Thai-Norwegian Business Review

Thai-Norwegian Business Review 2015 – 02

Thai-Norwegian Chamber of Commerce

Special Review Issue

Norway-Asia Business Summit 2015

Contents President’s Foreword 5 Digital Economy

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SEB: Putting Service Back into Banking

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Theme: Norway-Asia Business Summit 2015

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Key Takeaways from the 2015 Norway-Asia Business Summit

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Security as the Key to Sustainability: Business Lessons from a Nobel Peace Laureate

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Vidar Helgesen: Asia’s Importany Role for Norwegian Business

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Is Narendra Modi a Beacon of Hope for India’s Economy?

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Economic prospects for China, India and ASEAN: A Roundtable

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A Comprehensive Insider’s Look at the Indian Economy

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Should Geopolitics Matter to Norwegian Investors?

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The Energy Outlook in Asia

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Trying to Determine an Asia Investment Location through Speed Dating

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Summit Pictures

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Parsing the Trends in Asia Manufacturing

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Penguins in Asia: Jotun;s Expansion Strategy Abroad 39 Norway’s Entrepreneurial Outlook on Asia

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Newcomer Leads Jotun Thailand’s March of the Penguins

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Nera Seeks to Cash In on Thailand’s Move to Plastic

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Finnair’s New Airbus A350 Sets a Course for Bangkok

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Thailand’s Economy at a Glance

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Membership Directory

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Editor: Thitikul K. Opdal Advertising: Anders Magnusson Journalists: Eric Baker, Christopher Caillavet Graphic Design: Graphics-Related Co., Ltd. www.norcham.com

Jotun CEO Morten Fon and Nobel Laureate Kailash Satyarthi at the Norway-Asia Business Summit 2015.

Photo: NBAI

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President’s Foreword EXPERIENCE A NEW SENSE OF FLYING ON BOARD THE NEW FINNAIR AIRBUS A350 The Norway-Asia Business Summit 2015 in New Dehli, India, was attended by a number of members of the Thai-Norwegian Chamber of Commerce. It was a well-organised and exciting summit where two Norwegian ministers and 11 Norwegian ambassadors from the region as well as prominent figures from the Indian government and business elite participated. In total almost 200 participants took part in the event.

On opening night, we were treated to an inspiring talk by Nobel Peace Laureate 2014, Kailash Satyarthi in which he shared his thoughts on what businesses and governments can do to connect with the rest of the world through the sustainable 4 ‘P’s; people, planet, prosperity and peace. In this magazine, you can read more about his thoughts in addition to many other stories and themes raised in India.

On 17 March 2015, the Thai-Norwegian Chamber of Commerce held its Annual General Meeting. We especially welcome Sverre Pedersen (dtac), Michael Shum (Jotun), Trond Tønjum (Wallenius Wilhelmsen) and Tom Varghese (Telenor) as new board members of the Thai-Norwegian Chamber of Commerce.

Spring also marked a first for the Chamber’s Premium Members: On Thursday 26 February, H.E. Ambassador Kjetil Paulsen opened the first of three annual Premium Member Luncheons at his residence. This forum offers an opportunity to learn about Norway’s engagement with Thailand and gives our premium members an opportunity to voice their opinion and come with constructive ideas for an improved bilateral business relationship.

2015 is the first year in which Norway actively promotes winter tourism to the consumer market. Norway was represented with a pavilion at Thai International Tourism Fair 2015 at the end of February. At the beginning of March a media/travel agent group visited northern Norway with stops at North Cape, the Ice Hotel in Alta and in Tromsø to view the dramatic Northern Lights, already very popular with tourists from Japan and Korea.

Turning to the news, we are constantly reading stories of Thailand’s energy demand exceeding supplies in addition to stories on environmental concerns with landfills catching fire, spills of dangerous waste etc. Our hope is that the authorities actively will work to clean up years of environmental damage to country and to use waste as a source of future energy. We have several companies in Norway eager to help Thailand in this sector.

Europe’s first Airbus A350 XWB aircraft arrive in our fleet in Autumn 2015 and flights from Bangkok start on the 5th of December. Read more about the Finnair A350 experience and book your tickets now at a350.finnair.com

#A350Finnair

Across the border in Myanmar, the subchapter of our Chamber will elect its first board this month and we look forward to hear news on Norwegian progress in Myanmar in the months to come.

Let me end by wishing you all a happy summer Sincerely, Vibeke Lyssand Leirvåg

President Thai-Norwegian Chamber of Commerce Thai-Norwegian Business Review

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Who wouldn’t want to save 30 olympic-size pools of diesel fuel - if they could?

Assessing Thailand’s Readiness for a Digital Economy

By Eric Baker

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Takorn Tantasith, secretary-general of the National Broadcasting and Telecommunications Commission, is upbeat about where the industry is headed.

The conference, organised by the European Association for Business and Commerce-Thailand and the Joint Foreign Chambers of Commerce in Thailand, focused on structures and governance needed if Thailand is to successfully develop a digital economy. Though executives and regulators were generally upbeat about prospects in the ICT industry, they also felt the government needed to do more to drive development and encourage private investment.

“Thailand had the fastest conversion from 2G to 3G platforms in the world, jumping from 80 million 2G users and 5 million 3G users in 2012 to 17 and 91 million now, respectively.

he Thai government has said developing a digital economy is a priority as it aims to promote economic growth and promote equality by reducing the digital divide. Industry players in the information and communication technology (ICT) sectors gathered on 28 April 2015 to offer their forecast on where the sector is and what urgently needs to happen for it to progress.

“We want you to know that the government is committed to this sector,” said Sompo Kanjanaporn, advisor to the ICT minister. “We have a framework with five pillars we want to build: hard, soft and service infrastructure, promoting the digital business ecosystem and providing easy access to the digital world.”

