A promising year lies ahead


  • Business
  • Thursday, 02 Jan 2003

Rebuilding the brand name again – that's the top priority for Datuk Ramli Abbas, group CEO of Celcom (M) Bhd. 

Although the growth of cellular phones in Malaysia will still be very strong in the next five years, Ramli faces the difficult task of regaining the number one spot in the cellular business for Celcom. Although Celcom was Malaysia's first mobile operator and had the first mover advantage, poor management in recent years has allowed rival Maxis to overtake and stretch its lead. 

Ramli comes to Celcom with strong credentials, having built up the Motorola business in Malaysia. 

For Rainer Althoff, CEO and president of Siemens Malaysia, the German industrial conglomerate remains very much a leader in its various fields in Malaysia. 

Althoff believes Siemens and its various business units – energy, transport, telecommunications and healthcare – are well positioned to take advantage of an economic recovery. 

An electrical engineer, Althoff has spent most of his career with Siemens and has been in his current job for the past four years. 

For Noorazam Aziz, director-general of the Labuan Offshore Financial Services Authority, 2002 has been a stellar year and 2003 looks equally promising.  

Given the rise of terrorism and the hunt for terrorists' financial networks, tax havens like Lofsa will come under increasing pressure from foreign governments and international regulatory authorities to provide more disclosure. 

Noorazam's good work has not gone unnoticed, and he may soon be rewarded. 

Datuk Ramli Abbas

DATUK RAMLI ABBAS 

Group CEO 

Celcom (M) Bhd 

 

The year 2003 looks like a year of uncertainty for the world economy. In your view, what are the challenges and prospects for Malaysia's economy? 

Malaysia is very fortunate to be blessed with a balanced economy. We have progressed from a predominantly agriculture-based economy to one that is manufacturing-led and, more recently, services and information technology-based. Our palm oil sector, and similarly the oil and gas industry, is performing well while our services and IT sectors, not forgetting our tourism industry, are showing promising signs. 

I believe the balanced profile of our economy, relative to other countries in the region, has helped to shield our country from any major global economic downturn. We have managed to absorb the impact of those down swings much more effectively and continued to stimulate growth within our domestic market. 

I am quite confident that we shall be able to ride out the uncertainties fairly well and achieve our targeted growth. 

 

The government (in the September 2002 budget) has projected a growth rate of between 6% and 6.5% for the national economy in 2003. Do you feel that this growth rate can be achieved? 

Malaysia should achieve a growth of about 4% in 2002 and an incremental growth of a further 1% to 1.5% would be a realistic and achievable target this year. I foresee the manufacturing sector picking up. We should be seeing some growth by mid-2003 within the electronics sector in particular. 

In the meantime, I believe domestic consumption should remain quite stable, with steady growth in the construction and housing sector. And as we shift towards moderate growth, our oil and gas, as well as tourism, IT and services industries will continue to play an important role. 

 

What do you see are the challenges and opportunities for Celcom in 2003? 

I believe there should still be good growth potential within Malaysia for telecommunications services. We have a population base of 23 million and, with an average of 7% penetration growth for both fixed and wireless services, we should be looking at one or two million incremental customer growth per year for the next five years. 

In terms of potential growth areas within the sector, we should continue to see contributions from value-added services, as well as better yields from the mobile market. I also believe the messaging business, both voice and data, will continue to grow rapidly in this market. 

In addition, the consolidation of telcos – with the impending merger of Celcom and TM Cellular for one – will lead to the creation of better cost efficiencies and, effectively, higher quality service levels. A higher level of service and better cost structures should in turn boost growth in the mobile sector. 

 

We have seen China's economy powering ahead with successively high growth rates. China is also the favoured nation for foreign direct investments. Do you see China’s emergence as an economic powerhouse providing opportunities for Malaysian companies or do you see China as a competitor? 

China has a huge population base and its economic growth, which is still largely generated by domestic consumption, has been stable in a way because of its controlled economy. I do not believe that Malaysia should be overly worried about any competitive challenge from China, particularly its ability to compete on 'low labour' cost alone. 

