Fary Akmal OSMAN Graduate School of Economics, Kyoto University, Japan [email protected] “BUSINESS HISTORY AROUND THE WORLD – TODAY & TOMORROW: Foreign Direct Investment by State-owned Enterprise, Malaysia and Beyond Abstract State-owned enterprises (SOEs) were well established in countries with mixed economies and in developing countries including Malaysia since 1970s. While SOEs have become widely accepted as an alternative forms of government ownership in country’s industrial structure, its recent foray into global markets and contributions to foreign direct investment (FDI) have trigger important phenomena. Furthermore, the fact that an increasing share of the world’s largest companies are held by SOEs proved that there is an upward trend of their internationalization. In 2012, The World Investment Report indicates that currently there are at least 650 multinational SOEs with more than 8500 foreign affiliates, with about 65 per cent of which are from developing countries and 44 per cent from advanced economies. There are a numbers of SOEs in Malaysia at federal and state government level. In this study we will examine the data on FDI by Johor Corporation (JCorp) in 11 countries. Its business interest spans not only in Malaysia but also in other countries namely Australia, Papua New Guinea, Singapore, Cambodia, Brunei, the Philippines, Solomon Islands, India, Indonesia and Thailand. The four main sectors of their international businesses include plantations, food and restaurant services, medical specialists as well as healthcare services. However, the main focus of this paper is to understand the outward investment by JCorp in its medical specialists and healthcare businesses. In detail, this paper aims to examine and understand why SOEs embarks on cross- border investments. What factors help internationalization of SOEs from an emerging economy? At the same time, this paper aims to contribute to the recent discussion on the new multinational SOEs and the global FDI trends. This paper will look at JCorp as a case evidence from an emerging economy perspectives, with a holding group owned by a local state government operating businesses beyond its country. Keywords: FDI, SOE and multinational corporations (MNCs), corporate capabilities. 1. Introduction 1.1 Background of the study SOEs have become a pivotal development strategy in many emerging economies under two traditional logics for its establishment. One is for the economic condition, to act as the solution of market imperfections and the other is due to political ideology or strategy of a government to safeguard important sectors. Generally, many governments use a mix of both logics to justify the creation of SOEs for their national 1 interest. It is a well-known fact traditionally that public enterprises or state-owned enterprises were bureaucratic in nature, thus almost all SOEs are normally seen as inefficient and poorly managed as well heavily subsidized and protected by the government. Theories on SOEs which elaborate further on this include Agency View, Social and Political View1. Historically, SOEs are created to focus on domestic economic needs, however recent studies have shown that increasing outward FDI by SOEs with wide varieties of approaches. Thus, this study will provide useful insights and understanding of the evolution undertaken by SOEs in its internationalization, its business model and growth strategy. Even though this study goes deeper into the analysis of a single multinational SOE, we provide opportunities for a new case and different scenario, as this area has been predominantly focused on Chinese SOEs in recent decade, mostly acting as sovereign wealth fund. It is obvious that outward FDI by SOEs has grown significantly in recent years and this phenomenon will also grow in financial markets as well as the global economies. 1.2 Objective of study The motivation for this research is derived from the popularity of SOEs in global market and their increasing role as major investors. Do SOEs operate on a fair level playing field? Do they act as industrial policy instrument for developing countries or are they merely a burden for the government? There are very few studies on Malaysian SOEs that examined long-term performances in detail. The lack of studies is perhaps due to data limitation. Moreover, previous research mostly focuses on the aspect of ownership, management and entrepreneurship orientation of leaders of SOEs at a federal government level such as PETRONAS, Tenaga Nasional, Telekom Malaysia, Malaysia Airlines and Khazanah, and nothing specifically on SOE at a state level. Hence, this research is the first of its kind and it aims to examine the international business expansion and outward investment of a SOE at the state level known as Johor Corporation Malaysia (JCorp). The main goal of this study is to determine the contributing factors on the following research questions: - Why JCorp as a SOE embarks on cross-border investments? and - What factors help the internationalization of JCorp, an SOE from an emerging economy? 