PETRONAS – Powering the supply chain ecosystem

If success is the sum of many parts, then PETRONAS’ value chain ecosystem aptly reflects that.

The Malaysia-based energy group, with an international presence in more than 50 countries, is no stranger to the benefits of a well-oiled supply chain network.

As the world moves in favour of sustainable energy consumption, PETRONAS has taken a similar approach by focusing on clean and renewable energy resources.

Partnerships with Malaysian OGSE (oil and gas services and equipment) vendors are very important. Equally important is ensuring that vendors such as Haluan Cekap – a local SME that offers pipeline and equipment maintenance services – can thrive within its supply chain ecosystem and not be restricted by factors such as financial constraints.

This is when UOB’s Vendor Financing Programme comes into play, with a memorandum of understanding signed between the Bank and PETRONAS in 2019 to provide end-to-end working capital financing support to vendors.

By leveraging PETRONAS’ strong credit standing and UOB’s sector expertise, the financing initiative allows vendors – mostly Malaysian SMEs – to focus on fulfilling their projects while staying financially resilient.

This in turn strengthens the network that PETRONAS is anchoring, minimising potential disruption to the myriad operations within its value chain ecosystem.

With comprehensive solutions tailored to clients’ needs, UOB’s “One Bank” approach connects businesses to growth opportunities in the region, and beyond.

About this series

Building Asia is a collection of business stories on CNA that examines the financial forces driving Asia’s position as an economic powerhouse.

PETRONAS – Powering the supply chain ecosystem was first aired on 14 November 2022 under the Building Asia with UOB series. It looks at how UOB supported PETRONAS and its suppliers with innovative vendor financing solutions, paired with the Bank’s sector expertise to strengthen existing supply chain relationships.

Transcript

Mohd. Khairul Ghazali (Director, Haluan Cekap):
I used to work here as PETRONAS staff…

But now, I work as a service provider to PETRONAS.

Syaharudin Hassan (Head of Industry Shaping and Collaboration, Group Procurement, PETRONAS):
In our industry, oil and gas vendors are very important. Because you see, our vendors, mostly are small medium enterprises and they do have challenges to access fluid, intensive and fast working capital.

Ng Wei Wei (CEO, UOB Malaysia):
Given UOB's track record in banking the entire value chain, I do understand where you're coming from.

I think this is where our partnership with the Vendor Financing Programme (VFP) has been very helpful for many of your vendors, just like Haluan Cekap.

I'm really glad to see that UOB is able to provide anchors like PETRONAS, greater stability and help you build stronger relationships within your value chain.

Many of your vendors who come on board the programme, they're able to obtain working capital financing and this helps them focus on carrying out your projects in a smooth and efficient manner.

Syaharudin Hassan:
Yes, in fact the Vendor Financing Programme is to assure and ensure that our vendors are supported so that they can build their resiliency, they can be innovative and they can also grow in their business.

Ng Wei Wei:
That's why the MOU that PETRONAS and UOB signed back in February 2019, put in place a holistic Vendor Financing Programme.

Your vendors get end-to-end financing support from the bank.

It definitely gives PETRONAS the confidence that your vendors have the capability to fulfil requirements and leveraging on PETRONAS’ strong credit standing and the performance track record of your vendors, the overall supply chain financing costs gets lowered.

Ahmad Zahari Mat Shaari (Business Development Manager, Haluan Cekap):
Well for new projects, the challenge is always making sure that we have the financial capability to perform new energy or the new ventures, which the risks are unprecedented.

Mohd. Khairul Ghazali:
Basically, with this VFP and the UOB support, we can manage our cash flow in terms of the project executions.

Ahmad Zahari Mat Shaari:
It makes our lives as a vendor, much more assured for us to do business for PETRONAS.

Syaharudin Hassan:
We are very much grateful to UOB Malaysia as our vendor financing partner that truly elevates the resiliency of our vendors.

Ng Wei Wei:
I'm really delighted. UOB'S Vendor Financing Programme has provided PETRONAS with a strong base for your ecosystem to thrive.

Syaharudin Hassan:
It is for the whole ecosystem. Thank you.