Trying to Determine an Asian Investment Location through Speed Dating
By Eric Baker, for Thai-Norwegian Chamber of Commerce
The 2015 Norway-Asia Business Summit took a page out of previous seminars and hosted what it called Asia Café: an opportunity for 11 Norwegian ambassadors from various Asian countries to give a short presentation about their nation of posting to summit participants and prospective investors. The result, which some in the audience dubbed speed dating as there was less than 10 minutes per small group presentation, yielded some interesting titbits.
Sri Lanka might not be first on an investor’s list when looking at Asia, but since its war ended in 2009, GDP has grown by 7-8% annually. The country sees a lot of interest from Norwegian small and medium-sized enterprises (SMEs) because Sri Lanka is smaller and more manageable. The people there have good English-language skills and there are plenty of talented, young workers, especially in the IT sector. The ambassador said there are no pollution or infrastructure problems in the country, in part because China helped to build up the latter. The presidential election this year yielded a surprise result and there are indications the new government wants to fight corruption.
Malaysia is especially popular with SMEs because it is about half the price of Singapore despite being right next door. The Malaysian Investment Development Authority helps ease the process for new investors in the country, and you can establish a company there in only one day for $500. In fact, the country was recently ranked fifth in the world on an ease of doing business scale. Malaysia has a multimillion-dollar oil and gas project about to get underway just to the east of Singapore.
Norway has had a long trading relationship with Japan, and about 40% of Norway’s exports there are seafood. Japan is suffering from several fundamental economic problems where Norwegians might be able to help. The country has to completely overhaul its energy system by 2020, reducing its dependence on nuclear and liquefied natural gas. The hope is to switch to renewable and green technology. The marine sector presents an opportunity as Japan has high purchasing power and demand. The country is also redefining its security issues and uses the same fighter jets as does Norway. The rapidly growing elderly population also makes Japan an interesting test case for health technology initiatives. The ambassador acknowledged language can be a barrier, so a local partner must be used. But once contact is established, business can operate.
With perhaps the largest hub of Norwegian companies in East Asia, Singapore is very familiar and welcoming to investors from Norway. Besides being clean and well-organised, Singapore is a very expensive place to do business, especially if one needs space. Some companies complain that it is hard to recruit local Singaporean talent, but by and large firms say they are very happy, said the ambassador. The Singaporean government calls all the companies every six months and asks if there is anything it can do for them, and people tell me the Norwegian government could learn from this.
The Philippines offers some advantages you cannot find in other investment locations in Asia: much of the nation is Catholic, meaning employees there may be more likely to have a cultural connection to Norwegians, they speak English and are very loyal workers. The country has growth projections of 6-7% for the next few years and the government has been deregulating the telecom, energy, financial and infrastructure sectors for years. Some 30,000 Filipino labourers work on Norwegian sea vessels, so the two countries are already quite familiar with one another. Obstacles for investors are that a lot of red tape still exists and there is an energy crisis ongoing, meaning there is no guarantee of reliable power. But the Philippines’ government has created tax-free zones for foreign companies where they try to shield them from corruption from the start of their investment, holding their hand through the process.
South Korea has long been hailed as an economic miracle, and the country is now the second-largest exporter in Asia. It is now a donor country instead of a recipient, said the ambassador. Offshore oil and gas and fisheries are its biggest sectors for Norwegian investors, as the country catches 700,000 tonnes of king crab annually. Korea is an easy place to do business and there is no corruption, but sometimes the tax authorities visit companies and decide they have a different form of accounting, said the ambassador. The OECD reports Koreans have the longest working day in the world, averaging about 12 hours, in part because they are not very efficient, he said. Medical tourism is becoming a booming sector.
Norway has what it calls a “special position” with Myanmar because it was one of the first to greenlight its trade and aid channels to the country after it opened up. Norway has even provided assistance to opposition parties and hill tribes fighting oppression. Telenor is undoubtedly the flag bearer for Norwegian investment, as it was given one of two telecom concessions by the Myanmar government, and this sector will be responsible for helping to build the country. Myanmar needs investment in energy provision, oil and gas exploration, marine, maritime, telecom, agriculture and roads and construction. There are still some sanctions against the country, so US dollar payments can be blocked. Inflation is quite high and most payments are made in cash. They drive on the right side in Myanmar, but most of the cars there are imported from Japan, which drives on the left side, worsening what is already a bleak traffic problem. Investors in Myanmar should know what they are getting into, as many things people take for granted in Norway don’t exist or operate there. The Innovation Norway team in Myanmar helps vet potential partners, introduce you to government contacts and smooth investor entry into the country.