Wooing China, Mid-East tourists


  • Business
  • Friday, 03 Jan 2003

TODAY'S CEO OUTLOOK 2003 features two CEOs in the hotel sector and one in the information technology (IT) industry. 

Unlike many sectors in Malaysia which see the emergence of China as competition to their industries, the hotel sector is looking forward to the Chinese dollars as China becomes more affluent and its citizens catch the travel bug. 

Christian Hassing, the general manager of Mandarin Oriental Kuala Lumpur, says the Mandarin Oriental group has expanded its sales offices in Beijing and Shanghai to tap the Chinese market. 

Another group that the hotel is wooing are tourists from the Middle East, who are attracted to the hotel because of its five-star standards and proximity to the shopping mecca KLCC. 

Tan Boon Lee heads the hotel business of the IGB group, but he is participating in this CEO survey as president of the Malaysian Association of Hotel Owners (MAHO). 

He commends the Culture, Arts and Tourism Ministry for doing a fine job putting Malaysia on the tourist map, and shares Hassing's optimism about the growing market for tourists from China and the Middle East. 

Looi Kean Leong CEO of SCS as well president of Association of the Computer and Multimedia Industry of Malaysia (Pikom), also commends the government for its efforts to promote Malaysia as an IT nation. 

His company has grown rapidly in Malaysia in recent years and is moving into other Asian countries as well as the Middle East. 

This concludes our CEO OUTLOOK 2003 series. A record 53 CEOs participated in our fifth annual CEO Outlook series and our thanks and gratitude go to them for their frank and interesting views.  

May their businesses prosper in 2003. 

Christian Hassing

CHRISTIAN HASSING 

General Manager 

Mandarin Oriental, Kuala Lumpur 

 

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 needs to realign and re-engineer its growth strategies to cushion itself against weaker external demand and look towards stimulating domestic-led economy and intra-regional trade to bolster economic status and enhance economic resilience. Dynamic changes are required to stay ahead of emerging trends and development in the regional and global arena, in particular globalisation and the increasing competitiveness of the world economies. 

The government continues to take a strong and proactive role in facilitating economic dynamism and competitiveness for Malaysia; however, the private sector must continue to be the key driver in spearheading domestic-led economic activities. New niche areas, particularly in the services sector such as tourism, education, transport and health, must be focused on to ensure greater stability and sustainability of the nation’s growth in the medium and long term. 

Proactive, increased and sustained promotional activity and focused destination marketing efforts of the Malaysian Tourism Board in key targeted geographic markets have yielded valuable returns. Malaysia is far more visible, positioning itself more prominently as a premier destination for travellers seeking a truly Asian experience. This increased global presence has reaped over RM24bil in tourism receipts from a record of more than 12.8 million visitors to the country last year alone. 

We see tourism remaining as one of Malaysia’s biggest foreign exchange earner. The continuous improvement of tourism product and services and tourism-related infrastructure marketing and promotion, preservation and conservation of historic sites as well as enhanced institutional and regulatory frameworks will stimulate even stronger economic growth. 

 

What do you see as the challenges and opportunities for Mandarin Oriental in 2003? 

Locally, the hospitality industry in Kuala Lumpur will continue to be competitive going into 2003 with the soft opening of Westin Hotel (452 rooms) in early this year, the full completion of the Prince Hotel and Residences (448 rooms and 160 serviced apartments) and the re-launch of Shangri-La and Mutiara Hotel. 

While demand remains stable, there is still an oversupply of hotels in the city. Mandarin Oriental aims to continue to dominate market share in rate and occupancy, growing rates and maximising business profitability through proper revenue management and continued investment in both facilities and human resources. 

Going forward, the economic challenges businesses faced this past year reinforces the need to redefine business processes around customer value with realigning offerings based on customer’s evolving needs and lifestyle preferences. 

To be competitive, one must be innovative and Mandarin Oriental prides itself on its ability to be flexible and responsive to change and where possible set new trends. Our latest technological advancements include the integrated state-of-the-art digital telecommunications systems and broadband wired and wireless Internet access. Our new online reservation systems continue to generate high growth. 

