New core centres to drive growth


  • Business
  • Wednesday, 24 Dec 2003

CEO Outlook 2004

The three CEOs we feature today are entrepreneurs who have carved a name for themselves in their respective businesses. 

They are Datuk Shahril Shamsuddin of the Sapura group of companies, Datuk Kevin Tan of TSH Resources Bhd, and Datuk Lim Kim Hong of I-Berhad

Shahril and Tan are managing the businesses built by their fathers, and have taken their respective companies to greater heights, with new core centres. 

Sapura started with telecommunications, and has since branched into information technology, education, and oil and gas, the last through the takeover of Crest Petroleum and the injection of Sapura Energy into Crest. 

Tan has diversified TSH from an oil palm grower into a resources-based group. Palm oil remains a core business, but the group is promoting a new business line with its engineered solid wood flooring, under the Ekowood name. At the same time, it has ventured into oil palm biomass power generation. 

Lim has changed strategy with the emergence of China as a manufacturing base for the world. First, he is shifting to higher margin, home electronic products, such as computers, digital cameras and DVDs, instead of air-conditioners and electric fans, which he sources from China. 

Second, after firmly establishing the i brand at home, he is taking it overseas. 

Datuk Shahril Shamsuddin

Datuk Shahril Shamsuddin 

President and chief executive officer 

Sapura Group of Companies 

What do you see are the challenges and prospects for Malaysia's economy in 2004? 

The forecasts projected for Malaysia, as per numerous credible sources, imply a significant growth of gross domestic product (GDP) for 2004 compared with 2003. This lays a strong, confident and optimistic grounding for both our national and global economies as we expect to see stronger trade and investment flows from foreign direct investment (FDI) and through local investments. 

Excellence, integrity and adaptability will be critical for Malaysia’s carving a sustainable position in developing, delivering and supporting world-class products, services and intellectual property (IP). Raising the competitiveness of local companies remains the greatest challenge for us all in the coming year. 

We need to increase the appreciation, drive and need for creation of value – becoming net exporters rather than mass consumers of technology – if we aim to grow in the global marketplace. 

Local companies must therefore adapt and innovate to remain ahead by using our domestic market to build, enable and establish competitive advantages that allow us to compete on the global stage. The value we create, our innovativeness – be it through the design, engineering, production and delivery of software, hardware, products or services – must be of world-class standards. 

There can be no compromising this. 

 

Prospects and challenges for the information and communications (ICT) Industry in the coming years? 

The prospects are incredibly bright for Malaysia as we are well positioned to take advantage of the global need for companies to enhance the way they do business. 

We can expect organisations to make significant investments in increasing service levels such as in customer relationship management (CRM) systems, as well as intensifying efforts to boost their business process efficiency and productivity. We see the trend for outsourcing of IT and other non-core business processes which started in the last two years or so, gaining momentum in 2004 as well. 

The main challenge remains in finding the right people and getting them to a position of 'maximum advantage'. They have to be skilled, of the right calibre, willing to think 'outside the box' and, most importantly, be willing to learn. Creating good people – and enough of them – is our main challenge moving ahead as we seek to be the ICT leader in the region. 

In the face of globalisation, local IT companies need to consider merging or consolidating their competencies and operations to build the critical mass and industrial strength necessary to compete and avoid being marginalised by the larger and more established global IT players. Malaysia is at a crossroads that will see us either taking the lead or being relegated to a 'me-too' scenario in the regional ICT sector. By increasing our expertise and ensuring our solutions are of world-class standard, we will be able to ensure a competitive advantage in the future. 

What will be the focus of your company/group in 2004 given that the group has recently diversified into the oil and gas industry? 

For Sapura, our focus has been, and remains, the development and provisioning of world-class services, technology, IP and human capital development in our four business areas: ICT, oil and gas, education, and the manufacture of industrial products. 

In 2004, this focus will allow us to further expand and drive value creation for all stakeholders including shareholders, employees, customers and, of course, the country. 

We spent 2003 consolidating our business areas to operate as independent publicly listed companies with their respective managements and boards of directors. Through this, each company is able to focus on exploring and securing opportunities and growth in its own market. 

It also enhances the level of corporate governance, transparency, competitive advantage, innovation and ability, as well as agility in addressing the needs of the marketplace through the delivery of world-class products and services. 

