Act, Don’t Just React

Do you tend to associate the term ‘chemicals’ with the materials found in chemistry laboratories back in school, such as hydrochloric acid, sodium and ethanol, just to name a few?

The fact is that almost everything that we use on a daily basis is a chemical of some sort – from our toothpaste and shampoo, to the salt and vinegar in our food.

The chemicals and chemical products industry is very diverse and complex; it encompasses petrochemicals, agrochemicals, cosmetics and toiletries, paint, industrial gas, oleochemicals, pharmaceuticals, soap and detergents, and fertilisers and pesticides.

Based on the 25th Productivity Report 2017/2018, it is one of the leading economic subsectors in Malaysia, accounting for 8.9 per cent of Malaysia’s total export for manufactured goods.

The majority of businesses in this industry fall under the small and medium-sized enterprise (SME) category, and despite the diversity, there are two common aspects that need to be addressed for the industry to flourish further.

Human capital

The upskilling of local talent is necessary for Malaysia to remain relevant in the global market. Chemicals and Chemical Products Productivity Nexus Champion, Datuk Dr Abd Hapiz Abdullah says that it is important to train, certify and pay workers accordingly, in order to change the perception that certain jobs are less dignified.

This will help locals see that there is a future for them in the industry, and the development of local talent will give Malaysia the opportunity to displace skilled foreign workers.

Business operations

SMEs in Malaysia need to maintain their competitiveness in a commodity market, and Dr Abd Hapiz believes that innovation is the way to go. “When you’re in a commodity market, the most relevant concern is how to reduce your cost – to me, that’s the number one thing.”

“Reducing cost doesn’t mean cutting down on manpower – there are other ways, such as the adoption of Industry 4.0 and innovation,” says Dr Abd Hapiz. “SMEs need to become more innovative rather than relying on the big players like Petronas to drive innovation in the industry.”

Nexus initiatives

Establish a centre of excellence (COE) for chemicals

Elements that the COE are responsible for including the implementation of Responsible Care programmes and innovation through research and development.

Responsible Care is the global chemical industry’s initiative to enhance environmental, health, safety and security performance, where its signatories pledge to conduct business in a responsible manner.

The Nexus has been reaching out to SMEs through roadshows to introduce them to the principles of Responsible Care, but Dr Abd Hapiz says that the challenge lies in getting SMEs to attend these roadshows in the first place, even though there is no cost involved.

“This is where there the government agencies, for example, SME Corporation Malaysia and Department of Occupational Safety and Health (DOSH), need to come in to encourage SMEs to come listen to us.”

The roadshows aim to illustrate the correlation between safety and productivity, as many business owners do not realise how a simple injury to a worker can impact their business.

“If SMEs adopt the Responsible Care programme, we can guarantee that their safety will improve tremendously, and their productivity will automatically go up – this in turn translates into more money in their banks,” says Dr Abd Hapiz.

He adds: “The challenge is mammoth, but I think it’s worthwhile if it involves human lives. The Nexus and government agencies must keep pushing this.”

Deepen collaboration between industry players and local educational institutions

Malaysian businesses tend to seek foreign labour – be it skilled or unskilled – even though local talent is readily available.
“I don’t know why people see foreign talent as being better. I’m impressed by some of the work that local universities have in their portfolio, and they should collaborate with the industry to help crystallise local ideas and provide local manpower,” says Dr Abd Hapiz. 

Unfortunately, there is currently a large gap between the industry and related education institutions, which the Nexus hopes to close by creating more awareness on both ends.

Dr Abd Hapiz shares an example from his personal experience: “One SME needed skilled workers and it did not know where to get such manpower, when in fact, the factory was only about half a mile away from a technical college – they didn’t even bother checking to see if they could get students who have compulsory internships to complete.”

“It’s surprising that SMEs have no idea where to look, and their first instinct is to go to a foreign worker agency when there is cheap local labour.”

Another aspect of collaboration that the Nexus is looking at is to get industry players who have the right technology to work with local universities or agencies to use palm oil to create bioplastics. “This immediately narrows it down to a local context,” says Dr Abd Hapiz.

“If it works, then the industry players can sell. It doesn’t require hundreds of millions of dollars in investment; probably less than a million, but it would take at least 10 to 20 players to make the whole endeavour worthwhile.”

Enhance SME capabilities

Dr Abd Hapiz says that while SMEs range from mom-and-pop businesses to bigger ones that are more organised, their standard operating procedures (SOPs) are nearly the same across the board, which is rather alarming as they are quite outdated.

However, the Nexus sees it as an opportunity for them to guide SMEs by providing technical, digital and management support, for example, conducting Industry 4.0 readiness assessments and pilot projects. “Their SOPs cannot remain the same; they have to evolve to keep up with the times,” says Dr Abd Hapiz.

Help SMEs move towards high value components

Dr Abd Hapiz shares that it is extremely difficult to convince traditional business owners to invest in value-added products if it requires them to revamp their operations.

He explains that the change has to be done in phases, and government agencies need to understand that change cannot happen overnight – they are in for the long haul.

“SMEs have to be willing participants and this is where we provide them with the opportunity to be innovative. Rather than telling them what to change, we tell them what the goal is, and partner with them to work towards it.”

Provide support to high potential SMEs to expand internationally

According to Dr Abd Hapiz, most of the players in the industry only target local markets (30 million people), when they really should be thinking about penetrating the Asean market, which is much larger with a population of 635 million.

This is where the Nexus comes in, providing support to SMEs that want to increase their exports. “The idea comes from the Nexus, and it’s open to everyone. Whoever wants to pick it up can do so, and we’ll work with you to grow your market,” says Dr Abd Hapiz.

He adds that the challenge here is to get SMEs to collaborate, instead of trying to outdo one another. “Instead of competing with each other for the local market, they should work together and go for the foreign market. This way they will have an opportunity, otherwise they won’t even be able to start.”

Safety first

Safety is the number one priority in this industry, as there can be huge repercussions when an accident occurs. “People can talk about the damage to their reputation and loss of business, but the onus is on the chemical industry players to ensure that there is no loss of life,” says Dr Abd Hapiz.

He adds that this is crucial, as each incident – even a simple one such as a chemical spill – reinforces the public’s negative perception of the industry and gives it a bad name.

“At times these safety processes make us too rigid, but it’s something that needs to continue for the chemical industry to have a sustainable future. It is not enough to get all riled up only when something goes wrong – we need to be cognizant of the risks at all times.” 

“The mantra of the Nexus is safety. SMEs and manpower is our focus, but it is driven with safety in mind. The more we push that, the better off we are,” Dr Abd Hapiz declares. “We hope that these Responsible Care principles are adhered to at all times, irrespective of the future environment.” 

“At the end of the day, I want everyone to be at peace knowing that the chemical industry is doing its utmost best to make sure that they are safe; that you are safe to use and eat products that contain chemicals,” says Dr Abd Hapiz.