This was one of the suggestions proposed by the Bumiputera Agenda Steering Unit (Teraju) to improve the performance of these enterprises in their Bumiputera Value Chain Performance Study in the Logistics Sector report.
Teraju stated in the report that the collaboration, also referred to as the Bumiputera Logistics Collaboration (KLB), can be in the form of a joint venture or cooperative, taking into account the long-term impact during the strategy’s implementation phase.
“The collaboration needs to be designed with the goal of forming Bumiputera companies of the fourth party logistics standard (4PL).
“It aims to strengthen the network and service integration between Bumiputera logistics operators, increase their competitiveness at a speedy rate, empower existing assets and resources to compete in a dense market, and open up more business opportunities for them, especially in new markets which have a high margin,” according to the report.
The report stated that the collaboration (in the form of a cooperative) can be opened to all Bumiputera logistics companies in the country and abroad with a stipulated membership fee and members will receive annual dividends based on the performance of investment and collaborative business.
If all the proposed strategies can be implemented, the report claimed that KLB will increase Bumiputera participation in the logistics sector from 14% to 25% in 2030 based on their estimated earnings before interest, tax, depreciation, and amortisation.
To ensure that the main objective is achieved, KLB through its commercial entity needs to act as a corporate entity where decisions and investments are made for the benefit of its members, the report said.
It said the programme requires an initial investment amounting to RM227 million for upgrading infrastructure, standards, digitalisation and operations from the private sector.
However, it said, KLB’s main goal to form a Bumiputera company with 4PL status is not easy to achieve.
“(The) 4PL companies need to be sophisticated and complete from all aspects of service, especially in value chain management. Therefore, Bumiputera companies must firstly be equipped with all those requirements,” it said.
It also said the strategy’s implementation is divided into short-term, medium-term and long-term to provide opportunities for collaboration, allowing its members to overcome challenges and weaknesses gradually and progress sustainably.
Besides the collaboration strategy, Teraju proposed two other strategies, namely the exploration of new markets and high-margin businesses by Bumiputera companies, in addition to increasing opportunities for them to build competitiveness and resilience.
“With increased involvement in high-margin services and new fields, the total value of gross operating surplus (GOS) contribution of Bumiputera companies in the sector is expected to reach up to RM9.2 billion in 2030.
“This estimate is in addition to the GOS target of the Bumiputera Development Action Plan 2030 of RM23.5 billion by 2030,” it said..
In the report, Teraju listed seven challenges faced by Bumiputera logistics companies, namely limited business opportunities; less investment and less skilled human capital.
Bumiputera companies also face the challenge of limited ability to meet high and diverse demand; lack of competitiveness in a crowded market; industry fragmentation and lack of integration and the impact of the Covid-19 pandemic.