(From left) Looi, Mazlan, Ng, Tan and Lee during the panel discussion titled ‘Thriving in Asean: Expert Strategies for Established Exporters’.
JOHOR BARU: Navigating regulatory hurdles and intense regional competition are key challenges facing Malaysian companies eyeing expansion into emerging markets, say industry leaders.
Brandt Business Services founder and chief executive officer Datuk Dr Munirah Looi said that among the strategies exporters could adopt to mitigate these challenges was through building partnerships and using digitalisation to enhance efficiency and remain competitive.
“One of the major challenges we face is the regulatory hurdle as different countries have regulations, and unfortunately, in emerging markets, sometimes the regulations depend on who you speak to.
“So, that becomes very confusing and very time-consuming as well. We would need to take more time to set up an operation in those markets.
“The strategy that has worked for us and that we recognise as important is to use the collaboration and partnership model. That is the easiest and fastest way to get to the market.”
She said this during a panel discussion titled “Thriving in Asean: Expert Strategies for Established Exporters” at the Global Navigator Series (GNS) – an initiative by the Export Excellence Awards (EEA) 2024.
The panel discussion was moderated by Malaysian International Chamber of Commerce and Industry (MICCI) southern region chairman Lee Ting Kiat.
Lee (centre in grey) together with MICCI members who attended the Global Navigator Series at St Giles Southkey, Johor Baru.
Looi added that exporters should also take into consideration that what they offer may not be new and that there is competition coming from the country they are exporting to as well.
“Therefore, we need to be able to come out with our unique value proposition. Only then people will start looking at what we are offering,” she said.
On the same note, she added that Malaysian companies also face competition from other Asean countries that are able to offer lower prices.
“Malaysia is no longer cheap, and if you look at the emerging markets today, it makes a lot of sense to buy from other Asean countries.
“That is another thing we find challenging, but it also challenges us to start looking at our own internal transformation and explore ways to become more efficient.
“Digitalisation is one way to improve efficiency. Once they are able to be more efficient, they could then have a lower price point and be more competitive,” she said.
To tackle these challenges, exporters could also reach out to the Malaysia External Trade Development Corp (Matrade), says Matrade’s China and Northeast Asia and Asean and Oceania Section director Mazlan Harun.
“Unfortunately for Matrade, most Malaysian companies know us because of only two things – grants and overseas exhibitions – but we do a lot more than that.
“One of the key services we provide is advisory and consultancy to Malaysian companies.
“For example, if they have a product but do not know where to export it to, you can come to us and discuss it.
“We can advise them which region or country is suitable for their products as well as the rules and regulations of the country, as well as other things such as logistics matters and import tax,” said Mazlan, who was also a panellist at the event.
He added that Matrade, which has 49 overseas offices, also identifies opportunities for Malaysian companies and shares the information through its MyExport portal.
“We have all kinds of information for exporters in the portal, including events and market intelligence.
“However, it is important that they frequently update their personal information in the portal, especially your contact details, so that we can share the information with them,” he said.
Panellist Ronnie Faizal Tan, who is in charge of Mustafa’s Pte Ltd’s overseas expansion, gave some tips to small and medium enterprises (SMEs) when dealing with foreign clients.
“Almost 60% of the products sold at our Singapore department store are sourced from Malaysia.
“When we approach Malaysian SMEs (for stocks), they tend to quote us in Singapore dollars with a mark-up price,” he said, adding that sometimes it was cheaper to buy the items at retail stores.
“These are some of the small challenges I want to highlight to the local SMEs – take things seriously for exports. It is about the volume, not the margin, because we are in a FMCG (fast-moving consumer goods) world.
“With so many opportunities arising, other countries are also working hard to help their SMEs to export,” he added.
Tan also noted that the halal segment was filled with opportunities, especially in minority Muslim countries such as South Korea, Japan and even Singapore.
Asean as a region holds an abundance of opportunities, noted panellist Standard Chartered Singapore head of trade and global business banking Alan Ng.
“In 2010, the middle-income class accounted for 29% of the Asean population, and this figure is forecasted to grow to 65% by 2030. This makes Asean very interesting and important for businesses and the bank,” he said.
Ng also shared how SMEs could utilise the bank’s 170 years of experience to grow and expand their business overseas.
He said businesses were bound to face risks when selling their products overseas, such as clients not paying on time and difficulties in obtaining working capital facilities.
“Through our bank’s very established credit processes, we have helped SMEs obtain cross-border facilities through our local knowledge and close collaboration between your overseas office and your business in Malaysia,” he added.
When wrapping up the session, Lee, who is a lawyer by profession, also shared some of his observations about the business approaches of western and Asean countries.
“When we see (western) investors coming in – this is similar to when we want to invest overseas – it is all about documentation first. They always put the law at the forefront, with all the due diligence, background checks and have many questions for their lawyers before putting their foot forward.
“For Asean investors, they tend to be more informal, involving key opinion leaders like TikTokers in their approach. Sometimes they go in first, then talk later.
“I think the rigidity of the western approach has been softened by what we see in Asean, with the help of Matrade as well as digitalisation,” he added.
Rosmizah: It is imperative for Malaysian companies to do their due diligence and understand in-depth the market.
Meanwhile, in her presentation, Matrade’s Asean and Oceania section senior manager Rosmizah Mat Jusoh said it was imperative for Malaysian companies to do their due diligence and understand in-depth the market and regulations of the country they want to export to.
“Market research is one of the important things for companies to do, and this is also related to your value proposition and pricing, among other things.
“Regulatory compliance is another crucial element they need to consider before they export. We always come across Malaysian companies coming to us when they encounter problems with this, and this is not the kind of thing we want to have.
“Therefore, we encourage companies to really do their due diligence and cross-check the regulatory requirements of the market,” she said.
During her sharing session, KJH Wood Industrial Sdn Bhd executive director Joanne Tay said winning the gold award for industrial products in EEA 2022 for the SME category has alleviated her brand image.
“I also noticed a shift in our customers after winning the award, as they were the ones who approached us upon reading about us in the media.
“Our annual turnover is touching RM35mil and we’re handling over 100 shipments each month in and out of Malaysian immigration gateways because we are importing timber and exporting wooden pallets.
“Next year, we have a forecast target of RM50mil as we are starting to venture into the Indian market,” said Tay, who founded the Batu Pahat-based wood processing company 19 years ago.
Tay: Winning the gold award for industrial products in EEA 2022 for the SME category has alleviated our brand image.
She also shared about the export challenges faced by her operations, such as understanding tax, duties and customs clearances as well as finding quality customers and pricing issues and ways to overcome them.
While many SMEs typically think that environmental, social and governance initiatives are costly, Tay advised them to take easy steps such as installing rooftop solar panels or switching to LED lights, recycling and reducing paper usage and going for sustainable product design.
Join the GNS in Penang
The Penang edition of the GNS will be held on Jan 15, 2025. Stay tuned for more information.
The EEA 2024 is organised by Star Media Group in partnership with Standard Chartered Malaysia, with PKT Logistics Group as a co-sponsor and Matrade as patron. It is audited by BDO.
Submissions for the awards programme are also open from now until Jan 17, 2025.
For more information on EEA 2024, go to exportawards.com.my or email eea@thestar.com.my.