1.3. Research methodology This paper has employed qualitative approach with initial analysis of firm-level data and information related to its outward FDI were collected from secondary sources such as annual report, National Auditor Report and official publication as well as archived documents. Then, we will detail out the establishment of its subsidiaries abroad as well as other entities to support its international operations. This paper also uses triangulation and combination of several research methodologies aimed to corroborate one set of findings with another commonly applied in social sciences. According to Cuervo-Cazurra et.al (2014), multinational SOE characteristic is defined as performing an outward FDI and having a subsidiary abroad. On the other hand, this paper will also elaborate the study base on the theory developed by Mazzolini (1979). We framed the research and discussion based on his theory in explaining the 1 Musacchio and Lazzarini (2014), “Reinventing State Capitalism” p.4. 2 behaviour of government-controlled enterprise in their strategic and policy decision and also the theory developed by Hymer (1976) on the concept of firm-specific advantage and demonstrates that FDI take place only if the benefits of exploiting firm-specific advantage outweigh the relative costs of the operation abroad. 2. Literature Review The history of SOEs have a long history dating back to the mercantilist era in Europe and in the early 1930s in the U.S. In the initial phase, it was one of the basic instruments of social partnership and played an important role in improving socio- economic condition as well as job security. Ramu (1976) has identified six goals of public enterprises which is to provide basic needs, employment, self-reliance, economic growth, national prestige and regional development. It was also found that different categories of industries have different degrees of internationalization of socioeconomic objectives. SOEs face with many challenges in their daily business operation due to the economic crisis, political interference and conflicting social objectives plus poor performances, the results of SOEs were generally negative2. At the same time, were never able to develop or performing their economic potential in full and these perspective has been supported by several theories. According to Agency theory, SOEs are inefficient because their managers lack of high-powered incentives and proper monitoring. The Social theory illustrate that SOEs have social objectives that sometimes conflicting with profitability, while Political view argued that politician may use SOE for their personal benefit or to benefit the politically connected capitalists. In contrast, Industrial Policy view has elaborate on the establishment of SOE or state investment as a way to promote development beyond what is possible under free-market. As for Malaysia, SOEs were established as a way to promote development of new industries for national interest, usually industries that require higher investment and those of high risk would be difficult under free-market system. It is also a unique characteristic for SOEs in Malaysia with its dual federal and state level system and those created at the federal government due to the historical process embedded in the national constitution3. The goals of respective SOEs were complex and varied depending on its objectives when first established. In recent decades, many public enterprises from developing countries have become global. To understand FDI one must first know the motivation of a firm to invest abroad rather than focusing on domestic market especially for an SOE. Two perspectives, both economic and behavioural theories have proposed some arguments concerning the internationalization process of MNCs from developing country. Most of the economic theories had assumed that MNCs are from developed countries and that the host countries are the developing countries. Moran (1978), describes bargaining power between the MNC and the host country on the basis of characteristic of the product, characteristic of the host country, and exogenous factors. According to the 2 Suraiya, 2011: Morris and Jones, 1999: and Abdul Hafeez, 1992. 