A Safe Har­bour to cap­i­talise on the vast ar­ray of op­por­tu­ni­ties in the boom­ing Philip­pines

Scan­di­na­vian ex­pats are en­cour­ag­ing com­pa­tri­ots to cap­i­talise on the vast ar­ray of op­por­tu­ni­ties in the boom­ing Philip­pines

Norway-Asia Business Review - - Contents - HENRI VIIRALT

Paal Utvik, a Nor­we­gian naval ar­chi­tect with 20 years of ex­pe­ri­ence xin the ship­ping and off­shore sec­tor, has led a colour­ful life to say the least. His ca­reer got started in the US and South Korea, be­fore mov­ing to China to fin­ish his MBA. He re­mained there af­ter com­plet­ing his stud­ies for nearly a decade to work in busi­ness de­vel­op­ment and in­vest­ment anal­y­sis in the mar­itime sec­tor.

In 2012, Mr Utvik de­cided to leave his po­si­tion as the head of busi­ness de­vel­op­ment at Grieg Ship­ping Asia in Shang­hai to join forces with his friend David Wu, also a ship­ping and off­shore oil & gas spe­cial­ist, in es­tab­lish­ing a com­pany called Land­mark Cap­i­tal, which was to fa­cil­i­tate Chi­nese investments and financing for projects within the mar­itime sec­tor.

Land­mark Cap­i­tal be­came “rel­a­tively suc­cess­ful” and the duo was able to launch their own in­vest­ment firm from the pro­ceeds, man­ag­ing their own investments in star­tups and as­sets in ship­ping and off­shore.

Af­ter set­ting up the first oversea shop in Sin­ga­pore, Utvik and Wu part­nered with oth­ers in sev­eral lo­ca­tions, in or­der to have lo­cal pres­ence in the most sig­nif­i­cant re­gions for the in­dus­try.

Sin­ga­pore was some­what “stale and bor­ing”, Mr Utvik says, and I de­cided to move to Manila in or­der to, yet again be hands on - on the ground. That’s the only way to rec­og­nize real op­por­tu­ni­ties.

“I got to­gether with two gentle­men, Knut Ove Nytre and Jo­eran Noestvik, whom I’ve known for a while, all of us with slightly dif­fer­ent back­grounds, but in one way or another con­nected to the mar­itime in­dus­try and also all of us hav­ing served as lo­cal rep­re­sen­ta­tives of for­eign com­pa­nies. To­gether we started dis­cussing what is in­ter­est­ing and doable in the Philip­pines. With a pop­u­la­tion of 100 mil­lion and an econ­omy ex­pand­ing at 6% per year, there is a lot that can be done, es­pe­cially in terms of in­fra­struc­ture.”

Af­ter fur­ther in­ves­ti­ga­tion, it be­came clear that there is a strong need for for­eign in­vest­ment, but there wasn’t any­one in the mar­ket with rel­e­vant ex­per­tise and the abil­ity to bridge projects with financing. As a re­sult, En­try­Point Part­ners was es­tab­lished, spe­cial­is­ing in busi­ness ad­vi­sory, fi­nan­cial con­sult­ing, iden­ti­fi­ca­tion of mar­itime and re­new­able en­ergy investments, as well as tech­nol­ogy so­lu­tions across var­i­ous in­dus­tries. The com­pany is part of the ex­tended net­work of the Land­mark Group.

“Our aim is to help for­eign com­pa­nies set up op­er­a­tions in the Philip­pines, and to match them with lo­cal part­ners. This can be quite risky if you’re not on the ground as you need to nav­i­gate bu­reau­cratic red tape and lo­cal own­er­ship struc­tures. In ad­di­tion to bring­ing funds to the Philip­pines, we can act as the lo­cal part­ner for Scan­di­na­vian com­pa­nies that are look­ing to bring their prod­ucts and ser­vices here, but don’t want to spend USD 1 mil­lion per year on set­ting up the le­gal struc­ture and run­ning a small of­fice. Es­sen­tially, we’re the boots on the ground that man­age and build your busi­ness here as re­quired.”

Mr Utvik con­sid­ers risk mit­i­ga­tion, much less cap­i­tal in­ten­sive en­try, lo­cal

ex­per­tise and their net­work of of­fices around the globe that their clients can tap in at any time to be the key rea­sons for part­ner­ing with En­try­Point Part­ners.

