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Defence one of the “key sectors” in Malaysia’s economic vision

Interview - May 20, 2014
BAE Systems is a global company engaged in the development, delivery and support of advanced defence, security and aerospace systems in the air, on land and at sea. In an interview with PM Communications, Managing Director Mr. John Brosnan explains why the company has centred its ASEAN operations in Malaysia
Different crucial security aspects have emerged as a consequence of the rapid economic growth of the ASEAN region: How would you describe the role of Malaysia within ASEAN and in relation to the defence industry?
We’ve been established in the ASEAN region for many years and we have an installed-base of equipment along with opportunities for future business in just about every ASEAN market. Malaysia, Singapore, Thailand, Indonesia, Brunei are all currently seeking a range of defence, aerospace and cyber security solutions and so these are the markets where we currently remain most active.  Malaysia plays a leading role in ASEAN both economically and politically.  
Over the past two years we have centred our core ASEAN operations here in Malaysia. The geographical position and the rapid and impressive development of business infrastructure, makes Malaysia an ideal location for a global business looking to establish a regional hub. And we’ve done that in a big way over the past couple of years.  We’ve invested more than RM40m in new facilities, technologies, and skills, creating a strong national presence that will deliver the best possible partnership opportunities for our company.
Do you consider cyber diplomacy and cyber-war as the new frontier of foreign policy and warfare?
Definitely. Cyber-security is now core to BAE Systems’ defence and security strategy. Over the last seven years we have acquired several companies in order to build our range of capabilities. Already we are providing integrated cyber-security solutions for governments and commercial entities such as banks and telecom companies. We are building our cyber security position globally and locally across ASEAN using Malaysia as our operational hub for the region. 
What is BAE Systems’ business strategy for Malaysia and the region?

I’m expanding my team to build our presence in Malaysia and across the region. We plan to develop our position through procurement-led industrial partnerships across peninsula and eastern Malaysia. 
There are a range of businesses with an untapped mine of skills and capabilities that can be further developed with education and technology support from international partners such as BAE Systems. We have already started engaging learning centres in these areas with MIGHT/Meteor to promote and deliver education programmes in engineering and aerospace.
For many years now we have been involved in industry partnerships linked to the Malaysian government’s procurement of defence systems and equipment across air, land, and sea domains. The key to doing this successfully is to develop successful partnerships and make them long-term. Piece-meal offset and technology programmes may satisfy the short term offset needs of less innovative companies but they are strategically ineffective and do little to develop long term capabilities for industrial partners who need sustainable capabilities.  That isn’t the BAE Systems way as our track record demonstrates.  Today we have local industry partners still adding value to Malaysia’s economy through export revenues based on technology-led offset programmes we helped put in place in 1993 and in subsequent years.  That’s real value added partnership, sustained for 20 years and set to continue for decades to come. That’s the BAE Systems way.
What is your perspective regarding the development of the human resources here in Malaysia?
The availability of high-skilled human capital is one of the main reasons we have chosen Kuala Lumpur as our regional hub. We invest in human capital development and believe in knowledge transfer. We have hired 120 people over the past 12 months in a bid to develop our cyber-security operation in Malaysia.  
We expect to grow that number to more than 350 over the next two years. 
The Malaysian government has put great emphasis on the development of a knowledge-based society and the country is now moving forward in developing an outstanding pool of talent across a range of key disciplines.  We believe we can assist that process when it comes to areas of engineering and technology.
How can the defence industry contribute to Malaysia’s objective of moving from a labour-intensive economy to a knowledge-based economy?
Malaysia’s government has identified defence as one of the key sectors to be developed in its bid to achieve its economic vision over the next few years. Defence and aviation brings in cutting edge technology and Malaysia is well placed in terms of human capital to take advantage of it. There are a number of ways in which companies like ours can add tangible value to that development process.
Working with MIGHT Meteor we recently launched a schools outreach programme, because we believe that capturing the imagination of young people towards engineering starts in the Classroom. We aim to spread this programme to almost every corner of the country, not only in Peninsular Malaysia. These areas are equally important to us. The objective is to send out young executives to schools and share their experiences about our company with the students. 
Another area where we are pleased to add value is through Chevening Scholarships. We are doubling the number of Malaysian students who can study post-graduate courses in the UK to become future leaders in Malaysia. So far we’ve invested more than RM2.5m in support of this programme over recent years.
What is your perspective regarding DSA 2014? 
It was a good event. Definitely one of the most important defence events in this region.  Overall, the attendance was very high and we saw many delegations from ASEAN countries. These events allow us to showcase our capabilities and maintain relationships with our customers. 
You recently said: “We want to actively bridge the gap between UK and Malaysian SMEs and enable a strong and sustainable trade relationship, fostering mutually beneficial partnerships and industrial collaboration in the countries where we operate, has been a key focus for BAE Systems.” How is this effort progressing?
We recognise Malaysia’s effort in developing its SMEs. The UK trade and investment organisation (UKTI) plays an important role in increasing the trade between the UK and Malaysia and we are able to support that process by helping to bring like-minded enterprises from UK and Malaysia together to discuss and plan working relationships that benefit both parties. 
This year we will attend our third SME exhibition, SMIDEX, in June. We will bring with us about 20 UK SMEs to connect with Malaysian counterparts. We have a broad and varied supply chain and so the value we can bring to this process is significant. 
You have supported the UK government with different roles and you are now a figure-head in the defence sector globally. What inspired you to work in security and defence?
What inspires me about defence and security is the opportunities it provides for companies and governments to work together across international boundaries to enhance national, regional and global security and generate real economic value.  

So, in my roles with the UK Government and now with BAE Systems, I have seen many programmes where the Company has entered into major industrial partnership programmes, transferring technology, skills and know-how to our international partners – all within the UK Government’s most stringent export controls, of course.  This is what we are now looking to do in Malaysia, where there are a number of opportunities for us to do good business, while at the same time assisting the Government of Malaysia satisfy its defence and security requirements and its plans for economic development and growth.

 It’s pretty complicated and it doesn’t happen overnight, but when we get it right it really does provide a ‘win-win’ for all concerned.