3 The governance system is divided into three, federal government and the state governments, while the federal territories are directly administered by the federal government. The Ninth Schedule of the Constitution of Malaysia lists the matters under responsibilities of the federal and the state governments. The State specific responsibilities comprise matters such as land tenure, agriculture, forestry, local government, riverine fishing and Muslim law. In addition, some matters were under authority of both the Federal and State Governments, covers social welfare, scholarship, protection of wildlife and town and country planning. Thus, the State development and mostly involving land, agriculture, forestry as well as local government are place under the State jurisdiction through respective SEDC. 3 market imperfections theory by Hymer (1970), firm’s decision to invest overseas is explained as a strategy to capitalize on certain capabilities not shared by competitors in foreign countries. Hymer identified two major determinants of FDI. One was the removal of competition and the other was the advantage which some firms possess in a particular activity4. On the other hand, Wells (1977) elaborates that MNCs from developing countries will be competitive due to cost competitiveness, adaptive to technology and at the advance stage of the product life cycle. He further outlines the difference between developing and developed countries with respect to MNCs5, and due to this differences the MNCs from developing countries are assumed to follow a “pecking order” system with specific features mostly being small, low-technology, labour intensive and low quality manufacturers. The assumptions have been questioned by Lall (1982) where he concludes that the analysis of MNCs from India shows several cases which are exceptions to the above generalizations. Besides, there is a revealed comparative advantage (RCA) of MNCs from different developing countries with specific reference to India. The findings show that there is a high local contribution of skills, capital goods and components in the foreign ventures. There is also a high learning cost in the initial stages to adapt to high-level technological know-how, which contribute a positive factor for multinationalization of such enterprises from developing countries. In addition, Mazzolini (1979) has developed three alternative theories for explaining the behaviour of government-controlled enterprises in their international strategy and policy decisions. Firstly, the rational selection of strategy is in line with its objectives. Next, organizational process helps to determine the strategy of an organization and is reflected in the existing organizational structure and in each subunit. Finally, on organizational politics whereby this approach identifies key individuals and their personal objectives and power in relation to strategic change of the organization. He further distinguished whether a particular government-controlled enterprise is established with a profit goal or as a tool goal. Based on the research and case studies conducted on the OECD countries’ public enterprises, Mazzolini comes to the conclusion that the third approach which is organizational politics, is the best for analysing the behaviour of public enterprise. Since most of these enterprises’ experience shows that their objectives are not adaptable to international operations, hence the result is inefficiency. However, those public enterprises with extensive multinational objectives would naturally develop a suitable procedure for international operation which in turn leads to greater efficiency. 3. The Establishment of SOE in Malaysia In Malaysia, Government-Linked Company (GLC) and SOE are defined as a company in which the government owns at least 20 per cent of the issued and paid-up capital6. The formation of GLCs and SOEs were carried out progressively through the process of privatisation and corporatisation with many government departments first privatised and later transformed into separate wholly-owned government companies7. The period of privatization took place in mid-1980s and more so in 1990s under the leadership of the fourth Prime Minister Tun Dr. Mahathir Mohamad. The downsizing 4 Hymer, S. (1976), “The International Operations of Nation Firms: A study of Foreign Direct Investment”, Cambridge, MLT Press. 5 Ramu S.S (1986), p.96. 6 Definition according to the Ministry of Finance, Malaysia (1993). 7 Ministry of Finance Malaysia’s Report, 1986. 