Up Close and Personal with Datuk Michael Tio, CEO of PKT Logistics Group Sdn Bhd

Updated: Saturday January 4, 2014 MYT 8:06:57 AM

Up Close and Personal with Datuk Michael Tio, CEO of PKT Logistics Group Sdn Bhd



IT’S Tuesday. Datuk Michael Tio is in his office hard at work, ensuring that operations at PKT Logistics Group Sdn Bhd, a total logistics service provider, is running smoothly. The irony is that it’s also his birthday, and birthday greetings are already pouring in – by the minute.

In Tio’s office to one corner of the room hangs a large screen high-definition TV that’s hooked up to the Internet. Tio, a big social media advocate, replies his thousands of “fans” periodically as the greetings come pouring in, all during the course of this interview. Yes, PKT Logistics has its own Facebook page, and to date, has over 20,000 unique fans and growing.The Milo van phenomenon

But being heavily active on social media is more than just about exchanging greetings and keeping in touch, says Tio. Most importantly, it’s a great way to build the brand of your business.

“Facebook is a fantastic way to grow your brand, and with over 20,000 fans already, it’s like having 20,000 sales people promoting and talking about your product,” he tellsStarBizWeek.

The bulk of PKT Logistic’s Facebook fans happens to be university students, mainly within the logistics industry. Tio says he periodically has talks at universities around the country on topics related to PKT Logistics and the logistics industry in general.

Sometimes, the company has site tours at its office.

“I focus mainly on university students. I call it the ‘Milo van phenomenon.’ When I was a young boy, we’d have the Milo van coming to our schools sometimes and they would give out free drinks. It tasted so good that many of us would eventually grow up drinking Milo.

“In other words, we would remain faithful with the brand because it was ingrained in us while we were still young. So that’s what I’m trying to do with the university students. It’s so that once they graduate, they will come to us.”

Humble beginnings

PKT was established by Tio’s father, Datuk Tio Sook Keo, in 1974. At the time, the company was known as Port Klang Trading and operated out of a terrace house in Port Klang.

“The office was in the front of the house while we lived at the back,” Tio recalls.

In 1986, Tio went to the UK to pursue his studies while his father carried on the business in Malaysia.

While still studying, Tio says his father encouraged him to start earning a living – as a businessman.

“My father has always inspired me to become a businessman. So I started buying used cars and sold them in Malaysia.”

Over the years, Tio grew the used car business but eventually, he knew that his future was with the family business.

“I came back to Malaysia in January 1996. The company at the time was operating from a shoplot with an annual turnover of RM2mil.”

Today, PKT Logistics sits on a sprawling RM160mil state-of-the art centre known as the “one logistics hub” in Shah Alam that spans over 27 acres. The company currently generates an annual turnover of RM500mil.

The hub comprises two structures – a 180,000 sq ft cross-dock distribution centre called “The Ship” and a 380,000 sq ft regional distribution centre called “The Waves.”

PKT is in the midst of finalising construction of its third structure – a 200,000 sq ft multi-storey distribution centre called “The Lighthouse.”

Collectively, Tio says The Ship, The Waves and The Lighthouse form a “beacon of hope.”

“The structure is akin to a ship under the heavy wave, looking for a lighthouse to come to the shore.”

When looking back in 1996, Tio recalls that the company’s reach was quite limited.

“We were handling just two or three products, offering trucking and forwarding services. We then converted the company from a partnership into a private limited one.”

The aim, says Tio, was to become a multinational company (MNC).

“We wanted to become a logistics MNC, to have a global reach and to be able to service international clients,” he says.

A self-proclaimed admirer of former prime minister Tun Dr Mahathir Mohamad’s “Look East Policy,” Tio looked to countries such as Japan and South Korea to expand PKT’s business.

In the late 1990s, at the height of the Asian financial crisis, the company began doing business with a Korean partner with a firm network in the country.

“That’s when we ventured into the Kia (Korean car manufacturer) business,” says Tio, adding that in 2001, Malaysian business conglomerate Naza had begun introducing its first completely-knocked-down Kia model in Malaysia – with PKT as the logistics provider.

PKT also started to provide logistics services for Hyundai, through Oriental-Hyundai, a partnership that was then affiliated with the Berjaya Group.

“That’s when we ventured into the automotive logistics business,” says Tio, adding that over the next few years, PKT started providing its services to more global companies.

Eventually, the automotive logistics business became PKT’s core business, and currently accounts for about 80% of the company’s total sales.

By 2007, Tio felt that PKT’s automotive logistics business had reached its peak, and decided that there was a need to diversify the company’s services to boost earnings.

“By 2008, our annual turnover had hit RM200mil. We thought of listing the company but we did not have enough assets, because as a business we were providing a service.

“So from focusing on the automotive segment, we decided to diversify into the fast-moving consumer goods (FMCG) segment.”

Given that the bulk of its earnings is from its automotive business, PKT has set a near-term target, called “Wawasan (or vision) 60:40,” to increase its FMCG business operations to 40% of total sales from about 20% currently.

Tio says PKT is also targeting to generate 30% of its total automotive logistics sales from Asean countries.

While its FMCG business has been steadily growing, so is its automotive business, says Tio.

Among the countries that PKT is currently trading with are Thailand, Vietnam, Indonesia, Cambodia, Laos, Taiwan, India and South Korea.

Another mid-term plan is its “Wawasan 5M5,” where the company intends to grow its warehousing footprint to 5 million sq ft by 2015 from about one million sq ft currently. It is also targeting to grow its revenue to RM1bil by 2015 and be a serious contender in the local FMCG industry.

To compete with other MNCs, Tio says there is a need to invest in information and communications technology (ICT), green technology, manpower and training as well as repatriating local experts from overseas.

“Many choose Singapore as their logistics hub, but why not Malaysia? There is no reason why Malaysia cannot be a logistics hub for the region. Our land and labour cost is cheaper than many other countries in the region,” he says.

Taking care of its people

Tio emphasises that having a happy workforce equates productive talents.

PKT Logistic’s hub offers many amenities, from a gym to dining and recreation rooms. It even has a large pineapple farm, known as the “Sea of Pineapples”, flanking its premises outside.

Tio says the company offers various incentives to its employees that clock-in many hours at its office gym. What’s more, the company also has annual retreats for its people to various exotic locations around the world.

“My philosophy has always been that life is short and that you should be able to see the world while you still can. We want to visit all seven continents. So far, we’ve gone to five.”

PKT Logistics’ last ensemble trip was to Antarctica. The next trip, says Tio, will be to South America.

Looking back at how the company has grown over the years, Tio sums up his secret for success with a simple yet deep philosophy:

“Thou shalt not be jealous of others’ success. Learn from them and be appreciative and contribute to society when successful without expecting anything back in return.


About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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