“Our goal is to have 90-95% of the country covered by broadband at the end of 2016. A company has been set up to deliver national broadband for Thailand. There is 310 kilometres of broadband cable in Thailand right now.

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Perhaps equally important, – a hybrid solution will benefit both the environment and the local communities near the site: Significant CO2 emission reductions, less noise and local pollution, and maybe even provide surplus energy to nearby health stations, schools or other important village functions.

*Assuming 10 000 towers

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“Another company has been created to encourage data centre investment in the country. The government is trying to promote a lifelong learning concept through online education projects. In addition to engaging people to learn throughout their lifetimes, our hope is the project will be of use to those with learning disabilities.

“We want to raise awareness about the benefits of a digital economy because we know it can be utilised to promote a creative work, allow for e-invoicing and driving online start-up companies. Building capacity is essential for our small and medium-sized entrepreneurs [SMEs] over the long term.”

“Let me confirm for foreign investors we just finalised the details for the 4G auctions later this year, so they are definitely happening as scheduled,” he said. “This is very important because right now it feels like Thailand is on an eight-lane highway and there is a lot of congestion. If we don’t get 4G in the near future you will see some problems because of the explosion of data.”

“The delay in the auction was because the government wanted to ensure it received the maximum benefit from 4G rollout as well as to mandate predetermined service prices to lessen inequality.

“The starting bids for the 4G auction will be 70% of the value of the appraised frequency. If the number of bidders is less than the number of licences being auctioned, the reserve price will be 100% of the spectrum valuation.

“While these two auctions in November and December will be for bands on the 1800-megahertz spectrum and 900-MHz spectrum, negotiations are already underway for allocating 4G spectrum on the 2600-MHz spectrum.”

Chaiyod Chirabowornkul, executive vice-president of DTAC, provided a laundry list of what needed to be done to build a digital economy in Thailand.

“First you need access and affordability, which means building a cost-efficient infrastructure,” said Mr Chaiyod.

“You also need a service and content ecosystem that encourages entrepreneurs to develop material. Finally you need a secure internet, which means training the public on how to safely use it, as well as fair government practices.”

Continued on page 68

Thai-Norwegian Business Review

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SEB: Putting Service Back into Banking

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EB has made a name for itself in Asia, becoming the largest Nordic bank in the region after opening its first Asian branch in Singapore in 1979. It attributes that success to the way it views itself, which is as a relationship bank.

Mr. Jan Stjernström General Manager

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SEB is serving large corporations and financial institutions with corporate banking, trading and capital markets and global transaction services. The international nature of SEB's business is reflected in its presence in some 20 countries worldwide.

The bankʼs focus in the Asian region is serving Northern European and German clients. SEB helps these home market companies entering and establishing operations in Asia as well as Asian companies expanding operations into Northern Europe and Germany. SEB has been working with homemarket clients in Asia since 1979. The bank knows the market and its opportunities. It has a broad footprint in Singapore, Shanghai, Hong Kong, Beijing and New Delhi. Close working relationships between the sites, in Asia and home markets, provide a seamless experience. With more than 170 employees in the region we have the knowledge and competence to meet customer needs.

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“The whole idea is we follow our clients as they grow, everywhere they go. Growth in Asia has been much higher than other parts of the world for some time, so it was only natural that we follow our clients here. Their growth helps lead to our growth,” said Jan Stjernström, general manager for the Southeast Asia and Pacific region at SEB. “SEB set up shop in Asia after our clients in Europe that we had strong relationships with came over here. The majority of our clients are Nordic or German, and of course Norway has long had a business relationship with Singapore because of shipping links.

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E-mail : Lars.Hagne@seb.se

“But having said that, it still comes down to trust. SEB has been here for a long time, established in 1866. For example, Norsk Hydro was founded in 1904 and SEB started providing it assistance in 1909. Our customers know they can trust us, but the advice still has to be sound.

“A lot of our small and medium-sized enterprise (SME) clients are from Sweden, but we would welcome more from Norway and Germany as there are several opportunities for them in this region. Several SMEs feel they don’t have the resources to expand overseas, so we help them with that and provide advice on financial decisions. The region can also be challenging for newcomers from Europe, especially in terms of attitudes toward corruption.”

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SEB conducted a recent survey of local chief executives and found them to be generally upbeat about the regional economy.

“Local CEOs see some warning signs, describing Indonesia and Malaysia as a concern for the short term. But for the long term, everyone is positive about the region.

The Philippines and Vietnam are getting a really good response,” said Mr Stjernström.

Map showing SEB’s worldwide coverage

“For Thailand, we see industrial production signs improving in some segments, which is positive going forward.”

Lars Hagne, head of international corporate coverage in Singapore, said the bank’s customer-centric approach has three prongs. First, it wants to offer competitive terms and service levels to help build a relationship. Second, it works to foster that relationship over the long term. And finally, it hopes to excel at advice, always putting the clients’ needs first.

“SEB also works with partners in Asia because in some markets we are not allowed to compete,” said Mr Hagne.

“We do a lot of cross-border transactions, which is challenging because we take risks on using local banks as well as the buyers and sellers.”

Thailand is notable for SEB because of the large number of private banking clients it has living here. Many of them are retirees who have moved here from Europe, said Mr Stjernström.

The bank’s Singapore office focuses on corporate matters such as cash management, foreign exchange and lending, with an emphasis on the shipping industry. It has 110 employees.

SEB also has an office in Shanghai opened in 2005, and another in Hong Kong specialising in financial institutions that started in 2011. The bank’s branch in Tokyo has 200 team members.