4 of the public sector and the introduction of Privatization Master Plan in 1991 was based on two major objectives. Firstly, to swiftly achieve the New Economic Policy’s (NEP) goal of providing more opportunities for bumiputera (Malay ethnic and other indigenous groups) businessmen to participate in the economic activities. Secondly, to reduce the government’s financial burden in providing core services to the public such as road construction, health services, energy and power. It was estimated that between 1983-95, over 100 SOEs were privatized and subsequently corporatized through the issuing of a portion of their shares on Kuala Lumpur Stock Exchange. These corporatized entities have come to be known as GLCs since the government has maintained substantial ownership in these companies. At the same time, the government also obtains substantial ownership in many Public Listed Companies (PLCs) directly or indirectly through its investment holding companies namely Ministry of Finance (MOF) Inc. and Khazanah Nasional Berhad. A panel of advisory board was responsible to manage all these trust funds and all decisions related to their investment strategies fall under the authority and jurisdiction of the government, collectively known as government investment portfolio. On top of that, all State Economic and Development Corporation (SEDC) and other State agencies that have at least 20 per cent shareholding in PLCs are also considered as GLCs base on MOF’s circular in 19938. Comparing the situation with other regions on how state capitalism evolved, we saw that in the mid-1970s state capitalism peaked in European when the governments nationalized firms in large scale. Then, government in developing countries either nationalized firms or created (and then owned) tens or hundreds of new ones9. However, thereafter and the turn of the twenty-first century, government transformed the way they owned and managed the firms as efforts to reduce their financial struggle. The SOE tries to improve corporate governance, implement performance contracts for firms and managers as well as training for SOE executives (Shirley 1999; Gomez- Ibanez 2007). Although, many SOEs faces huge losses due to the oil shocks of the 1970s and liquidity crunch in the early 1980s still yet only small number were partially privatized. The new forms of state capitalism emerge whereby government take the role as controlling shareholders and minority investors in a large number and wide variety of corporations10. And recent research highlighted that the ownership arrangements in many SOEs are more stringent in term of corporate governance and financial accountability11. In the mid-1960s State Economic Development Corporation (SEDC) were established to foster industrial and commercial infrastructure at the state level throughout Malaysia. It is important to know the background of legal system in Malaysia. The governance system is divided into three, federal government and the state governments, while the federal territories are directly administered by the federal government. The Ninth Schedule of the Constitution of Malaysia lists the matters under responsibilities of the federal and the state governments. The State specific responsibilities comprise matters such as land tenure, agriculture, forestry, local government, riverine fishing and Muslim law. In addition, some matters were under authority of both the Federal and State Governments, covers social welfare, 8 Including JCorp, initially was name as State Economic Development Corporation for the State of Johor. Currently, 13 SEDC act as investment agency for the respective Sates in Malaysia. 9 Musacchio et. all, (2014) pg.6. 10 Based on research work of Bortolotti and Faccio (2009), Survey of SOE in OECD countries. 11 Musacchio et. all, (2014) pg.7. 5 scholarship, protection of wildlife and town and country planning. Table 1 illustrate the establishment of major public enterprises and SEDC in Malaysia. Table 1: Establishment of Major Public Enterprises and SEDC in Malaysia Public Enterprise Year of Incorporation 1956 Federal Land Development Authority (FELDA) 1964 Selangor SEDC 1965 Penang SEDC, Terengganu SEDC, Bank Bumiputra (M) Berhad 1967 Kedah SEDC, Kelantan SEDC, Melaka SEDC, Negeri Sembilan SEDC, Perak SEDC 1968 Johor SEDC Source: Publication on Government-Linked Companies, MOF 4. Cross-Border Investment by SOE: The Case of JCORP Group JCorp was established in 1968 as a public enterprise and a statutory body at a state government level (SOE). Starting with a business loan of RM10 million (US$3.3million) from Johor State Government in 1970, the group evolve and branched out internationally by adopting a unique business positioning and investment strategy thus becoming a global player. Today, JCorp is among the highest earning conglomerates in Malaysia with a record-high RM1.05 billion profits after tax and a total of RM17.28 billion worth of assets in 2011 with several core business sectors encompassing palm oils, foods and quick services restaurants, specialist healthcare