Asia Connects Issue 06

ASIA CONNECTS

BUSINESS NOT AS USUAL IN A BURNING WORLD

Margie Ong, Partner at ERM shares why ESG is key to MSME’s survival

INVESTING IN THE ‘P’S THAT ACTUALLY PAY OFF Daylon Soh, Founder of CuriousCore on Price, Place, Promotion and Product

resilience Finding through diversification

For Leon Lee , success comes with many turnoffs, extending the adventure and increasing possibilities.

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EDITOR’S NOTE

LET’S TALK ABOUT CORPORATE SUSTAINABLE LONGEVITY

Survival is the most significant and common challenge for firms around the world. According to the research Corporate Sustainable Longevity: Scale Development and Validation done by research scholar Shabir Ahmad, Associate Professor Rosmini Omar and Associate Profession Farzana Quoquab from Azman Hashim International Business School, Universiti Teknologi Malaysia, in 2019, most of the firms do not survive in the long run and die through the second generation in case of a family firm. The average firm age has decreased significantly in the past few decades because most firms fail to adapt to the increasing complexities. Contemporary globalisation challenges, brutal competition, technological advancements, and many more elements threaten the very survival of the firms.

CSL, also known as Corporate Sustainable Longevity, is a term used by researchers and management gurus on what enables the firm to achieve longevity. Why and how do some companies thrive over the decades, or even centuries, while others could not survive to the average firm age? Apart from the profit growth, what are the other desired approaches and techniques to determine the sustainability of the businesses? Can a values-driven process in developing business strategies be vital to long-term success?

In this issue, we speak with a panel of experts specialising in the essential factors in Corporate Sustainable Longevity, from diversification and business legacy planning to ESG practices; we have got it covered. Read on; we hope it brings new insights to you and your team.

Rachel Khiew

Keeping a business going amidst change is an expected challenge for any company. But the past two years of the Covid-19 outbreak have greatly raised the odds against business resilience. With strong vaccination rates and the lifting of movement restrictions, the Malaysian economy is on the road to recovery – it is projected to expand by 5.5% in 2022, according to the World Bank. Yet businesses barely have time to catch their breath. Those that survived are now staring at more upheavals like the climate crisis and increased workforce attrition, which will require nimble adaptation and a rethinking of day-to-day operations.

As more shocks are likely on the horizon, this issue of Asia Connects covers several pertinent – but often overlooked – factors that can help SMEs stabilise their runway, carve new opportunities and build resilience.

Business longevity through income diversity

As the travel and beauty service sectors learned during

the pandemic, entrepreneurs with foresight know that being overly dependent on one revenue stream may spell disaster if demand for it dries up unexpectedly. While diversification can build business resilience, it does invite risks – dividing resources, attention, and expertise into different areas may stretch a company more than what it is ready for.

The urgency to branch out from one’s comfort zone –main revenue line – is usually driven by major changes in the market, such as a pandemic or a formidable competitor entering the playing field. This compounds the risks of diversification as companies usually weigh it “under intense time pressure”, according to Constantinos C. Markides, a professor of strategic and international management at London Business School, in the article ‘To Diversify or Not to Diversify’ for the Harvard Business Review

Markides recommends that companies deliberate several points before diversifying, such as identifying the business’s unique strengths and the

strategic assets it needs in a new market, assessing its ability to match or surpass existing competitors, and whether the diversification move would fragment assets that needed to be intact. Ultimately, the professor writes, a company wins at diversification only when it can offer the new market something unique that incumbents cannot imitate quickly and cheaply.

Zeon Properties seems to have it figured out – from being a conventional real estate firm, it has expanded into periphery services that include international project marketing, foreign direct investment, retail planning, building management and hospitality, even assisting expatriates in retiring or investing in Malaysia. With his adept fingers in many pies, Zeon’s founder Leon Lee has ensured business continuity even when the Covid-19 wrecking ball had pummelled the real estate sector. Read the full story on Page 10.

One right to rule them all

In many ways, diversification and intellectual property (IP) protection go hand-in-

Business longevity after the Covid crisis

hand. Whether businesses are entering new markets with a game-changing product or solving internal limitations with innovative processes, they can open up new revenue streams by registering and protecting their inventions.

According to the World Intellectual Property Organisation (WIPO), IP refers to any creation of the mind. It consists of six components:

1. Copyright – creators’ rights over their literary and artistic works, including books, music, paintings, computer programs, advertisements, maps, and technical drawings.

2. Patents – an exclusive right for an invention, allowing the patent owner to decide how and whether others can use the invention.

3. Trademarks – any signs (names, signatures, words, numerals, or any combination thereof) that distinguish the goods and services of one entity from another.

4. Industrial designs – an article’s ornamental or aesthetic aspects, including patterns, lines and colour.

5. Geographical indications – a sign that indicates a product’s

qualities and reputation are due to a certain geographic origin.

6. Trade secrets – IP rights on confidential information that may be sold or licensed.

“Increasingly, and largely as a result of the information technologies revolution and the growth of the service economy, companies are realising that intangible assets are often becoming more valuable than their physical assets… In short, large warehouses and factories are increasingly being replaced by powerful software and innovative ideas as the main source of income for a large and growing proportion of enterprises worldwide… and SMEs should seek how to make the best use of their intangible assets,” says WIPO.

The organisation further explained that IP gives companies an exclusive right to prevent others from commercially using or imitating a product or service, thus helping the business maintain a competitive advantage. Licensing and selling the creation for other companies is another way that IP owners can maximise

the return of their research and development investment, earn additional income, and expand their business footprint without extensive capital. IP assets may even ease the ability to obtain financing.

