Straits Inter Logistics Berhad is the only listed bunkering company in Malaysia. This has been our original objective, to want to establish ourselves as a premium bunkering player. In terms of branding, we are a public listed company (PLC) and this has its added advantages.
Asean Business Leaders: Oil bunkering services in Malaysia is considered a niche market with full potential for growth. Can you give us an introduction of Straits Inter Logistics Group (Straits) and how the company is transforming into a marine logistics company?
Ho Kam Choy Ron: The Company was originally known as Raya international and assumed its current name in June 2017. We were specialized in manufacturing and trading of water filters. We went from producing water filters to a marine logistics player.
A bit of the history is that, I took over the company and that’s when the transformation of the company started. So, I took over in late 2015, and then we began the journey of Straits transformation exercise. In 2016, we started with oil trading. In 2017 we did a corporate exercise to discuss the transition of the company. So, during the last 2 years, we have been transforming the company so significant. As of today, the company essentially provides a "floating fuel station" for seagoing vessels such as marine cargo carriers, bulk transporters, oil and gas vessels, floating production storage and offloading vessels.
In Malaysia, we have a lot of offshore support vessels that run between the supply base and oil field. These companies transport crew, materials and equipment between the base and the field. In this process, vessels will consume more fuel to go back and forth. What we do to aid this is to offer a solution to provide the fuel on the water. You can say we act as a 7-Eleven petrol kiosk open 24 hour a day, 365 days a year. Moreover, the recovery in crude oil prices will heighten shipping activities and consequentially bunkering services. Thus, we consider that this positive signal will definitively have an impact that will make our company valuations more attractive.
Asean Business Leaders: According to our research, Straits Inter Logistics has acquired a 55% stake in marine bunkering operator Tumpuan Magah Development. Can you elaborate on the impact that this will have on the company?
Ho Kam Choy Ron: Tumpuan Megah Development is a company, which has core similar activities like ours. Tumpuan Megah principally engages in the oil bunkering services business, which includes ship-to-ship bunkering, barging operations and dealing in oil and petroleum products. The company currently has operations at eight ports in Malaysia, all of which are licensed under Petroleum Development Act 1974, through seven bunkering vessels ranging between 500 to 4,700 dwt.
The acquisition comes with a minimum total profit guarantee, of RM 10 mil (USD 2,3 mil) for FY19 and FY20. This would translate into a yearly profit of RM 2.75, aprox (USD 656,000 mil) a year in these two financial years. The acquisition will also enlarge the customer base of Straits by tapping into the existing customer base of Tumpuan Megah, allowing Straits to capture larger market share and increase its market presence in the bunkering services industry in Malaysia to improve its competitiveness and sustainability in the marine logistics industry.
With such expansion of asset base, Straits is capable to undertake higher volume of bunkering services, thereby increase its operational capacities. Thus, it will allow us to be closer to Singapore.
Asean Business Leaders: Do you consider that getting access to Pasir Gudang Port in Johor, it might help to expand your operations in Singapore bunkering market?
In deed, gaining access to the ports in Johor Bahru will also be key for us to capitalize on business opportunities with Singapore due the proximity between both locations. The company has many licenses that are needed for bunkering, so we will be able to tap into the infrastructure aspect. Also, with the regulation changes in Singapore, there will be an outflow to the Johor port. Because of the stricter regulations, many boats will come to the nearest port (PTP) and here poses opportunities, which we can capitalize on.
Asean Business Leaders: Moving forward, does the group forecasts more collaborations and business expansion activities to widen its geographical coverage?
Ho Kam Choy Ron: The demand for the group’s bunkering activities for 2019 is expected to be encouraging and it will continue to assess the demand from our existing and potential customers through continuous marketing activities.
In January 2018, we also entered into a nonbinding Heads of Agreement with Hong Kong-based bunker trading firm, named Banle Energy International Limited to explore potential business cooperation and/or collaboration opportunities for a further nine months ending 17 February 2019.
Asean Business Leaders: Is Straits Inter Logistics struggling with maintaining its human capital?
Ho Kam Choy Ron: We do not have any problems with maintaining human capital at this moment. Ever since the company started, this was never a problem. Most of the staff that joined from the beginning is still here with us. Our workers are well under our care and their welfare is very important to us thus in return, we expect them to show dedication and loyalty. We do not mind putting in the investment and hours to train our people because by doing so, they help the business grow.
Asean Business Leaders: What would you say is the advantage of Malaysia being a business hub in the region?
Ho Kam Choy Ron: The benefits I would say are the following: Malaysia has plenty of resources and in regards to quality manpower, we have that too. Furthermore, many of the industries that had built factories around Asia are coming back to Malaysia. After the recent election, Malaysia has proven to be very harmonious and multilingual. Also, there are plenty resources and it is not difficult to do business here.
Asean Business Leaders: How do you foresee the Malaysian business community progressing in the next coming years under this new political era?
Ho Kam Choy Ron: For small-medium enterprises (SMEs), it is rather difficult to function. The major difference as compared to back in the days, there is notably less corruption now, which is a good start. Deliverables can now be done in a shorter period of time. Fortunately, in our line of business, we do not encounter many of these problems mentioned as we are in a very niche market. Part of our initial struggle was the lack of support from the government. Now, with the new government, we will put forth to communicate our efforts to convince them that this industry is actually very profitable as well as to assist them to understand better this industry and the impact that the abolish of Good and Service Tax (GST) and the introduction of the Sales and Service Tax (SST) will have on the market.
Similarly, we believe that there are too many ports on the same coastline, which may seem as an advantage. Should the government be willing to hear us out, we would advise them to not emphasize too heavily on building more ports, but instead they should make plans to upgrade existing ports to increase the current load and efficiency.
Asean Business Leaders: How important it is for Straits Inter Logistics to create brand awareness on the bold steps the company is doing to become more competitive?
Ho Kam Choy Ron: Straits Inter Logistics Berhad is actually the only listed bunkering company in this country and in Singapore. This has been our original objective, to want to establish ourselves as a premium-bunkering player. In terms of branding, we are a public listed company (PLC) and this has its added advantages. It is always better for companies to collaborate or to partner with a PLC. Also, the media supports us a lot; our management and safety are frequently covered. Furthermore, we are confident that we have a superior product at hand. If you need fuel, you can count on us at Straits Inter Logistics Berhad for the best quality. We supply to many different navies like the Japanese, Americans and Australians because they know we have the proven track record and we offer the best quality.