Malaysia’s own unique strength lies in our more highly talented and skilled human resources. For instance, our human resources include technical/engineering talents who can contribute and compete with the rest of the world in the high technology sector. 

In addition, if you look at the electronics industry, for example, labour cost amounts to around 5% of total production cost while material cost accounts for about 60%. The rest constitutes research and development (R&D) and other administrative costs. What is, therefore, more important is to have quality people resources to manage the high value material cost as well as the value-added content of the total product. In this area, I believe Malaysia leads the way. 

Another significant fact is that Malaysia has a pool of leadership talent in manufacturing and management who have been exposed to new technology and management competencies through their involvement with multinational companies both within Malaysia and in other parts of the world. Many Malaysians have, in fact, been given expatriate assignments overseas. This leadership pool, which has virtually grown in number, will definitely contribute to the growth of the private sector in the long run. 

The key issue is to keep the 'brains' and leadership talent from moving out of this country. 

Over the last few years, many multinational companies in Malaysia have moved up the value chain in their strategic growth. They have gone beyond focusing on basic manufacturing and have been creating new value-added manufacturing platforms in Malaysia. These activities include R&D, establishing software centres, distribution centres, engineering integration centres and other value-added platforms. All these activities will lead to the creation of a new epicentre of talents for Malaysia; and, of course, have a 'rub-on' effect on the local industries, too. 

The future is about competing on quality, and not just on managing costs alone. Combining both the quality and leadership talent factors, Malaysia should, and will, be able to compete relatively well in certain sectors. 

 

Next year is the start of the Asean Free Trade Area (Afta), under which tariffs on a wide range of products will be drastically reduced. How will your company be affected by the implementation of Afta? 

The telecommunications industry is still very much domestically driven in Malaysia and Afta may not have too much of a direct impact on the demand for communications services. 

Moreover, most imports in the telecommunications industry are not from Asean. However, with the better alignment of cost structures, we should fare more competitively if we export our telecommunications services and products. 

 

Do you expect Celcom to do better or worse in 2003 compared with 2002? 

We anticipate a better year for all aspects of the business. Basic services continue to show promising growth. Nonetheless, our focus will be on strengthening our brand, understanding the customer to go beyond meeting their expectations, enhancing customer care, offering value and services that are meaningful and relevant to them and ultimately delighting them in all aspects of our service. 

We feel very positive about the future even as we strengthen our position in the market. The imminent merger with TM Cellular is a definite plus for both Celcom and Telekom. 

Rainer Althoff

RAINER ALTHOFF 

Managing Director 

Siemens Malaysia Sdn Bhd 

 

Challenges and prospects for Malaysia's economy. 

Mitigating the external effects arising from the global economic uncertainty and sustaining growth would pose major challenges for Malaysia. With the value of goods and services exports exceeding the value of gross domestic product (GDP), Malaysia's economic structure would need to gear towards greater emphasis on domestic-led growth to reduce the country’s vulnerability to the effects of global economic performance. 

The Budget 2003 sent a strong message of fiscal consolidation with many incentives aimed at strengthening Malaysia’s position as a logistics hub and lowering business cost. The ringgit's peg to the US dollar serves to accord stability, which is conducive for business activities. 

On the back of strong economic fundamentals, we expect the anticipation of stronger domestic demand and the more competitive currency position to support increased growth in 2003. 

 

Do you feel the growth rate of between 6% and 6.5% for the economy for 2003, as projected in the budget in September 2002, can be achieved? 

We have seen economic growth gaining momentum over the last three quarters, with complementing fiscal and monetary policies to support continued growth. Given that recovery of the US economy is expected to continue into 2003, and coupled with rising intra-regional trade and domestic consumption trending upwards, achieving the projected growth rate is not impossible, barring any unforeseen events. 

 

Challenges and opportunities for Siemens in 2003. 

Reports of uncertain economic outlook have undoubtedly affected business confidence, with most erring towards the wait-and-see approach. Our customers are understandably cautious in their capital expenditure, and the challenge would lie in striving for improved efficiencies in our processes to enable on-time delivery of high-quality solutions within the given budget. 

