TM Vendor Transformation

We were invited by TM to explain about new TM vendor transformation plan.

For the last 30 years TM have been working with JKH vendors ( JKH – Jadual kadar harga).

There are 104 vendor JKH now. They are bumiputera vendors.

They are using JKH. Currently TM have about 1700 in jadual kadar harga ( rates )

Current structure is:

TM gives contracts to JKH vendors directly. They will micro manage the vendors themselves.

New Structure:

Two main groups:

MC – Main Contractors

CP – Contractors

TM will award to MC.

MC will award to their CPs.

Target is to have only max 18 MCs for the whole country.

The MC can be Bumi or non-bumi.

Some of the questions:

1. How do TM protect bumiputera vendors?

Answer: Only 25% are open portion, 75% are still closed.

2. How to become MC?

Paid up capital > RM5 millions.

TM requires MC to be strong financially and technically.

TM expect current JHK to merge to create bigger companies

or get new investor.

Currently a few JKH vendors are already exceeding RM5 million paid up capital.

3. What is TM experience in HSBB?

Answer: During HSBB TM purchased directly to hardware manufacturer like Huawei.

Most JKH vendors provide services, like installation, support, constructions.

TM noticed that even with this, the vendors can get substantial services and income.

High value is in services, that create a lot of jobs. Not as a supplier of hardware where value add is very little.

 

My Analysis of the situation:

1. TM is trying to be more competitive. pressure from competitors.

Currently TM owns 25% of market share ( revenue), but profit share is only 14%.

Which means TM is less profitable as compared to DiGi, Maxis, Celcom etc.

2. I believe we need to create bigger entities to be able to compete regionally.

In this case i support this merging activities.

Create stronger company, more competitive, going regionally type of company.

3. Worry?

Sometimes something went wrong during implementation.

Suddenly all juicy contracts are awarded to one Towkey Cina, with lots of justifications.

4. Advice to Bumiputera Contractors?

The best strategy is to have own unique value proposition. have our own strength. Not dependent on TM alone.

Can compete in Malaysia, Indonesia or in any countries.

This is like building very strong company. Brick type, not paper strength.

We should go for it. If we cannot become strong after so many years, then we need to search for business that we will become strong, without the need for continuous support from government.

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