Low gas prices, high levels of infrastructure and government incentives are attracting Asian businesses to the Bayou State. Image: Sigma Engineers, Inc.

Louisiana's Business Environment Attracts Asian Petrochemical Investment

Asia Australia Taiwan

Louisiana is in the midst of a chemical manufacturing renaissance, as low gas prices, high levels of infrastructure, and government incentives attract businesses from across the world. Numerous Asian companies have jumped on the bandwagon, investing millions of dollars in petrochemical projects across the Bayou State.

Earlier this year, Incitec Pivoct, an Australian fertilizer manufacturer, announced plans to build an $850 million ammonia plant in Louisiana. The state offered a $3 million tax credit and an open-ended 10 year exception from local property taxes. Similarly, Taiwanese chemical giant Formosa Plastics declared its intention to invest in a new $3 billion ethylene plant, adding to their existing plant near Baton Rouge.

Formosa was one of a dozen companies to meet with Governor Bobby Jindal during his recent visit to Asia, aimed at encouraging regional businesses to invest in Louisiana. Since taking office in 2008, Governor Jindal has made attracting foreign investment a top priority. The state government currently offers millions of dollars in incentives to secure major projects, including performance-based grants for infrastructure costs and reimbursements of relocation expenses. Louisiana is also in a great position to attract investment because it boasts some of the nation’s lowest prices for natural gas, has low construction costs, high quality infrastructure, and a friendly regulatory environment.

Such conditions have also allowed existing investments by Asian businesses to expand. Tokyo-based Shintech Inc has plans to spend $500 million on its Louisiana plants this year, increasing production by 20-25% and creating 300 local construction jobs.

In addition to FDI, Louisiana has strong trade ties with Asia. In 2012, 19% of the state’s exports were headed to Asian nations, particularly Singapore and China. Of this, basic chemicals, resins and synthetic fibers accounted for over $2 billion, or 26% of total exports. Further investment from Asian companies will continue to grow the volume of exports headed in that direction.

Jonathan Gordon recently graduated from the University of Sydney and is a Research Intern at the East-West Center in Washington, D.C.