services, hospitality, property and logistic services as well as intrapreneur business. Currently, JCorp owns more than 350 diversified companies with a total workforce of about 60,00012. In its early years, the Group’s business activities and growth were financed through fiscal means but this method were gradually replaced with profits and surpluses from its operations as a public enterprise. It is interesting finding from the research that the Corporation had recorded profits for every year of its operations since 1971 up to 1987. On top of that, its accumulated profits up to December 31, 1987 amounted to RM326.5 million, a first time record a figure exceeding the total outstanding Federal Government loans which has stood at RM319.9 million on the same date13. Based on historical data, JCorp has been making strategic investment in its subsidiaries since 1971 until the present with more than three hundred and fifty companies consists of diverse business sector and services under one umbrella. The investment has gradually increased over years as the Group’s operation expanded and below in Table 1 was the amount invested from 1971-1984. 12 JCorp Annual Report 2015. 13 Paper by the President and CEO of JCorp in March 1988, “A Public Enterprise’s Role and Achievements”. 6 Table 1: Investment in Subsidiaries Companies. Year Investment (RM million) 1971-1974 1 – 4 million 1975-1976 5 – 8 million 1977-1980 10 – 15 million 1981-1982 69 – 72 million 1983-1984 80 – 92 million Source: Table by author, data from Annual Report JCorp, 1970-1984. Under the JCorp Group, 5 subsidiaries company were successfully listed on the Kula Lumpur Stock Exchange which includes Kulim (M) Berhad, Al-Aqar Healthcare Reit, KPJ Healthcare Berhad, E.A. Technique and Al-Salam Reit. However, for this paper only 3 main subsidiaries with international operations will be highlighted in details as below. 4.1. Kulim (Malaysia) Berhad – “KULIM” Kulim (M) Berhad corporate history dates back to 1933 when it was first incorporated in the United Kingdom as Kulim Rubber Plantations Ltd. Later, Kulim was incorporated as a public company and was listed on Kuala Lumpur Stock Exchange in 1975. JCorp became the major shareholder of Kulim in 1976 and has increased its interest in the plantation industry through acquisition of plantation companies. Kulim is an established plantation company with footprints in Malaysia as well as Papua New Guinea, Solomon Islands (SI) and the United Kingdom via its 48.97%-owned associate company, New Britain Palm Oil Limited (NBPOL). In the industry, Kulim was amongst the earliest plantations in the world to be certified as a sustainable palm oil producer when its operation under its then-subsidiary NBPOL in West New Britain, PNG and in Malaysia were awarded the RSPO certification in 2008 and early 2009 respectively. Kulim’s management and growth strategy is fundamentally guided by Vision “30:30”, it is a target fruit yields of 30 tonnes per hectare and combined palm product extractions rates of 30 per cent, and sustainable development principles. 4.2. QSR Brands Berhad QSR Brands and its subsidiaries are in the Foods and Quick Service Restaurants industry. Through franchise licensing, the company carries popular brands such as Pizza Hut, PHD-pizza hut delivery and KFC. Domestically, new brands were developed such as RasaMas, Ayamas and Life. The QSR guarantees that all products it produces and sells are Halal14. QSR operates its KFC and Pizza Huts restaurants in 5 countries including Malaysia, Singapore, Brunei, Cambodia and India. 14 Halal food complies with Islamic Law or Syariah and stipulates that food consumed should be hygienic, not harmful to health, free from any forbidden parts of animal origin and free from anything regarded as filth under Islamic Law. This is also important for food safety and religious compliance in Malaysia. 7 The company operates 810 KFC restaurants under KFC Holding (M) Berhad, in Malaysia, Singapore, Brunei, and India, as well as 456 Pizza Hut outlets in ASEAN. It also operates 25 RasaMas restaurant in Malaysia and 2 in Brunei. It also maintains a network of 75 Kedai Ayamas convenience store and poultry retail outlets. At the same time, the company is also involved in an integrated poultry operation that include operations of feed mill, breeder and boiler farms, a hatchery, and a poultry processing plant. 