Adastra, an eight-year-old firm specialising in IP rights, talks more about the value of IP protection in ensuring business longevity and dispels a few myths about the system – get the full picture on Page 22.

Export revenues going up in flames?

While plenty of threats can weaken business resilience, perhaps none is more urgent and overwhelming than extreme weather events, sea level rise, water stress, and the resulting public health risks –all of which are likely to affect, even eviscerate, an industry’s supply chain and day-to-day operation in the blink of an eye.

For example, the floods that hit parts of Klang Valley in December 2021 due to days of continuous downpours incurred heavy losses for businesses in the affected zones. SMEs – some of whom

saw their shops flooded within 10 minutes – were unable to save their inventory, electrical appliances, furniture and fittings and so on. On top of suffering property and asset damages, manufacturers struggled with production and logistics disruption as the floods cut off roads. The continuous rain also wiped out crops, causing a shortage in the food supply chain across the state.

Overall, the Department of Statistics estimated that flood losses in 2021 for Malaysia totalled up to RM6.1 billion, of which 15% were manufacturing losses, and 8% were business premise losses.

Environmental scientists see floods as an example of extreme weather patterns resulting from high carbon emissions – a driving force of climate change.

As climate change brought a domino impact across closely-interlinked economic sectors, world leaders and economic players have been jolted into action. Across the globe, governments –including Malaysia – have set an ambitious target to achieve net-zero greenhouse gas emissions by 2050.

As such, multinational corporations (MNCs) are feeling the pressure. In the Carbon Dated study last year by Standard Chartered, 78% of multinational companies (MNCs) will remove suppliers threatening their carbon transition plan by 2025. Rather than focusing on their own carbon output, 67% of MNCs said they would tackle emissions from their supply

chain first. After all, the study found that supply chain emissions account for 73% of MNCs’ total emissions.

This means that the supply chain ecosystems that have yet to catch up to the MNCs’ decarbonisation pace may be looking at massive losses in export revenue. Malaysia is expected to be one of the top seven biggest losers in the world; its annual export revenue at risk is worth US$65.3 billion (RM304 billion), according to the same study.

SMEs, which contribute 18% to Malaysia’s overall export, would take a substantial hit. As MNC clients usually make up a large chunk of an SME’s income, business resilience would be severely compromised if they lose these contracts.

What can SMEs do?

Margie Ong, Partner at the Malaysian office of the global sustainability firm Environmental Resources Management (ERM), has some answers. She unpacks the seemingly daunting interplay of sustainability and business continuity while recommending practical strategies for SMEs to begin their sustainability journey on Page 14.

The Malaysian finance minister Tengku Zafrul Aziz has also urged banks to help MSMEs to practice environmental, social and governance (ESG), which is the set of measurable standards to evaluate a company’s sustainability, ethics, and risks. Riding on the prospering Halal trade ecosystem, Standard Chartered Saadiq launched a programme that helps SMEs leverage the natural ESG advantage of

Islamic financing and supply chain – read more on Page 26.

Keeping employees = keeping a business going

Having lived through two years of fearing for their health and safety, it is no wonder that people have a newfound appreciation of life outside of work. This has culminated in one in two Malaysian employees saying that they would leave their jobs if it stands in the way of them enjoying their lives, as the recruitment agency Randstad found in its 2022 Workmonitor survey. It also found that respondents who switched employers rose from 29% in March 2021 to 36% in September 2021.

This aligns with the ‘Great Resignation’ trend observed worldwide. While the survey of another recruitment firm Robert Walters found that the trend did not hit Southeast Asia as badly, it nonetheless reported that 68% of its respondents are looking to change jobs within the next year.

Losing key employees, even a whole team, can knock the wind out of a business, especially one in survival mode since the pandemic. According to an estimate by the US Department of Labour, the cost of replacing a team member who left their job is 33% of a new recruit’s salary. The price involves direct training expenses and lost productivity. Beyond that, a company also suffers from dented morale when employees leave en masse. The increased workload of staff who stayed can lead to heightened stress, poor health

and – coming full circle – more resignation letters.

There are clues to what will keep employees from jumping ship. When asked the reasons for switching employers between March and September 2021, most (51%) of the respondents in the Randstad survey say they value career growth opportunities, followed by opportunities to gain more long-term marketable skills (37%). This indicates that, outside of work-life balance, talents also emphasise on levelling up – especially as the job market is evolving to depend more on machines and artificial intelligence.

Hence, while companies woo more clients with promotions and attractive pricing, career accelerator and coaching practice CuriousCore makes the case on Page 24 that it may be more worthwhile to invest in employees’ skill development – a crucial piece to the business longevity puzzle.

To plan for succession is to plan for long-term success

Sadly, besides resignation, there is another way to lose

valuable decision-makers in a company – death or disability. As the world lives with an infectious disease that has killed millions since 2020, this risk weighs even heavier on the mind. Without adequate preparation, the loss of an executive leader in an SME can cripple operations amidst the grief, transition in management, and possible power struggles.

Despite that, many businesses in Malaysia have neglected succession planning – which involves laying out who will take ownership of a business in the event of the owner’s death, disability, or retirement. According to PwC’s Family Business Survey 2021 - the Malaysian Chapter, only 59% of Malaysian family businesses polled have some form of ownership governance policy, compared to 79% globally.

Equally concerning is that many of the Malaysian family businesses surveyed do not seem aligned internally about future plans. Only 45% of respondents agreed that all of their family involved or affected have similar views or priorities about the company’s direction. Without a succession plan, a change

in business ownership – if the owner can no longer run the business – may be fraught with complicated clashes and derail a company’s trajectory.

