AT Systematization Bhd, a Penang-based manufacturer and integrator of automated systems, is teaming up with China's MaoMing JiaCheng Industrial Co Ltd to develop renewable energy in Malaysia.

It will begin with plans by JiaCheng, one of the major players in the renewable energy industry, to expand its production facility by setting up a plant in Malaysia.

JiaCheng chairman Huang Shen said the company would incorporate petrochemical technology such as using ethanol with petroleum to produce renewable energy. Ethanol is 6% cheaper than petrol.

Both companies signed an agreement to seal the deal here today witnessed by Minister in the Prime Minister's Department, Datuk Seri Mohamed Nazri Aziz.

According to a press release made available at the signing, both companies would form a joint venture and explore fund-raising through a foreign listing exercise, possibly on the London Stock Exchange, to build the new production facility in Malaysia.

The statement said Malaysia was a suitable choice for the new production facility due to the availability of high quality raw materials which in turn would hopefully provide better production volume and profit yields.

JiaCheng has a current annual production of 600,000 tonnes of renewable energy, supplying to some of the largest and most established companies in China.

Its products include benzene, solvent oil, blending oil, light fuel oil and DM fuel, while its suppliers and customers are established industry players.

Another benefit of the collaboration is that it would complement the global drive, including the government's drive for a greener future, in line with the green initiatives that the goverment has implemented.

This includes lifting of the import tax for hybrid cars, which will help Malaysia grow into a globally known key place for renewable energy production.

It will also lead to the advantageous transfer of fresh intellectual property and knowledge to develop a new growth sector.

This will increase Malaysia's role in being the key player whether in production and research and development in the renewable energy industry, the statement said.