This article first appeared in The Edge Financial Daily on July 26, 2018
CYBERJAYA: Datasonic Group Bhd plans to aggressively expand its business overseas this year, focusing on Indonesia, West Africa and the Middle East as it is confident of the business prospects for these markets and believes it has more than half a chance of clinching projects tendered.
“Our focus will be on the secured identification (ID) business, driving licences and passports,” deputy managing director Chew Ben Ben told reporters after Datasonic’s 10th annual general meeting yesterday. “We will not go into foreign countries if the chance of winning a contract is less than 50%. It is not worth the cost spent.”
He pointed to Saudi Arabia, Egypt and Qatar as some of the potential markets which Datasonic considers to be politically and financially stable.
The second-largest shareholder with a 25.33% stake, Chew said Datasonic aims to tender for projects with a profit margin of about 20%.
“We will also bank on the support of a good local partner, while we expect the government there to be a good paymaster. Once secured, we hope that earnings contributions will come in starting from FY20 (financial year 2020),” he added, noting that contracts in foreign countries normally have a long gestation period.
This year, Chew said, Datasonic hopes to secure a significant government contract in at least one of the 17 West African countries.
“The contract that we are aiming for is secured ID solutions,” he said, adding that the goal next year is to secure a sizeable immigration-related contract from the Saudi government, which handles more than two million Muslim pilgrims yearly.
“The Saudi government is very impressed with our product offering, particularly with our ability to clear one immigration customer under 15 seconds via our proprietary passport and facial recognition technology, without compromising on security.”
In Indonesia, Datasonic is hoping to secure work to upgrade magnetic bank cards to chip-based cards.
In December 2016, Bank Indonesia announced that the archipelago will be rolling out chip-based technology bank cards by early 2022, which would affect 143 million debit cards and 17 million credit cards currently in circulation, and over 100,000 automated teller machines.
“Although the timeline is still a long way, we are taking this opportunity to ready our technical expertise ... and if we do get the contract, the payment terms will be per upgraded card.”
In September 2017, Datasonic embarked on a joint-venture partnership with Perum Percetakan Negara Republik Indonesia, a state-owned firm, to establish PT Datasonic Teknologi Indonesia, which will expand the smart card business in the island archipelago.
Chew said Datasonic’s order book stands at RM958 million, which will keep the company busy for over three years.
On market speculation that the company is politically-linked, managing director Datuk Abu Hanifah Noordin who owns 28.38% of Datasonic maintained: “We are not linked to Umno or Bersatu. We are a company whose business value is always based on merit and capability. We are basically non-partisan.
“Yes, our long-standing chairman is the brother-in-law of the prime minister, but look at our track record — we have secured projects under the previous Barisan Nasional government, and we worked well with the then opposition government in Penang.”
A former military general, Datasonic chairman Tan Sri Mohamed Hashim Mohd Ali, 83, is the younger brother of the prime minister’s wife, Tun Dr Siti Hasmah Mohd Ali. Mohamad Hashim has been Datasonic chairman since June 2011.
“We have survived political changes, which I deem to be good as it reflected the will of the nation. Contracts will be merit-based and Datasonic should be judged solely on its merit,” he added.