Malaysia's InvestKL Woos Top Oil, Gas MNCs to Base in Kuala Lumpur
Thursday Oct 06, 2016  
URL: https://www.rigzone.com/news/oil_gas/a/146942/malaysias_investkl_woos_top_oil_gas_mncs_to_base_in_kuala_lumpur/

Malaysia’s InvestKL is more than half way to completing its mission: attracting 100 multinational corporations (MNC), including top oil and gas firms, to base their regional headquarters in Greater Kuala Lumpur (KL) by 2020.

Luring oil and gas MNCs ranked among the Fortune 500 or Forbes 2000 group of firms looms large for InvestKL given Malaysia’s well established petroleum industry, anchored by national oil company (NOC) Petroliam Nasional Berhad (PETRONAS).

“It’s is not the main focus, but it’s certainly a key sector because oil and gas is one of the 12 national key economic areas. KL is also an oil and gas hub for Southeast Asia,” Daniel Teng, senior director of Marketing & Communications, Strategy, Advisory and Services at InvestKL told Rigzone.

Strong Government Backing for InvestKL

With strong government backing, InvestKL – which was established in July 2011 – can tap on an array of state resources to achieve its objectives.

“We work very closely with PETRONAS and Malaysia Petroleum Resource Corp. (MPRC), which is under the Prime Minister’s Department. We work with them as they are the subject experts that can guide us in attracting the oil and gas MNCs. We also use our channels to help the MNCs,” Teng said.

The synergies created through the location of oil and gas MNCs in Greater KL would benefit PETRONAS given that the NOC has extensive operations in the different segments of the petroleum industry.

“PETRONAS is very supportive because it is also their goal to bring more companies to KL so that they can be closer to the company,” Teng explained.

Building Capacity Through Relocation

With the petroleum sector negatively affected by several rounds of cost-cutting exercises in the current downturn, InvestKL acknowledged that cost is certainly a key driver encouraging MNCs to seek an alternative operating base to neighboring Singapore.

“Cost is an important consideration, but not the main factor. It’s about sustenance. MNCs look at strategic options to build a sustainable business. We position KL as a very good complementary alternative to Singapore for MNCs that wish to establish their regional headquarters,” Teng said.

“What this means is that MNCs need to understand whether their operational capacities are lost, maintained or expanded. The relocation to KL is about building capacity, in terms of building talent ability, developing available talents, bringing in expatriates to KL and of having a support ecosystem.”

He recounted that MPRC told participants at an AmCham Singapore’s industry talk Aug. 23 that the ecosystem in KL can be a good value-add to MNCs doing business there as sub-contractors are easily available.

“So it’s talent capacity and ecosystem capacity. But above all, we are making it very easy to do business. We help them, facilitate them with immigration, we connect them to the right parties,” the InvestKL executive said.

The attraction of working in close proximity to PETRONAS – Southeast Asia’s largest oil and gas firm and a Fortune 500 company – in KL could be a key consideration for MNCs thinking about relocating their regional operations to the Malaysian capital.

“Proximity to the customers and the support ecosystem is very important. That could be considered an advantage,” Teng elaborated.

By working with local Malaysian companies, oil and gas MNCs that relocated to KL may be able to capitalize on the lower cost structure of the former by outsourcing work to these firms rather than trying to do everything by themselves.

MNCs “also benefit local companies through their demand for auxiliary services from these firms,” he added.

Ensure Supply of Talents

The Malaysian government agency seeks to ensure a seamless transition for MNCs that relocated their regional operations to KL, including in key areas such as manpower, where sufficient supply of local or foreign skilled workers are readily available.

“When [foreigners] come [to KL], we allow them to bring their talents. This is to help them minimize disruptions in their operations. But along the way, they will hire a lot more of our people, who are actually very well trained. It’s an ecosystem, so there’s opportunity for locals, especially those with experience,” the InvestKL senior director told Rigzone.

Over the years, Malaysia has been strengthening its talent resources, including those interested in working for the oil and gas industry. Among these are graduates from Universiti Teknologi PETRONAS (UTP), Universiti Teknologi Malaysia (UTM) and Universiti Malaya (UM).

“We run structured internship programs for university undergraduates in Malaysia. They were placed, for example, with Schlumberger. They took a lot of interns from our local universities because it’s a resource pool of future talents,” Teng revealed.

InvestKL also helped these oil and gas MNCs in the provision of interns not only from UTM and UM, but also UTP as well as other relevant tertiary institutions.

On skilled expatriates relocating together with the MNCs to KL, Malaysia does not impose a cap on the numbers that can work for these firms.

“Right now we don’t have any cap, but we prefer at least a 1 to 1 ratio in these companies. You cannot have, for example, 90 foreigners and 10 Malaysians. Besides, it doesn’t make sense for your cost structure anyway. We don’t have that problem [so far] as it doesn’t make sense cost-wise. So the MNCs try to maximize the number of locals they hire,” Teng elaborated.

3 ‘B’ Model

Given that oil and gas is a niche industry with specialized manpower needs, InvestKL adopted a 3 ‘B’ model – Bring, Buy and Build to attract MNCs.

“So if you are short [on skilled manpower], we have 3 models. Bring – you are allowed to bring them from elsewhere; Buy – we connect you to the headhunters to look for the right people; and Build – through programs offered by the universities as well as the development of your own people. So it’s a BBB program,” Teng outlined to Rigzone.

In addition, he observed that the manpower supply situation is fairly positive at the moment as there are some Malaysians (skilled oil and gas workers) who wants to return home in the current industry environment.

Earlier this year, McDermott International, Inc. decided to relocate its regional office to KL from Singapore as part of a strategy to address issues arising from the current downturn. Several of its competitors were already based in KL, where strong engineering resources are available. In addition, key suppliers are located in Malaysia, where a vibrant subsea industry operates.

“We have to be positioned to be very competitive in the industry. We see that things will come back … [but customers] will be very cost conscious and competitive,” Hugh Cuthbertson, McDermott’s vice president, Asia, said April 13 during a media briefing at Keppel Shipyard in Singapore ahead of the launch of its new flagship derrick lay vessel DLV 2000.

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