Boustead Heavy Industries Corporation is a maritime, engineering and defence-related service provider in the areas of shipbuilding, maintenance, repair and weaponry. In an interview with PM Communications, Managing Director of the company Tan Sri Ahmad Ramli talks about the growing political and economic position of Asia through ASEAN and the role of the defense sector in Malaysia’s technological and industrial development.
Many political analysts have clashing views of the world today. Many say that the power is shifting from the West to the East, and that this will be the century of Asia, where Asia may play a hegemonic role. Other analysts think of this period as one with the multiple centers of power where there is no hegemony. What is your perspective on the current status of global affairs?
I think that whilst there are conflicting views, the issue here is how power is distributed. Certainly we can talk about multiple centres of power. I would suggest that Asia plays a dominant role, both in matters of political security as well as economic stability.
Moreover, in this kind of situation the size of the country is very important. Malaysia is rather small in terms of size, but the ASEAN region will definitely play a major role.
Asia is a very diversified continent. We have China and India as emerging global powers; then we have the ASEAN region that all together comprises six hundred million people, which is also a huge emerging market. What do you think would be the role of ASEAN in the global market?
First of all, we have six hundred million people and the population is generally very young. At the same time, we are located in a very good position; we, and Asia as a whole, are in the center of the activity, because whether you look at it from Europe, the Middle East, or the US, all actions converge towards our region. Of course, it is a very strategic area. In addition, what makes it more interesting is the Malacca Straits which is very important for trade and plays a strategic role in the political and economic context.
Therefore, Asia will play a very important role, both towards the US, China and India. Although China and India are becoming two of the most powerful economies and they are constantly looking for new opportunities, Malaysia is well positioned and it can be considered as a catalyst of growth.
As you mentioned, Malaysia is strategically positioned and it oversees one fourth of the global oil shipments because it’s right in the middle between Middle East and the Asia-Pacific region. So, with the establishment of the AEC next year, how do you think is Malaysia positioned in order to face threats such as piracy, terrorism, or cyber security?
Piracy is cancerous to the well-being of the people. When the economy is in a challenging situation, piracy attacks automatically increase. Security issues like this have occurred before, therefore I think that firstly we have to address the source of the problem, which is the economic status of the people. In this regard, our priority is to make the region grow economically. This, in turn, will contribute to lower the threat posed by pirates. Another aspect is security expenditure, countries in ASEAN are getting wealthier, therefore they can spend a bit more on security and keep a better control of the situation. This is evident from the fact that recently we haven’t had any civil society crisis. I think that this has to do with the fact that, despite the global economics problems, countries in particular Malaysia, have lived a very well in the last few years. Therefore, the key is to maintain a secure economy, in order to avoid the risk of terrorist attacks. It’s a situation where if we are better off, combined with the fact that we are able to spend more on security, the problem itself is minimized.
With the establishment of the single market, what would you expect to be the impact of this free flow of not only products, but also people within the ASEAN region? What will be the new opportunities for Malaysia in the maritime sector?
I can say that with the single market, those who are more productive and competitive will be able to participate without problems. At the same time, however, I think that each of us in ASEAN will try to participate. So hopefully, if we are successfull, we will become the most competitive region. Malaysia, for example, is allocating a great deal of public funds on human capital; this means that we are quite qualified and we will be able to benefit from this single market. On the other hand, it will also mean protecting ourselves. Therefore, we will be able to make our system more competitive.
The defence sector has always been a driver of technological development. How do you think the defence sector is contributing here in Malaysia to the promotion of industrial development and technological evolution?
I think defence plays a very important role, because at first glance people are willing to invest only if the location is safe. This is why it is necessary to create a very secure and safe environment. That is the main contribution of the defence sector. However, in the process of improving capabilities we also have learnt from past experiences that there are multiple effects from high defence expenditure. Look for example at Singapore: it has done very well; it has contributed substantially to stabilising the economy, although initially, due to the political turmoil, everything was put on hold.
In Malaysia we have created many spill overs, especially in the commercial sector, with significant technological transfer from the defence sector. Nonetheless, on the defence side, we embark on the problem of building up our first generation of petro-vessels.
In this process we also created opportunities for a lot of SMEs. This means that we want to build up expertise not only in the defence sector but also in the oil & gas sector. Consequently, we have been able to increase our local content. For example, if a project costs three or four billion US dollars, in a normal situation, almost all of it will be outflow. We approach it differently because we are building the assets and also creating skills. That’s why many people, who are not in the business, think that defence speeding is only an outflow. However, it brings benefit to the country; indeed, it has contributed quite a lot. We can look at the US, for example. Many people in the US complain about high defence spending.