“In family businesses, the ultimate decision-making power lies with the owners. For this reason, families need to learn what it means to be capable owners and to pass the ownership to the right people in the next generation – not necessarily to the heirs,” writes PwC.

With a strong track record in legacy planning for businesses, Sun Life Malaysia explains on Page 20 how and why business and wealth protection helps keep a business going strong amidst transitions and secure the owner’s vision for the legacy they have built.

Business longevity requires adapting to change.

Entrepreneurs in Malaysia may still be finding their footing after suffering concussions from the pandemic blows. Still, if anyone can master the delicate dance between the risks and opportunities that a shifting market can bring, it is the agile SMEs.

Editor’s Note

Staying Power Business longevity after the Covid Crisis

Finding Resilience through Diversification

For Leon Lee, success comes with many turnoffs, extending the adventure and increasing possibilities

Business not as Usual in a Burning World

Margie Ong, Partner at ERM shares why ESG is key to MSME’s survival

Legacy Planning for Business Continuity and Longevity

Sun Life Malaysia offers insurance and takaful solutions to safeguard SMEs’ future

Snoozing on IP Protection

= Plenty to Lose

Adastra, the IP expert shares how SMEs can avoid the common blind spots

Investing in the ‘P’s that Actually Pay Off Daylon Soh,

on

of

and

Sustainable Islamic Supply Chain Standard

resilience Finding through diversification

For Leon Lee, success is not a straight road. Instead, it comes with many turnoffs, extending the adventure and increasing possibilities.

Come November 2022, Lee’s real-estate consultancy company, Zeon Properties Group, will be celebrating its 10th anniversary. What was once a simple real-estate agency has now grown into a marketing and consulting firm housing more than 1,000 staff members and agents in Kuala Lumpur and Penang and being involved in more than 300 property developments across the nation.

This year, the Penangite was conferred the Darjah Johan Negeri (DJN) award in conjunction with Penang’s Yang di-Pertua Negri Tun Ahmad Fuzi Abdul Razak’s 73rd birthday celebration for his contributions to the state of Penang. This recognition follows the Pingat Kelakuan Terpuji (PKT) and Pingat Jasa Kebaktian (PJK) awarded by the Penang Governor in 2016 and 2010, respectively.

“I am glad that we have managed to come this far. Right from day one, my team members have been told to be bold, creative, and try to be unique in their approaches

towards branding and strategies. It seems that our approach has paid off,” he tells Asia Connects

Zeon Properties has indeed come far, having gone through a global pandemic that has crippled the real-estate industry and emerging on the other end resilient, successful, and ready to celebrate a decade of growth and excellence. But it’s not sheer luck that got Zeon Properties through Covid-19 and a decade of socioeconomic and technological disruptions.

The company is not a typical real-estate firm. Offering a complete spectrum of property-related products and services, Zeon Properties specialises in property development and project management that encompass design and concept planning, sales and marketing, and submission of Advertising Permit and Developer’s License (APDL) for approval and endfinancing facilitation.

Beyond that, Zeon Properties also provides international project marketing, foreign direct investment, retail planning, building management and hospitality services.

“We are the go-to service provider for foreigners who wish to settle down in Malaysia through the Malaysia My Second Home (MM2H) programme. We assist expatriates who either retire or invest in Malaysia and those who require medical and educational tourism facilitation,” Lee says.

This diversity in services and products and its embracing of digital technology have ensured that Zeon Properties remain relevant and resilient even through the economic

turbulence of the past two years. The Group is building towards a new future where sustainability in business also means environmental sustainability.

DIVERSE BEGINNINGS

Leon Lee is himself a person of diverse interests. Even from a young age, Lee was active in sports clubs, societies and associations at school, holding several key positions like President, Chairman, and Captain that helped prepare him for leadership roles.

Today, Lee’s many hats include serving as the National Council Member of the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM), the National Chairman of the ACCCIM Young Entrepreneur Committee, and the Chairman of the Penang Chinese Chamber of Commerce (PCCC) Young Entrepreneur Section, among others.

Notably, under his leadership, the ACCCIM Young Entrepreneur Section and

PCCC Young Entrepreneur Section have both grown to about 8,000 and 1,500 members, respectively this year.

Lee is also serving as the Consul-General of the People’s Republic of China in Penang as its consular protection liaison officer and the All-China Federation of Returned Overseas Chinese Youth Committee member.

A stalwart Scouts member since 1995, Lee made the grade as King Scout in 2000 and is now the Penang

Maritime Automall and Wisma Zeon at Karpal Singh Drive, Penang

Scouts Council Chairman, overseeing over 30,000 scouts in the state.

In laying the foundations for his future career, Lee understood the importance of preparing ahead. Believing that technology will be central to prospective businesses and trends, Lee dedicated himself to learning Information and Communications Technology (ICT). As a school student, he took on part-time jobs in computer service centres to develop his ICT skills while earning pocket money.

“During my secondary school years, I was also helping to repair computers in the school library. After a while, I gained a certain level of trust among the teachers and students, who began asking me to service their personal computers,” he says.

This propensity for technology led him to found Zeon

Computers while pursuing a course in Business Information Technology. “I obtained a Bachelor’s Degree in Computer Science (Hons) from Northumbria University, UK. At that point, I was already a strong believer in the power of connections and networks. I knew that resources would directly determine one’s income level,” Lee explains.

After completing his tertiary education, Lee expanded his ICT business from one to seven outlets in the Northern Region of Malaysia. He set up two other companies – a software programming company called Unieksoft; and an IT parts and accessories company called Cebiz Distribution. He eventually sold them to DIS Technology Holdings Bhd, a public-listed company.