Thai-Norwegian Business Review

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Theme

Norway-Asia Business Summit 2015 This issue of Business Review centres on the most important meeting for Norwegian businesses in Asia this year: the Norway-Asia Business Summit held in New Delhi from 16 to 18 April 2015.

This year, Nobel Peace Laureate Kailash Satyarthi graced the event as a guest speaker on opening night. He is co-winner of the 2014 Nobel Peace Prize with Malala Yousafzai, and he shared his thoughts on what businesses and governments can do to connect with the rest of the world through the sustainable 4 ‘P’s; people, planet, prosperity and peace.

Two Norwegian ministers and 11 Norwegian ambassadors from the region as well as prominent figures from the Indian government and business elite participated in the summit. In total almost 200 participants attended the event to better understand the Norway-Asia relationship, to exchange ideas and to network. Geopolitical issues and their impact on Norwegian businesses and the economy were widely debated. Breakout sessions allowed for in-depth analysis on the energy, ICT, innovation and maritime sectors.

Mr. Chairat Teekhasaenee, MD of Skanem Bangkok donated the pressure sensitive labels to Camillian Home which is non-profit organization supporting children living with disabilities or been orphaned/abandoned on 28 November, 2014.

This year’s summit also focused on India and the vast opportunities for Norwegian businesses as the country opens up its economy. Advertising campaigns to promote manufacturing in India have run on several worldwide TV channels during recent months with the umbrella slogan “Make in India”.

The man behind the push, Amitabh Kant, the secretary for the Industrial Policy and Promotion Department, was at the summit to clarify the Indian government’s position and provide some guideposts for the future.

Our special thanks go to the Norwegian Business Association India, to the generous sponsors and to Ambassador Eivind Homme for a well-arranged Norway-Asia Business Summit 2015.

Happy reading!

Thai-Norwegian Business Review

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Key Takeaways from the 2015 Norway-Asia Business Summit

By Eric Baker

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his year’s Norway-Asia Business Summit, held from 16-18 April, 2015 in New Delhi, offered something for everyone, whether it was networking, knowledge about specific sectors, or access to heavy hitters in government and industry. Here are a few of the lessons learned at this year’s summit.

Asia offers immense potential, but investors should not enter these vast markets without doing their homework.

Companies need to know their aspirations so they can determine the right return on their time and investments.

This is where Innovation Norway, chambers of commerce and business associations around Asia can come in handy, as they know the lay of the investment landscape, can help vet potential local partners, and have developed a set of government and industry contacts to help smooth entry in Asian countries.

Investors considering expansion in Asia typically need to be committed for the long haul. In addition to the cultural and logistics differences, it can take some time for companies to build trust in a brand in this region. Several speakers mentioned their company’s goal to “be local”.

The most successful Norwegian businesses in Asia seem to have made a footprint here, becoming an accepted part of the community that gives back to society. Companies may need a different strategy for each country in Asia, but the backbone of the business model needs to be aligned in the region.

In fact, Jotun (China) won the 2015 Norway-Asia Business Award in part because it does such a good job of including local players and hires into its business there while still mixing in its Norwegian “penguins” to help inculcate the company values in a foreign setting.

Part of the reason countries are so receptive to Norwegian businesses is they expect them to be responsible. Katja Nordgaard, former ambassador to Norway and executive vice-president at Telenor Group, said “you must have control over your value chain. You need to be transparent

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and take up a role in the community, engage locally. You must fight against corruption. In the long run, these are all facets that help Norway build a competitive advantage.”

your company can fit in to the new market, he said.

Both Ms Utne and Ms Nordgaard noted the importance of hiring locally, but added you can minimise turnover and ensure your company’s values are being absorbed abroad by continually spending on training.

Tima Iyer Utne, senior vice-president of international hydro and head of Southeast Europe and South Asia at Statkraft, said “A lot of the press about India focuses on the drawbacks, but the economic progress here the past 15 years has been staggering. Part of the value of these conferences is sharing our lessons learned in Asia. If Norwegian companies were better at this we would be even more successful here.

“You must have control over your value chain. You need to be transparent and take up a role in the community, engage locally. You must fight against corruption. In the long run, these are all facets that help Norway build a competitive advantage.”

Helping to make sense of it all was moderator Nisha Pillai, a former presenter with BBC World News who now specialises in presiding over panel discussions and high-level dialogues. She tried to draw out the real opinions of the speakers, encouraging them to clarify their talking points, and prodding them about predictions for Asia going forward.

The summit hosts, the Norwegian Business Association (India), made sure participants got a feel for the country as well, planning several activities that featured the sizzle of the subcontinent. The first night saw a dazzling drumming exhibition from a street band that now tours internationally.

The dinner party the second night attempted to recreate a

Summit MC Nisha Pillai getting ready for Hard Talk at the Norway-Asia Business Summit 2015. Photo: NBAI

Rajasthan fair, complete with fortune tellers, street vendors, a puppet show, and of course a sumptuous repast.

The summit, held at The Oberoi Gurgaon, also had a programme for spouses as well as a day trip on Saturday to Agra to see the Taj Mahal, the magnificent monument to love built by a 17th century Mughal emperor to house his wife’s remains.

For some participants, networking is the highlight of the summit and they would be hard pressed to find a stronger portfolio of speakers, policymakers and analysts. The guest list featured two Norwegian ministers and 11 Norwegian ambassadors from the region, and the summit facilitated the meet-and-greet by hosting “Asia Café”, a type of speed dating where the ambassadors and their investment representatives give a short presentation to small groups about their Asian country and the challenges and opportunities it presents.

