MISC looks to use Dubai as strategic hub in the region

Malaysia-based MISC, which opened its regional offices in Dubai this week, said it has managed to attract about 12 per cent of the Middle East trade, and is looking forward to use Dubai as the springboard for the rest of the GCC and the region.

Amir Hamzah Azizan, President and CEO of MISC, in an exclusive interview with Emirates Business, said the company is also planning to upgrade its facilities in the Indian Subcontinent to be prepared for the growing potential.

Apart from the liner business, the company is focusing on making use of the massive potential the region provide in chemical business and plans to expand its fleet by another 16 vessels in the next 18 months, said Azizan.

The regional office in Dubai will cover markets in the whole of Middle East – a total of 16 countries apart from the South Asian market, excluding Bangladesh.

The Dubai office, he said, will firstly support the company's liner business, "especially since we have restructured our liner business from global to intra-Asia service".

"Since we restructured our business in our liner trade, the volumes that we have at play in this market now has nearly tripled. In order to do this, it is fundamentally important for us to have front line people who are able to support the products."

In January, MISC launched the new service to compliment its current Halal Express Service. The Malaysia East Asia Service (MES) will directly connect the Far East ports to Ho Chi Minh and the South East Asia region.

Azizan said: "The importance of the Middle East market is that here we felt that we need to be close to the customers. Moreover, the trade flows we are looking at, Dubai is a very important place to be.

"We are finding that as East starts to grow, the consumption and wealth in this part has increased and therefore we believe that the long- term growth is going to be here.

MISC launched the first Halal service in April 2009 and after six months a second service as well.

"The Halal 1 Express was launched with six vessels covering China straight into the Middle East and the Indian Subcontinent. The response was so good that we decided to launch Halal 2 service in September last year. Again the response was so good and that's when we decided to set up base here and start our operations, forming a joint venture with our long term agent Al Hilal Shipping. We had to show our commitment to our customers and the region," said Azizan.

According to him, MISC – which is the third largest shipping company in the world – has also become a fairly large player in the region. "Based on the last count, I can confidently say that almost 10 to 12 per cent of the Middle East trade is carried out by MISC. It is logical that in order for us to continue to play this role we have to have a representation in strategic locations in this market. We feel that Dubai continues to play such a strategic role."

"Now that we have started off in Dubai, we hope that we will be able to start in India and the rest of the market as well, so that we are able to react to market changes and define how the product needs to be sold," he added.

According to him, MISC is also excited about this region because of the growing potential in the energy and chemical sector.

"There is a massive potential here. We run a growing chemical business and our ships normally carry oil from this part of the world and bring back chemicals. We want this office to take leadership and strengthen our business in chemical trade," said Azizan.

Petronas, MISC's parent company meanwhile, has been successful in winning four contracts/bids in Iraq. "We hope something will come off from there and we want to use Dubai as the launching pad for us to support the growth coming from there.

"Initially we started with 1250 TWUs committed to this trade. As we progressed during the past eight months, it has grown to 5500 TEUs on a weekly basis. In fact we have become one of the largest operators in Dubai today covering the whole of the region," he said.

The investments that have been put into the petrochemical sector, basically in Iran and Saudi Arabia, gives MISC tremendous growth potential, he said.

"The challenge for us now is to make sure that we have adequate capacity to service the game. At this point of time, I still have another 16 chemical tankers that are due for deliver over the next year and a half. That is what we are using as the launching pad to capture the market," he added.

MISC, which started off in 1968 with two ships, today operates a fleet of more thna 170 vessels, participating in LNG, chemicals, petroleum, and run an offshore business and heavy engineering.

Commenting on the global economy and the downturn, Azizan said noted that the shipping industry has not been immune and has had to make radical changes in order to survive the downturn. "We will see some freight rates recovery but nothing close to pre-2008 levels, particularly to the liners. The tanker market has adjusted downwards and has had a good run in November, December and January."

This year, he said, the market has seen a bit more resilience in the global recovery. "The recovery will be steady and slow and a long climb up. There will not be double-digit growth. Post- 2011, things will be better and back to normal. We as a company are optimistic because we see a long-term benefits," he added.

About MISC he said: "What is different is that we have had a diverse portfolio and despite the difficult periods we have remained profitable and we are using this timeframe, or you can call it an opportunity to position ourselves for the upturn. We need a good bedrock to stand on and it is critical for us here in Dubai, using it as the gateway to the GCC and the South Asia and linking it up. I am extremely optimistic that as the world matures, and economies here in the middle east, south Asia grows this will be the powerhouse for the world. This will be the strategic location for us to underpin the growth for the company in the long term," he added.

The company's next step, he said, is to strengthen its operations in the Indian Subcontinent. "Our next focus will be South Asia. At this stage we are looking at the possibility of another big market, which is India. This is something that we want to pursue quickly. We are pretty comfortable with the agents there with whom we are working today. However, we sort of want to raise our level of co-operation."

According to him, the company has a strong financial base.

"We have a very strong support. Petronas owns 62.4 per cent of MISC. We have historically relied on internally generated funds. We do have a couple of bank debts. Most recently, we announced the rights issue and if everything goes right on February 24 we will be receiving about $1.5 billion (Dh5.5bn) coming into our books. Looking at our base balance sheet today, our debt is in the ratio of point four. Add to this the $1.5bn we have a hell a lot of capacity to do things," he said.

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