EXPORT STRATEGY OF PALM-BASED

BIOMASS PELLET BY GREEN PELLET

SARAWAK SDN BHD TO SOUTH KOREA

Synopsis

Wood pellet pellet fuel that usually made

from compacted sawdust and other
industrial waste
Reduction of Greenhouse Gases (GHGs)
emission drives the renewable energy
market in South Korea
Increasing demand and consistent supply
required to achieve Renewable Portfolio
Standard (RPS) Quota
Green Pellet Sarawak (GPS) Sdn Bhd (woodbased
pellet
manufacturer)
Diversify
product range to Palm-based biomass pellet
Malaysia Tropical countries with abundant
of wood resources and second largest palm
oil export in South East Asia
To acquire future growth and development

Background Information
Home Country (Malaysia)

Has tropical rainforest and abundant of

palm oil resources
Palm oil-related products Second largest
export of Malaysia(Shuit et al. 2009)
Increasing palm oil production increase
in residue generated
Each kg of palm oil 4 kg of dry biomass
Comparative advantage to be
international biomass pellet supplier

Background History
Host Country (South Korea)

Experienced rapid economic growth energy use

and CO2 emission increase
Serious concerns on reduction of GHGs emission
by 2020 (Wood Pellet Association of Canada
2016).
Wood pellets are commonly use in Korea
consumption of pellet is expected t o increase
Implementation of RPS Consumption expecting
to increase (Dickson, Griffith and Cho 2015).
Korea forest product self-sufficiency rate 6%
(Insufficient to meet the pellet needs) (Dickson,
Griffith and Cho 2015)

Projected Pellet Demand in South Korea Source: Han. 2009

(Roos and Brackley 2012)

South Korea Wood Pellets: Top Import Sources, 2014 (kg)

(Dickson, Griffith and Cho 2015)

Recommendation
Arguments in Support
Product Features (Comparison Study)

Category of Biomass Production and Estimation of Biomass Energy Productivity in

Malaysia (Ratnasingam et al. 2015)

Wood Pellet

EFB Pellet; Fruit Fibre Pellet

Cost (RM/ton)

Wood Pellet: 520 ~ 770

(Jeong and Kim 2010)

EFB Pellet : 150 ~ 300;

Fruit Fibre Pellet: Approximately 600
(Soong 2011)

Recommendation
Arguments in Support

Feasibility Study
- Raw material availability

Type of biomass in Malaysia (Ratnasingam et al.

2015)

Technology Adapt the same

manufacturing process using different
raw material
Raw
Raw
Material
Material
Screenin
Screenin
g
g

Grinding
Grinding

Drying
Drying

Pelletizin
Pelletizin
g
g

Cooling
Cooling

Screenin
Screenin
g
g

Packing
Packing

Recommendation
Arguments in Support

Implementation of Renewable Portfolio

Standard (RPS)
- Accelerate renewable energy deployment
- Mandate 13 largest power companies to
increase energy mic in total power generation
- RPS target

Yearly RPS targets (% of Renewable Power Generation) (International Energy

Agency 2016)

Greenhouse Gas Energy Target Management

System (TMS)
- Reduce 30% of GHGs by 2020

Recommendation
Argument in Against

Financial Risk
- Selling Price & Shipping cost are affected by
foreign exchange rate

Country Risk
- Korean government newly imposed new
requirement to ensure biomass pellet
sustainability
- Fibre cutting certification and raw material supply
documentation are required to submit to importer
- Create logistical problem Could be difficult to
acquire every single cutting license from supplier

Implementation Trading
Background (Malaysia Korea)

ASEAN Korea Free Trade Area (AKFTA)

- Bilateral cooperation between ASEAN
countries and Korea in economic
activities Lee 2010)

Implementation Strategies

Exporter background Green Pellet Sarawak Sdn Bhd

1) Joint venture between international trading group CellMark
and Timber Industries Corp
2) Specialise in wood-based pellet manufacturer
Located in Bintulu, Sarawak (Strategic location)
3) Access to wood waste and oil palm waste
4) Comparative and competitive advantage (Country with
abundant of sources and current adapt pelletizing technologies)

Diversification New product introduction

1) Palm-based wood pellet
2) Increase current production capacity
3) For future growth and development
4) Provide more and consistent supply to Korea

(Green Pellet 2016, Kotrba 2015).

Implementation Strategies

Multidomestic strategy different culture,

language, income level and different
demand on the product from home country
Competitors and Target Market South
Korea import from different countries such
as Indonesia, Thailand, Myanmar.
Indirect exporting engage with CellMark,
International trading company
Assist in marketing, supply chain, promotion
and customer service activities

Implementation
Value-Chain

Implementation
Storage, transportation and logistic
Storage
- Packed in bulk in jumbo bags
- Tight seal to inhibit moisture penetration
- Finished goods stored at GPSs warehouse
and shipped out after order confirmation

Transportation
- Engaged to freight forwarder, DHL.
- Products will be sent to Bintulu Port and
ship to Korea by DHL cargo container.