Espen Henriksen, president of Kongsberg Protech Systems, said it is important not to spend too quickly when a company first enters a market as it tries to suss out the environment. Take some time to learn the proper pace so

Anders Lier, chairman of Innovation Forum Norway, pointed out that trust is a Norwegian value, baked into the country’s flat business model, and that Norwegians companies would do well to export that value to India.

“We want the brightest people working for us no matter what field they are in,” said Mr Lier. “You have to disrupt your own business models in order to innovate.”

The talent flow does not need to run one-way either, said Kristin Skogen Lund, director-general of the Confederation of Norwegian Enterprises. In addition to promoting Norwegian businesses abroad, people and companies need to know that the country continues to build clusters of excellence in Norway and there is always room for competent leadership there.

“We shouldn’t be afraid of foreign ownership in Norway,” said Erik Borgen, president of the Norwegian Business Association in Singapore and senior advisor for Herkules Capital. “Plenty of people in Norway are enjoying quite good lives working for foreign-owned companies there.”

Innovation Norway also received much kudos for stopping investors from moving to Asia until they have done their homework. The large Asian market can be quite rewarding, but it can also be punishing if a company has not done its due diligence.

Thai-Norwegian Business Review

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Security as the Key to Sustainability: Business Lessons from a Nobel Peace Prize Laureate

By Eric Baker

T

he 2015 Norway-Asia Business Summit in India was lucky enough to have Kailash Satyarthi as a guest speaker. Mr Satyarthi is an Indian children’s rights supporter and a labour activist. His Bachpan Bachao Andolan group (Save the Children Movement) has fought to protect the rights of 83,000 children in 144 countries.

Mr Satyarthi’s activism led the International Labour Organization to adopt Convention No.182 on the worst forms of child labour, and that standard is now followed in countries across the world. He is co-winner of the 2014 Nobel Peace Prize with Malala Yousafzai, and he shared his thoughts on what businesses and governments can do and should think about the world, including operating in new markets.

“I can still feel the warmth of Norway from the day last year when I was invited to receive the Nobel Peace Prize, even though it’s a very cold country,” said Mr Satyarthi. “And when I came back to India, there was a big celebration in the streets for my achievement. But that same day came news of terrorists taking over a school in Pakistan. Journalists asked me what my feelings were, and I told them the terrorists should take me hostage instead, because all children are our children. 130 children were killed later that day.”

“We all know the role of the state is shrinking compared to civil society and popular institutions. Previously government agencies would talk about ways to stop violence against children and slavery. But now the government is looking to non-governmental agencies and businesses to combat these problems. Companies are now expected to become leaders on these issues of child labour and slavery.

“I think sustainability in business is dependent on security.

How are we going to make this world safer for children, more secure for the environment? Every day we hear stories about how the world is becoming more unsafe. This month is the one-year anniversary of 190 girls being kidnapped by Boko Haram and still we have no idea where they are.

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“We can’t rely solely on governments on these issues because there is a trust deficit. Business and the civil sector have to fill in the gaps.

“You can’t rely on merely a legal framework either. We have to create a moral system of accountability among people and our children. There is where the business community is so important. Business needs to have compassionate intelligence. This will help you better connect with the world and have better leadership.

“We can’t rely solely on governments on these issues because there is a trust deficit. Business and the civil sector have to fill in the gaps”.

“The best way to connect with the rest of the world is what I call the sustainable 4 ‘P’s. People are the most important P. We have 1 billion people living in abject poverty, with 1% of the people controlling 51% of the wealth in the world. We have to think long and hard about how to be responsible citizens in such a world. The one key to a sustainable society in this setting is education.

“The second P is planet as we need to change from a short-term perspective away from greed to a more long-term focus. The third P insists that prosperity be shared so that society gets rid of poverty. And the fourth P is peace, as business and society cannot be sustained without peace.

“This is not about dogma, it is about culture. How do we create more peace? Our youth are becoming more intolerant, and business can play an important role in solving this problem.

Nobel Laurate Kailash Satyarthi addressing the Norway-Asia Business Summit 2015. Photo: NBAI

“If one single child is deprived of opportunities, I view this as slavery. We need to become a progressive society where every child matters, and I refuse to accept that collectively we cannot do this.

“In fact, I know we can do this because I have recently seen businesses take more responsibility. I tell you we can end child slavery in our lifetime. Now is the time because children cannot wait any longer.

“In India, the 2% mandatory corporate social responsibility law needs to be prioritised. Children are suffering here. Just remember that sustainability lies in what you contribute to the world.

“Normally I do not prepare remarks for a public speech, but the Nobel Peace Prize was a momentous occasion.

Unfortunately in the run-up to the ceremony, I lost my papers. I was flustered until I remembered a story from my childhood.

“There was a massive fire and everyone was rushing to save themselves, including the king of the jungle — the lion.

But he saw a small hummingbird rushing back toward the flames. He said ‘What are you doing?’ The hummingbird said ‘I am going to extinguish the fire.’ The lion said ‘How?’ The bird said ‘I have a drop of water in my beak and I’m going to do my part.’

“I urge you to do your part.”

Mr Satyarthi has been an advocate against child labour for 35 years and has won numerous human rights awards around the globe.

Thai-Norwegian Business Review

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Vidar Helgesen: Asia’s Important Role for Norwegian Business

By Eric Baker

One of the keynote speakers at the 2015 Norway-Asia Business Summit was H.E. Mr Vidar Helgesen, Norwegian Minister and Chief of Staff at the Office of the Prime Minister with responsibility for the European Economic Area (EEA) and EU Affairs. While outlining government priorities, Mr Helgesen made it clear how crucial Norwegian businesses in Asia are to the country.

“I first visited New Delhi in 1988 when it was little more than a village,” he said. “Now it is a symbol of the transformation of the country.”