With tourism promotional efforts intensified by Tourism Malaysia given the incremental tourism fund, demand from new emerging markets has been created, an essential one being the Middle East where we have had significant increase of about 76% compared with the same period the preceding year, representing 7% of our total market mix composition versus 4% last year. And this is expected to continue to rise in 2003. 

 

We have seen China's economy powering ahead with successive high growth rates. China is also the favoured destination 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? 

According to the World Trade Organisation, China will become the biggest source of global tourism in the next 10 years, undoubtedly providing opportunities for Mandarin Oriental Hotel Group and Kuala Lumpur. 

Mandarin Oriental Hotel Group has been expanding regional sales offices in both Shanghai and Beijing as well as a corporate network which is becoming very focused on developing this territory, striving to capture a greater share of the increasing outbound travel market. There is a growing affluent middle class in China, presenting untapped potential for a luxury product such as Mandarin Oriental. 

The Malaysian government has paved the way for enhancing economic relationship with China, inviting the latter to use Malaysia as a trading hub. Malaysia continues to see an influx of Chinese tourist arrivals as the Chinese government eases overseas travel visa for its citizens and with Malaysia now having been granted Approved Destination Status for leisure travel from China. 

Even more recently, China has agreed to give Malaysia landing rights to 10 new Chinese destinations, translating to 50% in landing rights and flight frequencies from the present quota. This co-operation between China and Malaysia would pave the way for increased bilateral trade, investment and tourism. 

 

This 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? 

Mandarin Oriental, Kuala Lumpur will not be directly impacted by Afta except through the increase in intra-regional trade which will make our market more competitive and boost travel demands. Mandarin Oriental, Kuala Lumpur will benefit from the purchasing of goods in the Asean region utilised in the business. Any cost reductions will be passed on to the consumer. 

 

Do you expect Mandarin Oriental to do better or worse in 2003 compared with last year? 

Since Mandarin Oriental, Kuala Lumpur opened in October 1998, the hotel has recorded double-digit growth in revenue year-on-year and achieved near full capacity in available rooms in 2002. As 2002 was a year of record achievement in every aspect of our operations, it will be a challenge for us to reprise this success in 2003 given the uncertainty in the global economic landscape, increased competition from new and refurbished hotels coming into the market and the possible slowdown in international travel from an outbreak of war in the Middle East. 

However, by focusing on the continued development of our capabilities and business opportunities – prioritising well-established market segments which deliver strong base of business and working with our global network of sales offices to enhance our profile and visibility in the target markets – we are confident of harnessing higher growth in 2003. 

The increase in budget allocation to the Tourism Fund to boost growth will allow for enhanced intense promotional activity, human resources and infrastructure development that will continue to boost Malaysia’s global visibility. 

With the services sector primed as one of the main contributors to the economic growth, we are optimistic about doing better as we continue to sustain our market leadership position maintained on a total quality management culture which ensures that Mandarin Oriental, Kuala Lumpur is the preferred supplier, preferred employer and preferred investment in the country, a level of excellence in all facets of our business as is frequently recognised by prestigious international and local publications and organisations. 

Tan Boon Lee

TAN BOON LEE 

President 

Malaysian Association of Hotel Owners 

 

Challenges and prospects for Malaysia's economy. 

Against a backdrop of a continued global economic slowdown and the increasing threat of instability in the Middle East, 2003 will be a very challenging year. Domestically, we will enter a new era with a new Prime Minister who will lead the coalition into the polls. Although our financial sector is more resilient, our banks remain very selective in their lending. 

Fortunately Malaysia's economy can still weather these challenges as reflected in the healthy trade surplus arising from the strong prices for palm and crude oils. 

Furthermore, the initiatives undertaken by the government to strengthen corporate transparency and the regulation of the securities market will attract investor confidence in the economy. 

 

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

Barring any unforeseen circumstances, the projected growth rate of 6% to 6.5% is very encouraging for the national economy. For the hotel sector we are also projecting growth this year but it is more modest. 

We envisage growth of about 4% is achievable. Hotels in Kuala Lumpur may experience some slowdown towards the second half of 2003 as a number of new hotels come onstream. 

 

Challenges and opportunities for the tourism sector in 2003. 

