In­cu­ba­tion pro­gramme

The Star Malaysia - StarBiz - - Focus -

PETRONAS has been very sup­port­ive of the de­vel­op­ment of lo­cal play­ers, in­clud­ing hav­ing an in­cu­ba­tion pro­gramme known as the Ven­dor De­vel­op­ment Pro­gramme (VDP).

De­spite the rout in the global crude oil price since 2014, its VDP cur­ricu­lum is still on­go­ing to nur­ture po­ten­tial com­pa­nies to adapt to the new era of the O&G in­dus­try.

The mar­ket be­lieves the price of crude oil will re­main low es­pe­cially with the con­tin­u­ous pro­duc­tion and in­no­va­tion in shale oil.

Un­der the VDP pro­gramme, the ven­dors are awarded con­tracts by Petronas or its pro­duc­tion shar­ing con­trac­tors.

The first VDP ven­dor in Petronas was ap­pointed in 1994. Hav­ing 99 com­pa­nies un­der its wing, about 64 have grad­u­ated from the pro­gramme since its in­cep­tion in 1993, in­clud­ing listed com­pany Serba Di­namik Hold­ings Bhd, Sabah­based com­pa­nies North Java Sea Sdn Bhd and Firm Syn­ergy Sdn Bhd, and man­u­fac­turer ProEight Sdn Bhd.

Serba Di­namik, which was listed last year on Bursa Malaysia, grad­u­ated from the VDP in 2007.

The com­pany is now val­ued at RM3.7bil in terms of mar­ket cap­i­tal­i­sa­tion, with about 30% of its rev­enue com­ing from jobs in Malaysia while re­main­ing 70% is from over­seas namely Qatar and Bahrain.

Serba Di­namik manag­ing di­rec­tor and chief ex­ec­u­tive of­fi­cer Datuk Dr Mohd Ab­dul Karim Ab­dul­lah said the Petronas VDP had pro­vided the com­pany with the needed guid­ance and sup­port to grow its business.

“Un­der the VDP, we suc­cess­fully se­cured Petronas con­tracts that con­trib­uted 70% of the com­pany’s rev­enue and 10% its prof­itabil­ity.

“Dur­ing that pe­riod, Serba Di­namik’s rev­enue had shown a grad­ual yet solid in­crease. Com­ing from a low base, growth was sig­nif­i­cant in the early years of Serba Di­namik as a ven­dor un­der Petronas,” he said.

Serba Di­namik se­cured its first over­seas con­tract in 2001 with a global op­er­a­tions and main­te­nance (O&M) ser­vice provider in Qatar.

“Since then, we have been do­ing business glob­ally and at­tracted in­ter­na­tional part­ners to work with us in many ar­eas,” Karim said.

Mean­while, North Java Sea Sdn Bhd (NJS), which joined the VDP pro­gramme three years ago, said Petronas had been pro­vid­ing the com­pany with pro­fes­sional guid­ance to ex­pand its business.

Since then, the com­pany has suc­cess­fully en­tered into con­tracts with Petronas Cari­gali and Mur­phy Oil Cor­po­ra­tion to sup­ply emer­gency rope lad­der and swing rope.

“Petronas VDP has helped NJS to get a feel of global mar­kets and to nur­ture and match us with use­ful con­tacts and cut­ting-edge tech­nolo­gies that can prove cru­cial for our business sur­vival.

“We have seen en­quires about NJS’ prod­ucts from the Mid­dle East and Euro­pean coun­tries,” said NJS manag­ing di­rec­tor Ab­dil­lah Yassin.

“The VDP Pro­gramme was de­signed to grow more re­silient and com­pet­i­tive Bu­mipu­tra en­trepreneurs in medium and high tech­nol­ogy man­u­fac­tur­ing and tech­ni­cal ser­vices with im­port sub­sti­tu­tion as the main goal,” he added.

He pointed out that the VDP aimed to cre­ate gen­uine en­trepreneurs who were re­li­able and com­pet­i­tive to pro­duce lo­cal prod­ucts and ser­vices to re­place im­ported ones that were used by O&G com­pa­nies in Malaysia.

“The abil­ity for NJS to be glob­ally com­pet­i­tive is no longer im­pos­si­ble with the sup­port and guid­ance of Petronas which has been con­duct­ing fair and trans­par­ent business,” Ab­dil­lah said.

Firm Syn­ergy Sdn Bhd CEO Rudy Lawrence Si­payang said the VDP is a well-struc­tured pro­gramme with clear key per­for­mance in­di­ca­tors and tar­gets for business growth and ex­pan­sion.

“The com­pany started with only two staff – the CEO and one ac­count per­son­nel. Since then, our work­force has grown to 45 peo­ple,” he said.

The Sabah-based com­pany, which pro­vides in­dus­trial equip­ment sup­ply and ser­vices for the O&G, was se­lected for the VDP pro­gramme in 2014.

For a com­pany like ProEight, which is in­volved in de­sign and man­u­fac­tur­ing, the VDP pro­gramme has al­lowed it to grow its re­search and de­vel­op­ment and come out with new innovations.

“Through proper business strate­gies and plans, ProEight was able to al­lo­cate more than half of its rev­enue into state-of-the-art fa­cil­i­ties, ma­chin­ery, and equip­ment,” said manag­ing di­rec­tor Azhar Zainal Abidin.

As a re­sult, ProEight said it grad­u­ated from the VDP pro­gramme in 2014 with two of­fices, five man­u­fac­tur­ing plants lo­cated in Batu Caves, Teluk Kalung, Miri, Bin­tulu and Labuan, and more than 130 units of ma­chine and equip­ment.

The com­pany’s rev­enue has grown sig­nif­i­cantly to RM19.5mil in 2014, com­pared with RM1.85mil prior to par­tic­i­pat­ing in the VDP.

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