“Norwegian investments in India have increased eight-fold in the last decade. Just two days ago the IMF raised its growth projection for India this year to 7.5% and lowered its outlook for China to 6.8%. India is Norway’s eighthlargest trade partner and Norway believes its technological expertise can help lubricate Indian growth.

“One key will be a free trade agreement between the European Free Trade Association and India, which we are trying to conclude as soon as possible. Both sides agree that free trade is in their best interests.

“Norway also wants to increase its investments in Asian infrastructure, including as a founding member of China’s new infrastructure bank. Some USD 8 trillion is projected as needed for infrastructure in Asia, and Norway wants to be part of the Asian century. In fact, this very week the prime minister of Norway is visiting Vietnam and Indonesia.

“It is true that Europe will always remain our most important market. Indeed, Norway is even more integrated into the EEA than many EU member countries.

“But we would lose enormous opportunities if we didn’t look beyond Europe’s borders. We need to remove restrictions against free trade, and we’ve just done that in pacts with Singapore, South Korea and Hong Kong.

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“Innovation Norway has nine offices in Asia and the Norwegian government now views economic diplomacy as a priority for the country. We want Norway to be seen as an international magnet for talent.

“Norway is a small, open economy. As such, it is dependent on being able to trade and our ability to compete. We are trying to promote Norway as a location for education, excellence and research.

“The Norwegian government’s top priority in adapting its economy is improving competitiveness, making it easier and less expensive to do business in Norway” H.E. Minister Vidar Helgesen addressing the Norway-Asia Business Summit 2015. Photo: Axel Blom

“The recent drop in oil prices has not gone unnoticed. Our dependence on oil has passed its peak and we need a more diverse, knowledge-based economy. But this is not a crisis, rather a move to a new normal.

“The offshore industry is already adapting to this new environment, as 26 offshore technologies have been applied to different fields such as medical, automotive and aerospace.

“The Norwegian government’s top priority in adapting its economy is improving competitiveness, making it easier and less expensive to do business in Norway. We have four policies designed to accomplish this.

“First is to reduce taxes to stimulate private ownership.

Next is infrastructure, building up roads and railways. We need to do this quickly. As we say in Norway, no one is in such a rush as a dead salmon.

“Third is less bureaucracy and finally investing in knowledge and innovation. This last point is key as the government has already made significant increases in the budget for research and innovation. The foreign service has added science diplomacy to its agenda, pushing for more joint ventures in science because we see a high return on investment in this field.

“India is one of Norway’s 10 target countries for R&D partnerships, with a particular interest in the fields of ICT, nanotechnology, and biotech in medical research.

“What the Norwegian businesses at this summit are doing in Asia contributes to our ‘economic diplomacy’ as well.

It is important to Norway that you learn from these other countries. Even in the European innovation rankings, Norway is not doing good enough because there is fierce competition.

“But even more important is the role you play in showing Asian communities that doing business with us is good for them. And hopefully we are showing people back in Norway how important Asian markets are for us as well.

“I just finished a TV interview with a station back in Norway where half of the interview was taken up with questions about whether we should feel shame in doing business in Asia. I told them no, Norway doing business here is good for human rights and labour rights. The Norwegian business model can help better these societies. The goal is doing business with Norway should be good for both us and them.

“And as a minister, I am encountering fierce opposition to the EEA agreement back in Norway, with people stating that it is ‘brutalising’ our labour markets, with especially strong resistance from labour unions. But as I’ve stated before, Norway needs to remain an open economy in order to be successful.”

Thai-Norwegian Business Review

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Is Narendra Modi a Beacon of Hope for India’s Economy?

By Eric Baker

T

here is a great deal of anticipation about Narendra Modi’s policies in his first year as prime minister. Amitabh Kant, the secretary for the Industrial Policy and Promotion Department, came to the 2015 Norway-Asia Business Summit to clarify the Indian government’s position and provide some guideposts for the future.

“India has a very young population, and they voted the Modi government to power with one agenda — to grow the economy,” said Mr Kant. “If we don’t do that, we will be thrown out.”

“But in the past year, I think we’ve had a good start. The government has gotten rid of a lot of the bureaucracy and forms that were needed for business. And you can now use technology to connect different ministries and government agencies together.

“The key is to change the mindset of the last 60 years here.

If India is to grow, we have to make it easy to do business here.

“People need to know the ‘Make in India’ campaign is not about protectionism. We realise we are part of the global supply chain. Just look at our defence, medical device and railroad sectors — other than retail, India is one of the most open economies in the world.

“The last seven to eight months foreign direct investment has grown 45%. Of that FDI, 92% was automatic, meaning only 8% required government clearance.

“India is adding 9 million mobile numbers a month as people are starting to do business by mobile here, not just brick and mortar shops. There are 950 multinational companies doing R&D in India, especially around Bangalore and Hyderabad. Some half a million young Indians are working in R&D fields right now.

“The country is going through unprecedented changes too.

By 2030, 350 million Indians will move to cities. By 2050,

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that number will rise to 700 million. Think about that — in essence, we have to create the equivalent of four United Stateses.

“But hopefully we won’t do it in the same manner. The ecological footprint of Atlanta is 12 times greater than Barcelona even though the cities are the same size. So India needs to work hard to equip its cities with public transport and make sure it can recycle water as well as manage waste.

This will be a challenge as India has been a hesitant urban planner in the past.

“People need to know the ‘Make in India’ campaign is not about protectionism. We realise we are part of the global supply chain” A beaming Ambassador Eivind Homme greets Secretary Amitabh Kant at the Norway-Asia Business Summit 2015. Photo: NBAI

“The Make in India programme is meant to drive manufacturing because this will provide enough jobs for the country to grow. Some 60% of the GDP comes from services now and the government wants the share contributed by manufacturing to rise from 16.5% now to 25% by 2025.

