KUALA LUMPUR (June 10): Government oil and gas (O&G) agency Malaysia Petroleum Resources Corp (MPRC) said Malaysia needs to grow its oil and gas services and equipment (OGSE) segment for the country to become an O&G hub in the Asia Pacific region.

Speaking at the launch of the agency’s second edition of its MPRC 100 publication today, MPRC executive director Shahreen Zainooreen Madros said there is an urgency for Malaysia to develop its OGSE segment as the country cannot rely on its natural resources indefinitely.

On average, the O&G industry contributes about 20% to Malaysia’s gross domestic product (GDP), with the OGSE segment making up 5% of that total contribution, while the balance 95% is accounted by the exploration and production (E&P) segment. MPRC hopes to increase the services sector contribution to 20% by 2020.

“There is an urgency to develop our services sector. We cannot depend on our natural resource forever. It is a reserve that one day will run out. Eventually, when our oil is completely depleted, we hope that there is still a services industry in Malaysia to service the region,” he said.

He added that it is challenging for the country to compete on the labour cost perspective, as other countries in the region such as Vietnam and Indonesia have relatively higher population compared to Malaysia’s 29.72 million.

“We recognise the fact that cost of doing business from a labour perspective is a difficult angle to compete. So we have to look at more on adding value, more on the high-income, technology content side of things,” he said.

The MPRC 100 publication lists the 100 top performing companies, both listed and unlisted, in the OGSE sector.

Among the listed companies included in the list are Dialog Group Bhd (fundamental: 2.5; valuation: 1.1), UMW Oil & Gas Corp Bhd, Dayang Enterprise Holdings Bhd (fundamental: 2.7; valuation: 2.1), Daya Materials Bhd (fundamental: 0.55; valuation: 0.9), Alam Maritim Resources Bhd (fundamental: 1.6; valuation: 1.5) and Uzma Bhd (fundamental: 1.3; valuation: 1.5).

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)