Implementation
IT & Payment Method
IT
- Enterprise Resource Planning (ERP)

Implementation
IT & Finance Management
Finance Management
- Transaction will be done in Korean Won
- Letter of credit flexibility of it to both
customer and supplier
- HSBC in Malaysia and Korea will be the
main banks to collaborate

Implementation
CSR & Ethics
CSR
- Replantation activities
- To ensure consistent growth of oil palm tree
- Balance of ecosystem

Ethical Issue
- Raw material source harvesting of raw
material comply to government policy
- Manufacturing process reduction of GHGs
emission usage of pellets in power generation

References

Aljuboori, A. H. R. (2013) 'Oil palm biomass residue in Malaysia: availability and sustainability', Int J Biomass Renew, 1(2), 13-18

CellMark (2016) About. Sweden: CellMark. [Online] Available from: <http://www.cellmark.com/contact/> [10 July 2016]

Dickson, C., Griffith, A. and Cho, M. (2015) 2015 Top Markets Report - Renewable Fuels
A Market Assessment Tool for U.S Exporters, United States of America: International Trade Administration. [Online] Available from:
<http://trade.gov/topmarkets/pdf/Renewable_Fuels_Top_Markets_Report.pdf> [3 July 2016]

Fletcher, K. (2015) Situation South Korea. United State of America: Biomass Magazine. [Online] Available from:
<http://biomassmagazine.com/articles/12543/situation-south-korea> [8 July 2016]

Forero Nunez, C. A., Jochum, J. and Sierra Vargas, F. E. (2012) 'Characterization and feasibility of biomass fuel pellets made of
Colombian timber, coconut and oil palm residues regarding European standards', Environmental Biotechnology, 8

Goh, C. S., Junginger, M., Cocchi, M., Marchal, D., Thrn, D., Hennig, C., Heinim, J., Nikolaisen, L., Schouwenberg, P. P. and Bradley,
D. (2013) 'Wood pellet market and trade: a global perspective', Biofuels, Bioproducts and Biorefining, 7(1), 24-42

Green Pellet (2016) GPS Story. Malaysia: Green Pellet Sdn. Bhd. [Online] Available from: <http://www.greenpellet.com.my/about/>
[9 July 2016]

International Energy Agency (2016) Renewable Portfolio Standard (RPS) - Korea: International Energy Agency. [Online] Available
from: <http://www.iea.org/policiesandmeasures/pams/korea/name-39025-en.php?s=dHlwZT1yZSZzdGF0dXM9T2s> [7 July 2016]

Jeong, N.-Y. and Kim, L.-H. (2010) 'The Study of Economic Feasibility of Wood Pellet in Domestic Power Plants Sector', Journal of
Energy Engineering, 19(4), 251-257

Junginger, M., Goh, C. S. and Faaij, A. (2014) 'International Bioenergy Trade',

Kim, H., Shin, E.-s. and Chung, W.-j. (2011) 'Energy demand and supply, energy policies, and energy security in the Republic of
Korea', Energy Policy, 39(11), 6882-6897

Korea Custom Service (2016) Import Clearance System South Korea. [Online] Available from:
<http://www.customs.go.kr/kcshome/main/content/ContentView.do?contentId=CONTENT_ID_000001332&layoutMenuNo=21051>
[19 July 2016]

References

Kotrba, R. (2015) Land of the Rising Mill. Malaysia: Biomass Magazine. [Online] Available from:
<http://biomassmagazine.com/articles/12544/land-of-the-rising-mill> [9 July 2016]

Lee, Y.-H. (2010) 'Ushering in new era of Korea-ASEAN relationship', The Korea Herald. [online] Avaialble from:
<http://www.koreaherald.com/view.php?ud=20090601000096> [8 July 2016]

Lim, K. and Hii, P. (2005) 'Commercial Scale Carbonization Of Briquetted Tropical Wood Sawdust',

Mathews, J. A. (2012) 'Green growth strategiesKorean initiatives', Futures, 44(8), 761-769

Moon, J.-H., Lee, J.-W. and Lee, U.-D. (2011) 'Economic analysis of biomass power generation schemes under renewable energy initiative with
Renewable Portfolio Standards (RPS) in Korea', Bioresource technology, 102(20), 9550-9557

MPOB (2015) Oil Palm Planted Area by State as at December 2015 Malaysia: Economics & Industry Development Division, MPOB | Area 2015.
[Online] Available from: <http://bepi.mpob.gov.my/images/area/2015/Area_summary.pdf> [9 July 2016]

Murray, G. (2010) Lillooet Biomass Energy Corporation Business Plan for a Wood Pellet Plant. [Online] Available from:
<http://www.sibacs.com/wp-content/uploads/2009/02/2010-04-26-Lillooet-Pellet-Business-Plan.pdf> [8 July 2016]

Ratnasingam, J., Ramasamy, G., Wai, L. T., Senin, A. L. and Muttiah, N. (2015) 'The prospects of rubberwood biomass energy production in
Malaysia', BioResources, 10(2), 2526-2548

Roos, J. A. and Brackley, A. (2012) 'The Asian wood pellet markets',

Shuit, S. H., Tan, K. T., Lee, K. T. and Kamaruddin, A. (2009) 'Oil palm biomass as a sustainable energy source: A Malaysian case study', Energy,
34(9), 1225-1235

Soong, S. H. (2011) Palm Oil & Related Products - 1 of 12 NationalKey Economic Areas under Economic Transformation Programme. Malaysia:
Chinese Chamber [Online] Available from:
<http://www.chinesechamber.org.my/html/themes/chinesechamber/images/content/bulletin338/Palm_Oil_And_Related_Products.pdf> [7 July
2016]

Stelte, W. (2012) 'Logistics and storage of torrefied biomass Safety aspects',

Sulaiman, F., Abdullah, N., Gerhauser, H. and Shariff, A. (2011) 'An outlook of Malaysian energy, oil palm industry and its utilization of wastes as
useful resources', Biomass and bioenergy, 35(9), 3775-3786

Wood Pellet Association of Canada (2016) Korea offers vast pellet market. Canada: Wood Pellet Association of Canada,. [Online] Available from:
<http://www.pellet.org/wpac-news/korea-offers-vast-pellet-market> [7 July 2016]