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INTERNATIONAL NEW YORK TIMES.

6 | TUESDAY, SEPTEMBER 23, 2014

Greater Kuala LumpurRegional headquarters for oil and gas multinationals in Asia

BUSINESS HUB | Oil and gas industry

Malaysia targets energy for growth

GREATER KUALA LUMPUR | Highly ranked in ease of doing business

World-class communications and transport infrastructure in a flourishing business ecosystem

WORK FORCE | Critical mass of expertise in oil and gas

Multinationals and universities enrich talent pool

Greater Kuala Lumpur: Regional headquarters for oil and gasmultinationals in Asiawasproduced by the TBrand Studio international department and did not involve the International NewYorkTimes reporting or editorial departments. It was sponsored by InvestKL. Text by JENNIFER EVELAND.

AFFORDABILITY | Highly competitive on costs

Surveys say Greater KL is a bargain

I n 2011, the Greater Kuala Lumpur metro-politan area pledged to attract 100 multi-national corporations to set up regional

headquarters in Malaysia’s capital city. Todate, the city has achieved 40 percent of itsgoal, welcoming 40 multinational compa-nies across 12 National Key EconomicAreas, including oil and gas, engineering ser-vices, health care, food processing, whole-sale and retail, and clean technology.

The government is targeting these sec-tors as part of its program to raise Malaysiato a high-income economy by 2020, accord-ing to InvestKL, a governmentagency responsible for helpingMNCs establish their regionalheadquarters in Greater KL.

Companies in the oil and gassector, such as ExxonMobil,Conoco and Technip, as well asPetroliam Nasional Berhad, orPetronas, Malaysia’s national oiland gas company, have chosento locate in Greater KL for thecity’s multiple investment opportunities,high-skilled talent, good quality of life andcost advantages compared with other citiesin the region.

In a survey by the industry website Rig-zone, its readers ranked Greater KL amongthe top 10 cities for opportunities in oil andgas.

These, and other multinationals, have lo-cated in Greater KL also to take advantageof Malaysia’s competitive edge. The nationtook sixth place in the 2014 World Bank Re-port on Doing Business, which measureseconomies by how conducive they are tosetting up a local business. Malaysia’s

ranking increased three notches, to 12thplace among 60 economies in the IMDWorld Competitiveness Yearbook 2014,and jumped four spots in the World Econom-ic Forum’s Global Competitiveness Reportfor 2014-15, ranking 20th out of 144 econ-omies. The country also improved its scoreby 10, to number 15, in the A.T. Kearney2014 Foreign Direct Investment ConfidenceIndex.

Asia will require energy resources in everincreasing amounts as its population growsin number and wealth, and Greater KL

presents an attractive option inAsia for multinationals in the oiland gas sector. According to a2014 Economist Intelligence re-port, by 2040 the regional popu-lation will reach 4.6 billion, andthe World Bank in April reportedthat the region’s economiesgrew by 7.2 percent in 2013 andcontributed more than half ofthe world’s economic growth.

Malaysia’s oil reserves are the fifth-highest in the Asia-Pacific region and one ofthe 30 highest in the world, according to theOil & Gas Journal, which also reports thatMalaysia held proven oil reserves of four bil-lion barrels as of January 2013, the fifth-highest reserves in the Asia-Pacific regionafter China, India, Vietnam and Indonesia.The journal also reports that Malaysia hasthe third-largest natural gas reserves inAsia, with 83 trillion cubic feet of proven nat-ural gas reserves.

In September, Kuala Lumpur joined theWorld Energy City Partnership, a nonprofit or-ganization of international energy capitals.

‘‘The outlook for the oil and gas sector isvery positive,’’ says Zainal Amanshah, chiefexecutive officer of InvestKL. The sector ac-counts for 20 percent of the nation’s grossdomestic product, and Malaysia is pursuingmajor sectorwide initiatives to reach ambi-tious real annual growth targets and providea sustainable energy platform.

