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    Exporting by Design in Malaysia


    International Trade Forum - Issue 4/2005, © International Trade Centre

    Photo: Veritas Architects SDN BHD

    The Malaysian design firm Veritas went into business with an international outlook. In this challenging service sector, it learned how to ride out the storms as well as take advantage of international opportunities.

    Located in Kuala Lumpur, Malaysia, Veritas is an awardwinning design firm backed by a team that includes more than 40 qualified professionals and over 60 support staff. Although it began as an architectural practice, Veritas now offers a full range of design services. The firm opened its first overseas representative offi ce in Dubai in September 2005.

    It has always been an objective of Veritas to be "a premier architecture and design firm worldwide", as stated in our vision statement. However, the first opportunities to venture abroad only appeared in the early 1990s, about six years after our inception. By this time we had grown to about 30 staff and were already becoming recognized as an up-and-coming local firm.

    Managing globalization

    Meanwhile, macroeconomic factors were at work. The booming South-east Asian economy made Malaysian businesses feel invincible on the global stage and they started exploring international markets. Simultaneously, foreign companies were coming into Malaysia. Technological impediments to communication were coming down as the Internet evolved from an experiment into a reality. Barriers to trade and travel restrictions were also disappearing, and soon Malaysians enjoyed visa-free entry into most Asian nations. Visa requirements into Malaysia were also relaxed.

    All of this was a double-edged sword for Malaysian professionals, however, as it encouraged Western firms to enter our market and compete against less experienced and marketing-savvy local architects.

    The initial response of the local architecture profession and its institution (the Malaysian Institute of Architects) was to "batten-down-the-hatches". There was a lot of defi ance to the prospect of World Trade Organizationimposed market access by foreign professionals.

    Veritas took a diff erent view. We encouraged the entry of the foreign professionals. Either we collaborated with them in a "technology-transfer" spirit, completing many high-profi le projects that we could not have done alone, or we willingly competed against these "intruders", sharpening our own skills by necessity, and occasionally winning. For this we were roundly criticized by our peers. Then we jumped on the bandwagon ourselves and started exploring the global market. Our first forays were modest speculative attempts in Thailand, Viet Nam and later the Philippines. We got our feet wet, enjoyed minor success and recognition but did not get anything major built.

    In 1996 I began to think the time was right for a serious international eff ort. We created a dedicated unit, Veritas Global Sdn Bhd, under the leadership of a talented British managing director, and soon started to latch on to some serious projects in Cambodia and India that were led by Malaysian entrepreneurs, and later even Saudi Arabia. At one time, Veritas Global Sdn Bhd had more than a dozen staff and was cited regularly in the media.

    Emerging from the Asian crisis

    Then came the Asian financial crisis of 1997-1998. Within six months our global work shrank to almost nothing, the managing director left and the remaining staff were absorbed into the parent firm, Veritas Architects Sdn Bhd. We thought international work was just a mirage. We fought hard to survive in the Malaysian market, which itself had contracted to a fraction of its pre-crisis activity. After some very hard times, Veritas eventually emerged with a greater market share by the time the Malaysian economy rebounded at the turn of the millennium.

    To get back in the international game, we started participating in various "high-risk" invitations, selection exercises and competitions, and eventually won mid-sized projects in China, Sri Lanka and Pakistan which we have since completed. Of course, we lost a few too.

    The attraction of Dubai

    In 2003 we decided to go to Dubai, uninvited and completely in awe of the huge potential there. Dubai is a city that is developing very fast and is a big draw for ambitious architects. Unfortunately, our all-too-obvious eagerness made us easy prey for local developers wanting new design ideas on the cheap (or free). We spent a lot of money and achieved very little other than the normal kudos for effort.

    Fortunately, however, we met one impressive, honest young developer who controlled a successful property company. Mr Ismail Abbasi gave us our first real project in Dubai, which is now under construction. We have since formed a joint venture with his company, Bonyan Emirates Properties, and opened a Dubai office to undertake other projects in the United Arab Emirates with him. This has given us greater confidence to go further afield.

