PMI sees Malaysia as strategic hub

KUALA LUMPUR: Malaysia's advanced manufacturing capabilities, supplier network and talent pool are strengthening its position as a strategic hub for Philip Morris International (PMI), with the company saying the country has an important role to play in its wider Asian operations.

PMI East and Southeast Asia and Global Travel Retail president Vassilis Gkatzelis said Malaysia's significance extended beyond its domestic market, with the country supporting the company's global supply chain and exports to about 80 markets.

He said PMI viewed Malaysia as a strategic location for advanced manufacturing, talent and supply chain resilience, citing an estimated RM6 billion in export value of PMI devices from the country between 2023 and 2026.

"Malaysia has a strategic role as a hub of talent, a hub of advanced manufacturing, and definitely a hub to ensure supply chain resilience around the world," he told the New Straits Times in an interview.

Gkatzelis said the company's operations had also created an ecosystem involving local suppliers, with about 3,400 jobs and collaboration with 400 Malaysian companies over the four-year period.

"We have a full ecosystem, and we trust the Malaysian ecosystem, not only in terms of manufacturing capabilities, but also in terms of talents.

"We're very happy to see that Malaysia is one of the most, I would say, advanced economies with strong growth and strong potential."

He pointed to Malaysian professionals holding leadership positions within PMI globally, including at its regional headquarters in Hong Kong, as another indication of the depth of the country's talent pool.

"We have many Malaysians who are creating an impact in Malaysia and beyond," he said.

Gkatzelis said Malaysia's strategic location was another factor behind its importance to PMI's regional operations, noting that the company had recently opened an office in Johor.

He also highlighted what he described as a "predictable and innovation-friendly policy environment" as an important consideration for businesses looking at long-term investment.

"We're always collaborating with stakeholders to always make improvements," he said.

The comments come as PMI continues to reposition its global business, with Gkatzelis saying the company had been building new capabilities and reshaping its organisation to respond to changing consumer and societal needs.

He said such a transformation required more than investment in new businesses, but also changes in the way a company approached talent, capabilities and long-term planning.

"PMI today is not the same PMI from 10 years ago or when I joined the company 23 years ago," he said.

Gkatzelis said the company's culture was built around three elements — better together in terms of collaboration, care and being "game changers" — which he described as part of PMI's corporate DNA.

He said that the emphasis on Malaysia's manufacturing, supplier and talent ecosystem reflects the country's role in the company's broader regional strategy, rather than simply as a market for its products.

Gkatzelis said the company remained confident in Malaysia's potential, particularly as the country sought to strengthen its position as a destination for higher-value investment and advanced manufacturing.

For Malaysia, he said attracting more high-value investments would require the country to continue anticipating future needs and strengthening its position as an innovation hub.

"Malaysia as a hub for innovation is important, and together, as an ecosystem, we need to look at what is ahead and proactively anticipate what is coming," he said.

"This will attract investment, but also sustainable growth. We're very confident in the future."

Gkatzelis also identified regulation and enforcement as important components of a business environment, particularly in tackling illicit trade.

He said illicit trade was a complex problem that required cooperation between governments, industry and other stakeholders, as well as cross-border collaboration.

"It starts with regulations, which are, of course, decisions of the government. But as an industry, together with different stakeholders, we're always providing learnings from other markets," he said.

He said evidence-based regulation, appropriate taxation and stronger cross-border cooperation were needed to tackle illicit trade.

Gkatzelis said the issue could have wider economic consequences, including lost tax revenue and jobs, while also contributing to criminal activity.

He cited cases in other markets like Australia, where illicit trade had been associated with violence against retailers, describing such incidents as "shocking".

"It is a global problem because some of this problem is linked to criminal organisations that are operating across countries," he said.

In Malaysia, Gkatzelis said PMI works with the Finance Ministry, Investment, Trade and Industry Ministry, Customs Department and other government agencies as part of a multi-agency approach to the issue.

"But I think the government has been making concrete efforts. So I would like to thank the authorities who have been collaborating together to combat this issue. That is not only happening in Malaysia, but around the world.

"It's a collaborative, multi-agency effort that we work together. A complex problem, but with concrete actions taken, and we hope that we are going to see the progress continue," he said.