Focus Malaysia Dec 14-20, 2013, Roundtable Discussion

22
mainstream
FocusM
DEC 14-20, 2013
Lack of collaboration
stymies Malaysia’s
growth in O&G
W
hile going
global is now
a necessity
for
local
oil and gas
companies ,
the lack of
corporate size and experience in
bidding for global projects can throw
a damper to lofty ambitions. These
challenges, say panellists at the recent
FocusM Roundtable Discussion on Oil
& Gas, can be overcome only by closer
cooperation.
Size does matter when going global.
Industry players also agree that unlike
South Korea, China and Japan, where
companies form consortiums and
joint ventures when expanding overseas, Malaysian SMEs and their larger
counterparts seemed to shy away
from teaming up to achieve greater
heights. Perhaps the lack of trust and
teamwork are among the key reasons.
The lack of experience, talent and
financial strength further aggravates
the situation when going global. The
panellists also pointed out that many
local financial institutions tend to
be rigid and decline to take risks in
lending money to SMEs when they
need it most to expand in the region
or globally.
The roundtable session was
moderated by FocusM executive
editor Prathab V. Panellists include
Technip Geoproduction (M) Sdn Bhd
chairman and senior vice-president
for Malaysia and Brunei, Syed Feizal
Syed Mohammad; Schlumberger
Group Asia-Pacific chairman Jamal A
Ainul; Malaysia Petroleum Resources
Corporation (MPRC) executive director Dr Shahreen Zainooreen Madros;
Muhibbah Engineering (M) Bhd
managing director Mac Ngan Boon,
Deleum Bhd group managing director
by Hafidz Baharom
photos by Saiful
Hizam Mansor
Not forming
partnerships
appears to be a
Malaysian culture,
says Abdul Rashid
Nan Yusry Nan Rahimy, Malaysian Oil
& Gas Engineering Council president
Ir Abdul Rashid Md Sidek; and ProEight Offshore Engineering Sdn Bhd
managing director Ir Azhar Zainal
Abidin.
In this second and final part from
our roundtable session held earlier, the
panellists proposed that Malaysian oil
and gas companies collaborate more
in order to make waves globally. They
also shared their frustration on how
government red tape is slowing down
the pace of activities in the sector.
Does size matter really matter in
the oil and gas industry?
Syed Feizal: I think the main purpose
is to help companies to go global. So
[if] that’s one of the key objectives, I
think this is where synergy of local entities need have strong fundamentals.
Sometimes [it needs] synergy with
multinational companies [MNCs]
and I think that when you put the
two together [Malaysian companies
and MNCs], then it gives a lot more
synergy in terms of breaking into the
market.
A combination of the two can
compete for almost all of [the] opportunities in the Asia-Pacific region as
well as outside.
I think local companies should also
find synergy with analysis and ride on
the network, ride on the competency
and skill sets that MNCs can provide.
MNCs themselves also have to think
largely of being multi-local, not just
multi-national; to be local-minded,
and with opportunities given within
the country should re-invest in the
country to grow the business.
Today we start, maybe as a one-person (show), so to speak. Today, we are
three thousand people.
Mac: In my opinion, for a lot of Malaysian companies, we have the real
capital but we don’t have the expertise.
The only way companies can move forward is to work [together] with MNCs.
I think there are no two ways about it.
In terms of our engineering, the depth
of the oil and gas in the Malaysian
companies are still not there yet. Take
for example the work processes. I think
only one or two [local] companies
have some form of process experience,
while the rest do not have the process
experience.
It is true from the one or two jobs,
you will learn something and maybe
you can try something with fewer
processes. But at this moment, other
than one or two which have taken the
initial steps, the rest are not capable.
We need to collaborate. As far as
SMEs are concerned, I think if they are
specialised in some form or another,
they may have to look at keeping up
[with] some of the bigger corporations,
listed companies which then give them
the muscles to go, to work with them
to grow. But in the meantime, collaborate. On another point, Malaysian
companies somehow are rather averse
to working with each other. I don’t
know why it seems to be that way.
Consider the Japanese companies.
They are always working closely together. They team up when there is a
job. Even the Koreans do this, though
they ‘hate’ each other. Malaysian
companies find it very difficult to work
together. They are suspicious [of each
Syed Feizal says MPRC is in a good
position to understand the issues and try
to get everybody on the same page
other].