BREAKING OUT OF COMFORT ZONES

Another person would have stuck to the comforts of an industry that they are already familiar with. Lee, on the other hand, wanted to explore new grounds. On 28 November 2012, Leon set up Zeon Properties Group to create a strong brand presence that connects and resonates with customers through solid partnerships with leading industry players.

His focus on building strong connections and networks paid off. “Our strength is, of course, our loyal and established clientele base developed over the years. That speaks volumes of our strong track record. This is evident with our appointment as an exclusive marketing

partner for a few public listed property developers in the country,” he elaborates.

In the ten years since its establishment, Zeon Properties have grown into one of the premier realestate entities in Malaysia. Their achievements include being the exclusive marketing partner for City of Dreams, the luxury seafront residential development between Seri Tanjung Pinang and Gurney drive. With its facades inspired by cut diamonds, City of Dreams stands as one of the most recognisable landmarks in Penang. It is designed to be on par with five-star resorts with over 80 worldclass amenities spread across 120,000 sq ft of facility floors.

Besides that, Zeon Properties is also the exclusive marketing partner for three other notable projects, including one in Melaka – The Wyndham Hotel & Residence. The other two are Maritime Signature in Karpal Singh

Our strength is,

That speaks

of course, our loyal volumes of

and established our strong

clientele base track record

developed over the years.

Drive and Penang Gateway in Bayan Lepas.

Like his penchant for embracing new and diverse interests, Lee ensured that Zeon Properties do not remain stagnant.

“From a Penang-based property, we have ventured out of our comfort zone. In less than ten years, we now have representatives stationed in Singapore, Vietnam, Indonesia, China, Hong Kong and Taiwan,” he says.

“In Malaysia, we even set up four special divisions –Properties, MM2H, Property Management and Hospitality - just to cater to the needs of different types of clients.”

EMBRACING SUSTAINABILITY

Presently, Lee is also looking towards building sustainability within his businesses. In 2018, he completed a Ministerial Workshop on “Forging Closer Partnership to Implement 2030 Sustainable Development

Agenda for Developing Countries,” sponsored by the Ministry of Commerce of the People’s Republic of China.

For businesses to remain resilient, Lee sees the need to build a company culture rooted in sustainability. “Given the ascent of environmental, social and governance (ESG) adoption globally, we know how important this green agenda is. We are responsible for the world we live in. We know climate change is real, and it is vital for everyone to play a part in reducing carbon footprint,” he says.

As a start, Zeon Properties encourages its management team members to buy electric vehicles (EVs), supporting the cause in several ways, including providing a financial package for employees buying EVs.

Additionally, their office renovations emphasise comprehensive planning and green concepts by using

sustainable materials. “We use a lot of indoor plants with natural lighting and ventilation, as we believe it will bring people closer to nature and experience the beauty of existence while reducing energy consumption and promoting healthy living,” explains Lee.

These efforts are expanded from the ESG commitments and sustainability practices adopted during the COVID-19 pandemic Movement Control Order (MCO). Lee says that the MCO allowed the company to embrace technology as a means to connect and interact, as well as to manage workflow and retain business continuity.

Zeon Properties now exercises flexibility in their work, allowing employees to dial into virtual meetings if they can’t attend physical ones, which Lee sees as a way to reduce carbon emissions. Working from home is also an option. “Every small step means a lot in achieving the ESG commitments,” he adds.

What’s next for Lee? “My ultimate aim is to set up the first college that offers broadbased real estate education. Continued resilience and growth require the next generation of real-estate experts. It is vital to empower and equip those in the industry with the necessary knowledge,” he says.

This means that Lee will be dipping his toes in education – another departure from his comfort zones. But that’s not a strange, unusual thing for Lee. It is what keeps him going.

The Zeon Properties team.

In the global race towards green and sustainable business practices, the heat is on. Quite literally. Earth’s global surface temperature has risen at an unprecedented rate, according to a landmark report from IPCC earlier this year. If greenhouse gas emissions continue at an uncurbed pace, temperatures could reach an increase of 5.4C (RCP8.5) by 2100. This is well over the 1.5 to 2°C temperature rise limit – the point that would see extreme and simultaneous climate change effects like longterm drought and heatwaves. Scientists warned that immediate and large-scale reductions of all greenhouse gases would be required to limit global warming to 1.5°C.

Business not as usual in a burning world

Why ESG is key to MSME’s survival

Much of the world is springing into action. Regulators of major economies – such as the US and Europe – have begun demanding environmental, social and governance (ESG) disclosure and compliance. This pushes companies worldwide to divert much focus and capital towards sustainable solutions, community empowerment, and ethical policies.

For example, Malaysia –committed to a carbon neutral target by 2050 – is working on requiring climate risk stress testing (CRST) exercise among its financial institutions by 2024 after releasing the TCFD Application Guide for Malaysian businesses earlier this year.

Following the Sustainability Reporting Framework of 2015, Malaysian public listed companies have been disclosing ESG-related practices. But for many local micro, small and mediumsized enterprises (MSMEs), ESG may be unfamiliar territory.

This is where Margie Ong comes in. The founder and CEO of Thoughts In Gear, a sustainability and social impact consulting firm based in Malaysia, has been helping organisations of all sizes strategise for a more sustainable future. Most recently, Ong joined ERM, the world’s leading sustainability consulting firm, as a Partner.

Asia Connects catches up with Ong to find out why MSMEs can no longer afford to wait in the adoption

of ESG, and how these companies can align business continuity plans with the urgent fight for the planet.

Congratulations on your new role with ERM! Over two decades ago, you were working as an engineer with Intel Malaysia. How did that evolve into a career in sustainability and social impact consulting?

