Following a resolution of the Association of South-East Asian Nations (ASEAN) in 2014, many of the economies that comprise the ASEAN Region are preparing for deregulation of their oil and gas markets in coming years – albeit with varying timelines to implementation.

Such a move brings significant challenges and many of the ASEAN economies have commenced investigations of the market issues, regulatory considerations and industry capabilities required to ensure that the current state-owned oil corporations can compete effectively with global market entrants.

“The desire of ASEAN economies to better understand both the operation of deregulated fuel markets and new industry capabilities required is one of the key reasons why ACAPMA has chosen to engage with the Asia-Pacific Market at this time”, said ACAPMA CEO Mark McKenzie.

“The engagement not only benefits our ASEAN counterparts –  it creates new opportunities for ACAPMA member companies to provide their products and services into new markets while also providing ACAPMA with an opportunity to syndicate our training and information products into these markets in the future, said Mark.

In an effort to better understand the opportunities and threats that will likely be faced by fuel retailers in their local market, a delegation from the Petroleum Dealers Association of Malaysia (PDAM) was hosted by ACAPMA in Sydney last week.

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The delegation comprised 15 dealer members of PDAM’s Executive Council who currently market fuel under the three biggest brands in the Malaysian market (i.e. Petronas, Shell and Petron) and was billed as a precursor to the provision of more detailed information at the upcoming 2016 Asia Pacific Fuel Industry Forum (see https://apfiforum.com/ for more information about this event).

Delegates spent the first day in back to back conference sessions covering topics ranging from the nature of the Australian retail fuels market, to discussions about national competition law and some of the contemporary business systems used by Australian fuel retail businesses (e.g. Back Office, Point of Sale and security systems).

Of particular interest to the delegation was the operation of Australian Competition Law, as it applies to fuel pricing and monitoring in Australia. A comprehensive presentation on this topic was delivered by Mr Nick McHugh (Head of Antitrust and Competition, Norton Rose Fulbright) and provided delegates with a full appreciation of Australian Competition Law as it applies to fuel retailing in Australia.

Key differences between the functional realities of the Malaysian and Australian retail operations – in terms of staffing numbers and configuration – was also explored deeply during the first day.

In Malaysia, for example, the typical staffing arrangement for a retail fuel outlet comprises up to 10 staff at any point in time (i.e. two cashiers instore, one fuel only cashier on the forecourt, one driveway attendant to dispense compressed gas and up to six staff on the forecourt to supervise customer filling) which is in stark contrast to the lean staffing models typically used by Australian fuel retail businesses.

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During the second day, delegates toured retail sites of varying sizes to better understand how Australia’s low staffing model worked in practice – and to better understand more about the business systems utilised by Australian fuel retailers within the context of an openly competitive fuel market.

The PDAM delegates were particularly interested in the unique approaches of some dealers to the design, layout and offering within their stores – largely due to the fact that the Malaysian model currently utilises a generic site format that is controlled by the Oil Major.

Delegates took advantage of the opportunity to meet Eddy Nader (NSW BP Dealer) at his Smeaton Grange site to observe the unique site layout of this new site and hear about the underlying business strategy that defined the operation of his site.

During the visit to this site, delegates were given a tour of the physical safety controls at the site by NSW BP Dealer Manager, Alastair Wilson, who provided information about the contemporary safety and control systems typically used on Australian retail forecourts.

Delegates then visited a 7-Eleven ‘small format’ store and noted the use of reliable standardised stock delivery and targeted stockholding practices – noting that small sized convenience stores are likely to closely mimic the formats that will likely be adopted in Malaysia.

The PDAM delegates also visited the Jack & Co’s retail site at Northwood, in the northern suburbs of Sydney. Delegates questioned owner and ACAPMA Board Member, Wade Death, about the extensive fresh grocery offering instore and the importance the business places on barista-made coffee and locally sourced organic produce.

Finally, the delegation visited the offices of United Convenience Buyers and spoke with Director Darren Park about the opportunity that the Malaysian dealers have to leverage their large numbers when sourcing and engaging with suppliers in a future deregulated market.

Darren echoed one of the key themes discussed during the preceding day with respect to the importance of using business sales information to understand the specifics of their local market – and to utilise information not just from direct competitors, such as other fuel retailers, but also from other food, beverage, convenience and grocery providers.

Delegates were particularly interested in the idea of engaging with suppliers as a group but developing individual unique offerings, layouts and equipment solutions depending on their local environment.

The two-day tour concluded with ACAPMA hosting a dinner for the delegation and it is understood that a number took advantage of one of Sydney’s more popular Karaoke spots to finish off the night.

PDAM formally thanked ACAPMA and all involved for the information provided and committed to sending around 40 dealers to the 2016 APFI Forum which, when combined with Petronas’ commitment to send 20 senior employees, suggests that the Malaysian retail market will be well represented by delegates at the upcoming event.

“We are very grateful to all involved in the two day tour – particularly Eddy, Alistair, 7 Eleven, Wade and Darren who took time out from their busy schedules to provide valuable insights about fuel and convenience retailing operations in Australia”, said Mark.

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