Indra Angelo – President Director & James Peter Parsons – Director, Altus Indonesia
The President Director and the Director of Altus Indonesia assess the ease of doing business in Indonesia, highlighting the challenges they encounter when bringing best practices, international standards and expertise into the Indonesian market. Furthermore they explain the need for changing procurement behaviour in the hydrocarbon industry in the context of the low commodity price.
Altus is represented all around the globe. How significant is Indonesia within Altus global network?
Indra Angelo (IA): Although Altus is now a global company, headquartered in Singapore, its roots and heritage lie in Indonesia – naturally Indonesia is of utmost significance to us. Assessed on a more tangible basis, Indonesia proves to be of utmost significance as well as almost half of our global revenues are generated in Indonesia. Although this balance has started to shift as other markets gain, I am confident that Indonesia will remain one of our main markets!
How do you assess the ease of doing business in Indonesia?
IA: Doing business is different in every country due to different conditions and cultural aspects. What remains the same, regardless of specific industry conditions, is the significance of reputation in terms of expertise and health and safety. Especially in Indonesia, it is a challenge to convince prospective clients of our outstanding expertise; rather than simply offering cheap services we have to show them how our services can’t just reduce costs, but improve efficiency and add true value in the long haul.
James Peter Parsons (JPP): The regulatory principles in Indonesia are supposed to enhance the overall quality of services offered while giving the opportunity to participate in tenders to as many companies as possible. However, in some cases I have witnessed that the established framework works against these principles. We are trying to bring in the kind of efficiencies you only achieve through internationally recognized best practices: integrated solutions. The current framework can inhibit companies like us to present these integrated solutions; we are the forefront of quality and innovation but the traditional regulatory mind-set hinders us in bringing this to the market with full effect.
We witness a strong push by the government towards raising national content. Is that a challenge for Altus?
IA: The local content requirements in Indonesia are not a particular challenge to us. We have excellent human resource opportunities to tap into and furthermore we continually develop the personal capabilities of our Indonesian staff regularly. Our procurement process is tied to raising local content and the combined efforts of our business operations in that respect help us handle this requirement.
JPP: Local content has been a vital part in our strategy in Indonesia. All our Swire vessels are Indonesian flagged and the companies under the Altus group are all domestic companies. Overall we are able to use these local content requirements to maximise our competitive advantage.
The current trend within the Indonesian hydrocarbon industry is to move away from onshore projects in favour of offshore projects— your speciality. What is your strategy for tapping into this potential?
IA: Indonesia’s biggest opportunity in the oil and gas sector undoubtedly lies in its offshore and deep water reserves, especially in east Indonesia where further exploration is needed. Therefore, our opportunities in the offshore and deep water segment are equally large, even more so as we traditionally specialize in this area. Offshore and deep-water projects are our future and Indonesia’s future alike!
JPP: The offshore and deep-water segment is indeed our main focus. However, the current commodity price forces us to diversify our service portfolio. Therefore we enhanced our scope to renewables and onshore projects. The offshore and deep-water segment heavily relies on incoming investment towards exploration. Indonesia needs to further develop the attractiveness for foreign direct investment by enhancing transparency of their taxation system, setting the right incentives and allow companies to reliably analyse their costs of production if investing in Indonesia. That too includes providing greater flexibility in how operators evaluate and acquire the services needed for delivery. Then I believe Indonesia’s resources can be fully taped with greater efficiency and in return enhanced value back to the market and to the Government and people of Indonesia.
Offshore and deep-water projects are typically associated with high costs. How do you help your clients to reduce costs and provide economic feasibility to their projects?
JPP: We are able to provide integrated services tailored to the individual needs of our clients which makes us the ideal solution provider. This ability originates in our constant bundling of international best practices which simply provides service value and cost efficiencies to our clients.
In the context of the current commodity price and its induced outlook for the hydrocarbon industry, procurement teams within our clients’ companies are immediately asked to cut around twenty percent of their spending. This situation challenges all services providers to reassess their own cost base as well. At this moment, we witness how this has led some of our local competitors to offer extremely low priced services, at the behest of overall contract value, safety and service quality. We have seen recently that some of these project costs are now mounting as the customer is required to compensate for ‘cheap’ or sub-standard service solutions.
Altus stands for quality and quality has its price. Although the initial investment may be higher than it would be with some of our competitors, we are cost efficient in the long haul as we deliver acquired services to the highest international standards! We encourage our prospective clients to challenge their procurement behaviour and operating planning in favour of integrated solutions based on international best practice experience, which will provide unmatched cost efficiencies further down the line. This requires strategic thinking that can often be difficult when there is immediate market pressure to recover costs as best and as soon as possible.
How do you encourage your clients to challenge their procurement behaviour?
JPP: Through engagement with our clients. Challenging the way business thinks and behaves isn’t an easy process. We traditionally engage with our client base in a professional and consultative manner, challenging their way of thinking; “help us to help you” is the key message in overcoming this challenge. We need our client base to be transparent of their thoughts and process so we can utilize our experience to tailor the best individual solution. This can be a cultural challenge in any business and is not unique to Indonesia.
Altus was partially acquired by Swire Pacific Offshore (SPO) in 2012, then fully acquired midway through last year. What has changed for Altus ever since?
IA: Being a wholly owned subsidiary of Swire Pacific Offshore brings an additional reputational strength, enhanced financial capabilities as well as governance security – which is of utmost significance in Indonesia. Since 2012 a lot has happened in terms of business development.
Is the result of the strong business development that Altus is now represented all around the world?
JPP: The outcome of having Swire Pacific as new owner brought security, reduction of liability, financial strength and thus induced the confidence and courage within Altus to expand our footprint globally. Obviously the industry in 2012 was much healthier than today and non-organic expansion was economically feasible and on the agenda.
The decision to keep the Altus brand was the result of recognizing its embedded reputation within South East Asia, which we were able to expand overseas. This allowed the maximum capitalization of Altus’ strengths under the Swire banner.
When we come back in 2019, where will Altus be positioned in Indonesia?
JPP: We have established very clear targets in terms of where we want to head. Our main business units include supply base, supply chain, oilfields services and manpower, and marine. Our traditional strength in Indonesia has always been to operate in diverse environments, establishing supply base operations in remote areas and connecting the complete logistical supply chain that feeds into these bases. Our plan is to leverage on our strength! We want to succeed in securing long lasting contracts for supply bases in Indonesia in the future. Moreover we are planning to diversify our portfolio further to service a greater number of logistics and project cargo opportunities that are closely linked to base operations. We will be able to serve more clients in the broader energy industry surrounding onshore, offshore and renewables; we see solid potential in unconventionals, renewables and geothermal energy.
Why is Altus the “go-to-partner” in Indonesia for these supply bases?
IA: There are a number of reasons, why we are the natural choice. The list is extensive and multidimensional. Our roots are in Indonesia and we know the market perfectly, we have grown from a domestic company to an international brand with best practice experience and knowledge. We have the best staff in terms of experience and personal development as well as environmental integrity held to international standard. As we are represented in Indonesia, Singapore, Thailand, Vietnam and in China, we are not only the one stop solution provider for Indonesia but also for the region enabling us to take on projects that require a larger scope of operations. We have a genuine spotless track record of health and safety and thus provide that level of security to any project. Our core characteristic is the combination of flexibility and adaptability which allows us to provide individually tailored solutions to help our clients achieve all their aspirations!