The initiatives are part of Malaysia’s Eco-nomic Transformation Program, which wasestablished in 2010 to raise the country to

developed-nation status by 2020, a goal itestimates will require $444 billion in invest-ment in order to create 3.3 million new jobsand raise gross national income per capitato $15,000.

The plan outlines 13 entry-point projectswithin the oil and gas sector, creating anabundance of opportunities for global energycompanies to take advantage of governmentinitiatives and incentives for the industry. ‘‘Theentry-point projects are designed to enhancethe growth of the sector through innovative

G reater KL remains a cost-competitivechoice for multinational corporationsoperating in Asia, according to a

PricewaterhouseCoopers investment guide,‘‘Kuala Lumpur, Malaysia: Launchpad toSoutheast Asia.’’ The PwC report says that‘‘with stable inflation and good operatingmargins, doing business in KL is both afford-able and profitable.’’

Multinational corporations are lookingfor cost-competitive locations that have at-tractive business environmentswithin which to operate, saysthe report. The report notes thatGreater KL is competitive oncost among the major cities inSoutheast Asia, particularly asit compares with Singapore,which is one of the most expen-sive cities in Asia.

According to PwC, Greater KL has greatpotential to complement Singapore as aregional command center, especially giventhe city’s competitive business environ-ment and its position as an establishedglobal services hub for multinationalcompanies.

Greater KL made its first appearance inanother PwC report, ‘‘Cities of Opportunity2012,’’ capturing the 18th spot out of 27 cit-ies surveyed, scoring well in terms of costand ease of doing business. In the report,the city ranked third in terms of low costs,fourth lowest in cost of commercial rentsand seventh lowest in tax rates.

PwC’s Greater KL investment guide citesa 2012 Bloomberg survey of profitability in-dicators among listed companies in devel-oping Southeast Asia that shows that major

F or most oil and gas companies, theavailability of talent is a main concern,according to Zainal Amanshah, chief

executive officer of InvestKL, the govern-ment agency tasked with attracting foreigncompanies to Greater Kuala Lumpur. It’s amajor concern for Malaysia as well, giventhe critical role that knowledgeable workersand innovative industry leaders will play inreaching the nation’s Economic Transforma-tion Program goals by 2020.

Greater KL supports almost 350 foreignoil and gas companies that operate inMalaysia, among them large multinationalslike Shell and Exxon Mobil, both of whichhave invested in the country for many years.This cluster of companies has created a crit-ical mass of sector-related talent and an en-vironment that is ripe for valuable skill andknowledge transfer, explains Zainal.

The findings of two major international sur-veys on employment and recruitment havetaken note of this ecosystem of well-educated,English-proficient talent. The World EconomicForum’s Human Capital Report placed Malay-sia at number 22 out of 122 economies fortalent availability, higher than any other newlyindustrialized nation. WEF also ranked Malay-sia above average in work force and employ-ment, enabling legal and infrastructural envir-onment, education, and health and wellness.Another survey, by Education First, rankedMalaysia 11th out of 60 countries and territo-ries in its English Proficiency Index 2013, thelargest survey of its kind.

More than 36 public and private universi-ties in Greater KL supply a steady stream ofgraduates in a variety of disciplines that sup-port the oil and gas industry, such as engi-neering, finance and business administration.These graduates enrich Greater KL’s robustshared-service offerings in areas related toinformation technology and the outsourcingof business and knowledge processes.

Oil and gas sector companies are alsosupported by industry-specific institutionsthat cater to more specialized requirements.The Universiti Teknologi Petronas has pro-duced more than 10,000 graduates in a widerange of industry-relevant undergraduateand postgraduate engineering and technol-ogy programs and has undertaken researchwith leading multinationals in the sector.

Among other Petronas initiatives are theInstitut Teknologi Petroleum Petronas, or In-step, which has recently launched a new in-tegrated oil and gas training center toprovide knowledge and skills in upstreamand downstream activities in a real-worldand safe plant environment; the PetronasLeadership Center, which provides con-sultancy and advisory services and innova-tive learning experiences within the energysector; and the Akademi Laut Malaysia,which educates workers for maritime ca-reers with local and foreign firms.