In addition, ensuring professionalism, excellence and integrity is key as talent is a critical element in our growth. We have to create it by ensuring that executive development is a basic part of our operational design, spotlighting the best talent, sharing it across the corporation, filling jobs with executives who can learn the most from them, and creating leaders in the respective spaces. 

We now have the structure to support our strategy and ensure that the implementation of our strategic objectives is conducted in a cohesive, effective and timely manner. 

 

Do you expect your company/group to do better or worse in 2004? Why? 

The year 2004 will see a stronger Sapura that is better positioned for growth. For us, this year was about streamlining, planning and positioning the various subsidiaries of the group. The strategy is now in place to address the different sectors that we are in – ICT, oil and gas, education and manufacture of industrial products – and continuing their growth. 

Our streamlined subsidiaries are now more focused, agile and better equipped to deal with market demands that are growing as our economy strengthens. Specifically, each of our listed companies has a very bright outlook as it moves up the value chain, becoming creators and exporters of IP. 

In the ICT business, for instance, demand for greater efficiency and productivity is driving the demand for better, faster and more flexible solutions. The education sector is, of course, growing as the demand for qualified, proven and world-class educators remains constant. 

The demand for more advanced and innovative design and manufacturing is also leading to greater growth in our manufacturing business. 

Meanwhile, the oil and gas services business retains a very positive outlook with the new deepwater oil and gas finds driving more demand for advanced technology, expertise and integrated solutions. 

Internally, we will continue to focus on the fundamentals of good business including developing and delivering innovative world-class IP, products and services along with excellent customer service.  

It’s about the basics. About getting it right while we make sure that the group moves ahead on strong fundamentals which will be the foundation for growth in 2004. 

What should be the priorities of the new Prime Minister for the country? 

The Prime Minister’s efforts to strengthen our economy by developing new sources of economic growth – such as services – will enhance our competitiveness and growth. 

Having additional support for this effort, in terms of incentives for the adoption of world-class solutions, products and services by Malaysian companies, would help spur local development efforts. 

By prioritising this area, we will significantly enhance our long-term ability to compete as a nation, and improve economic productivity. 

More importantly, it will help elevate Malaysian companies and the quality of the products and services that they create and export, to set the country higher up on the value chain. 

Datuk Kelvin Tan

Datuk Kelvin Tan 

Group managing director 

TSH Resources Bhd 

Challenges and prospects for Malaysia's economy in 2004. 

The global economy is expected to post an improved growth of 4% in 2004, with synchronised recovery in the United States, Japan and the European Union.  

The country’s export sales will be a beneficiary. 

Coupled with macro-economic policies adopted by our government that have focused on mitigating uncertainties emanating from the external environment, our economy should continue to benefit from internal and external factors. 

The existing expansionary fiscal policy and accommodative monetary policy is likely to continue and enhance domestic economic activities. With strengthened domestic demand and business confidence, the economy should become more resilient to potential downside risks in world economic development. 

With a favourable external and internal environment, the country is on track to achieving 5.5% –6.0% gross domestic product (GDP) growth next year. 

The main challenge for our economy will be to ensure global competitiveness through innovation and technology adoption to upgrade product value. We must accept the reality that we cannot continue to produce low-priced, low value-added goods. 

 

Prospects for your sector/industry next year. 

TSH has built a good resources-based portfolio of value-added manufacturing and plantation. The export growth of crude palm oil has recently outpaced production and, hence, prices are expected to remain firm in the near term. 

We are also confident of achieving higher yield and improving cost management to sustain growth. 

Our real wood flooring product, Ekowood, is expected to strengthen its brand presence in Europe, the United States and Malaysia. 

Ekowood's quality has consistently been affirmed with three consecutive best supply quality awards in the United Kingdom and Ireland. We are the first Asian company to have ever won these prestigious awards. 

With such a world-class branded product and engineering innovations, we expect the business to thrive in the years to come. The forecast improvement in global economic environment augurs well for our Ekowood business in 2004. 

The government has outlined numerous incentives for the construction/housing industry during the past two/three years. Has these incentives given a boost to your company’s operations and revenue? 

Although, we have not directly benefited, our environmentally friendly Ekowood flooring has been well received by developers, architects and interior designers in some of their projects, which in turn have benefited from government incentives. 