The tourism sector, of which the hotel industry is a major component, is very fluid and volatile. Domestic or international incidents will have an impact on the sector instantaneously. Concerns over terrorism, coupled with an economic slowdown in the West, will have a negative bearing on visitor arrivals from traditional sources. Travel advisory warnings add to this dilemma. 

The challenges for the hotel industry would be to address the market mix to reflect these changes in global trends and to reposition products to cater to new markets. An obvious example of this would be the Saudi market, which has grown over the last few years. 

 

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

Without a doubt China is a magnet for foreign direct investment. As they power ahead economically, the Chinese are turning out to be the fastest target market for travel and shopping destinations. With an increasing propensity to spend, they are being courted by many national travel agencies. This changing trend will be an opportunity for Malaysia to become a favoured travel destination. 

Being multicultural and affordable as well as possessing diverse cuisine, fascinating sights and an abundant shopping opportunities, Malaysia's travel industry stands to gain tremendously from continued Chinese economic success. 

This opportunity is well recognised by the Culture, Arts and Tourism Ministry, and a tremendous effort to encourage more tourist arrivals is in place. One of the challenges facing the ministry with the Chinese tourists is the need to encourage these tourists to stay longer and spend more while they are in Malaysia. Currently, the tour groups coming from China are on a tight schedule and the average spending is very low. 

LOOI KIEN LEONG 

Chief Executive Officer 

and Managing Director 

SCS Computers 

 

Challenges and prospects for Malaysia’s economy. 

Although the information and communications technology (ICT) market is soft, it will still grow in tandem with the country’s development. As both the public and private sectors are key investors in the industry, and since ICT is one of the main engines of growth in Malaysia, it will continue to fuel our economy. 

I believe that the government will continue its ICT spending and this will also help sustain growth. 

The Association of the Computer and Multimedia Industry of Malaysia (Pikom) believes that while the industry might be sluggish locally, compared with the high growth years of the late 1990s, there is an outreach to tap into foreign markets with high potential growth. 

 

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

I would expect about 10% overall growth in the local ICT industry this year with a total trade of at least RM8bil.  

The ICT environment will remain challenging, particularly with the stormy global economic condition and the threat of political instability and fear of terrorist attacks in certain areas around the world. 

But with Malaysia being resilient to the global economic slowdown as proven in the 1998 financial crisis, we have become stronger and more confident. Malaysia’s ICT development is in parallel with the overall economic situation in the country. 

Although the Budget 2003 announcement was not much in favour of the ICT sector, the government does show that ICT is necessary in the development of the nation. 

This is very obvious for the education and public sectors. The former, set to have 4,000 laboratories in schools nationwide, goes to show that inevitably, more computer hardware, software, operating systems, Internet access, ICT human resource as in training and skills will be necessary. 

As for the public sector, the introduction of smart cards also marks the need for more related and even new applications. 

Challenges and opportunities for SCS in 2003. 

SCS is able to provide expertise developed in Malaysia to its networking throughout the region, especially in the current focus on hospital applications, laboratory systems and point of sales. 

SCS has a strong background and much exposure to business expertise, large-scale project experience and comprehensive range of services. 

Although providing customer satisfaction is a key challenge, it has also become our top priority – we benchmark ourselves in keeping with expectations. 

SCS’s support services have made significant improvements since 1997 when the SCS customer satisfaction survey started, with the rating increasing from 58% to 92% by 2000. Customer satisfaction levels for 2001 and 2002 were rated at a high 96%. 

Our three main contributory sectors are healthcare, telco, oil and gas and banking and finance, which will remain important income generators. 

 

How will your company be affected by the implementation of the Asean free Trade Area (Afta)? 

SCS will need to continue to be extremely flexible and create a conducive as well as competitive environment where we are able to stand as equally as possible with foreign competition and still hold our own. 

We expect some impact from Afta but it will be minimal because we have actually started our own expansion plans in Singapore, Hong Kong, China, Thailand and Brunei with representation in all these countries. 

Our other emerging markets include Vietnam, Cambodia and the Middle East. All these efforts have been made ahead of the World Trade Organisation (WTO) and Afta as vehicles and opportunities for growth. 