    In 2004, Veritas was appointed as architects for major developments in Iran and Pakistan, and we have recently been invited for projects in India and Indonesia. Meanwhile, we are seriously considering reactivating Veritas Global as an independent profit centre.

    Aim for best in class

    • A strong local base. From our experience, firms with international ambitions need to already be one of the "best in their class" in their local environment in some important or niche area. They need to have a strong financial base. Going overseas out of desperation is a sure road to disaster.

    • Interest in the wider world. They also need to possess a culture of adventure, a thirst for challenge and a healthy curiosity about alien culture, religion, food, etc. It helps if the people in the firm are multilingual, multiracial or multi-cultural. Given the global business disposition towards English (in most places), being fluent in this language is very important.
    • Excellent grasp of technology. Technology plays a big role in being internationally competitive. At Veritas, the computerization of all design and drafting work has ensured a greater level of coordination and attention to detail. The Internet is the greatest "field-balancer", making even small firms visible and enabling them to market themselves as niche players. But to be truly competitive internationally, a small firm going global must leverage technology to the maximum. An impressive web site, high bandwidth access, good internal communication infrastructure, mobile capability and preferably a file transfer protocol (FTP) service are the minimum requirements nowadays.
    • Meeting international standards. Standards are critical to the success of service exports in a world where diversity is the norm. In my industry, it is important to develop capability in a set of standards in compliance with either British and/or American standards. Further, achieving international quality recognition through ISO is a great way to be accepted wherever you go.

    Respect creativity

    There is also a proposal to policy-makers: please respect the creative output of your service sector professionals. Give them due credit for their intellectual innovations, which are the intangible, yet most valuable asset they have to trade. For too long the developing world has placed too much emphasis on the physical entity at the expense of the non-physical, the service/intellectual dimension. Even in Malaysia today, our creative output, which appears as drawings on paper, is not fully appreciated until it gets translated into actual buildings. Then it is the developers and contractors who get all the credit. Yet it is precisely in this area that developing or transitional economies, leveraging communications technology, can leapfrog up to or over their peers from developed countries.

    So please raise the rank of your service professionals to the position they deserve in society. Respect their copyright. Credit them for their contribution to the economy. Only then will they build up the self-esteem to truly become world players.

    Promoting service exports - A checklist

    Government, trade support institutions and the private sector all play a strategic part in helping to promote exports of services.

    Government: National brand building, iconic local projects, charismatic leaders and a culture of quality. Also needed: tax incentives, double deduction for marketing, discounts for increases in international remittance and government projects overseas such as investments, embassies/trade offices and exhibitions. Overseas trade office/embassy promotion support could include a professional services officer and professional services exhibits, flyers or brochures. Trade associations for professional services could gather information on international opportunities, organize professional consortia for international projects and arrange inbound/outbound trade delegations.

    Government-to-government agreements could cover visa facilitation, telecommunications infrastructure improvement, negotiation to avoid double taxation and mutual recognition of professional credentials.

    Institutions: The trade promotion organization could take the lead in initiatives aimed at:

    • raising general professional standards to gain access to international opportunities;
    • creating a directory of professional practices;
    • organizing talks, lectures or training to encourage interest in exporting;
    • arranging international tours or trade delegations;
    • encouraging professionals to attend and exhibit at trade events overseas;
    • gathering and disseminating intelligence on international opportunities; and
    • publishing a world-class magazine of local professionals.

    Corporate: Company initiatives could include building a culture of excellence to compete internationally, creating a Business Development Unit for international projects; entering international design competitions; maintaining a network of international associates;
    investing in an effective information and communications technology system and tie-ups with local contractors; lobbying local corporations with global aspirations; lobbying multinationals with global business interests; engaging in joint ventures with overseas partners; and joining international networking organizations.

    Small firms, especially, can consider joining consultant consortia for more efficient market penetration and building relationships with foreign consultants for joint ventures on international projects.

    David Mizan Hashim is a founding member of Veritas Architects Sdn Bhd, Malaysia. This article is extracted from Mr Hashim's presentation to ITC's 2005 Executive Forum on National Export Strategies. The fullpresentation is available on ITC's web site (http://www.intracen.org/execforum/ef2005/montreux/programme.htm ).