M ultinational corporations in the oiland gas sector can reap an abun-dance of advantages when they lo-

cate their regional headquarters in Malay-sia’s capital city, Kuala Lumpur. ‘‘Greater KLoffers a competitive business environment,a skilled multilingual talent pool and cost-effectiveness,’’ says Zainal Amanshah, chiefexecutive officer of InvestKL, a governmentagency that puts together attractive fiscalpackages for multinational companies andhelps them identify business opportunitieswhile strengthening their competitivenessregionally and globally.

‘‘Businesses setting up abroad face is-sues regarding regulations, processes andprocedures,’’ says Zainal. ‘‘To ease some ofthese concerns, Greater KL’s business-friendly environment makes it easy forMNCs to operate in the city, and enhancedgovernment regulations contribute to Great-er KL’s competitive, connected and efficientbusiness ecosystem.’’

It’s a formula that has earned Malaysiathe number six spot in the World Bank’sEase of Doing Business 2014 report, whichcompares 10 factors — including efficiencyof starting a business, dealing with construc-tion permits and protecting investors —

across 189 economies worldwide. The re-port also gave Malaysia the top spot forease of getting credit, ranking it fourth forprotecting investors and fifth for tradingacross borders.

Malaysia is committed to pushing itsstanding even higher with a host of new ini-tiatives to be implemented by year-end viathe Special Task Force to Facilitate Busi-ness, or Pemudah.

The city’s world-class infrastructure, ahost of government initiatives and incen-tives to aid investment, and shared high-skillservices and knowledge-processing plat-forms encourage businesses to explore thepotential of the oil and gas sector in Malay-sia, says Zainal, adding that specific incen-tives, such as tax reduction and waivers onoil and gas operations, have been intro-duced to promote more technically challen-ging ventures.

‘‘We’ve seen the rise in oil and gas de-mand,’’ he says, ‘‘and meeting this demandwill prove a challenging concern as extrac-tion of fuel becomes more difficult. However,there are many opportunities for multina-tionals to explore new oil and gas fields asthe government provides initiatives and in-centives as part of the nation’s Economic

solutions, rejuvenating and intensifying explo-ration and production activities, creating spe-cialized learning centers and increasing petro-chemicals output,’’ says Zainal.

Prime Minister Najib Razak, in an ad-dress at the Offshore Technology Confer-ence Asia 2014 in Kuala Lumpur in March,explained the challenge. ‘‘After decades ofoil and gas production,’’ he said, ‘‘our do-mestic resources will inevitably start to de-plete. To prepare for this, we will strengthenother value-creating activities in the oil and

gas value chain and ensure that we have asustainable energy platform for the future.To this end, the government will developMalaysia into a leading oil and gas serviceshub in Asia, grow Malaysia’s role in oil stor-age, logistics and trading, and import lique-fied natural gas to serve latent gas demandand attract new gas-based industries.’’

The oil and gas sector isn’t the only areaof interest to get a boost. Malaysia has iden-tified Greater KL as a National Key Econom-ic Area under the Economic Transformation

Program, establishing initiatives to attracttalent to the city to generate a critical massof economic activity and grow the local busi-ness ecosystem, build state-of-the-arttransportation infrastructure within the met-ropolitan area and with neighboring cities,revitalize public places to enhance quality oflife and modernize public facilities such aspedestrian networks and waste manage-ment. InvestKL helps MNCs take advantageof these and other initiatives. As Zainal says:‘‘We’re open for business.’’n

In 2011, the government establishedTalentCorp to drive initiatives that will cata-lyze talent to meet the demands of sectorsrelevant to the economic plan.

TalentCorp focuses on three pipelines fortalent supply: domestic talent, to ensure thatlocal talent is in line with the country’s chan-ging needs for economic growth; foreign tal-ent, to pave the way for top expatriates fromaround the world to work in Malaysia; andMalaysians abroad, to attract and facilitatethe return of those who have expatriated.

