Malaysia’s industrial sector contributes close to 40% of the country’s GDP. Notwithstanding the Covid pandemic, the Industrial Production Index (IPI) increased 50.1 per cent in April 2021 compared to the same month of the previous year.
Driving this growth is strong and sustained Foreign Direct Investment, especially in the services and manufacturing sectors, which leverages the country’s geographical location, its educated, low-cost workforce and its developed infrastructure.
Numerous global players including Alphabet, BASF, Honda, Intel, Panasonic and many more have set up manufacturing facilities across the country, delivering made-in-Malaysia products to markets around the world. However, despite the advantages these international giants see in choosing Malaysia as a manufacturing base, issues of infrastructure reliability and performance have arisen.
Quality risks being compromised by maintenance and reliability issues
While these global players have established their own local operations, they still rely on Malaysia’s industrial facilities, and therein lies the challenge. For production and performance to consistently meet their required international standards, including an urgent spotlight on low carbon output, it is essential to have state-of-the-art facilities with reliable utility supply and the ability to monitor and track systems performance at all times. These global players, or any organisation, should be focusing on their own core business and not having to manage the “housekeeping,” so providing them with a single point of contact for all on-site infrastructure management requirements is critical. This then provides a comprehensive overview of the plant’s performance and the expertise and ability to respond without delay to any issues that may arise.
The fundamental design of some industrial plant in Malaysia has not always followed best international practice. This leads to operators needing to take remedial steps which are by their nature time-consuming and inefficient. The situation can lead to higher staffing overheads as companies have to take on additional manpower and deploy more resources to manage the systems, impacting the availability of budget which could be better allocated to the core business. It means plant operators are facing inefficiencies, lack of control and more problems to manage at a time when companies around the world are scrutinising their operations in the context of sustainability, carbon neutrality and climate change.
Recent advances in the approach to industrial plant design and operation are demonstrating that a solution is available, promising an end to these headaches. As with many non-core business support functions, huge benefits can be seen when the individual tasks or indeed the entire process is outsourced to an entity which makes this their core focus and specialisation. Outsourcing utilities management to an expert third party is known as Utilities-as-a-Service (U-a-a-S) and it is rapidly gaining traction in Europe where companies maintain a laser tight focus on their core business. Still a relatively new practice in the Southeast Asia region, U-a-a-S gives a single expert contractor full responsibility from the initial concept and design to the build-up, installation, operation and maintenance of the utilities supply infrastructure.
Legacy realities vs the vision for the future
In fairness to the legacy systems we see in Malaysia and elsewhere today, very few were developed as turnkey projects and the results are obviously varied. The lack of central coordination from the outset can lead to random and inefficient distribution of the various elements of the infrastructure. Future expansion is frequently neglected at the greenfield design stage and instead the focus is placed on meeting immediate needs. This shortsightedness further magnifies the long term issues, all leading to inevitable wastage, outage and duplication.
The Utilities-as-a-Service Advantage
In contrast, the U-a-a-S model offers a complete transfer of responsibility from the facility owner or operator to a specialist contractor. This is a similar concept to the Design, Build, Operate, Transfer model which has been in practice for decades and is often seen in public-private sector partnerships covering the development of large-scale infrastructure such as ports, railways and so on.
Under the U-a-a-S model, for an agreed fee the contractor provides all the engineering expertise and equipment necessary to meet the conditions of the contract, against penalties for non-performance.
It means plant owners are no longer responsible for the recurring costs of maintenance, allowing them to focus on their core business. In addition, they can expect to see all the long term efficiencies and cost savings derived from best maintenance and management practices and, in the case of a greenfield project, even the initial design and build.
In the context of an escalating awareness of carbon neutrality, emissions control and climate change, all of the company’s regulatory and compliance elements within their utilities needs and usage are managed by their U-a-a-S provider, again enabling them to focus on their core business.
Sustainability wins from U-a-a-S
The recent IPCC report on climate change has put even greater emphasis on the urgency of reducing emissions. The time for debate is over – we must adapt the global economic model to produce resilient and sustainable human environments, from the cities we live in to the industrial facilities that supply us with the goods we need. The moral obligation is clear, and legislation is sure to follow. The environmental and economic benefits of adopting the U-a-a-S model for industrial infrastructure are straightforward to achieve, and deliver both immediate and ongoing benefits to the facility owner and operator.
A Southeast Asia site benefits from U-a-a-S
A greenfield production site in the region adopted the U-a-a-S model for a major project comprising the following utilities: cooling tower water, cold glycol, chilled water, low temperature hot water, hot glycol, compressed air and steam. The contract tenure with the contractor was 15 to 20 years, performance was guaranteed, and 550 tons of CO2 per year was avoided due to best practice from the outset.