13 April 2022
In SPEEDA User’s voice, we would like to share the stories from our clients on how they are utilizing SPEEDA to enhance research efficiency to promote business growth. In today's round, we have invited our partner, Tan Chin Teck, Executive Director, Transfer Pricing from BDO Tax Services Sdn Bhd.
BDO in Malaysia is a member firm of BDO international. The world’s 5th largest network of professional firms providing audit & assurance, advisory and tax services to businesses ranging from established multinational conglomerates to growth-oriented organizations, whether public or private. Having more than 50 years of experience in the commercial landscape with a strong reputation as a top-quality professional services provider, positioning *the 4th largest national accounting firm in Malaysia.
*By market capitalisation of audit clients as of 31 December 2021
Transfer pricing is one of the subdivisions under the tax segment. For transfer pricing, benchmarking is very important. While other consulting companies or advisory companies might tell you that benchmarking is more about competitor analysis or how well you understand the market player, though, for us BDO, benchmarking analysis is really for compliance purposes. What we do is defend our client’s related party transactions, based on what is known as the “arm’s length principle”. Our primary use of SPEEDA is to conduct these benchmarking analyses.
Other than compliance purposes, as a transfer pricing firm, we also work on advisory assignments for our clients.
Let me explain by using a global holding company as an example. The company wants to expand their business and set up a subsidiary in Malaysia. They are willing to provide the technology, and database charging what we call “Related Party Transaction” to the subsidiary company. Though, if the company has not operated in Malaysia before, they might have some concerns like, “What would be the appropriate amount to charge that is acceptable from the local tax authority’s perspective?” So, their next step will be determining the most appropriate rate, also confirming if they are following the local regulations by engaging a local transfer pricing consultant company like us. We support our clients to complete these kinds of studies.
We are a fast-growing team in Malaysia. Our objective is to become a respectable transfer pricing firm in Malaysia, and there are 3 factors we have in mind to achieve this. “Be Large in the market. Receive high credentials. Work very efficiently.”
So, as a team, we need to hit our revenue target, and at the same time, ensure the quality of work. Though to ensure the quality of work, a lot of time means that you need to spend more time on the job and pay more attention, taking care of the final deliverable report to your clients. For this part, SPEEDA plays an important role to cut down our time by providing credible data. Especially in terms of benchmarking.
Before using SPEEDA, we were utilizing publicly available company directories such as SME Directories, Yellow pages and other websites to identify comparable companies. In one typical benchmarking report, there will be around 400 to 500 companies from the initial search, and we will apply more criteria to filter the companies. Occasionally, the list can include up to 1,000 companies, if the industry is large. Doing the benchmarking using all publicly available information takes a lot of time.
Back then, when we are dealing with a large industry case, we used to spend 1 week on research, but now it just takes a few clicks with SPEEDA. This helps us save a lot of time.
Let’s say we want to search for gold distribution companies (companies selling gold) in Malaysia. We enter a few keywords and tick the Malaysia region and there you go! We got our search results instantly.
We started using SPEEDA from an industry referral. Now our team has around 22 members, and we all use SPEEDA on a daily basis. I think, not only for our benchmarking studies but SPEEDA can also help us in other ways as well to expand our business as well.
We also used SPEEDA Customized Research Service in the past which was also helpful. SPEEDA Consultants are professional and competent. Sometimes we might not have the expertise in industries which we are not familiar with, but we were able to ask for SPEEDA’s support and get industry insights on an ad hoc basis. As an example, we had a case requiring information to understand the market size of the “rubber hose market” which we can only find limited information from public websites. Whereas SPEEDA team provided us with more details to aid our research which we found to be quite helpful.
Not only for the current benchmarking research, but we also use SPEEDA for business development. As it can help us to collect the information very quickly. An example is sales pitch preparation. Before a meeting, I research my client and their peers’ financial performance on SPEEDA. This can give me a better sales pitching opportunity. I can use phrases like, “Based on my research your financial year is like this…” “You are having a healthy profit, so your financial risk is relatively lower…”. The data can help me to identify the client’s competitors as well. “Who are their competitors” “What is the overview of their performance?” These data can help me to make my pitch more outstanding.
SPEEDA industry reports also help to understand the industry performance. In the past, I read industry reports like Electronic Vehicles and Ready-To-Drink Beverages in Malaysia. These reports can be reviewed by the types of products, companies, regions and so on. It enhanced a lot of my industry understanding, which I can also use when communicating with our clients.
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