I think for us to grow to the next
step, we must all be open-minded.
Abdul Rashid: The cultural work
ethic can work for you or it can work
against you. What Mac said is correct.
It appears to be a Malaysian culture of
not trying to form partnerships.
But slowly, when companies are
exposed to the international market,
they do see the need to team up. For
Malaysian companies, you need to
have the size, you need the mass.
Which is why, in my opinion, yes, size
does matter in some ways. For example, how can you create technology
with, say, just three units (workforce)?
Shahreen: It is a challenge. Our
finding is that the Koreans and the
Japanese work very closely together.
Somehow Malaysian companies tend
to work separately.
Unfortunately, our non-interven-
mainstream
DEC 14-20, 2013
FocusM
23
as if “You go and find the multinational
or global company to work and bring
them here”. This, perhaps, is why the
competitive atmosphere surfaced in
the first place. I don’t know how we
can resolve that. It is number one. We
need to look at it, we have to talk to the
clients and see how we can do (it), how
best we can approach this.
tionist attitude of letting the market
work on its own doesn’t help. Hence,
in MPRC, we brought 15 companies
together. Here was a platform for them
to find out what each other is doing
and they really started to talk to one
another.
Existing platform is not enough
to instigate (this type of collaboration). We hope more companies will
participate in venturing out together,
meeting and understanding one
another better. There needs to be a lot
more communication to understand
one another. This is among the things
we found out among the big players in
Malaysia that have gone international.
Local companies which have ventured internationally, came to us and
said: “Hey, can you guys help to identify who else has been in this market
from Malaysia” because for them their
business is to do the work, but they do
not know who else from Malaysia has
Participants at the
O&G roundtable
discussion (from
left): Syed Feizal,
Jamal, Abdul
Rashid, Shahreen,
moderator Prathab,
Nan Yusri, Azhar
and Mac
Shahreen says Malaysian companies tend to work separately
the experience.
So we are trying to find, for example,
how many companies from Malaysia
Mac says the only way companies can move forward is to work together with MNCs
have gone to Indonesia. So instead of
many companies running around, we
have a list of companies that one can
talk to. This information sharing has
to happen as well (in order to enable
the collaborative network). Prior to
this, there is no entity doing this. We
are trying to break the ice and see and
celebrate all these small successes. We
can do one or two to make it happen
and then people start seeing there is
a value in doing this, and hopefully
grow. But I think this persistence to
keep on pushing is the way to make
this happen.
Abdul Rashid: We have to talk together. Also, we need to talk to understand
the way they (global organisations) set
up the bidding process. Sometimes, in
the bidding process, they invite small
local Malaysian companies, and of
course, by doing that these companies
would have to compete with each
other.
What they say to local companies is
We hope more
companies will
participate
in venturing
out together,
meeting and
understanding
each other
better.”
– Shahreen
Nan Yusri: The move by the government and other parties has drawn interest from global companies that want
to work in Malaysia. They are looking
for partners. They want to collaborate
with partners in Malaysia.
Again, it comes once again to the
processes. We do have this dream in
which we want to be a regional hub
and all that, but somehow or rather
somebody needs to look at the process
from the dream to the formation of the
entities.
Like any other company, we have
a vision and a mission statement. We
also have plans on how you can achieve
that. Let me give you an example, not
from one but a few of our partners who
were looking to set up some facilities
in Malaysia. Compared with our neighbouring countries, these companies
articulated their experience when
dealing with the equivalent of our
Malaysian Investment Development
Authority (Mida). Interestingly, within
two hours they know everything from
A to Z on whatever you have and whatever you need when venturing to other
countries.
The person sitting at the counter is
able to provide step-by-step guidance
on the types of grant, incentives available and so on. But when they meet
up with the Malaysian government
agencies over here (they had a different
experience). Let’s say you are setting up
a chemical company. What do you need
to do? What are the incentives that you
will be getting? In one situation, a company was asked (by the government
officer) if the chemical plant was for
agriculture or for oil and gas. If it’s for
oil and gas, the officer mentioned that
they only handle agriculture (-related
queries)!