4.3 KPJ Healthcare Berhad KPJ Healthcare Berhad (KPJ) is the leading private healthcare provider with a network of 22 hospitals in Malaysia, 2 in Indonesia, 1 in Bangladesh and a retirement and aged care resort known as Jeta Gardens in Brisbane, Australia. Today, KPJ has more than 3,000 operating beds at its network of hospitals throughout Malaysia and serves more than 2.5 million patients annually. In 2011, KPJ served 2.4 million outpatients and over 240,000 inpatients. With a wide span of expertise in various medical fields, KPJ portfolio now covers hospital management, healthcare technical services, hospital development and commissioning nursing, health sciences and continuous professional healthcare education, pathology services, central procurement and retail pharmacy through more than 900 medical consultants and almost 9,000 support staffs. KPJ is the first home grown healthcare group in Malaysia listed on the Main Board of Kuala Lumpur Stock Exchange on 29 November 1994. In 2007, KPJ revenue exceeded RM1 billion. By 2011, KPJ achieved its highest consolidated revenue of more than RM1.91 billion, translating into its best performance yet in 30 years since its establishment in 1982. The evolution of JCorp can be seen as a results of many contributing factors. They are among others, changes in domestic policies and global economy, business competition and change in the market structure. In order to remain competitive and to sustain growth, the group continues to restructure its business and embrace corporate reform. Based on the company’s record, JCorp has embark on indirect investment abroad since 1972 by equity purchasing, joint-venture, franchise licensing and FDI. Table in Annex II shows the detail list of the activities performed by JCorp related to overseas outward investment. 5. Internationalization of SOE’s from Emerging Economy Over the years, the Corporation has established a formidable track record of business and corporate success. The Group’s business segment is managed on a worldwide basis with Group revenue distribution by geography in 2010 is dominated by Malaysia (75%), Europe (13%) and the remainder spread throughout Asia. JCorp has become a national market leader in several of its core businesses, namely the Specialist Healthcare Services and Quick Service Restaurant while it also has a significant regional presence in the palm oil business interest spanning not only in Malaysia, but also other countries namely Papua New Guinea, Brunei, Indonesia, Singapore, the Philippines, Solomon Islands, Cambodia and China. One can therefore assume that this SOE are in the position to enter international business due to economics of scale. 8 4.1 Specialist HealthCare Division under JCorp Since 1994, the JCorp continued to record impressive business growth. Over the past 25 years, the Corporation had positively built 190 subsidiaries organised within 16 divisions involving more than 21,000 employees. Specifically, the Healthcare Division recorded a total turnover of more than RM172.4 million in 1994 compared to RM141.4 million in 1993, an increase of 21.9 percent. In the process of enhancing its businesses, the Corporation adopt and adapt the best management principles and practices along with the principles of Islamic syariah in conducting business. In the healthcare sector in particular, through its subsidiary known as Kumpulan Perubatan Johor Sdn. Bhd. (KPJSB), the company had established a good reputation and became a market leader by managing the largest chain of specialist hospitals in Malaysia. The main objectives of JSEDC’s involvement in the Healthcare Sector are to upgrade its specialist healthcare services, to expand pharmaceutical activities, to venture into related business as to derive effective synergy and to strengthen the Division as the premier private healthcare provider in Malaysia and Southeast Asia. KPJ had entered into the healthcare business back in 1979 with the establishment of the first specialist hospital in Johor Bahru known as Johor Specialist Hospital (JSH). Thus, following the incorporation in 1979, the Healthcare Division of JCorp was established with JSH began operations on 10 May 1981. Next, in 1988 Tawakal Hospital Kuala Lumpur was acquired. Subsequently, Kumpulan Perubatan Johor (KPJ) was incorporated. KPJ Healthcare Berhad also became the first homegrown company to be listed on the Kuala Lumpur Stock Exchange’s main board under the healthcare category in November 1994. At that time, KPJSB owns and manages six specialist hospitals, two in Johor Bahru and one in Kuala Lumpur, Kedah, Pahang and Perak respectively. Additionally, a string of acquisitions quickly followed, expanding KPJ’s presence nationwide. At the level, KPJ then ventured into education through the establishment of Puteri Nursing College with the vision of training nurses for both its and the nation’s needs. 