Executive Focus: David Wong, CEO, SnT Global

Executive Focus: David Wong, CEO, SnT Global

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Transcript

What new Initiatives is SnT Global currently involved in?

WONG: SnT is currently expanding its business regionally in Asia. We plan to establish an e-fulfillment hub in Malaysia to better serve the ASEAN region. We have been working very closely with the government to achieve this objective. In fact, it is a part of the government's Economic Transformation Programme (ETP). It is a long-term project that is targeted to position Malaysia as the e-fulfillment Hub for e-commerce in the ASEAN region . We are targeting US and neighboring countries to setup or outsource their regional logistics business over to Malaysia. In line with this plan, SnT will expand its footprint by setting up operations in Singapore, Indonesia, Thailand, and eventually to all other ASEAN countries.

What is your future growth and development strategy?

WONG: Presently, the greatest area for growth in Malaysia is e-commerce. When I initially started SnT Global, 10 years ago during the dot-com era, it never really took off. However, the infrastructure for e-commerce has been growing strongly in the past 1-3 years. The number of Internet users in Malaysia has grown immensely and, as a result, e-commerce is now in a healthy growth stage of more than 30% per annum. The market is now worth at least MYR 120bn ($40bn). I believe that this growth will open up new opportunity for Malaysia to position itself as the logistics hub for e-commerce in the ASEAN region. Thus, It is important for SnT to have a regional presence with last mile fulfillment capability to be able to provide end-to-end services.

How competitive is the BPO (Business Process Outsourcing) industry throughout the region? What is Malaysia's market share?

WONG: The BPO (Business Process Outsourcing) industry throughout the region is very competitive. Right now, Malaysia is the new kid on the block. However, Malaysia is catching on very fast. Besides logistics, Malaysia also attracts a lot of financial shared service and outsource centers. Also, there are numerous technical help desk and support centers based in Cyberjaya, which is like the Silicon Valley of Malaysia. We are now looking at how to improve our capability in order to tap into the potential opportunities that this industry can provide. Malaysia's market share in the BPO (Business Process Outsourcing) industry is expected to be $2bn by 2013. We have been growing at about 15%, which is considered healthy compared to the overall GDP growth of the country. The government is now paying very close attention to this sector because it has been classified as a NKEA (National Key Economic Area). With increased government intervention, we are hoping to push the market growth for the industry to above 20%. In the end, we would like to grow the industry and create more jobs. Job creation is very important. We understand that this industry is people oriented. As a result, we are also focused on producing knowledgeable workers who can take on many different fields that are apart of the BPO (Business Process Outsourcing) industry. We are setting benchmarks that are on par with some of the world's leading companies. In order to compete globally, we have to ensure that our capability is on the same level as the rest of the developed world.

What makes Malaysia an attractive destination for companies looking to outsource their business operations vis-à-vis other countries in the region?

WONG: We are very competitive in the region in terms of infrastructure and costs of labor. Malaysia is also a standout amongst its regional neighbors because of its multilingual capabilities. More than 90% of the population of Malaysia speaks English. We have a very diverse cultural that is comprised of the Malays, Chinese, and Indians. Therefore, we are able to meet the needs of many countries. Also, I believe that we have a very conducive environment for businesses to operate and grow in. The policies here in Malaysia are very stable and the financial systems are very well regulated. In terms of competitiveness, Malaysia has recently been ranked number 10 in the world. As a result, I think that we are on par with other key global players in terms of competitiveness and overall attractiveness.

How well accepted is the idea of using e-logistics in Malaysia? What difficulties have you faced in convincing companies to utilize e-commerce?

WONG: Like any other industry that is in its growth stage, there have only been pockets for the implementation of e-logistics. For example, the implementation of GPS has been very successful. The rate of GPS technology adoption by transport providers has exponentially increased over the past 5-10 years. Also, the custom declaration and clearance process by Customs Department in Malaysia has greatly improved. The government has implemented the National Single Window (NSW) project, which is geared towards the enhancement of trading efficiencies. E-logistics has also been implemented in ports to facilitate procurement. The main difficulty that we have faced is the overall integration of these solutions. I believe that there is an opportunity for us to pull all of these solutions together and make it more efficient and cost effective for the industry and its customers.

How does the ICT sector contribute to the development of the Malaysian economy?

WONG: The ICT market in Malaysia is valued at roughly MYR 60bn ($18.7bn). This year, the industry is expected to grow by about 10%. We are still enjoying healthy growth given the economic downturn over the past few years. Therefore, I believe that people are recognizing that the ICT sector is a strong enabler to help overcome an economic crisis. We are very optimistic with regards to the future growth of mobile, social media, and e-commerce. These are the areas that many companies should embrace and invest in. The intervention of the government throughout the sector should also help spur growth. Within the Economic Transformation Programme (ETP), the government has identified 132 NKEAs (National Key Economic Area) or EPPs (Entry Point Projects). Out of the 132 NKEAs, 85 are either ICT intensive or ICT enabled. These numbers prove how dependent the Economic Transformation Programme (ETP) is on the ICT sector. I believe that there will be a lot of opportunities for players as soon as these projects start to take off. Furthermore, the ICT infrastructure has improved immensely over the past couple of years. For example, many 4G licenses have been issued and states are now starting to implement free Wi-Fi for their entire area. I think that we are moving in the right direction. Infrastructure is necessary for both the users and the players to be able to create the entire ecosystem.

Is the government of Malaysia investing adequately in ICT? What ICT objectives has the government set for 2020? How would you assess the progress towards these goals to date?

WONG: Government spending as a whole comprises about 8%-10% of the total market. There are a couple of areas that the government is now paying a little bit more attention to. For example, it has been implementing a lot of e-government services. This will help eliminate many unnecessary face-to-face interactions. The one area that I hope the government starts paying more attention to is outsourcing. The government has not really tapped into the potential benefits that outsourcing has to offer. They should start implementing outsourcing services in non-sensitive areas. Another initiative the government has implemented is Digital Malaysia, an initiative under the Government's Economic Transformation Programme (ETP). All of the projects under Digital Malaysia are driven by the private sector in partnership with various government agencies. As for the Government, I feel there is a need for integration of ICT projects among various government agencies as well as with the private sector. There is no point for the private sector to develop systems if the government is not capable of coming in and integrating smoothly. The government has to be able to keep up with the pace of the private sector. I believe that we are well ahead of some of the developing countries in the region, but we still have some catching up to do with the more developed countries.