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Business diversity will make Malaysia and O&G hub

Interview - March 27, 2014
The Malaysia Oil and Gas Services Council (MOGSC) is committed to promoting the Malasian Oil and Gas Services sector and also promotes the country as a reginal hub for Oil and Gas services. In an interview with PM Communications, President of the company Sofiyan Yahya talks about the country's strategic location, its business diversity, “Malaysionisation” and the this years up coming oil and gas conferences
Geographically Malaysia holds a strategic position on the route of the oil shipments between the Middle East and the Asia Pacific region that oversees a fourth of the global shipment of Oil & Gas. What do you think is the potential for Malaysia to become an Oil & Gas hub in this region?

Malaysia has always been a trading nation and, as you said, its strategic position on the trading routes made it a key stopping point and a key trading port. The most important aspect about whether Malaysia can become a regional hub or not is its business diversity.

If you look at the different business levels in terms of access as well as all the different sectors of the value chain, you can see the range of diversity that can actually make Malaysia a regional hub.

If somebody asked me how are we heading in that direction I would answer that we are already there thanks to the diversity and the ability to meet and satisfy a wider range of the value chain within the Oil & Gas sector. Of course, also the effective involvement of the government policy has driven the country to this. From the beginning PETRONAS and the government promoted the development of local players and encouraged them towards making sure Malaysians were really involved in every sector – they called it the “malaysianisation” program – implying the local growth across wider bands of different sectors in order to cover the whole value chain.
I think Malaysia can really take advantage of its sophisticated economy, and the establishment of the ASEAN single market might represent a further opportunity. What do you think will be the impact of AEC on the Oil & Gas sector in Malaysia?

In my opinion, the impact that it will have on Oil & Gas sector  will be slightly different than on other industries.

Oil & Gas has always been a global industry because we work to global standards, which are technically demanding. The Oil & Gas sector already involves people from all over the world, including ASEAN countries the Philippines, Indonesia, and Thailand. We also have skilled workers from the ASEAN countries, hence there will be an impact with the other industries other than Oil & Gas,  and we will see a significantly higher access of local players into other regions.
As you just mentioned, companies in this sector have always competed in the global market. The Oil & Gas sector is already a crucial driver of the Malaysian economy; could it also bring about positive spillovers in related sectors and improve business practices up to global market standards?
It already represents a key driver in the economy, other industries will benefit from this sector. But then again Malaysia has always been an export-driven nation; we were exporting a wide range of products from food, electronics, electrical equipment to commodities like palm oil, tin and rubber. Malaysia has always been a global country in the trading sense.

Oil & Gas just brings a different focus compared to the other industry sectors because its activities and operations are different as it operates in a more challenging environment. Hence, with the establishment of the ASEAN single market we should see more Malaysians participating in opportunities in the other ASEAN countries, something Malaysians have not done enough in the past.
The Oil & Gas sector proved to be very instrumental in the economic transition of Malaysia because of the continuous investments in R&D that dramatically contributes to the transformation from a labour-intensive to a capital-intensive economic paradigm. The Oil & Gas sector is one on the NKEAs, how did this sector evolve in the past decade? What is its future prospect?

I think that the greatest contribution of the announcement of the NKEA and the Transformation Program has been that of giving visibility to the Oil & Gas sector. This sector has been around for a long time but it has gained greater visibility since the creation of the NKEAs within the Economic Transformation Program.

Thanks to this growing visibility the industry has become more attractive to the local business community to enter the industry, including foreign businesses who might want to bring their expertise to Malaysia. It may not appear to be of major relevance but this visibility will help the industry by creating awareness. One major challenge we are facing now is the shortage of qualified work force, and various initiatives are being undertaken to increase the numbers and capabilities of the work force, while the local players are encouraged to expand on their services.

This industry is constantly evolving and hence there will always be a dynamic movement of people and technology.  
Oil & Gas does not fall under any ministerial authority. What is the relationship between the private and public sectors then when it comes to Oil & Gas?

can be confusing. MOGSC had given advice to many foreign companies when they arrived and wanted to enter the business, but expected to visit an oil & gas or an energy ministry. In Malaysia, we have only PETRONAS who champions and is the lead national governance body for the oil & gas industry. I mentioned earlier how the NKEAs had given greater visibility and awareness of the industry, and it has also created more interest from the government agencies and other ministries.

Hence they have extended support for the oil & gas industry, especially for new local players. In some cases they have set up oil & gas divisions where they feel they can significantly contribute. MOGSC now works not only with PETRONAS but the other government agencies as well. 
You collaborate with numerous government-linked agencies like MPRC, MIDA and MATRADE. What kind of activities do you undertake together?
Well, the collaborations we have with MIDA or MATRADE are very important for MOGSC, they all serve different goals and targets.

MATRADE is a very important partner when it comes to promoting the local players and their capabilities overseas - we have exhibited with MATRADE in the US at OTC, in the Middle East, and our members have joined their oil & gas related business missions all over the world. With MIDA we work on the development of the industry locally, including encouraging foreign expertise to set up their regional centers of excellence in Malaysia. MOGSC mission statement has always been to make Malaysia a regional hub for oil & gas services, hence working with the government agencies is a key activity to drive this agenda.  