Margie Ong: In retrospect, every role I have held in my career over the last 25 years seems to connect to where I am. As an electrical engineer at Intel, the thought that the chips we were producing could be powering life-saving devices seemed to make the monotonous manufacturing process purposeful. As we were manufacturing chips on the floor, I constantly asked whether we were making an impact. Learning that our chips made a difference, such as by using life-saving devices in hospitals, would make me happy for a while.

I left Intel to pursue an opportunity in management consulting at the Boston Consulting Group (BCG).

Since then, I have run regional departments in global companies like HCL Technologies and worked with non-profits like the CIMB Foundation.

Over the years, I realised that companies need four core drivers for sustainability - a clear purpose, a good plan, excellent implementation and articulate storytelling.

This was nine years ago when in Asia, sustainability was just beginning to come up in conversations and mostly discussed as

part of corporate social responsibility (CSR).

That was why we founded Thoughts In Gear. The name denotes transforming ideas into action. In the last nine years, we have helped companies discover their purpose.

As I join ERM, I hope to carry over the knowledge and familiarity with the Malaysian business landscape I have built over the years with Thoughts In Gear. Moving forward, my focus would be to develop a broader and deeper knowledge of sustainability solutions beyond the Malaysian context and bring some of that knowledge to our shores. At the same time, Malaysia, as a resource-rich country, also has a whole host of nature-based solutions. How do we, in turn, use these to contribute to addressing the global climate crisis? So, it’s about bringing knowledge to Malaysia but also discovering what Malaysia has to offer the world.

With your depth of experience working with Malaysian companies, can you explain whether the global attention on ESG affects local MSMEs?

Ong: At the moment, with regards to ESG or sustainability in general, there is no regulation that applies to MSMEs in Malaysia. Regulations mainly apply to listed companies or industries regulated in specific ways, such as a cement company has to adhere to restrictions from the Department of Environment (DOE) on emissions, pollution levels,

and such. So, compliance is not a pressing issue for MSMEs for now.

That said, there may be several other pressure points pushing companies to speed up on adopting ESG practices. One source of the pressure is their clients. Malaysia makes up the supply chain of many multinational corporations (MNCs) worldwide. These MNCs focused on reducing their carbon footprint and ensuring ethical labour practices. As a result, the SMEs that make up their supply chain are being scrutinised more than ever.

The study Carbon Dated by Standard Chartered last year showed that 78% of MNCs will remove suppliers that do not get on board with the standards of ‘E’ (environmental) including greenhouse gas accounting; the ‘S’ (social) including labour practices; or the ‘G’ (governance) including anticorruption measures. That puts a lot of Malaysian export

revenue at risk. The report showed that our country would be the seventh worst hit in the world by this possible loss in revenue.

Financing is another factor for advancing ESG commitments. In our country, institutional investors like the EPF, KWAP, Khazanah and PNB have signed on to the UNPRI, or United Nations Principles for Responsible Investment. As a result, they would need their investee companies to report and disclose their ESG performance as well. MSMEs may also enjoy better financing rates with some banks if they can prove a high level of ESG performance and there are financing products that are purely linked to sustainability.

The last two pressure points are the talent pool and consumers. Millennials are beginning to choose employers based on a company’s purpose. Consumers are also shifting towards purchasing from

more ethical and sustainable brands.

For many MSMEs, the opportunities and risks of taking on environmental, social and governance responsibilities seem daunting. How can these companies structure their ESG plans?

When asked to self-assess their progression in Sustainability in th e five stages of The Sustainability Wave 1, the majority of companies (60%) placed themselves in Stage 2: Compliance 2

Ong: I usually position it as a scale between threats on the left and opportunities on the right. On the far left is the pillar of ‘Reducing Risks’. There are five risks we encourage a company to look at. One is physical risks – for example, what are the physical threats that climate change will bring to the company? Two is transition risks – as the world moves towards a low-carbon economy, what does it mean for the company? The third is existential risks – as in, is your whole industry at risk? Then, there are regulatory risks – what regulations are coming, not just within your country but across the world, which you need to be aware of? Finally, reputational risks – unethical company behaviours that would drive off consumers and investors. Reducing these risks is often the starting point for a company’s ESG journey.

asked what the biggest obstacles Sustainability are, companies selected

Then, the middle of the scale is the pillar of ‘Maximising Profits’. These are win-win situations whereby ESG practices positively impact the company’s bottom line and the environment or society. Most of the time, it’s about improving efficiency. For example, reducing a company’s water and energy usage would improve the environment while also helping the company save costs.

As a company improves efficiency, it would be on its

SELF

When

to

GE

their

way towards the far right of the scale – the pillar of ‘Unlocking Growth’. This is where it gets interesting for long-term business growth and sustainability. In a world transitioning to a low-carbon economy, what opportunities present themselves? Many companies would not be doing things the same way as before. What are the business pivots or innovations that you can embark on to differentiate yourself? For example, as companies begin to look for tenancy in green buildings, what does that mean for a property developer?

Change is tough, but SMEs are the best at pivoting. They are agile. When they see an opportunity, they would be quick to move on it. But it requires a mindset shift to not just plan for the next quarter but to strategise for the longer term.

For some MSMEs, it may seem difficult to invest in sustainability when they are still recovering from the impact of the Covid-19 pandemic. What would be your advice for them? Ong: I feel them. Having talked to so many companies out there, I understand the intense financial pressures they are under, especially post-Covid. They’d tell us, ‘We are in survival mode. We don’t have the luxury to take on ESG now.’