4.2 KPJ Group: Care for Life Today, KPJ has about 22 hospitals in Malaysia, 2 in Indonesia, 1 in Bangladesh and 1 in Thailand. In addition, for the retirement and senior citizen homecare 2 in Malaysia and 1 in Australia. All operations are supported by 1,088 medical consultants and 12,329 staffs treating 2,476,796 outpatients in 2015 and 279,419 inpatients with operating bed capacity of 2,912 nationwide. In preparing the needed workforce through their Nursing University College educational programme currently offering 38 programmes including Masters and Ph.D. course. Meanwhile, as the Group also strive for quality initiatives where 20 of KPJ hospitals received accreditation whereby 16 accredited by Malaysian Society for Quality in Health while another 4 by Joint Commission International. Customer’s trust in KPJ has steered the Group to greater success as they managed to attract many locals and foreign patients from all over the globe leading to higher achievement in both financial and operation performance as well as quality initiatives. KPJ for many years has been providing cutting-edge healthcare solutions into its hospitals with new clinical technology and introduced various services for the patients. 9 The journey of more than three decades for dedicated service in providing private healthcare, the Group’s vision is to become “The Preferred Healthcare Provider”. The Group hold a mission of “Delivering Quality Healthcare Services” with commitment to achieve a world-class patient care and professionalism and undivided compassion through continuous improvement in patient care and outcomes remain the priority. In performing their roles and responsibilities, the KPJ’s team every time being guided by the Group’s Core Values of Ensuring Safety, Delivering services with Courtesy, Performing duties with Integrity, Professionalism at All times and striving for Continuous improvement, all of which emphasize their commitment to “Care for Life” throughout every aspects of the operations. On the financial performances, KPJ had earned its first annual billion-ringgit turnover in fiscal year 2007 with revenue totalling RM1.11 billion and continued to achieved new records since then reaching a figure of RM2.71 billion in 201515. Malaysian operations remain at the center of the Group’s solid fundamentals, where KPJ’s 25 hospitals contributed an increase of 7.5 per cent during the year under review while the 4 hospitals abroad also turned in encouraging results. It was driven by the Group’s Indonesia operations which registered a 30.9 percent increase in revenue to RM52 million from RM39.7 million in 2014. On the part for developing in-house team, KPJ utilised 89 percent of the Group’s total Human Resource Development Fund and spent a total of RM8.29 million on a range of employees training and development programme nurturing more than 12,000 employees. This has demonstrated their commitment to offer a skilful workforce with the best services in healthcare to all patients. For the year 2015, under the Group KPJ Ipoh Specialist Hospital was named as the recipient of the Industry Excellence Award at national level and subsequently was crowned as the Global Performance Excellence Award (Best in Class) in Shanghai, China. The recognition and acknowledgement at the international level for many years definitely served as a motivational factor for making investment and operation in healthcare across national boundaries. 4.3 Healthcare Segment: Global Player We research and analyse the business operation and strategies implemented under the KPJ Group. The Group undertook an aggressive marketing strategies leveraging on the growing prospect in health tourism and the business performances continue to show stellar results as they expanded their footprint in Asia, the Middle East, Africa, Australasia and the European continent. At the same time, the latest market being explored is the Commonwealth of Independent States (formerly of the Russia Federation). In addition, the KPJ Group have a future plan to invest another RM1.29 billion for the building of up to eight new hospitals all of which to be ready between 2018 and 2019. This would further strengthen the Group presence as the forefront of the healthcare service provider in the nation as well as global player. The year 2004 mark the 25 years of dedicated service and gearing up for the future, KPJ intends making further inroads into the global healthcare sector. At the end of 2010, KPJ Healthcare Sdn. Bhd. as the subsidiary of JCorp with core activities in providing medical and specialist healthcare services, owns and manages 20 private hospitals throughout Malaysia and 2 hospitals in Indonesia thus bringing the total to 22 hospitals in the KPJ Group. In supporting its operation, the Group has a staff force 15 Data from JCorp Annual Report 2015 and KPJ Report 2015 to the Kuala Lumpur Stock Exchange, Malaysia. 10