“The government also wants to enhance logistics and connectivity. One target is to create a dedicated freight corridor between Mumbai and New Delhi. We already built one between Kolkata and Orissa province and it reduced the travel time between the two from 14 days to 14 hours.

“To deal with these major demographic shifts India plans to create 500 new cities. This will require new greenfield infrastructure and hopefully the creation of 100 smart cities that are embedded with ICT where the majority of residents use public transport.

“One major initiative is the government wants every Indian to have a bank account. This way subsidies can be more effectively passed directly to them.

analysts predict we will grow by 7.5% this year. Some people may look at us as an oasis of growth at a time when the global outlook is barren.

“Industry needs to be more sustainable here. A massive effort is underway to clean India of much of its garbage.

“But without health and education, India cannot grow.

We know this and the government must do a better job of ending meddling in these areas and improve on allocating resources.

“We are also drafting a new intellectual property law so companies can feel safe conducting business here. And the government is committed to transparency in the tax regime, which needs to be reformed. Some 84% of the companies here are small and medium-sized enterprises, and of those, 62% are micro-enterprises. Labour laws need to be changed in India to encourage companies to grow.

“If India wants to grow at 9-10%, certain legacies here need to be fixed first. India is growing at 6.5% now and all the

“One particular legacy that needs changed is the patriarchy needs to be dismantled. All the statistics and tests show the women are greatly outperforming the men in many educational sectors. If India’s economy is to truly grow, it will be women who are driving it.

“The agriculture sector also needs a huge infusion of new technology if it is to handle the massive demographic shift to cities and the shortage of labour that could entail.”

Thai-Norwegian Business Review

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Economic prospects for China, India and ASEAN: A Roundtable

By Eric Baker

E

conomists and analysts took aim at the big economic trends in Asia at the Norway-Asia Business Summit in India in April, with a few coming to quite different conclusions, especially about the outlook for China.

Sharmila Whelan, the deputy chief economist with Asianomics, was downbeat on several countries.

“We are very bearish on the global outlook, despite the quantitative easing in Japan,” she said. “The US is stuck in second gear and we predict a GDP increase of only 2% as we don’t expect a rate hike.”

“Quantitative easing is not going to work in Europe as the corporate and private sector is deleveraged. In Japan the most optimistic scenario is stagnation as quantitative easing is not working and the country has seen the biggest deterioration in real income since World War II. Deflation is coming to Japan.

“India’s demographics are different than China’s and the country cannot duplicate that model”

Roundtable discussions on Asian economies at the Norway-Asia Business Summit 2015. Photo NBAI

she said. “The leaders there have no interest in increasing credit again, so we don’t see another big stimulus package coming like last time. The Chinese government figures are not reliable, so we try to look at other numbers, such as power consumption, the Purchasing Managers Index, Chinese imports from Taiwan and South Korea. These numbers don’t back up the growth figures the government has been publishing the last few years, as manufacturing is going down.

“While some feel this will create the impetus for stimulus again in China, the situation is different this time around.

The service sector is booming, absorbing the losses from manufacturing, and there isn’t the social unrest problem there was in 2008.

“Asian exports have flatlined since 2011 because the demand environment is so weak. China is slowing as well as the property and manufacturing sectors are too indebted.

This is the start of a deleveraging period in China.”

“There is a 20% chance of devaluation in China based on the service sector not being able to soak up the losses. The country has a 56% fiscal GDP to debt ratio and we believe China is going to bail out the local governments there.

Here Ms Whelan made some waves at the conference, announcing her growth outlook for China by taking a shot at the country for fibbing its GDP figures.

“Our biggest overweight forecast this year is for India and the Philippines. India is at the end of a four-year deleveraging cycle and will start a multi-year investment cycle. We believe the rupee is undervalued by 8-10% and Prime Minister Modi will be able to get rid of some of the red tape delaying investment.

“Asianomics predicts China will have 3-5% economic growth this year, with 3% being the most likely outcome,”

Thai-Norwegian Business Review

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Continued from page 21

“Having said that, for the next three to four years, ASEAN is where you want to be. They are building factories there and the region should benefit from the downturn in China.

ASEAN was an export-focused region only for decades, but it is starting to build a domestic story. It is no longer just the backyard of China.

“But a slowdown is good, as China cannot sustain 6-8% growth for an indefinite period. The debt level in the banking sector and social unrest are risk factors. I think it is more useful to pay attention numbers in the individual sectors because they can vary widely, while national GDP is not that important.

is far beyond where it was 30 years ago and India needs to adopt the latest standards.

“You can see this story building in ASEAN since 2009, as every member country’s biggest export market is ASEAN. Almost 60% of the region’s exports are staying in ASEAN for final consumption. And the region has not had an investment cycle since 2007.”

“As Nobel Peace laureate Mr Satyarthi mentioned last night that planet is one of the 4 ‘P’s that can drive sustainable business, China is now paying the price for its phenomenal growth through the environmental damage it wreaked. Its population has also peaked, most recently reporting zero population growth.

Ms Whelan noted that cyclically India was primed to reach 9% growth in the future because interest rates are going to decrease.

Ms Whelan’s remarks caught the ire of Chris Rynning, who was a panelist for a different session at the summit and writes a newsletter on China in addition to his positions as chairman of the Norwegian Business Association in Beijing and partner of Staur Asset Management. In his newsletter, he pointed out that later the same month as the summit, the Chinese government did indeed offer a stimulus by reducing the reserve requirement for banks, thus freeing up liquidity for lending.

