Raw material PETRONAS FELDA Kian Hai
availability Melaka Global Industry Sdn.
Refinery Ventures Bhd. (Muar)
Future Holding
Carbon Berhad
Solution Sdn.
Type of industrial Petrochemical, food Petrochemical, Petrochemicals,
area processing chemicals and plastics chemicals, oil palm
processing, ship
Energy Telok Gong PETRONAS IPP YTL
availability Power Gas Berhad Power
Station Generation
Tenaga Sdn. Bhd.
Nasional Sultan
Berhad Iskandar
Water source Jabatan Pengurusan Johor
Bekalan Air Air Pahang Waterworks
(JBA) Berhad Department
Melaka (PAIP) Syarikat Air
Water Dam Loji Air Johor
Semambu Loji Air
Market The location is in the The location is in the Near to the Pasir
central industrial area central industrial area Gudang Port for
of petrochemicals and of petrochemicals and global export and
other chemical other chemical import as well near to
industries where industries where their supplies for
potential customers potential customers petroleum coke
are around are around
Road North-South Karak Highway PLUS Highway
transportation Expressway
Railway Batang Melaka Train Kerteh Petrochemical KTW West Coast
Transportation Station (cargo) Complex (Kuantan Railway
Port directly to
Gebeng Industrial
Sea Sunga Udang Port Kuantan Port Pasir Gudang Port
Air Transportation Batu Berendam Sultan Haji Ahmad Senai International
Airport (International Shah Airport Airport (International
and domestic) (Domestic only) and domestic)
Environmental Waste Management Semambu Water SWM Environment
Impact Sungai Udang Treatment Plant
Labour supply Moderate supply from Moderate supply from High supply from
nearby city nearby city nearby city
Community factor Less dense residence Less dense residence Very dense residence
Taxation and legal National Land Code Tax payable must be Pasir Gudang Free
restriction Act 1963 paid in equal monthly Zone where any
instalment and a goods can be brought
penalty of 10% on the in without any tax
outstanding amount
of tax will be charged
for every late
Climate Unlikely to Unlikely to Unlikely to
experience flooding experience flooding experience flooding
and has a nearby fire and has a nearby fire and has a nearby fire
station station station
Land cost RM8-19 psf RM10-18 psf RM41-50 psf

Decision Making Site Location

Criteria Bukit Rambai, Gebeng, Pahang Pasir Gudang, Johor

Raw material 5 5 5
Energy availability 4 4 5
Water supply 5 5 5
Market 5 5 5
Transportation 4 5 5
Waste disposal 4 4 5
Labour supply 3 4 5
Price of land 4 4 4
Climate 4 5 4
Taxation and legal 4 5 5
Total 42/50 46/50 48/50

Based on the weighted evaluation done, Pasir Gudang, Johor achieved the highest score and thus the
chosen as the strategic location for the plant. The deductions are rationalized as follows:

Raw Material Availability: Near to feedstock which is petroleum coke

The land price is reasonable considering the facilities being provided as well as the number of
available labours
Good transport facilities, which is near to the Pasir Gudang tax free port as well as near to
Senai International Airport.
Equipped with centralized waste management system
Residential area and facilities are sufficient. Suitable for local community and good tropical