 

Focus of your company/group in 2004. 

Our focus is to excel in the resources-based industry, through downstream manufacturing, product engineering, and utilisation of our industrial by-products and waste. We know that technological advancement in this industry will be a key to our long-term success. 

We are embarking on a fully bio-integrated complex in Sabah, integrating oil palm plantation and milling with oil palm biomass power generation, palm-fibre pulp and paper, and biogas energy using the palm oil industry’s by-products; complementing each other in an environmentally friendly manner. 

The first of its kind in the world, this bio-integrated complex is a serious push to enhance the long-term competitiveness of our palm oil business and stay friendly to our environment. 

Although Ekowood has attained international recognition in the global flooring market, branding is a strategic, continuous process and we will vigorously build on the strength of Ekowood.  

The internationally recognised Forest Stewardship Council certifies Ekowood as environmentally friendly. 

Our afforestation programme to plant 5.5 million trees in 300,000 acres of forest land is another testimony of the way we ensure environmental projects can also be a business proposition – and synergise this to benefit Ekowood

We are glad to have good management and a team of professionals who share the same vision and ethics. In line with our business strategies, we continue to actively recruit capable and dedicated employees and enhance the skill levels of existing staff as part of our group human resources improvement programme. 

 

Do you expect your company/group to do better or worse in 2004, compared with 2003? 

Bio-integration of our palm oil complex should begin to bear fruit in 2004. Coupled with the expected higher yield this year, our palm oil business is expected to turn in better results. 

Ekowood’s new product line, introduced to the market in the second half this year, has been well received. We will build on the momentum to achieve higher profitability for Ekowood engineered solid wood flooring. 

 

Is China an important factor in the management of your operations? 

At the rate China is developing, it is destined to be a new economic powerhouse. It would not be prudent for any company not consider China in its decision-making process. The rate at which China is attracting foreign direct investment and churning out products at competitive prices, especially electrical goods, is phenomenal. 

We have always been keenly aware of the capability of China, and strategised our business accordingly. Our focus to excel in technologies and integration of resources-based industry is made in cognizance of China’s strength. In the palm oil business, China is not likely to be a natural competitor due to its climatic conditions. China is in fact a major importer of palm oil. 

Realising that China can be a highly competitive, low-cost producer, we focus on quality, branding, innovation and advanced wood engineering to ensure Ekowood stays ahead of the competition. Worldwide, Ekowood has 800 showrooms; and in China, Ekowood has opened up 10 showrooms for a start. China is a potentially big market for Ekowood, one that we intend to tap. 

 

What should be the priorities of Prime Minister Datuk Seri Abdullah Ahmad Badawi? 

Datuk Seri Abdullah Badawi has had a smooth transition in taking over the post of Prime Minister of Malaysia. He has come out strongly as a down-to-earth and pragmatic Prime Minister. 

His priority in tackling corruption and red tape should be supported by all Malaysians, as these two factors can seriously undermine our competitiveness in the global market. 

Another priority is to start a green revolution – to emphasise the pivotal role of agriculture and resource-based industries in the economy and reinforcing agriculture’s significance and value through biotechnology. 

The agricultural sector must be looked at on the basis of its whole value chain, from primary production to tertiary products, and branding of products to directly reach out to end consumers, thus, cutting off middlemen. 

The government can assist in forging strategic alliances with neighbours Thailand and Indonesia to build on each other’s strengths and to stand united in multilateral trade negotiation forums.  

Agro-biotechnology and economic alliance can start within Asean, and possibly include India and China in the longer term. 

Based on our strength in agro-resource industries, Malaysia can indeed lead the way and spearhead such a strategic development for our country and the region. 

We have to reinvigorate this sector through changing the mindset of our businessmen and youth that agriculture is a sunset industry. When spliced with biotechnology, agriculture can be exciting and promising. 

We can then attract the needed talent into this sector to rebuild our talent pool; admittedly, human resource development in the sector has been somewhat neglected in the past. 

As value is added to our primary produce domestically, benefits will filter down to primary producers, thus, lifting the standard of living of the rural populace. The end result is fulfilment of the government’s objective to reduce the urban-rural social economic divide. 

Datuk Lim Kim Hong

Datuk Lim Kim Hong 

Chairman 

I-Berhad 

 

Challenges and prospects for Malaysia's economy in 2004? 

