Subscribe / Unsubscribe Enewsletters | Login | Register

Pencil Banner

Competition in Asia at 'bleeding speed’: iContro interview

AvantiKumar | March 24, 2014
Malaysia based iContro MD Frank Lee's take on Asia's different industry sectors includes fears that the coming of GST will both impact companies' profits as well as the cost of living.

A clear education and communication plan coupled with consistent, effective and cohesive implementation initiatives are imperative.  Although the private sector is equally responsible, the government has to take the lead.

b. Effective anti-profiteering measures against inflation
I would like to zero in on two major enemies of inflation, namely profiteering activities and negative speculations.  Comprehensive counter measures may already be in place.  Then again, it is all about comprehensive enforcement, especially immediately before and after the GST implementation to avoid spike in inflation.  Prosecution will be too late.


Businesses should be preparing for this by:

a. Early preparation and implementation
Worldwide experience shows businesses that commenced their GST preparation and implementation of GST-compliance business infrastructure at an early stage ensures smoother compliance implementation and minimization of disruption in business.  A special internal GST-dedicated task force is required to develop both Strategic Review and Structured Operation Blueprints, followed by execution plan to ensure successful and timely execution.

b. Blueprints - minimise impact on competitiveness and cash flow
Education on the mechanics of GST is the first step.  However preparation of GST implementation goes beyond GST compliance alone as it could impact the competitiveness and cash flow of a business. 

c. Business strategic blueprint
One key strategic issue, particularly on Asian businesses is business diversification.  Asian businesses in particular are dynamic, versatile and highly diversified in nature.  Inter-company transactions are the norm.  Unfortunately, GST will compound further the already complex operating environments, resulting in higher operating costs.  A review for a simplified and leaner corporate structure is required.

d. Structured operations blueprint
Raw material may increase as GST covers wider spectrum of goods and services.  Additional resources are required for tracking of every stage of operations within an organisation.  Literally passing the cost to the clients may not be that straight forward, especially for exporters in today's ultra-competitive marketplace, both local and global.  In addition to profitability, a structure review on Standard Operating Procedures (SOP) is unavoidable.

"Guanxi" or relationship culture is very much associated with Asian culture like Malaysian businesses.  Businesses with lax and flexible credit terms coupled with poor collection disciplines are prevalent. GST due on sales entails reporting and remittance of payment at stipulated interval.  Needless to say, businesses of tight cash flow in nature or businesses with poor systems in place are at risk.

e. Finally, ERP system beyond compliance
In today's borderless business competition, both small and large businesses require automation to some degree in order to survive and prevail.  The following must be observed

1. ERP, beyond compliance
GST implementation, particular on Asian businesses requires a next level of business automation.

Perhaps GST-complied accounting software suffices for small businesses.  However, Asian businesses in particular with their dynamic nature and versatility operate in more complex environments and require an ERP system that goes beyond the statutory GST compliance. 

2. Impartial computerization
It is common to find Malaysian companies with an operating environment that has several non-integrated systems or with partial computerization, especially in the manufacturing sector.  With GST implementation, it is important to advice that it is mandatory to have a complete end-to-end automation starting from manufacturing to distribution and accounting operations as GST entails tracking and reporting throughout the entire chain of operations within an organisation.

3. Agility and customisation cost
Many old enterprises are still grappling with rigid and limited capability legacy systems.  Not only are the risks and cost of customisation higher, but more importantly their rigidness will pose serious impediment when it comes to implementing the critical changes required for minimising the impact on business profitability.


What would be your key takeaways?

iContro G5 ERP suite of solutions include business intelligence, which is developed based on IBM Cognos and Mobility solutions and at the same time supports cloud computing platform.  Usually, solutions like BI and Mobility solutions are a natural progression once the core ERP system has been successfully implemented.

 

Previous Page  1  2  3  Next Page 

Sign up for CIO Asia eNewsletters.