‘‘TalentCorp,’’ says Zainal, ‘‘initiated theReturning Expert Program to attract skilledMalaysians overseas back to the country.’’Under the program, Malaysian profession-als abroad can return to numerous tax in-centives and permanent residence eligibilityfor their foreign-born spouses and children.Already, the plan has encouraged more than2,500 highly skilled Malaysians to comehome, he adds.n

1. Rejuvenating existing fieldsthrough enhanced oil recovery

2. Developing small fields throughinnovative solutions

3. Intensifying exploration activities

4. Building a regional oil storage andtrading hub

5. Unlocking premium-gas demand inPeninsular Malaysia

6. Encouraging investments in the oiland gas services and equipmentsectors

7. Taking oil and gas services andequipment companies to the globalstage

8. Attracting MNCs to set upoperations in Malaysia and partnerwith local firms

9. Improving energy efficiency

10. Building capacity in renewableenergy and solar power

11. Deploying nuclear energy forpower generation

12. Tapping Malaysia’shydroelectricity potential

13. Increasing petrochemical output

companies in Malaysia have high operatingmargins and high return on equity.

The average total cost in Greater KL ofleasing prime net usable space, includingrent, maintenance costs and tax, is only$4,180, compared with Singapore’s $11,220,according to a 2012 study by DTZ, an interna-tional real estate research company.

Competitive salary levels also appeal tomultinationals looking to locate in GreaterKL, where the median annual income for a

manager in accounting and fi-nance is half that in Singapore,according to a survey conductedby Robert Walters, a recruitmentcompany.

Malaysia also fares favorablyin regard to inflation, which his-torically has been consistentlylower compared with the aver-

age for developing Asian countries, accord-ing to Malaysia’s central bank and the Inter-national Monetary Fund.

As for quality of life, Greater KL deliversmore bang for the buck. In Mercer’s Cost ofLiving Survey 2014, which ranked the mostexpensive cities in the world, Greater KLcame in at 115 and Singapore at numberfour. Similarly, in the Economist IntelligenceUnit’s 2014 Worldwide Cost of Living survey,the city ranked 90th. In both surveys, num-ber one represents the most expensive city.

‘‘Greater KL provides MNCs the cost-competitiveness advantage,’’ says ZainalAmanshah, chief executive officer of In-vestKL, ‘‘with competitive property rental,cost-effective talent and generally lower op-eration costs without having to compromiseof the good quality of life.’’n

13 entry-point projectsfor the oil and gas NationalKey Economic Area

Examples of oil and gasMNCs based in Greater KL

Since 2004, ExxonMobil hasoperated a Business Support Centerin Greater KL, providinginfrastructure, applications services,project management and customerservice support to ExxonMobilaffiliates around the world.

Transformation Program,’’ he says, referringto Malaysia’s plan to make the country ahigh-income economy by 2020.

Greater KL’s strategic location in theheart of Southeast Asia is less than fivehours’ travel time to any of the region’s ma-jor cities and offers excellent connectivity byair, road, rail and sea. Greater KL encom-passes the Port Klang Free Zone, theworld’s 12th-busiest port in terms ofthroughput volume. The zone includes1,000 acres, or 405 hectares, of facilitiesfor international cargo distribution and aconsolidation center.

What’s more, adds Zainal, comparedwith its neighbors, Malaysia offers tremen-dous exploration opportunities in both oiland gas and is the only location thatprovides opportunities in both downstreamand upstream oil and gas projects.

Talent availability is another concern formost oil and gas corporations, and Zainalsays that Greater KL has one of the mostcompetitive talent ecosystems in the region,with a young, skilled and well-educated workforce that is proficient in English. The city’sshared services-outsourcing capabilities,particularly in knowledge processing, are in-creasingly tailored to the oil and gas sector,

which facilitates added-value creation andcost reduction.

The launch in June of the Expatriate Ser-vices Division makes it easier for foreignersto work in the city. The one-stop center re-duces the time for getting employment ap-provals from more than one month to onlyfive working days.

