Published: on 02 July 2012
Ee Ann Nee
sunbiz@thesundaily.com
KUALA LUMPUR (July 1, 2012): Global defence, aerospace and security company BAE Systems is looking at expanding its relationship with local partners and doubling its efforts to engage with more small and medium enterprises (SMEs) as it continues to focus on the defence market in Malaysia.
BAE Systems Malaysia vice-president Mark Burgess told SunBiz: "Historically, there has always been a defence market for us in Malaysia and the focus will remain, as a business and in terms of the level of industrial participation that we can work toward here."
In the defence market, he said BAE Systems is looking at partnerships with DRB-Hicom Defence Technologies Sdn Bhd (Deftech) on armoured patrol vehicles for the army, as well as an upgrade to a military bridging system sold some eight months ago. In addition, there are also prospects for naval weapons for the new Second Generation Patrol Vessels through its ongoing negotiation with Boustead Heavy Industries Corp Bhd.
"We can expand our role in the same market. Rather than just focus on the maintenance and overhaul, we can look at joint ventures with Boustead. We can explore more opportunities for voyage repairs of allied navy and where they can stop for repairs on vessels," he said.
"In addition, we can also look at adjacent markets like oil and gas as it is significant in East Malaysia. There are also opportunities in renewable energy that produce turbines to generate electricity in remote areas. All in all, there is a diverse range of opportunities or technological scale that we can bring to the region.
"That said, cyber security, while it generally has a lower value and is slower to reap, is just as, if not more important, to the defence of the nation in many aspects. Cyber security is the day-to-day maintenance of the integrity of critical national infrastructure, whether it's the ATM network, power generation network, mobile phone network or communication."
The defence business currently accounts for 95% of BAE Systems' revenue in Malaysia with the balance coming from its security business.
"Over the next five years, we think this balance will shift to an 80% contribution from the defence market and 20% from security, simply because defence equipment is more expensive than security systems," said Burgess.
On cyber security, he said BAE Systems has ambitious plans and high hopes for its ability to leverage its strength in this market and sell to the Malaysian government and private sector.
"We're looking to use Malaysia as the home for back-up operations. We've been winning lots of work in Australia and US and we're looking to do the back-office IT cyber security work here. In the ICT environment, Malaysia has a high skill base and is low cost."
He said BAE Systems Stratsec conducts cyber consultancy, systems testing and has experienced significant growth, with expectations that its employee base would double over the next 12 months and double again in 24 months.
"The cyber security market includes the government, like Ministry of Home Affairs, CyberSecurity Malaysia and the National Security Council. But we also do a growing amount of work with the local financial sectors. We've won a number of contracts recently, particularly in the banking and financial sector."
He said BAE Systems has a successful history of working with local industries to develop their capabilities and buying their output from them, where it transfers skills and technology and the local industries become sources of supply for BAE's global markets.
"Increasingly, we'll be looking at working in close partnership with a range of different companies for the transfer of technology and know-how to exploit our product and technology for our own supply chain as well as for Malaysia and the regional markets."
As part of its long-term commitment to Malaysia, BAE Systems continues to broaden its industrial participation reach throughout the peninsula. Having visited East Malaysia in May to engage with the state government, regional development agencies and local businesses, the company is now targeting the East Coast, including Kota Bharu and Kuantan.
"We now turn our focus towards the East Coast where we will engage state government, regional development agencies and local businesses, thereby giving us new opportunities to forge strong, sustainable relationships and identify mutual growth opportunities," Burgess said.
BAE Systems will grow its three market segments in Malaysia, which are services, electronic systems and platforms.
Burgess said about 20-25% of the value lies in procurement while 70-80% is in services over the life of the platforms.
"The initial sale is from the platform segment. When you sell an aircraft, you have a big procurement value associated with the aircraft sale. But the majority of the value actually is supporting the equipment through its life."
BAE Systems has had a presence in Malaysia for more than 20 years with an established Southeast Asia regional headquarters in Kuala Lumpur. The company is looking to play a significant role in Malaysia's economic, technology and capacity development via partnerships with innovative SMEs, government agencies and key academic institutions, as well as supporting the development of skills and technology through vocational training.
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