We want to be a partner in our customers’ success and, hence, customer satisfaction is key amid an ever increasingly competitive business environment. Our commitment towards greater efficiency and quality is evidenced by our company’s recent attainment of full ISO9001:2000 certification. 

Most of the divisions in Siemens Malaysia are very healthy and, with improved efficiencies, we are confident that we are well positioned to seize opportunities available – particularly in the energy, transport, telecommunications, ICT and healthcare sectors – in the coming year. 

 

Do you see China’s emergence as an economic powerhouse providing opportunities for Malaysian companies or do you see it as a competitor? 

From our customers’ perspective, some will no doubt view China’s emergence as an economic powerhouse as competition to their business. At Siemens Malaysia, we are constantly striving to assist our customers to increase efficiency within their industries by providing them with premium products, services and solutions that will enable them to better compete in this competitive environment. 

Concurrently, we are also focusing on domestic government projects in various sectors. So, yes, we definitely see opportunities for our company. 

 

How will your company be affected by full implementation next year of the Asean Free Trade Area (Afta)? 

We foresee that the Afta will only have a limited impact on Siemens in the Asean region. Siemens is a reputable multinational company, represented in more than 190 countries with manufacturing facilities in several Asean countries. 

In these countries, we already rely on domestic rules and regulations as well as on bilateral agreements between individual countries that have incorporated terms and conditions resulting from the Afta. 

As such, Siemens is able to ensure consistency in the quality of its products wherever they are manufactured at the most competitive price. We feel that this would be a key success factor in an increasingly competitive environment posed to us with the advent of Afta. 

 

Do you expect your company to do better or worse in 2003 versus 2002? 

Based on favourable economic growth prospects, we are optimistic that Siemens Malaysia will be able to improve on last year’s performance, and hope to achieve significant growth in turnover for the financial year ending Sept 30, 2003. 

Noorazman A. Aziz

NOORAZMAN A. AZIZ 

Director-General 

Labuan Offshore Financial Services Authority (Lofsa) 

 

Challenges and prospects for Malaysia's economy. 

The major challenge is to move Malaysia's economy forward through generating consumer and internally-driven growth and achieving greater prospects of trade with China and the other Asean+3 countries. The latest budget has strategically addressed effects to Malaysia's economy, if the global economy slows. 

 

Do you feel the growth rate of 6%–6.5% for 2003, as projected in the budget in September 2002, can be achieved? 

This growth rate is achievable, given that positive momentum is there after the 5.6% third quarter 2002 GDP growth, barring a major slowdown in the Western economies. 

 

Challenges and opportunities for Lofsa in 2003. 

The greatest challenge will come from foreign watchdogs and international regulatory bodies that place continual pressure on low tax jurisdictions to provide more disclosure. To date, Labuan has a good record with both the regulatory bodies and financial users and I don’t see that changing in the short to medium term. The challenge ahead will be to maintain that balance of good supervision, but continue to make room for the privacy needs of our financial service users. 

Another challenge is to increase awareness among Malaysian and foreign-based companies in Malaysia to use Labuan as a strategic base for cross-border trading and investments. 

The opportunities ahead are virtually limitless. We have recently coined a phrase in Labuan that the jurisdiction as a financial centre is the world’s best kept investment secret. And 2003 will be our year to lift the lid on that secret. 

Our intense promotional efforts to the Middle East and China and the Asian region is starting to pay off. More and more are finding out what a versatile, progressive and cost-effective financial centre Labuan is as a base for trading, banking, tax and financial planning, insurance and re-insurance business. 

The development in Islamic finance is most encouraging, and was given an impetus with the recent launch of the Islamic Financial Services Board. 

The policies, regulation and infrastructure are already in place, and Lofsa has already outlined aggressive marketing activities for 2003 to penetrate new markets outside Asia. We are confident of sustained momentum in terms of company incorporations, following a 30% growth in 2002. 

 

Do you expect Lofsa to do better or worse in 2003 versus 2002? 