Mr Rynning acknowledged there are hurdles for the Chinese economy, such as credit, defaults, shadow banking and the property market. But he insisted China needs more credit, not less, and credit has been expanding for some time now. Mr Rynning said social financing in the US is almost nine times larger in absolute terms than it is in China, so the credit market in China needs to grow and become more sophisticated.

Vidar Andersen, managing director and regional head of Asia for DNB Bank as well as an old hand in China, agreed with Ms Whelan that literal growth figures are too relative.

“For example, in a matter of a few months China’s economy went from ‘overheated’ to ‘in trouble,’” he said. “So what is the proper level?”

“You have to put it in context. If China grows at 6-7% for the next three years, it will add in nominal value the same amount as the whole Indian economy in one year. So China is poised to still drive growth in the region.

“Yet China should see an improvement in the quality and productivity of its workers, as many of those reaching retirement age were not educated. And the Silk Road Initiative should benefit the border provinces.”

Subir Gokarn, research director for Brookings India, pointed out the different challenges to the buoyant Indian economy.

“The drop in oil prices had a threefold effect on the Indian economy: it helped inflation decrease to 5% from 10%; it helped the fiscal deficit reduce because of less money spent on subsidies for fuel and fertiliser; and it helped the current account deficit decline,” said Mr Gokarn.

“Right now India is replicating the conditions of its high-growth cycle from 2003 to 2008, but it has three choke points it must be mindful of. The first is food prices, as the country has had a serious problem with food inflation. Food prices have risen 10-20% since 2008 and this remains a medium- to long-term threat. People here are starting to consume and demand different types of food, most notably protein, and the agricultural sector is not ready to deal with this shift yet.

“Dealing with these three bottlenecks should unlock growth in India, but it could still be five to six years before we accomplish it.”

“The long-term potential growth rate is 7-7.5%, and it is going to be quality growth because the interest rates will be set by the market with less government interference,” she said.

Thai-Norwegian Chamber of Commerce

Returning again to China, Ms Whelan said it is becoming a tougher place for foreign investors to do business because the Chinese are only interested in those investors who will bring in technology that they can copy quickly.

“This is not such a concern for Norway as we are mainly conducting business-to-business transactions, with not as many business-to-consumer companies,” said Mr Andersen. “Our industries are so sector-focused.”

“But the more selective Norwegian companies would do well to look to Indonesia and Vietnam.”

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“Second, private investment for infrastructure has not worked as the country is greatly under capacity in this segment. Public investment is needed as new ports are being built now without rail links.

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“Finally, India’s demographics are different than China’s and the country cannot duplicate that model. Technology

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“With Mr Modi, I expect three steps forward for every one step back. I am shocked every time I come to India how expensive things are here.”

www.neratel.com.sg

A Comprehensive Insider’s Look at the Indian Economy

By Eric Baker

T

here is a feeling among some analysts that although Thailand and India took different paths to get to their current levels of economic development, they both need the same thing to break through to the next level — infrastructure investment.

Pramath Raj Sinha, senior advisor of India for the Albright Stonebridge Group, a global strategy and business advisory, as well as a keen observer of the subcontinent for decades, is sympathetic to that hypothesis. India is an unusual case study, in that it went straight from agriculture to developing the service sector, unlike most mid-level economies, such as Thailand, that turned to manufacturing.

“The Indian government has recently put a lot of money into developing infrastructure for the first time since liberalising 25 years ago,” said Mr Sinha. “One key difference between Thailand and India is the size of the population, and you can’t lift your economy up to the next level of development without manufacturing. India went straight from farming to services and the IT sector. But you need roads, power, water, rail and land rules in order to develop.

“The good news is that there is great momentum to change this under Prime Minister Modi. The feeling is the country has great potential if infrastructure investment can unlock it, but the scale of public funds is limited. That means India needs to encourage private investment.

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investment becomes key, as previous efforts have all been public-private partnerships [PPP], and all have failed miserably. India has very complicated PPP laws and a lot of the projects were delayed because of disputes about money and transparency, keeping precious private capital unused.

“The system in India is schizophrenic in that it is the largest higher education programme in the world, but the quality of the graduates is sometimes suspect,” he said. “The supply of graduates is sufficient for employers, but they often complain they are getting graduates that are not ready for employment.”

“Great strides can be made just by undergoing simple infrastructure improvements in the power grid and distribution to consumers in India. If you look at the early days of the US in the 20th century, a lot of growth came from basic infrastructure gains. Mr Modi is trying to unlock those gains now through private investment.

“Some infrastructure improvements have already been made. Most of the major airports in India now are worldclass. Our mobile telephony network infrastructure is also world-class. The country has 1 billion mobile phones now and 3G is everywhere. We’ve shown how successful you can be in industries if you open them up to investment and liberalise them.

“There is a massive push for renewable energy in India. We could quickly become one of the largest solar energy producers in the world”

“The problem stems from previous governments trying trickle-down economics, which did not work. The gap between the haves and have-nots increased greatly so the government had to do something about this. It took the easy way out and went with doles to the poorest segment of the population, which took away public money that could have been used for investment.

“If only we could replicate that success with roads, power and water. The main question is how quickly and easily we can solve these infrastructure bottlenecks, because the demand is there.

“Our oil import bill grew because we do not have our own supply, which led to huge deficits. The Modi government is trying to curb the deficit over the next few years, while still trying to build up infrastructure. This is where private

“Although the business community is optimistic about Mr Modi, foreign investors have a general feeling of unmet expectations with India. Everyone has been talking about the promise of India for decades, but there were always

Thai-Norwegian Chamber of Commerce

quick to isolate it as an obstacle to India’s developments, citing several of the same complaints made about the kingdom’s educational efforts.

A panel on doing business in India at the Norway-Asia Business Summit 2015.

