Ryan Huang Channel NewsAsia 13 Jul 10;
SINGAPORE: Mainboard-listed ST Engineering is considering the possibility of expanding its environmental engineering business as a key pillar of its growth strategy.
It's also looking to make further inroads into the US defence market.
ST Engineering recently applied for one of its American units to be certified to handle military projects which are classified top secret.
ST Engineering's CEO Tan Pheng Hock was speaking at the Asia Leadership Dialogues 2010 in Singapore.
Building waste management facilities is part of the work in environmental engineering, where ST Engineering has been seeing more business.
Just last month, it was part of a consortium that won a S$66.5 million deal to build a waste management plant in Brunei.
This is one of the larger contracts that has been won by its environmental arm, which is currently parked as a smaller unit under its marine division.
The company believes the environmental engineering segment has potential for huge growth.
So it's considering putting more resources to make it a standalone business arm under the group.
Tan Pheng Hock, president & CEO, ST Engineering, said: “If things were to grow, we may then put in more resources to grow that as a fifth arm, a possibility for a fifth arm. Like for example, recently the company announced a Brunei project that we secured. We also are doing some projects in China and in Qatar as well. So we're seeing fruits of success coming through, and I think we're hopeful there may well be an important element for us to grow.
“So if that's the case, then you're going to see us with more resources financially and people as well to grow as a possible fifth arm. But like we always do, we don't want to put the cart before the horse. Let's see first see how it develops.”
ST Engineering is also exploring new markets to grow its various business units which include aerospace, electronics, marine and land systems.
It is eyeing the Middle East, India, Africa, and Brazil.
It is also bullish about further developing current markets like China, Kazahkstan and Mexico.
Mr Tan said: "Our thinking has always been that we're prepared to invest in an office for two, three years to understand the market and to sense how business is done in the market.
“At the start, we may not get much business over two years. Better be prepared and understand what we are going in for. Then when the time comes, you are at least ready - you know what the surprise could be because every market has its own challenges such as cultural issues, business perspectives.”
ST Engineering said adapting to local markets is essential to success overseas.
For example, it said the appointment of a former US general as the chairman of its American unit has helped open doors.
ST Engineering is hoping to make further inroads into the US defence market by handling more sensitive military projects up to 'top secret' level.
Four of its other US subsidiaries currently only have certification to handle projects classified up to 'secret' level.
Mr Tan added: “We've already put in an application. So subject to the systems clearing and approving it, we think it will go through.
“By being able to do top secret means you are able to access a lot of projects for example through waiver of tender, non-competition, because not many companies do sell 'top secret' in certain areas."
ST Engineering said its involvement in the US defence market rules out doing any business with the Chinese military.
However, it will continue to focus on China's commercial urban development sector. - CNA/vm