Cost competitiveness is yet another

deciding factor for oil and gas multinationalseager to establish headquarters in the re-gion. Zainal says that Greater KL’s cost-competitiveness advantage is leaps andbounds beyond its main competitors, Singa-pore and Perth, Australia, with competitiveresidential, commercial and industrial prop-erty rental costs, cost-effective talent andgenerally lower operation costs. He addsthat Greater KL offers this cost advantagewhile providing an excellent quality of life.

In terms of livability, Greater KL is a vi-brant city with excellent infrastructure andfacilities, including globally accredited hos-pitals, a wide variety of international schools(American, British, Japanese, French andGerman) and golf courses designed bysome of the world’s top designers and play-ers. The city also grabbed fourth place inCNN Travel’s rankings for the world’s 10best shopping cities in 2012.

Says Zainal: ‘‘This combination of world-class infrastructure, connectivity and qualityof life provide a strong value-chain proposi-tion and a fluid business ecosystem forMNCs to operate their regional head-quarters in Greater KL and to serve the 600million-strong Southeast Asian markets andeven the wider Asia-Pacific region.’’n

‘Doingbusiness

in KL is bothaffordable and

profitable’

A talent-rich cluster of more than 350 companies in the oil and gas industry have bases in Greater KL.

‘Thegovernmentwill develop

Malaysia into aleading oil andgas serviceshub in Asia’

4 billionbarrels

of proven oil reserves in Malaysia,fifth-highest in the Asia-Pacific region

‘‘Greater KL offers a competitive businessenvironment, a skilled, multilingual talent pooland cost-effectiveness,’‘ says Zainal Amanshah,chief executive of InvestKL.

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The Shell Business Service CenterKuala Lumpur, Shell’s second-largestcenter, provides expertise in financeoperations, customer service, supplyand distribution, contracting andprocurement, human resources andinformation technology.

Aker Solutions’ Malaysia operationscover subsea, engineering, umbilical,well-intervention, drilling and processservices and technologies, and itsGreater KL headquarters overseesmany of these operations within theAsia-Pacific region. In 2007 thecompany opened a manufacturingcenter for subsea productionsystems in Port Klang. The companyemploys approximately 1,500 peoplein Malaysia.

Technip leads international businessactivities in Southeast Asia, China andOceania from its main operationalcenter in KL. Technip’s core business isin design engineering and turnkeyconstruction of oil and gas upstreamand downstream facilities. TechnipMalaysia employs 2,600 personnel,1,600 of whom are engineers, with theremainder providing support functions.

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International recognition of Greater KL and Malaysia's advantages

6thin ease of doing

businessamong 183 countries

WORLD BANK, DOING

BUSINESS, 2014

2ndmost competitive city

in Southeast AsiaECONOMIST INTELLIGENCE

UNIT, HOT SPOTS: GLOBAL

CITY COMPETITIVENESS

BENCHMARKING, 2012

12thin competitiveness

among 60 countriesIMD SWITZERLAND,

WORLD COMPETITIVENESS

YEARBOOK, 2014

20thin competitiveness

among 144 countriesWORD ECONOMIC FORUM,

GLOBAL COMPETITIVENESS

REPORT, 2014-15

15thamong best countriesfor investor confidence

FOREIGN DIRECT INVESTMENT

CONFIDENCE INDEX,

A.T. KEARNEY, 2014

19thamong best countries

for doing business,outlook for 2014-18

ECONOMIST INTELLIGENCE

UNIT, BUSINESS ENVIRONMENT

RANKING, 2014

3rdcountry foroutsourcingGLOBAL SERVICES

LOCATION INDEX,

A.T. KEARNEY,

2011

2ndamong countriesfor work culture

HSBC, EXPAT SURVEY,

2013

115thin cost of living

out of 211 citiesMERCER, COST OF

LIVING SURVEY,

2014

4thbest shoppingcity worldwide

CNN, 2013

Greater KL, which joined the World Energy City Partnership in September, and Malaysia have beenrecognized by a number of international organizations and analysts in city and country rankings

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