To realise these benefits, ESG might require investments, and there are trade-offs. But they can be planned and carried out in phases. So, for companies that say they cannot commit to ESG now, I would recommend that they prepare by first learning about ESG and what it means for the business based on

BIGGEST OBS TA CLES IN A DOPTING SUS TA I NABILIT Y

the three pillars that we discussed. Evaluate the risks, look for opportunities, and create a framework.

It does not have to be a huge strategy document 80 pages bound in hardcover. It can be a simple roadmap that you sketch out – what the company will go through in the next three to five years, the investments it needs to adapt, and the potential returns. It should be a living document that you modify according to your learnings and the ebb and flow of different pressures. The plan can change, but at least start planning. It is the companies that are not finding out more and stumbling in the dark that I’m worried about.

Because the need for sustainability is not a passing trend. The world has urgent issues that need to be addressed, and as such, ESG is a crucial part of keeping a business going, not merely a nice-to-have. Recently, a client told us that at his last investor meeting, 60% of the questions from his investors

were about ESG. This made ESG an urgent agenda for him. But this client is also personally motivated; he wants to leave a better world for his children. This is often the case with ESG – the commitment to it is closely tied to one’s personal values and ethics.

But, as I always tell my team, it’s fine if a company’s ESG commitments are not motivated by altruism but by regulations or financing opportunities. The believing comes from the doing, and we’ll meet them wherever they are at the moment. Most importantly, companies must recognise that the focus on ESG is not going away, as we all have a role to play in this global crisis. It’s not something they can disregard today in the hope that next month, or next year, they will have ridden over the wave, and no one will look at ESG anymore. Companies need to be on this journey, and whether they start now or later, the difference is just how far they would be left behind.

Legacy Planning for Business Continuity and Longevity

Sun Life Malaysia offers insurance and takaful solutions to safeguard SMEs’ future

SMEs are the bedrock of many world’s economies, Malaysia included. However, the pandemic has exposed many SMEs to new threats – such as disrupted supply chains, labour shortages, inflation, cyber security, health, and environmental risks.

SMEs’ limited financial and human resources add to the

complexity. Most are also juggling changing consumer demands and the need to digitise their operations rapidly to stay afloat. These new challenges place immense pressure on profitability and the ability to grow.

Foresighted business owners are already feeling the urgency to broaden business capabilities and build business

resilience, primarily to ensure wealth preservation and to leave behind a financial legacy for generations to come.

Upholding longevity in business is a challenge, but a crucial one. It is essential that SMEs start planning and structuring their assets, liabilities and wealth in order for them to be passed on when the time comes.

That is the core of legacy planning, a topic that many find intimidating. Yet it is a critical strategy for long-term business prosperity.

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“Many business owners can attest to this statement –building a lasting business takes perseverance and good planning. While there’s no silver bullet in building a business legacy, it takes all three areas of profit, purpose and legacy planning to ensure that a business will survive unforeseen disruptive events,” says Raymond Lew, CEO and President/Country Head of Sun Life Malaysia (Sun Life), a leading life insurance and family takaful company.

How does legacy planning help SMEs prosper?

In running any business, both profit and purpose are vital for survival and growth.

According to Sun Life, this is where legacy planning kicks in to help businesses sustain their financial health and to provide long-term guidelines so that the company can withstand the test of time.

A survey on Malaysian business owners conducted by Sun Life at the end of 2021 found that about 79% of respondents are confident of their growth this year and even have plans to expand their businesses further.

While the immediate focus of SMEs is to sustain their bottom line and unravel new growth opportunities, the demand for adequate protection and wealth planning has never been greater.

Raymond Lew, CEO and President /Country Head of Sun Life Malaysia

“There is a growing conversation among Malaysian SMEs on the need to rethink wealth and risk management for longterm business resilience. It is a foreseeable fact that this pandemic’s effects will last for a while, so the protection of your business, as well as members of your business, now becomes more important. The goal is to protect the business for years to come and pass on a lasting legacy,” Lew added.

There is no precise formula for determining how much protection is adequate. But any protection is better than none. Sun Life Malaysia shares various ways that insurance and takaful protection could help businesses:

Protect and grow the business and wealth

Wealth accumulation, distribution and preservation is a progressive journey that takes time, consistency,

and persistence. Insurance and takaful plans serve as a risk management tool to ensure business operations and accumulated wealth continue to grow for future generations.

Double up as succession planning

It is most prudent, especially amid market instability, for businesses to re-examine the keyman protection plan, which will provide financial compensation to SMEs in the event of loss of key employees so that they can return to normal operations as quickly as possible.

Promote productivity and employee retention

Research has shown that employees may achieve higher productivity at workplaces committed to staff health and well-being. Hence, insurance and takaful benefits could double up as a talent hiring and retention strategy.

Your business is the result of many years of toil and labour, and all of that can be maintained as a legacy for your next of kin or those you trust to carry your business forward. Take the first and most important step today with effective business legacy planning.

Talk to a Sun Life Malaysia advisor today to kickstart your legacy planning, or visit www.

sunlifemalaysia.com for more info.

Snoozing on IP protection = plenty to lose

SMEs are powerhouses of ideas and innovations. Yet few have taken the extra step to protect their creations. IP (intellectual property) rights give a person ownership to any creation of their mind – literary or artworks, design, invention, symbols or names – and allow them to reproduce, sell, perform, display or license it. In Malaysia, IP rights are governed by various acts, including the Trademark Act 2019, the Patent (Amendment) Act 2022 and Copyright (Amendments) Act 2022, supervised by the Intellectual Property Corporation of Malaysia (MyIPO).