Yet, it is possible to see the spinoff. Especially during the 60s and 70s, when defence expenditure was high and the US corporations were top developers in the sector.
It’s always more or less the military leading the way in the technological transfer and innovation and that trickles down into different sectors.
Yes exactly, that is the rule we also follow.
I’m curious because you just mentioned your support to local SMEs and I have heard of your CSR activities. Does your Vendor Development Programme support also local SMEs?
Yes it does. For example, we have made improvements in our company, to become competitive against other European countries. We started this process by meeting all the commercial requirements and domestic defence requirements, so that we could be able to build up a chain of vendors meeting international standards. Consequently, now some of them have graduated and are able to provide supplies to the international supply chain.
Looking at the economic side of the maritime sector and its links with the oil & gas sector, what do you expect to be the growth in engineering projects, since nowadays the majority of the projects are done in deep water?
I think that there is great potential in our resources. Our national oil company has planned to spend 106 billion ringgit to enhance the production of oil and gas. In fact, the highest source of our GDP comes from oil and gas, 20% approximately.
Therefore, it is important to enhance our production, to provide the inputs to sustain ourselves at an initial stage, until we are free to run in other areas. This is possible by incorporating high technology in order to start working in deeper waters. Today many companies own these deep water structures: BHIC is not there yet, but certainly we are planning to get there. Although we have the people, unfortunately we are an early stage and we are limited by our “young facilities”. But of course we are always looking at improvements.
Looking more at the links between UK and Malaysia, as you mentioned before, one of the biggest challenges that you are facing is the shortage of human capital. I know that TalentCorp is very active. Do you think there is room for partnerships or a memorandum of understanding with the numerous UK University campuses here?
Certainly! Boustead has big ambitions and it is very informed about the activities promoted by the universities. In fact, there are many activities that we promote especially in different R&D sectors: one of them is the intern program in our associate company, of which we own 20% of the shares. Moreover, every year many students and visiting professors come from the UK. We are proud to be very open in this perspective.
The defence sector makes up 10% of British manufacturing and it accounts for 35 billion pounds. One of the special areas that UKTI is focusing on is building partnerships and creating business opportunities. Where do you think the major opportunities lie in the maritime sector, since Malaysia is the gateway for investment in this region?
For a few years we were very “Britain inclined”, probably because most people were trained in the UK. Also, many ships were coming from the UK. After our independence, we continued to buy a significant amount of equipment from the UK until approximately 10 years ago, when trade slowed down. I think that at some point the UK took us for granted, so that’s why they are now looking for fresh partnerships to build on the strong foundations of our relationship.
This in turn gives us enormous potential, because the majority of our engineers were trained in the UK, and after they came back to our country they contributed to improving the academic performance of our universities. To some extent, we have many talents that migrate to other countries. For example, many go to China, probably because, aside from English, many Malaysians can speak Mandarin; others travel to the Middle East. To stop this trend, we are trying to create here new opportunities for development.
Many scholars talk about the real value of human capital, meaning that when the opportunity comes people care about finding a job in their area of expertise. That’s a phenomenon we have to create. To do this we have to become flexible as a society, with competitive labor force in each area.
Yes, indeed. I agree with the idea that education in human capital and economic development walk hand-in-hand; it’s not possible to have one without the other...
In fact, in terms of percentage of GDP and in relation to education, Malaysia is one of the highest in the world.
Can you describe in three words what does your company stand for?
I will go with a sentence: We aim to create for our entire country innovative solutions that address the needs of our major stakeholders, and in particular the needs of those who serve and support us and those who pay for our services and products. That’s what we are aiming to do. It sounds general but it captures the whole idea. We have a major responsibility to create opportunities for the whole country. Of course, we aim to realise that in the long term. It is something that not all companies are willing to do, that is why it is a big responsibility for us.
I am aware that you spent sometime in the UK, since you trained at the Britannia Royal Naval College. Could you please share with the readers of The Daily Telegraph what are your favourite memories about the time you spent in the UK?
All my memories are connected with the idea of living a new experience, because I went there as a freshman. That was the idea of undertaking a new challenge, and maintaining good behaviour as well. This experience encouraged many feelings, in particular honesty, integrity, and the courage of taking on new challenges. Those feelings have influenced, and still are influencing all the things I’ve done, including taking care of this company. One could say no challenge no fun!