"CSL leverages Singapore’s unique trade and logistics connectivity, political and economic stability, as well as its strong IP protection."

Johnson Lai

VP, CHEMICAL SPECIALTIES LIMITED (CSL)

July 01, 2021

Could you introduce CSL to our audience?

CSL was founded 15 years ago in Singapore to provide world-class contract manufacturing to MNCs. We help MNCs quickly grow their manufacturing footprint in Asia and be positioned to tap into the fast-developing APAC and Middle Eastern markets with minimal capital investment. CSL leverages Singapore’s unique trade and logistics connectivity, political and economic stability, as well as its strong IP protection. We have invested in the highest levels of quality, safety, and great people. Recently, we were certified for Major Hazard Installation (MHI) compliance, a key milestone standard for the process industry.

What advantages do MNCs enjoy by choosing CSL?

CSL offers large-scale manufacturing capacities for specialty products. Our customers are typically large multinationals with a global presence who search for a middle-ground option between shipping their products overseas or investing in local production facilities to serve the region. Investing in large-scale production is often in excess of US$100+ million, and building a new plant can take 2-3 years. Since we already have the hardware building blocks to produce at a large scale, we can begin producing our customers’ products in a much shorter timeline. In terms of lead-time advantage, shipping large quantities from the US or Europe to Asia takes about two months, but from Singapore, it’s typically less than two weeks, giving them the ability to compete with local players.

Could you tell more about the capabilities of CSL?

What differentiates CSL is that we do not compete with our customers: toll manufacturing sometimes refers to approaching another producer in a similar product space who has spare capacity. This means risking your IP. Because we are essentially a service provider with manufacturing capabilities, there is no conflict of interests when an MNC chooses CSL. Another advantage is the way in which our plant is structured: unlike a linear, string structure, our facility can be reconfigured and bespoke our manufacturing parameters to match our customers’ unique process conditions. Large-scale contract manufacturing is uncommon for reaction processes in Singapore but reasonably common for low-temperature component blending like finished lubricants and petroleum commodity products. CSL has a high level of chemical process engineering capability for batch reaction chemistries, purification by semi-batch distillation, and the availability of ethylene oxide and propylene oxide pipeline feeds, that are key components in polymerization chemistry for polyols as well as surfactant chemistries in the oleo-chemical segment.

How have the pandemic and the recent trade tensions impacted the regionalization of manufacturing?

Covid-19 has definitely highlighted how interconnected chemical supply chains are geographically and the high dependence on logistics connectivity. A number of MNCs were in crisis mode in the first half of 2020, their first concern being to realize product availabilities / supply continuity in different geographies in Asia. The next steps will be to evaluate the possibility of regionalizing their global footprints to shorten their supply chains to their key markets.

Before the pandemic, the trade tension between US-China imposed very high import tariffs, which accelerated MNC’s production transfer and looking at Singapore to do their product conversion. Because the tariffs go both ways, we started to see Chinese specialty chemical manufacturers, thinking about expanding their manufacturing footprint into Singapore to supply their export markets like US and Europe. This is an interesting trend, Singapore becoming an intersection not just for west-east chains, but also for east-west flows.

What are the advantages of operating from Singapore?

Singapore is one of the busiest airports and seaports in the world, reaching all ports in the Asia Pacific typically within 2 weeks of sailing. Critical to Singapore’s success are also the many bi-lateral and multi-lateral trade agreements, which allow manufacturers to stay competitive in overseas markets. The growing trend for MNCs to formulate using sustainable raw materials rather than the conventional fossil fuel sources will also be steering growth: Between Malaysia and Indonesia, where over 70% of the global palm oil and derivatives are grown, Singapore is in a unique position to create the molecules needed to complement or partially replace petroleum sources. Finally, Jurong Island hosts about 100 companies that are connected to many basic chemistries.

What is your final message?

Our customers have witnessed significant growth in the past 10 years by incorporating CSL into their manufacturing footprint. We see the success of our customers as a measure of our own success, and our focus is to continue being a part of the integrated value chain of our customers moving on.

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