Harvard Business School
MBA, Utah State University
2003 President and CEO, PTT Group
2001-2003 Senior Executive Vice President, Gas Business Group, PTT Public Company
When Prasert Bunsumpun, then 51, was appointed President of Thailand’s national energy company, PTT Plc in 2003 it was yet to join the ranks of the Fortune 500 elite. By 2004, it was listed at 456. Later in 2005 PTT was ranked 373; by 2006 it had climbed more than a hundred places to reach 265; 2007 saw it at 207; PTT had reached 135 by 2008 and in August 2009, Fortune 500 magazine ranked it 118 and recently 155 in 2010 among the world’s largest companies. Under Prasert’s bold, industry-smart leadership, marked also by an intuitive politically nuanced style, PTT today is Thailand’s fully-integrated energy company with leading position in exploration and production, transmission, petrochemical, refining, marketing and trading of petroleum and petrochemical products.
So what of the man behind the company’s impressive transformation from a small, state-run enterprise to an oil and gas group with investments in Exploration and Production (E&P), refining, and petrochemicals? Now in his second term at 58, Prasert Bunsumpun is variously described as tireless, focused and adept at selling his often visionary and occasionally radical ideas.
A 1977 MBA graduate of Utah State University and an Advanced Management Programme certificate holder of Harvard Business School in 1998, Prasert Bunsumpun entered the high-octane world of petroleum products at the age of thirty in 1982, joining the then Petroleum Authority of Thailand, later to be privatised in 2001 as PTT Public Company Limited, but with the Thailand Ministry of Energy holding a controlling interest. A former director of Siam City Bank, Prasert is also known for his financial acumen and his ability to recognise an acquisition bargain.
Described by those who remembered him at the time as “quiet and determined” Prasert would not really find his stride and the opportunity to exercise his special talent for decisive leadership until he took over the helm of PTT as its president in 2003. The responsibilities of the job that involved safeguarding and developing much of the nation’s vast energy assets while balancing the often pressing demands of a volatile global energy market and juggling the necessity to play to the political balcony, require special qualities. Resilience, tenacity, a big picture mindset while still grasping the details, are all part of the mix. Add in a Bill Clinton-like ability to ‘compartmentalise’ and Buddha-like, to live in the moment, and the secret begins to emerge.
Prasert would though, be the first to point out that we’re all different and clearly there’s no one formula that guarantees success as a business leader. Whatever the complete recipe in his case though, it appears to have worked remarkably well.
His first notable recognition came in 2005 when he garnered a clutch of awards – Corporate Executive of the Year by Asia Money magazine; Asian Best CEO in Oil and Gas Business 2005; Thailand Best CEO 2005 by Institutional Investor Magazine; Thailand Business Leader of the Year 2005 by CNBC; and Best CEO of the Year 2005 by Stock Exchange of Thailand Awards 2005. There was more to come in 2008 when he shared the Oscar of the energy sector – Platt’s Global Energy Award for CEO of the Year.
In 2005 also, BusinessWeek placed PTT at the top of its list of Asia’s 50 best firms and said this about the company and its president: “with the spectre of $60-$70 oil hovering over energy-hungry Asia, a mad scramble is under way by regional oil and gas companies to lock up resources overseas and ramp up refinery capacity at home.”
“The unassuming civil engineer”, the article continued “is president of PTT Plc, a $15.7bn state-controlled energy giant that is enjoying windfall profits at home thanks to inspired management and spiraling gas and diesel fuel prices. The Bangkok company’s second-quarter profits alone rocketed 30 percent, to $449m, while sales jumped 50 percent. And no wonder, since PTT makes money all the way from the wellhead to the gas pump.
“PTT is now leveraging its supercharged shares – up 40 percent over the last year – to develop oil and gas assets from Algeria to Oman. ‘We want to have at least 20 percent of our revenues coming from international operations within five years,’” says Prasert.
The BusinessWeek article concludes, “In many ways, PTT is emblematic of the sudden fortune visited upon hundreds of companies supplying Asia with the energy it needs to stoke its growth. What sets the Thai company and a handful of other top performers apart is a shared drive to prepare the stage for future growth through rapid acquisitions while maintaining stellar profits and rich shareholder returns.”
Awards, peer and public approbation have no doubt been welcome by the PTT president and CEO. If nothing more, they suggest he must be doing something right, but what has his much vaunted ‘visionary’ leadership actually done for PTT? Even a cursory glance at the fortunes of the PTT Group during his tenure show they have improved massively. Under his unerring guidance the group now controls a vast network of interrelated companies in oil, gas exploration and production, transmission petrochemical, refining and marketing and trading of petroleum products. The Group’s revenue in 2009 amounted to $46.04bn with a net income of $1.73bn. Unsurprisingly the awards for PTT in 2009 also kept coming.
Achieving success in the high stakes and high pressure world of energy inevitably invites the “What’s your secret?” line of questioning. Prasert Bunsumpun would likely attribute his success to an overriding objective of attaining sustainable growth. To do that, he has said that he focuses on leadership development, employee competency improvement, and creating a culture of innovation. Part of that, means a strong adherence to good corporate governance and from every individual, a firm commitment to corporate social responsibility.
Prasert believes that any organisation is only as good as the sum of its parts and in his case this means ensuring transparent management practices in everything it does. Prasert has high ethical standards, values he expects of all those he works with and which are now enshrined as part of PTT’s core values and culture. Employees with a former ‘public servant’ mindset now see themselves as professionals working in a very professional organisation.
Part of this change in attitude no doubt stems from the very hands-on approach Prasert uses when dealing with, and motivating staff.
