Sazali Hamzah’s career with PETRONAS Chemicals Group (PCG) began as a process technologist back in 1990. He went on to work in operation engineering, refinery production management, technical management, and running plants. One common thread in his career at the Group is his affinity for reshaping and transforming the organisation; he has shown
a real ability to identify and resolve inefficiencies as he has progressed to the upper tiers of the company’s management.
Itself a subsidiary of PETRONAS, PCG comprises a network of subsidiaries and joint ventures, collectively producing a range of chemicals, including methanol, urea, fertilisers, plastics and various olefins and derivatives. It has significant market penetration in more than 30 countries across South East Asia, Asia–Pacific and Oceania, and is proud of its multicultural workforce that includes staff from around the globe.
Sazali Hamzah finds his career calling
Leading such a well-established multinational is a long way from Sazali’s early days as a shy boy in the villages of Malaysia. Encouraged by his family, he ventured to Texas to study a Bachelor of Chemical Engineering degree from Lamar University.
He credits his time spent in the Lone Star State, as well as further studies in London and Pennsylvania, with broadening his horizons. It also developed his passion for working with petrochemicals, and, on his return to Malaysia in 1990, he joined PETRONAS.
During Sazali’s 27 years with the company, PCG has forged close ties across the chemical and energy sectors. He says the reason for the company’s impressive market penetration is multifaceted. "It’s not only the product quality; it’s reliability, delivery and cost-effectiveness," he says. "When I first joined PCG, I realised that it is unique, as it has a lot of opportunities for business growth."
Sazali notes that many of PCG’s clients have been working with the company for more than a decade. This is, in part, a tribute to PCG’s approach of listening closely to its customers’ needs. "Our client’s perspective is important. We do a lot of what we call ‘Client Design Workshops’. We want to collaborate with them and work with them as a community. Ultimately, we see them as part of the system, not as just buyers and sellers."
Regular communication leads to opportunities for improvement
Integrating the suppliers into the system involves regular communication, Sazali explains. "We have what we call supply-chain leadership to review the day-to-day issues on delivery, consistency and gas feedstock supply. We always review where we are and the challenges we face.
From this, we’ve uncovered a lot of opportunities for improvement. Also, our approach is to help the suppliers reach the same level we have reached. We share not just our products but our best practices with them. Some of our suppliers were small firms when we started working with them; now they are global companies."
PCG has been an acquisitive company but, Sazali says, it has been highly selective in terms of what it adds to its stable. The Group will seek both organic and inorganic growth in the near future, he adds. "We have three approaches. One is to team up with our existing partners and clients who are willing to grow with us. Second, we will search for possible mergers and acquisitions of technology companies within our selected business segment. Third, we will invest some of our money into developing organic technologies."
Developing complementary technology
He says the Group is also interested in developing technology that’s related to its existing expertise. In particular, it would like to move into fields that are less resource dependent. "We are evaluating these options now. That will take a bit longer, looking into specific areas that we want to evaluate.
"Our key business message moving forward is about ‘stepping out’," he continues. "We plan to venture into new segments to futureproof our business in the face of a rapidly changing external environment.
We must seize the opportunity to leverage our strong petrochemical foundations to enter into niche specialty chemicals markets, including bio-based products, which have stronger margins and will benefit from the growth of consumer demand in emerging economies. This will require the infusion of new technologies coupled with increased customer focus to capture a share of the market.
Our key business message moving forward is about ‘stepping out’.We plan to venture into new segments to futureproof our business.
"This growth strategy is taking us into unfamiliar territory and will require us to be agile and able to embrace a new mindset to build the capability needed to succeed. Guided by our strong work culture, I am confident that our people will be able to deliver these strategies and ensure PCG’s sustainability in the years to come."
Plans to diversify
Sazali says there are multiple opportunities for the Group to diversify into the specialty chemicals market. "When you look at our portfolio now, it only represents around 0.2% of our revenue, it’s very low. So, moving forward, we are setting a target
of 15% revenue in specialty."
The company will enter this new territory with a methodical approach. "We will break down the planning into the short, medium and long term, and we will go into more granular detail about how we want to achieve this." He also notes that the company is starting to get bigger clients that are commissioning specialty chemicals, which are important components in consumer products.
"Our game plan is to aggressively move into this space," Sazali says of specialty chemicals. "To help gain traction in this potentially lucrative sector, we are also participating in PETRONAS’s Pengerang Integrated Complex in the Malaysian southern state of Johor. The state-of-the-art petrochemical facility costing US$2.7 billion encompasses an isononanol plant that would cater to the global demands for the use in construction and automotive industries."
Opening country representative offices
As PCG expands into specialty chemicals and derivatives, a major part of its ongoing success will be having the expertise to maximise the potential of this expanded product range. To help achieve this, it has already established country representative offices in South East Asia, China and India.
It is anticipated that these country representative offices will add to PCG’s foothold in these territories. There are also significant efforts being made to ensure that the commercialisation of new product lines is fully optimised.
"We have another dedicated team, free from day-to-day projects, focusing on the future and the market for the new products. Despite it being challenging, I’m comfortable with how we are moving forward. I can see the upside, and the strategy to make sure all these new products succeed is extremely strong."
A positive trajectory
Sazali moved into the CEO role in 2014, and under his guidance PCG has continued to refine its processes for optimal efficiency, drawing on improved asset management to achieve a 96% plant utilisation rate in 2016. This productivity has resulted in outstanding financial performance.
Shortly before Sazali spoke with The CEO Magazine, the company reported that its net profits had doubled from the same quarter a year earlier, fuelled by the winning combination of higher volume and reduced operating costs.
"We have been focusing on three main areas in PCG’s portfolio: commercial excellence, operational excellence, and our innovation and growth portfolio," Sazali explains. "We’ve spent a lot on commercial excellence to make sure our sales force is very capable. Also, we really have sought to improve our efficiency and found measures that will help both our clients and sales force in delivering our products. We have received great feedback over the past two years that our commercial excellence initiatives have improved our service despite the tough conditions, with crude oil hitting below US$50 a barrel."
Sazali says the company has a number of considerable competitive advantages, including its strategic location in a fast-growing region of South East Asia. It has also developed fully integrated production facilities and well-developed ancillary services that lead to synergies
across its production line.
The Group is carefully plotting the next phase of its history and believes it is well placed
to tap into developing megatrends. However, Sazali says, there is also a strong element of building on what is already working. "We believe that we are one of the biggest producers in terms of chemical volume; therefore, our focus is on continuing operational excellence as well as venturing into the specialty chemicals industry."