Local knowledge and ‘being there’ critical for business success in the Pacific region

Looking to invest successfully in the Pacific region? There’s no substitute for understanding your market and its people by being on the ground. Three successful regional investors outline which sectors have the most potential.

Round table with, left to right, IFC’s Jonathan Kirkby, CPL’s Mahesh Patel and Nasfund’s Ian Tarutia

Mahesh Patel founder of PNG’s CPL Group said there is a ‘close alignment among the Melanesian cultures.’

He believes relationships are especially important. ‘There has to be skin in the game,’ he said.

‘A lot of people have approached us over the years from various parts of the world, saying we’ll back you from here and you do the hard yakka on the ground.

‘Keep in mind you can just duplicate what has worked in another market.’

‘One piece of advice I give to everyone is that there is no substitute to being on the ground because you get the pulse of the market, you understand the culture of the nation and you need to be out there, knowing [what] the population wants.

‘Keep in mind you can just duplicate what has worked in another market.’

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Relationships

Ian Tarutia, CEO of NASFUND, agreed that the Melanesian cultures are aligned. He outlined three regional tourism investments with super fund colleagues in Solomon Islands (Heritage Hotel, Honiara), Fiji (Grand Pacific Hotel, Suva) and Samoa (the Taumeasina Island Resort).

‘We enjoy a relationship with our structured fellow funds in Solomons, Fiji and Samoa. The learnings are that if there is institutional support, and if there is government support, for investment, especially large scale, then things can happen.’

‘You have to know the market and … to operate in the market, know the land issues.’

Tarutia said that support involves local knowledge about approvals processes, statutory requirements, taxes, and import duty reliefs. The CEO Pacific Forum meetings also provide an avenue for sharing information among investors.

Jonathan Kirkby, Acting Resident Manager at the World Bank’s Investment Finance Corporation (IFC), agrees that having local knowledge and working with a local partner are important considerations. The IFC has made a number of strategic investments in the Pacific, including with Digicel and Bank South Pacific.

‘You have to know the market and … to operate in the market, know the land issues.’

Kirkby said tourism, fisheries, retail and telecommunications have great potential for investment.

‘New telecommunications will really open up things.’

‘Fiji, Vanuatu and Tonga already have important tourism industries which are providing incomes.

‘The Western province of Solomon Islands has enormous potential for big tourism development.’ He said China could provide enormous inbound tourism potential.

Agriculture and telecommunications

Agriculture is always going to be an important one, Kirkby added. New Britain Palm Oil is expanding on Guadalcanal in Solomon Islands and the Israeli company Innovative Agro is ‘unlocking potential in innovative ways of developing agriculture and showing the way to other countries’.

New telecommunications ‘will really open up things’, he said.

‘Understanding the role of women is also crucial.’

Tarutia said the proposed undersea submarine cable will be an important piece of infrastructure for Melanesia.

In PNG, agriculture provides our biggest source of employment at 50,000. ‘It could provide opportunities for Pacific companies to come and help build our agricultural base,’ he said.

Patel said it is important to understand the importance of relative youth, noting that in PNG half the population is under the age of 20

‘We have a vast young population hungry for goods and services. It is important to understand the local culture.’

He added that understanding the role of women is also crucial.

‘‘We’re quite proud at CPL of being focused on women’s empowerment and you can read statistic after statistic about how the economy can prosper just by empowering the female population.’

Comments

  1. Mari Ellingson says:

    Enjoyed the article. Very true. Know your market and what makes it tick is crucial to success whether in the private sector or the public sector. One of the important features in our emerging market are women game changers. Empower one and you empower a nation.

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