Singapore, the island state with 4 million people, inspite of being a small consumer of petrochemical products, is home to very large petrochemical complexes set up by multinationals.

Last year ExxonMoibl set up a 800KT Ethylene cracker with downstream Polyethylene and Polypropylene plants on Jurong Island. Jurong Island has been specially developed recently by Singapore to set up such world scale large petrochemical plants. It is not only ExxonMobil that has made investments in Singapore. Bayer, BASF and Shell from Europe and Mitsui, Mitsubishi and Sumitomo from Japan also have sizeable petrochemical investments in the island state. This large investment is inspite of the fact that none of the feedstocks are available in Singapore. Investments are obviously aimed at the growing export markets of the Asian region, notably that of China.

When you compare this with India you are disappointed to see that inspite of a huge potential of domestic demand unlike Singapore, no major multinational petrochemical giants have made any major investments in the commodity petrochemical sector of India. Why?

	Is it the maximum equity participation of 51% by multinationals which restricts them to enter India?
	Or is it the longer gestation time it takes for setting up the project that restricts them to plan out the projects, since the viability of petrochemical project greatly depends upon the right timing because of cyclicity of the business? Of course these are major impediments for attracting leading multinational companies to the Indian shores.
	However, poor infrastructural developments (unlike that in Singapore where excellent facilities are developed without delays) is another important impediment. An example of this is Singapore's Jurong Island which was developed in such a short span.
	Our corporate tax at 35% is much higher than 22% that is presently prevalent in Singapore.

All these point to the fact that the multinationals find a better and more competitive environment in Singapore. In fact, the major players like BASF, Basell, Bayer, BP, Dow as well as others are still committed to investments in the fast growing regions of Asia. China, the largest consumer of commodity petrochemicals in Asia, with its entry into WTO, would certainly continue to grow, perhaps at the cost of other countries. A classic example of this was seen when Basell decided to pull out of its commitment for investment in India.
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