In 2009, besides monthly labour relations meetings, PTT, led by its shirt-sleeved president instigated head-to-head meetings to get immediate feedback from staff on their opinions from important strategic decisions to the more mundane matters of administration and welfare. Effective communication, believes Prasert will lead to positive relations, taking the organisation to agreed unified goals. Nothing new in that of course, but making it work in the Thai culture where the boss is generally obeyed in silence and where opinions, even when sought are seldom forthcoming, is something to be roundly applauded.
In matters of earning staff loyalty, the PTT president displays an instinctive understanding of the European notion of business democracy where everybody is equal, eats in the same canteen, and the bosses at every stage of the hierarchy are accessible and the really big boss is more accessible than most. Again this is contrary to the traditional Thai cultural mores where senior figures are not only obeyed, but expected to remain distant.
Prasert is also seen at many company functions and makes regular visits to companies under the PTT umbrella.
Further insight into the Prasert management style is seen in his reported comments on what he describes as a ‘Learning Organisation.’ “To become a Learning Organisation, we rely on human intelligence. Learning is an ongoing, lifelong process”.
Expanding on his theme of building competent and righteous members of PTT and of society, Prasert talked about the company’s core values summarised in that very apt PTT acronym, ‘Spirit’ – synergy, performance excellence, innovation, responsibility for society, integrity and ethics, trust and respect.
In a June 2009 meeting organised by Thailand’s Institute of Directors the PTT leader voiced his opinion about the right course of action in times of financial crises. “Cash is the first priority in a time of crisis and because of high uncertainty, firms have to plan for different scenarios and conduct a stress test,” he said
Prasert noted that since the eruption of the worldwide crisis late 2008, PTT had moved the quickest to raise funds from the market, totalling more than Bt100 billion thus far. “It will issue more debentures very soon just before government bonds flood out the market,” he said.
“On the other hand, it is also important to look for opportunities,” he continued. «We must clean the house, developing personnel, restructuring, consolidating and reviewing operations, while also seeking opportunities. The last crisis had helped PTT grow several times. We can grow several folds this time because we are much stronger. There are more opportunities,” he said.
“We are aiming to turn the downturn into our turn,” he said, adding “communication is key.”
One example of Prasert’s leading-by-example method is his active support of the Thai government’s Energy Industry Act that sought to promote energy security for the nation through transparency in the provision of services, fair prices for consumers and licensees, and an equitable network access for competitors, although this law would mean more regulations to deal with for PTT’s gas business.
Bold decisions when other leaders might be inclined to be more conservative are also a mark of the Prasert style. His determination to build PTT through both organic and inorganic growth led for example to PTT investing almost $5bn in expanding gas pipeline networks to double capacity to stimulate the economy, improve domestic gas development, and increase PTT’s corporate value. This was in spite of the fall in demand following the 1997 Asian crisis. Since then, the demand for gas has risen rapidly, suggesting that in five years the pipeline will be fully utilised.
M&A has also been a strong vehicle for PTT growth under Prasert. Refineries and petrochemical ventures have been acquired and restructured during down cycles and nurtured to top performing companies in their market sector. An example is Prasert’s turnaround of Rayong Refinery Company (RRC), which PTT bought from Shell during the crisis and then successfully listed. In 2007, Prasert further strengthened RRC by merging it with Aromatics (Thailand) Public Co., Ltd., to finally become PTTAR, Thailand’s largest integrated aromatics refinery. Merger master Prasert later brought NPC (National Petroleum Corporation) and TOC (Thai Olefins Co.) together to become PTT Chemical, PTT’s petrochemical flagship company. Today, the two companies generate some 40 per cent of PTT’s earnings.
CSR fundamental to ptt’s sustainable development
A fundamental commitment to CSR that sees the implementation of good governance and social and environmental practices as a priority, has long been established at PTT. Reflecting the strong personal commitment and support from the current PTT president, a comprehensive CSR programme is now in place. The importance of the active promotion of a management and employee culture that embraces a socially responsible mindset at individual level has been the hallmark of the Prasert approach to making sure Good Corporate Governance and CSR translate into sustainable development for all concerned.
Today at PTT, not only is there an extensive and far reaching CSR programme in place that stretches across all its operations, it is one marked by a carefully planned framework that meets international CSR standards of reporting to maximum practical effectiveness across all business units. The objective is to lower PTT Group risks and to satisfy all stakeholders while providing maximum benefits to the community.
A response to global warming
The very nature of its business means that PTT has a major responsibility to take its response to the complex challenges of combating global warming very seriously. At every level, PTT has shown that it is committed to systematic management of this issue from carbon footprint management, including reduction of greenhouse gas emissions, to public educational campaigns.
Wider initiatives include promising research projects such as the application of biogases derived from industrial wastewater – expected to begin commercial production in 2011 – and construction of a prototype plant for bio-hydrogenated diesel and biojet, produced from diverse raw materials.
Another notable success has been a reforestation project in honour of His Majesty the King involving more than 400,000 acres. In the area of social and community development, an excellent example of PTT’s effort in 2009 was its cooperation with the International Union for Conservation of Nature (IUCN), in supporting the Sirinath Rajini Mangrove Ecosystem Learning Center in its efforts to preserve the Pranburi estuary mangrove forests. Another highly successful project, and one which took the 2009 Platts Global Energy Award, was PTT’s Sufficiency Path Project involving 84 sub-districts in Thailand. More recently PTT joined four other companies at a major industrial park in the province of Rayong committed to lifting social and environmental standards for local communities as well as transferring knowledge and experience.
PTT president Prasert Bunsumpun said the project was designed to give an example to other enterprises of all sizes in Rayong and elsewhere. “We met and agreed to join forces. We aim to share our experience in environmental care with others. We hope this will turn Rayong into the most liveable province. Rayong will become a green industrial town, an example for other provinces in terms of sustainable coexistence of factories and communities,” he said.