We are also looking beyond the Asean region by getting more involved with Australia, as our studies show that our products are not only of high quality but cost effective compared with countries in the region where our cost base is much cheaper. 

 

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

I believe that China’s role in global as well as regional trade is indisputable. Instead of fighting what will become a reality, we should work together and create a more realistic business environment in turning adversities into opportunities. 

We need to look at forging strong and lasting business partnerships with not only Chinese companies but other ICT players that have set up their bases on the mainland. 

Malaysia, being a multi-lingual and multi-cultural country, will not have any problems dealing with China compared to other countries. 

 

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

SCS had a turnover of RM152mil in 2001 compared with RM143mil in 2000. We are expecting to improve our standing this year. 

LOOI KIEN LEONG 

Chief Executive Officer 

and Managing Director 

SCS Computers 

 

Challenges and prospects for Malaysia’s economy. 

Although the information and communications technology (ICT) market is soft, it will still grow in tandem with the country’s development. As both the public and private sectors are key investors in the industry, and since ICT is one of the main engines of growth in Malaysia, it will continue to fuel our economy. 

I believe that the government will continue its ICT spending and this will also help sustain growth. 

The Association of the Computer and Multimedia Industry of Malaysia (Pikom) believes that while the industry might be sluggish locally, compared with the high growth years of the late 1990s, there is an outreach to tap into foreign markets with high potential growth. 

 

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

I would expect about 10% overall growth in the local ICT industry this year with a total trade of at least RM8bil.  

The ICT environment will remain challenging, particularly with the stormy global economic condition and the threat of political instability and fear of terrorist attacks in certain areas around the world. 

But with Malaysia being resilient to the global economic slowdown as proven in the 1998 financial crisis, we have become stronger and more confident. Malaysia’s ICT development is in parallel with the overall economic situation in the country. 

Although the Budget 2003 announcement was not much in favour of the ICT sector, the government does show that ICT is necessary in the development of the nation. 

This is very obvious for the education and public sectors. The former, set to have 4,000 laboratories in schools nationwide, goes to show that inevitably, more computer hardware, software, operating systems, Internet access, ICT human resource as in training and skills will be necessary. 

As for the public sector, the introduction of smart cards also marks the need for more related and even new applications. 

Challenges and opportunities for SCS in 2003. 

SCS is able to provide expertise developed in Malaysia to its networking throughout the region, especially in the current focus on hospital applications, laboratory systems and point of sales. 

SCS has a strong background and much exposure to business expertise, large-scale project experience and comprehensive range of services. 

Although providing customer satisfaction is a key challenge, it has also become our top priority – we benchmark ourselves in keeping with expectations. 

SCS’s support services have made significant improvements since 1997 when the SCS customer satisfaction survey started, with the rating increasing from 58% to 92% by 2000. Customer satisfaction levels for 2001 and 2002 were rated at a high 96%. 

Our three main contributory sectors are healthcare, telco, oil and gas and banking and finance, which will remain important income generators. 

 

How will your company be affected by the implementation of the Asean free Trade Area (Afta)? 

SCS will need to continue to be extremely flexible and create a conducive as well as competitive environment where we are able to stand as equally as possible with foreign competition and still hold our own. 

We expect some impact from Afta but it will be minimal because we have actually started our own expansion plans in Singapore, Hong Kong, China, Thailand and Brunei with representation in all these countries. 

Our other emerging markets include Vietnam, Cambodia and the Middle East. All these efforts have been made ahead of the World Trade Organisation (WTO) and Afta as vehicles and opportunities for growth. 

We are also looking beyond the Asean region by getting more involved with Australia, as our studies show that our products are not only of high quality but cost effective compared with countries in the region where our cost base is much cheaper. 

 

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

I believe that China’s role in global as well as regional trade is indisputable. Instead of fighting what will become a reality, we should work together and create a more realistic business environment in turning adversities into opportunities. 

We need to look at forging strong and lasting business partnerships with not only Chinese companies but other ICT players that have set up their bases on the mainland. 

Malaysia, being a multi-lingual and multi-cultural country, will not have any problems dealing with China compared to other countries. 

 

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

SCS had a turnover of RM152mil in 2001 compared with RM143mil in 2000. We are expecting to improve our standing this year. 


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