Without adequate IP protection, a company’s creation is vulnerable to being copied or used by competitors. At the same time, the company loses out on the profitable opportunities that the IP system can open up.

This is a situation that Adastra is poised to help address. Established in 2014, Adastra is a firm specialising in IP rights, with an emphasis in Malaysia, India, Singapore, and Indonesia. Its Managing Director, Dato Sri Mohan K. tells Asia Connects what IPs mean for business longevity and how trademarks and patents can minimise losses and open up new revenue streams.

What are the common blind spots that SMEs have when it comes to IP protection, and what are the consequences?

Mohan: IP is often sidelined in the early days of a business as it seems less critical or essential than other operational matters. There is also a common misconception that IP protection is an expensive endeavour. If IP protection efforts are undertaken at the start of a

business, there would not be a high upfront cost.

IP protection may even save costs and reduce complications in the case of an infringement. An example is our client’s experience – the case involves a product with a patented formulation and trademarked brand name. He discovered on an e-commerce platform that an online merchant had been selling an imported product that has similar product features as his. Through the proof of IP registration, he successfully demanded that the e-commerce platform take down the seller’s products.

Many startups and SMEs also neglect to check if their products, services or branding is potentially an infringement on existing IPs. If there is no upfront care for IP protection,

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these are the possible landmines; rectifying or correcting the oversight can be a more expensive exercise. Consequently, the company or individual holding the IP rights can stop your products, services, or trade names as it may confuse consumers.

Is it sufficient for a business entity to register a company name with the Companies Commission of Malaysia (SSM) to ensure no one else can use or misuse it?

Mohan : Unfortunately, it is a myth that just having a company name incorporated with SSM entitles a company owner to the exclusive use of the name. This is not correct. SSM only ensures that no similar company names were already registered to avoid a case of mistaken identities.

On top of that, the government is increasingly placing more importance on IP. For example, a business needs a valid trademark registration when applying for a signboard. E-commerce platforms like Lazada and Shopee require merchants to furnish proof of trademarks and patent certificates before selling the products on these platforms.

Do IPs also open up opportunities to contribute to a business’s long-term growth?

Mohan : Once you have protected your IP – such as a trademark, design, technology or system and method – you can license the brand or technology or know-how to other parties, whether it is in Malaysia or other

territories. It means earning additional income as these third parties would pay you royalty payments or license fees to use your IP. Similar to businesses built on a franchise model, this allows you to monetise the IP with less work and investment. Licensing your IP rights to third parties is also one way to expand the reach of your business without overstretching capital and resources.

Trademarks and patents also help deter potential competitors or at least create a high entry barrier for them to dilute your market share, which would help with your business longevity.

How does Adastra help businesses to start protecting their creations?

Mohan : We guide companies to identify what constitutes

IP assets in their business and how to protect them –not just in Malaysia but in other countries when they want to expand overseas. These companies factor IP into their decision-making when determining business models, distribution and sales channels, and production processes. We assist them in controlling the costs of IP filings, where to apply, maximising the coverage within their budget, and so on.

In addition to IP registration, we help companies and businesses to commercialise their valuable IP assets.

Adastra can link them to other companies who may be keen on their technology. Our IP valuation and advisory services will assist in any commercial transaction involving selling or acquiring IP assets.

Adastra IP exhibiting at the International Trademark Association (INTA) annual meeting in Washington DC

Investing in the ‘P’s that actually pay off

In today’s volatile market condition, most businesses –in the act of self-preservation – will likely focus on sales. This means that among the 4Ps (Price, Place, Promotion, and Product), Price and Promotion are usually the weapons that businesses wield. The pressure to drive prices down to attract customers is significant in a recessionary and competitive market. Yet, when everyone is running promotions, the price war will only spiral further, eroding brand value.

This was observed by Daylon Soh, founder and general manager of career

accelerator and coaching practice, CuriousCore. Once an e-commerce architect at Razer, an AmericanSingapore consumer electronics brand, Daylon witnessed how Razer often slash prices to clear older inventory, especially during year-end promotional periods like 11.11 and Black Friday.

“Over time, some of Razer’s customers would anticipate discounts, and a few would buy Razer’s products in bulk and resell them later at higher prices, creating a poor customer experience,” Daylon points out.

Today, Daylon teaches postgraduate students at the Singapore Management University (SMU) and runs development programmes in User Experience (UX) Design and Product Management. As a knowledge partner for its clients, CuriousCore accelerates business growth through talent-reskilling and process redesign in a company’s digital transformation journey. It aims to bridge the digital skills gaps in the Asia Pacific with a team of practising facilitators from the region familiar with local realities.

So how can leaders build a sustainable business while

Daylon Soh (third from left), Founder of CuriousCore with his team

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navigating a knowledgebased and increasinglydigital economy? According to Daylon: set aside Price and Promotion, rethink Place, Product, and People.

Rethinking ‘Place’: the lowhanging fruit of doubling down on digital sales channels

Digital marketplaces, like Lazada, are underestimated and underutilised by most organisations these days. By investing time and resources into them, customer experience can be improved.

While at Unilever, Daylon, as the digital marketing manager, observed that the FMCG conglomerate invested in driving traffic for its e-shop on Lazada, not realising that Lazada was learning about customer attitudes and behaviours. Unilever successfully launched a commercial product that achieved visibility quickly among women under-30. This was done by using digital influencers and e-commerce mobile checkouts to launch the new brands when experimenting with directto-consumer go-to-market strategies.

Rethinking ‘Product’: learning from Silicon Valley

By having the best technical talent and an ecosystem that supports the startup process, Silicon Valley consistently produced some of the world’s most inventive multinational enterprises –Tesla, Airbnb, and Instagram

– in an area half the size of Kuala Lumpur.