Being the largest body looking after the interest of the service providers in this industry, MOGSC is in a unique position to be the collaborative platform between industry and all the stakeholders to achieve this goal.
Safety and Environment are some key areas in the Oil & Gas sector. What are the main activities of MOGSC Health Safety and Environment working group?
As you say, HSE is very important, a top priority actually and in we focus on creating awareness and instilling commitment to address all HSE issues across the industry. We can never do enough where safety is concerned, accidents still happen in the industry and that is why we are trying to promote a zero tolerance policy for accidents. We have meetings with various stakeholders and members, and participate in the different HSE campaigns that are often conducted.

Though MOGSC is a member-driven organisation, but for HSE, our meetings regularly involve all parties across the industry as safety knows no business or contractual borders. 
In one of our previous interviews we had the chance to speak with the Honourable Minister Abdul Wahid Omar and in one of his answers he said that TalentCorp – the agency that he oversees – is trying to attract more talents especially in the Oil & Gas sector. Since you mentioned the shortage of work force, is this the biggest challenge that the sector is facing? Can it have a negative impact on the future development of the sector?

It is a serious challenge that all Oil & Gas industries around the world are facing. We have a new problem for example, that the younger generation are not interested in this sector or in engineering or technical topics. Hence this is one of the areas we are trying to address by working with the academic institutions.

With TalentCorp we work closely to find ways to increase the talent pool of qualified people for this industry. For example we are on the committee that has reviewed proposals to set up training programs, so that we ensure that they are suitable and meets the standards of the industry. We are regularly engaged with TalentCorp to provide any support to solve the shortage problem.
Last year we had the fantastic opportunity to attend one of your events and what struck me was the passion and the efforts that MOGSC puts into CSR activities. Could you please share with the readers of The Daily Telegraph what are the most recent of the CSR activities that your association is undertaking?
The most recent one has been the flood emergency during which we helped the victims affected by the floods. Somehow we were very unfortunate, there have been much heavier rains than usual, it has been reported that they were the heaviest in over 20 years. For three weeks we conducted an aid campaign through collecting money and goods to send to the victims. Some of our members personally volunteered and it’s an ongoing effort.

Apart from this major disaster, we also carry out other CSR activities like blood donation campaign and we have given financial help, such as to the association of the blind. Next month we will be organising a charity golf tournament and normally a percentage of the proceeds will be given out as donations to some charitable organization.  We are also involved in a campaign to purchase a mobile clinic, which can tour remote areas and offer medical services.
In the light of the two main events that are going to take place in Kuala Lumpur can you share some of your opinions and expectations about OTC that is going to take place in March and MOGSEC 2014?  How important are these events in terms of visibility? 
Well, as for the UK-Malaysia relationship, especially from our point of view, UK is the first foreign industry base that MOGSC has established relationship with. In the early days, I visited the UK to give talks to encourage the UK oil & gas sector to come to Malaysia and find partners here, so we’ve been very close to the UK Oil & Gas sector from the beginning. The development of the North Sea Oil & Gas sector where they have small players that grew developing their specific expertise is something that the Malaysian industry can emulate.

We are trying to encourage our small players to go bigger, and especially to become more technically focused and grow their home-grown expertise. In those days when I went to the UK, I was interested in meeting the small companies and find a match with small players in Malaysia because the problem concerning some of the small companies generally is that they don’t necessarily think global.

They might not realize that what they have might be useful or important to Malaysia and even the ASEAN region, apart from being a good business opportunity for them as well. For the coming OTC in March, we are expecting a UK delegation and we look forward to meeting them and provide any advice and assistance, especially to meet local players. We are organising our own event MOGSEC 2104 in September 2014.  It is the only event that focuses on Malaysian based players and hence promotes Malaysia as the oil & gas services hub.

We expect a very good turnout for MOGSEC 2014 as it was very well received during the its inaugural event in 2012.
We feel like UK-Malaysia relationship is stronger than ever. As you said the Oil & Gas sector in Malaysia is very sophisticated, where do you see the highest benefits for UK Oil & Gas service companies?
I think it covers the entire value chain of Oil & Gas services. In my opinion the key to Malaysia Oil & Gas industry growth lies in the implementation and development of integrated services. Considering the way the industry is growing, there are two possible scenarios. The first one is to develop your own capability and expand it into the other activities related to the industry in order to implement an integrated services system.

The other way is for your company to find another company that is specialized in an area different from but related to yours and then integrate both activities in order to offer a wider range of services. If Malaysia truly wants to be a regional hub then we have to offer more integrated services. In the future we should be promoting more Malaysian companies for a wider range of more integrated services and those who have special expertise in just one field shall link up with more companies.

By having more UK companies coming here and working with the local players, hopefully, they will encourage the development of more integrated services. 
Since I’ve been here it seems like 2020 represents a major milestone. By then, the economic transformation should be finalised. How do you see Malaysia in 2020? What is the role that it can play in the global market?
2020 is actually just around the corner but from an Oil & Gas industry point of view, the target of becoming a high-income nation and the expectations that comes with it, we are already a high-income industry. For example we work to meet global standards on every aspect of the industry, and we have a high priority for safety. Malaysia has a secret weapon that will ensure the success of 2020, which is diversity in the country itself and this aspect is not being highlighted as much as it should.

It is also strategically located, ever since humankind discovered the need to trade and global trade routes came into existence, Malaysia has always been strategic because of the Straits of Malacca, the world’s busiest trade traffic.