Mr Utvik notes that the Philip­pines is the most west­ern­ised out of all the ASEAN coun­tries, and that the cul­ture along with the Catholic back­ground pro­vides mu­tual un­der­stand­ing. English be­ing the of­fi­cial lan­guage, in ad­di­tion to Filipino, makes a huge dif­fer­ence as well, as it elim­i­nates the need for trans­la­tion of of­fi­cial doc­u­ments that other coun­tries in the re­gion re­quire. This can of­ten­times cre­ate mis­un­der­stand­ings due to in­ter­pre­ta­tion of jar­gon as the lo­cal lan­guage will al­ways su­per­sede trans­la­tions.

Some of the chal­lenges of do­ing busi­ness here in­clude an un­pre­dictable le­gal sys­tem, low trust and trans­parency, over­all frag­men­ta­tion and se­cu­rity, as the Philip­pines is con­sid­ered as one of the more un­safe coun­tries in the re­gion – which makes hav­ing a lo­cal ex­pert on the ground all the more valu­able.

There is also the ques­tion of un­cer­tainty as the in­ter­nal po­lit­i­cal sit­u­a­tion, at least viewed through the lens of in­ter­na­tional me­dia, paints a rather dire pic­ture, not­ing that a lot of for­eign in­vestors are pulling out. At the same time, Pres­i­dent Duterte’s ap­proval rat­ings are at an all-time high (Bloomberg writes on 12 Oc­to­ber that Philippine vot­ers have given Pres­i­dent Ro­drigo Duterte a job-ap­proval rat­ing of 86% af­ter three months in of­fice, de­spite in­ter­na­tional crit­i­cism of a deadly drug war that has seen more than 3,000 peo­ple killed).

“While western­ers may find him con­tro­ver­sial and un­pre­dictable, the peo­ple ab­so­lutely love him, and it could be spec­u­lated that he’s bring­ing him­self, and by proxy the en­tire coun­try, un­der the me­dia spot­light on pur­pose. As a by-prod­uct of his out­spo­ken­ness, there seems to be a re­newed in­ter­est and at­ten­tion on the coun­try. Lately I’ve had peo­ple call­ing me from China, South Africa and Brazil, all look­ing to in­vest af­ter in­ves­ti­gat­ing the coun­try out of cu­rios­ity be­cause of the me­dia frenzy.” Dur­ing Pres­i­dent Duterte’s re­cent state visit to China, wherein the two gov­ern­ments signed eco­nomic and trade agree­ments worth USD 24 bil­lion, Mr Utvik noted an in­creased ea­ger­ness from Land­mark Cap­i­tal’s net­work in China to do busi­ness in the Philip­pines. The re­cent his­toric trip may have re­sulted in a golden op­por­tu­nity to as­sist Chi­nese in­vestors with M&A trans­ac­tion ser­vices in the Philip­pines.

Mr Utvik says that western in­vestors pulling out is not a huge is­sue since the Chi­nese are much quicker to in­vest, es­pe­cially in largescale in­fra­struc­ture projects rather than western­ers who mostly in­vest in smaller projects and the stock mar­ket.

The coun­try’s in­vest­ment grade, too, re­mains rock solid. Back in April, Fitch rat­ings agency af­firmed the Philip­pines at BBB- with a pos­i­tive out­look on the back of its ro­bust eco­nomic growth. The econ­omy has ex­panded by an aver­age of 5.9% from 2011 to 2015, and it is fore­cast to ac­cel­er­ate fur­ther to 6% this year and next. Other coun­tries with a sim­i­lar credit rat­ing typ­i­cally grow by only 3.3%.

For growth ar­eas in the com­ing years, Mr Utvik is look­ing to­wards power gen­er­a­tion as a key area for his clients and his per­sonal investments be­cause there is a se­vere de­fi­ciency in power and a huge op­por­tu­nity in util­is­ing the coun­try’s nat­u­ral ca­pa­bil­i­ties for re­new­ables, such as wind and so­lar, but also the vast po­ten­tial for replacing coal with LNG. Aside from those, the mar­itime in­dus­try is one that shows great prom­ise.

“The Philip­pines is com­prised of 7,000 is­lands and the whole mar­itime cul­ture is deeply en­grained in them, so it cre­ates a strong com­mon ground es­pe­cially with Nor­we­gians. Another com­mon­al­ity be­tween the two is agri­cul­ture, and there is a mas­sive, un­tapped op­por­tu­nity for fish farm­ing and seafood in gen­eral. Nor­way and the Philip­pines have had a decades long re­la­tion­ship, build largely on pro­vid­ing cheap labour, but it could be so much more.”


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