The US economy is heading for a stronger paced recovery. It is heartening to note that the US gross domestic product (GDP) posted its strongest quarterly advance in 19-1/2 years with an 8.2% growth in the third quarter. The prospects for a strong recovery of US-led global economy are therefore bright. 

Such favourable external factors should create the right sentiments to spur our economy. Considering that the country's savings rate is high, the positive sentiments will fuel private consumption, which together with heightened public consumption, would be very stimulating for the business climate. This augurs well, particularly for consumer deliverables, which should see an uptake. 

With globalisation today, businesses in Malaysia will face increasing pressure to be competitive. The impact of globalisation, and China emerging as an economic powerhouse, will be one of the key challenges for Malaysian businesses, particularly those in manufacturing, in 2004. 

This underscores the need for Malaysian businesses to build their own brands as global brands for them to be competitive in an increasingly seamless marketplace. 

We can no longer compete as low-cost producer but instead should go to the market with the competitive edge of quality and value. These are the strengths that we need to build and make inherent. 

 

How badly was your company affected by SARS and the Iraq war and has your company recovered from these events? 

Being an open economy, external factors do have an impact on us. What counts is our resilience. As for l-Berhad, we are fortunate that SARS and the Iraq war did not have a significantly negative impact on us. 

 

What will be the focus of your company/group in 2004? 

While the company has had a long history of OEM manufacturing for exports, over the past year we have adopted a new strategy of building up i as a brand for export. This inadvertently made i a global Malaysian brand. 

Our focus in 2004 will be on building i as a global Malaysian brand known for its quality, value and innovation. Through i, and its niche in innovative digital products, I-Berhad aims to be a leader in product innovation. 

In addition to building i as a global Malaysian brand, I-Berhad also plans to take on a new role as the global Malaysian ambassador in spearheading a private sector initiative to enhance Malaysia-China friendship. This is in conjunction with Prime Minister Datuk Seri Abdullah Ahmad Badawi's declaration of 2004 as the Year of Malaysia-China Friendship to commemorate the 30th anniversary of diplomatic ties between the two countries. 

I-Berhad, through its senior management, has had a long history of working with the Chinese and is thus well placed to foster the relationship between both countries. 

China is a business environment where relationships are equally as important as technical and management competencies in operating a successful business. Thus, the Malaysia-China programme will be beneficial to the company. 

 

Do you expect your company/group to do better or worse in 2004, compared with 2003? 

Given the reinvigorated US economy and the positive outlook for the global economy, 2004 looks set to be a better year than 2003. I am confident that improved sentiments will fuel private consumption, which should augur well for a company like ours, which is in the business of consumer deliverables. 

In addition, our efforts in building i as a global Malaysian brand and the product innovation in digital appliances should aggregate into a better year ahead. 

 

Is China an important factor in the management for your operations? 

China has a low-cost strategy that makes it competitive in the appliances industry worldwide. It therefore can be considered a force that has a strong influence and impact on the appliances industry worldwide. 

Our long-standing relationship with businesses in China has enabled us to harness the strengths and, in the process, carve our own niche and yet remain competitive. 

I-Berhad has adopted a strategy which makes China an ally rather than going head-on as competitors. This is our 'supply chain' strategy that combines the Chinese companies' economies of scale with the i-brand value of quality and innovation. 

 

What should be the priorities of the new Prime Minister for the country and the industry you are in? 

The Prime Minister has shown his foresight that China is an important trading and economic partner for Malaysia. 

This is underscored by his declaration that 2004 is Malaysia-China Friendship Year. It cannot be denied that it is incumbent upon Malaysia to strengthen its ties with an economic powerhouse in view of globalisation today. There is much to be gained and learnt from China and in partnership Malaysian corporate citizens will be able to have the skills, expertise and tenacity to compete globally. 

We look forward to seeing the Prime Minister steering Malaysia and motivating corporate Malaysia not only to be global in outlook but also to build on our strengths to be global companies with global Malaysian brands. 

As Malaysians, we are imbued with the spirit to succeed. With guidance, leadership and a nudge from our Prime Minister, being global is achievable. l-Berhad believes strongly in this and will strive for i to be the global Malaysian brand that all Malaysians can be proud of. 

CEO Outlook 2004

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