“Their mindset of constant testing and learning through qualitative and quantitative data contributes to their success. This is also part of an agile mindset that allows them to adapt to VUCA [Volatility, Uncertainty, Complexity, Ambiguity] market conditions. The ability to innovate and optimise products cheaply and efficiently reduces venture risks that traditional businesses usually face over longer launch cycles,” explains Daylon. Understanding this, Daylon built CuriousCore to produce quality technical talent by teaching adult professionals to develop an Agile mindset in UX and Product Management areas.

Rethinking ‘People’: Workforce training to conquer risk of irrelevance

Digital transformation requires investments in people, processes, and tools (or technology). “However, most organisations over-invest in tools and technology and under-invest in people and processes,” says Daylon.

Training your workforce pre-emptively to stay ahead of digital transformation especially makes sense if you consider that:

1. Your staffs have been with your organisation for many years and have built deep domain expertise; hence

firing or replacing them would result in increased expenses and ramp-up time.

2. Hiring a digital-savvy talent is an expensive and time-consuming endeavour. After hiring, knowledge transfer is another challenge. Existing experts within your organisation may not be able to teach or facilitate excellent learning outcomes, which causes frustration and wasted potential among your new hires.

3. Your competitors or startups are stealing market share from your current business lines. It’s good to defend market share and consumer mindshare instead of using large sums of capital to recruit a technologicallysavvy team.

Regionally established brands, like Smartkarma and GIC Singapore, have invested in digitally upskilling their people by working with CuriousCore. Maxis has been working with CuriousCore by sending its marketing and digital staff to CuriousCore’s User Experience (UX) Research & Design custom program.

Foresight unites these companies that captain different playing fields. The only way to stay in the game is to build internal capabilities in product development and customer experience. This keeps the business adaptable and relevant, which creates a sustainable and competitive advantage that will last for decades.

Sustainable Islamic supply chain: Standard Chartered Saadiq goes the extra mile in to support the Halal trade ecosystem

The Halal industry is witnessing exponential growth, with various projections positioning it as a multi-trillion-dollar opportunity.

As the industry continues to globalise, there is potential to harness the sociallyresponsible funding mechanisms of Islamic finance and strive to produce goods and services which are Halal Tayyab (pure, safe and permissible according to Islamic law).

Capitalising on the synergies between the two industries can foster a genuinely sustainable Halal economy — an economy in which the sum of its parts is not only Shariah compliant but also has its place in the Divine Order.

Halal goods and services supply depends on a robust Halal ecosystem, with the primary criteria being Halal compliant. This means the credibility and trust around a Halal certification

are of utmost importance. Malaysia has taken the lead in developing a world-class Halal ecosystem via the Halal Development Corporation (HDC) under the Ministry of International Trade and Industry. The country’s achievement in this aspect solidifies its credibility in developing the holistic growth of the Halal industry while offering standardisation to cement consumer trust and confidence.

One driving force of the Halal ecosystem is Standard Chartered Saadiq, the Islamic banking arm of Standard Chartered Bank Malaysia Bhd. The leading international Islamic network spans Asia, Africa and the Middle East.

In 2020, Standard Chartered Saadiq launched the Halal360 proposition as an Islamic supply chain solution to connect the Halal trade corridors, thus ensuring

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that businesses across geographies can leverage its unparalleled Islamic network.

Specifically, Halal360 works to:

· Supports suppliers across various geographies

· Provide a digital platform with straight-through processing

· Eliminate physical documentation and allow for integration with different enterprise resource planning platforms

· Provide preferential treatment for SME vendors, hence creating economic sustainability and uplifting participation among these businesses

· Comply with environmental, social and governance (ESG) criteria whereby the bank and buyer can work with suppliers to improve ESG practices, thus moving towards the net-zero carbon emissions target.

Amid the increased awareness and adoption of ESG practices, Halal businesses have a natural advantage by being more ethically aligned and emphasising purity and cleanliness.

The longevity of any business is no longer solely dependent on the financial indicators but also on how well ESG practices are embedded into the corporate objectives and implemented into the standard operating model and ecosystem. Building a sustainable and resilient supply chain is no longer optional. Instead, it is a vital part of creating a business model that enables a company and its ecosystem to thrive in the long term.

MALAYSIA AIRPORTS: A SUSTAINABLE SUPPLIER FINANCING SOLUTION

• Malaysia Airports Holdings (MAHB) is one of the largest airport operator groups in the world in terms of the number of passengers handled, managing 39 airports across Malaysia as well as an international airport in Turkey.

• Amid the COVID-19 pandemic and the ensuing lockdowns that limited travel and tourism, MAHB was keen to set up a supplier financing programme which enables its vendors to enjoy immediate liquidity at competitive pricing, thus ensuring economic sustainability for the suppliers during the pandemic.

• Under the programme, SME suppliers enjoy preferential treatment over non-SME suppliers.

• Digital — The supply chain solution fully provides an end-to-end digital experience based on Halal360’s straightthrough-processing model with no physical documentation or manual processing.

• Shariah compliance — The programme demonstrates the depth of Standard Chartered’s Islamic finance innovation and solution capabilities, delivering a seamless digital experience that meets MAHB requirements.

This innovative and sustainable supplier financing solution allows MAHB’s vendors to access quick liquidity at preferential financing rates while helping MAHB optimise its cash flow.

The programme also promotes best practices in sustainability across the MAHB’s ecosystem. Overall, it reflects the company’s commitment to supporting SME suppliers throughout challenging economic conditions while leveraging digital capabilities to deliver a straight-through process and a seamless client experience.

CASE STUDY