HSBC bridging the gap between Malaysia and India


  • Business
  • Monday, 08 Sep 2003

BY YAP LENG KUEN

HSBC operations in Malaysia and India are working together to encourage a greater flow of investments between the two countries. 

Naina Lal Kidwai

Malaysian companies have responded to opportunities in the highways sector, especially in the Golden Quadrilateral project which links New Delhi to Bombay. 

Under this major highway development that links north-south-east-west of India, there are already 14,000km which have been developed and of which Malaysian companies have 30% of the contracts. 

“The experience has been very positive for Malaysian companies operating in India,” said HSBC Malaysia chief executive officer Zarir J. Cama. 

“The next round should see Malaysian companies come in aggressively and bid at prices which are obviously profitable for the companies. 

“Many of our clients in Malaysia – IJM, Gamuda and Road Builder – are involved. They have won contracts over there, and when we talk to them, their experience has been very positive. 

“The chances of them getting further contracts is very strong because they know the business climate and are now familiar with the local working conditions and laws over there,” said Cama. 

“There haven't been that many Malaysian companies which have gone to India in a big way.  

“We are seeing the start of it. Highway development is a very new thing in India, and I hope that in the next five years, we have the highways and airports that you have here,” said Naina Lal Kidwai, head of investment banking at HSBC India. 

Zarir J. Cama

India is now seriously opening up in the area of infrastructure – highway development, airports and ports.  

“Telecoms has been a pretty recent success story where we see new telecom companies coming in and it has really shown that you can make the quantum jump into the new age by putting in world-class systems. 

“In telecoms, we have benefited from companies like Singtel and AT&T. So it is this era of development that Malaysia would be a very natural partner, given Malaysia's strengths in construction, development, building whole housing projects, infotech cities and areas where India probably doesn't have the experience,” she said. 

India is privatising in a big way. The Shipping Corp of India, Dredging Corp of India, National Fertiliser Co and Madras Fertiliser Co in India are being privatised. 

Oil and gas sector exploration and processing is a big area of cooperation and an area that India is participating all over the world through government-owned company ONGC.  

There were sites made available to foreign bidders to drill for oil and gas in India, she said. 

Power is more of a challenge, according to Naina. “It is going to hinge on the privatisation and restructuring of state electricity boards (SEBs).  

Until those units are made competitive, they are by and large loss-making, and for independent power producers to come and have receivables from an SEB, which is not very liquid, is not a very comforting idea,” Naina said. 

However, efforts to improve this are spearheaded by the World Bank and other agencies. HSBC India is an adviser to the SEB of Andra Pradesh in their privatisation under a project funded by the World Bank and DFID which is a Britain-based development body. 

In food processing, there's a desperate need for technology, added Cama. Hotels are also beginning to look for opportunities in India, as there is a need for three to four-star hotels and motels to cater for business travellers. 

According to Cama, close to 100,000 to 150,000 Indian tourists visit Malaysia per annum.  

There is a successful travel package by Malaysia Airlines for three days' stay each in Langkawi and KL inclusive of airfare at just 25,000 rupees (RM2,000) 

“I'm amazed over the last two years how many Indian delegations are coming to Malaysia,'' Naina said.  

“They suddenly had a desire to understand Malaysia more. India has always been much more Western-oriented.'' 

“A few years ago, some Indian companies did come to Malaysia but they were too early. The (right) timing is now,” said Cama.  

There are big Indian industrial groups already here – the Birla group at Pan Century, whose plant in Johor is the biggest in the world. 

“In information technology, it is the Satyam group, and government-owned Ircon will hopefully get into railways. India has an extensive railway system and Ircon has continued to grow that,” added Naina. 

If Malaysian companies do it right, they can be pioneers in India.  

“Indian companies are suddenly facing globalisation and competition. As a result of belt tightening, last year was one of the best years of profitability across sectors.  

“For the last five years, they had not expanded and now they are looking at potential set-ups in India and abroad. 

“Malaysia is a natural partner. It is business friendly, has good business climate, power, water and openness to importing of skill sets,” Naina said. 

She felt the higher cost of labour was not a disadvantage. “We can compete by bringing in more Indian companies to establish a base here, e.g. in the IT area,” she said. 

“We are interested and excited at these opportunities,'' Naina said. “In another six months, the awareness will be higher and we'll be pushing on an open door especially with the advent of World Trade Organisation.” 


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