Lofsa is a unique organisation, in that its growth is directly related to the growth of our jurisdiction (Labuan IOFC). The short answer is yes, 2003 will be an even better year than 2002, and I am acknowledging that 2002 has been a stellar year; the number of incorporations having grown by 30% – and part of that growth included 10 new banks. 

But 2003 will be an even better year because a lot of time was spent last year developing new relationships in China, and the Middle East; and so far the feedback that we have received from those regions is that they like what they see. And by continually fostering the strong relationships we have established, it will be only a matter of time before these contacts enter their comfort zone and establish a presence in Labuan. 

There is no doubt that Labuan IOFC is the most progressive and business friendly environment for banking and international trade. That stands on its own. What is required is managing the relationships that we have established and allowing the trust to grow. The rest will come naturally. 

I am enthusiastic about 2003. As I have said, we will do even better in 2003 than we have done last year and the groundwork has already begun, we have already scheduled a follow up mission to Taiwan in the first week of this month. 

NOORAZMAN A. AZIZ 

Director-General 

Labuan Offshore Financial Services Authority (Lofsa) 

 

Challenges and prospects for Malaysia's economy. 

The major challenge is to move Malaysia's economy forward through generating consumer and internally-driven growth and achieving greater prospects of trade with China and the other Asean+3 countries. The latest budget has strategically addressed effects to Malaysia's economy, if the global economy slows. 

 

Do you feel the growth rate of 6%–6.5% for 2003, as projected in the budget in September 2002, can be achieved? 

This growth rate is achievable, given that positive momentum is there after the 5.6% third quarter 2002 GDP growth, barring a major slowdown in the Western economies. 

 

Challenges and opportunities for Lofsa in 2003. 

The greatest challenge will come from foreign watchdogs and international regulatory bodies that place continual pressure on low tax jurisdictions to provide more disclosure. To date, Labuan has a good record with both the regulatory bodies and financial users and I don’t see that changing in the short to medium term. The challenge ahead will be to maintain that balance of good supervision, but continue to make room for the privacy needs of our financial service users. 

Another challenge is to increase awareness among Malaysian and foreign-based companies in Malaysia to use Labuan as a strategic base for cross-border trading and investments. 

The opportunities ahead are virtually limitless. We have recently coined a phrase in Labuan that the jurisdiction as a financial centre is the world’s best kept investment secret. And 2003 will be our year to lift the lid on that secret. 

Our intense promotional efforts to the Middle East and China and the Asian region is starting to pay off. More and more are finding out what a versatile, progressive and cost-effective financial centre Labuan is as a base for trading, banking, tax and financial planning, insurance and re-insurance business. 

The development in Islamic finance is most encouraging, and was given an impetus with the recent launch of the Islamic Financial Services Board. 

The policies, regulation and infrastructure are already in place, and Lofsa has already outlined aggressive marketing activities for 2003 to penetrate new markets outside Asia. We are confident of sustained momentum in terms of company incorporations, following a 30% growth in 2002. 

 

Do you expect Lofsa to do better or worse in 2003 versus 2002? 

Lofsa is a unique organisation, in that its growth is directly related to the growth of our jurisdiction (Labuan IOFC). The short answer is yes, 2003 will be an even better year than 2002, and I am acknowledging that 2002 has been a stellar year; the number of incorporations having grown by 30% – and part of that growth included 10 new banks. 

But 2003 will be an even better year because a lot of time was spent last year developing new relationships in China, and the Middle East; and so far the feedback that we have received from those regions is that they like what they see. And by continually fostering the strong relationships we have established, it will be only a matter of time before these contacts enter their comfort zone and establish a presence in Labuan. 

There is no doubt that Labuan IOFC is the most progressive and business friendly environment for banking and international trade. That stands on its own. What is required is managing the relationships that we have established and allowing the trust to grow. The rest will come naturally. 

I am enthusiastic about 2003. As I have said, we will do even better in 2003 than we have done last year and the groundwork has already begun, we have already scheduled a follow up mission to Taiwan in the first week of this month. 


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