All this already takes up (at least)
one working day. You then meet
another government agency, go there
for oil and gas. There you are asked if
this is your own intellectual property
(IP) or shared IP. You are then waved
onwards to move to another counter.
This process needs to be improved.
When people want to invest, they want
it (solution) fast. They want to know
exactly what they are going to get and
we need to look deeply (at) how we can
improve that.
Azhar: I think the MPRC is doing a
great job in promoting Malaysia. But
I just want to add that we (ProEight)
have yet to actually receive a single sen
from government grants.
We need things fast because of
innovation (costs). From our perspective, I would think we were given the
runaround. We eventually did it on our
own.
In the end we said enough is
enough. We (just) don’t have the time.
We got our (own) financing and moved
forward. Luckily for us, since we’ve
reached a certain stage, when the
banks (began) supporting us.
That’s the main reason why we were
able to move far. While the government wants to do everything, when
it comes to the implementation, it is a
 Continues on page 24
24
mainstream
FocusM
DEC 14-20, 2013
Opportunity to be O&G hub
 From page 23
different thing.
For SMEs, the main problem is always finance. We can’t move [without
financial support]. We cannot go to
private companies [for funds]. Sourcing funding from the government is
also very difficult.
Mac: I still come back to the same
point. I think, to become a Malaysian
player in a global scenario, we need to
have human resources, backing from
financial institutions and [have] the
government’s participation. These are
the three things [we need].
Unfortunately, most of the time, as
Azhar said, it is hard to get access to
funds. So, as a startup you will really
have trouble getting access to funds
and you cannot even think about going to the next step. How then do you
nurture companies like ours?
While as a listed entity, we have
some experts, but it is still not enough
expertise to go abroad.
For me, there are two segments to
consider. First is the SME question.
How do we help them?
Next is listed companies. Without
sufficient expertise, how do we make
the government understand the oil
and gas industry? It is going to be
difficult.
I once had a one-to-one dialogue
with Bank Negara, telling it about several issues (facing the local oil and gas
sector). I suggested that the financial
institutions should look at supporting
I think the
more you
are known,
in terms of
oil and gas
on the global
map, then
you will find
opportunities
for the SMEs
or for the
bigger players
to penetrate
into those
markets.”
– Syed Feizal
Malaysian products, as Malaysian [oil
and gas] companies contribute 5-6% to
the national GDP.
However, Bank Negara declined to
intervene as it is not allowed to influence financial institutions.
We are not heading anywhere (in
resolving) these issues. This is exactly
what we faced. I requested that Bank
Negara have a dialogue and include the
financial institutions, so that we in the
industry can talk to them [the banks].
This will help the financial institutions
to ‘dialogue’ with us too and discuss
policy.
How do we make government agencies understand all this? We need this
to be in place so we can grow [steadily].
I see that in Japan and China today,
the banks are very involved with their
oil and gas companies. Even the other
Asean banks, as long as you do a job
they will throw a lot of money at you.
Sadly, we do not do it here. We need to
address this issue.
Syed Feizal: Yes. Rather than addressing things in a fragmented manner and
dealing with different agencies, there
should be a champion of the good
brain, dissemination of information
and trying to get all the relevant bodies
coming on the same page.
I think where perhaps MPRC is
doing a good job, is actively involved
and take a step further in helping us.
I think you are in a good position to
understand all the issues and try to get
everybody on the same page.
Nan Yusri says global companies are looking for partners here
There are things in which Malaysia
is ahead, we are number one in deep
water hubs. It’s all about marketing, so
marketing is about positioning. I think
the more you are known, in terms of
oil and gas on the global map, then you
will especially find opportunities for
the SMEs or for the bigger players to
penetrate into those markets.
Shareen: I think there is a clear need
to become a hub and this is an opportunity and we should not waste it. But
it clearly requires cooperation from all
sides to make it happen. MPRC will
always be the facilitator, crystallising
initiatives but of course, ultimately, it
is not about this alone.
Arriving and becoming a hub ... but
for sustaining it in the long run, it must
be a more sustaining initiative. I am so
happy to hear that there are actually
many people looking at it and saying
we can realise this. Government agencies are always meeting up to address
those issues and we do see that leadership needs to be there. These points
are noted. Again, I always believe that
it is not a single party, single agency or
single entity which must attend to this.
It has to involve everyone ... to move
this plan ahead.