Photo NBAI

delays. The last 10 years saw a policy logjam and deep paralysis. The government started to get involved in retrograde actions, such as retroactively imposing taxes, and people got frustrated as foreign direct investment [FDI] tanked. FDI was recently among the lowest levels ever.

“The mood is improving because Mr Modi has been more business-oriented since taking office and the election gave him a strong mandate. But for whatever reason there has been an overhang from the past. Everyone is waiting for the other guy to invest money so the economy is in a wait-andsee mode right now. The next 12 months will be crucial to determine if investment can be mustered.

“By contrast, foreign institutional and financial investors are very bullish on India, and as a result the stock market is doing quite well. The internet and e-commerce are also posting big gains. But these sectors do not reflect the real economy. This conference [Norway-Asia Business Summit] will be a good indication of how FDI feels and whether investors feel confident in putting in new factories, new staff and new ideas into India.”

Though some observers would argue India’s education system is light years ahead of Thailand’s, Mr Sinha was

“While there is a measure of success in operating the largest higher education system, India has failed in that it has not provided adequate education to enough of our people simply because the country is so large.

This is a social issue — we don’t have enough schools and colleges. But India has several smart, industrious people so I’m hopeful we can find a solution. And unlike Thailand, knowledge workers are not in short supply.”

Looking forward, Mr Sinha is upbeat about one sector in particular in India.

“There is a massive push for renewable energy in India,” he said. “We could quickly become one of the largest solar energy producers in the world. Our location gives us access to large periods of sunlight and the government is incentivising solar power. Analysts feel we should be competitive on pricing for solar as well.”

“Of course solar is only going to be a part of the energy picture. The power demand figures in India are so great solar alone is inadequate to meet the needs of a new economy. We could very well be running on generators in this hotel right now [in Gurgaon]. And this makes manufacturing sceptical about investing in India because you cannot run an industry without reliable power.”

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Should Geopolitics Matter to Norwegian Investors?

By Eric Baker

F

olks in the business world are often talented at assessing risks and rewards based on profit margin, market size, capacity and other figures. But as any foreign investor knows, the political situation can also have a big impact on business, sometimes even determining whether an investment succeeds or fails.

The 2015 Norway-Asia Business Summit had a session on Asia’s regional risk assessment and its view of the West where four seasoned analysts offered their take on the lay of the land.

“In China, the relationship between the Communist Party and the people is a social contract,” said Philip Lote, a journalist with NRK. “The government knows it has to deliver sustainable growth or it will lose power.”

“Clean air is the most important and sensitive topic in China today. The country needs to focus more on itself right now because it has a lot of problems.

“Thailand has had a full decade of conflict over democracy and the use of state resources, with the middle class wanting its share of the pie, and still there is no end in sight.

“India’s largest trade partner for goods and services is the EU. China’s time has come. The US and EU will eventually be replaced, and both China and India are growing their economic, political and military power”

“It is important to note that in India, the village is seen as pure and desirable. In China, the village is seen as a backwater where the people are illiterate. Chairman Mao and Deng Xiaoping helped to create this myth.

“India is capable of major surprises. Identity politics is no longer enough, as the middle class expects concrete results now.

“I think it is wrong to assume just because China and India will become the two largest economies in the world they will want to have political power as well. This new scenario is not normal; it will be a completely new setting.”

“My advice to businesses looking to move abroad is governance is weak in many Asian countries. Do not expect a governmental agency to do all its homework — do your due diligence before investing.

Amy Kazmin, a South Asia correspondent with the Financial Times, partially agrees with Mr Lote’s assessment of India.

“One example is when Uber came to India. Part of Uber’s business model is it claims to validate the records of all its drivers through police verification documents. But after a driver raped a passenger, it was discovered the driver bought the document on the street and he was not the only one. These are the types of problems that can sink your business.

“Gandhi taught that authentic India lived in the village and the corrupt live in the city,” she said. “But people in the village don’t share that view. They want to go to the cities to get a better job. This is the only way they can escape the caste system. Yet there is no urban planning in India to accommodate the villagers moving to the city, unlike in China.”

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“In Asia geopolitics can change rapidly overnight. If you look back to Indonesia in the 1990s, Suharto was in full control of the country. But when growth disappeared, so did he. The whole political system changed.

Thai-Norwegian Chamber of Commerce

“Another is the Rana Plaza collapse in Bangladesh where over 1,000 people died. Multinational companies such as

Benetton, Walmart and H&M all had contracts with the employer at this building and faced massive protests after the disaster. These companies assumed everything was fine because the buildings had permits, but they learned the hard way that building inspectors didn’t do their job. Companies need to check the permits, the building infrastructure and its structural integrity themselves, and the industry has now formed a group to do this because they can’t depend on the local government.”

Meera Shankar is the former Indian Ambassador to the US and she believes global economies are so interconnected now it is in every county’s best interests to co-exist peacefully.

“India’s largest trade partner for goods and services is the EU,” she said. “China’s time has come. The US and EU will eventually be replaced, and both China and India are growing their economic, political and military power. But these economies are so linked, China cannot have the US and EU falter.”

“I believe China wants mutual respect and for conflicts to be avoided. I think China wants Asia for Asians, for the region to take care of its own security. It is not a coincidence that the Trans-Pacific Partnership does not include China or India. China sometimes sees the US ‘pivot to Asia’ as a way Continued on page 49;

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07.11.14 10:58

The Energy Outlook in Asia

By Eric Baker

D

espite proclamations that Norway is rebalancing its economy as global oil prices bottomed out around 45 USD earlier this year, oil and gas are going to continue to play an integral part of the country’s fortunes.

But what does the future hold for the industry, and what energy sources will Asia turn to as massive demand is expected to materialise the next few decades?

“The BJP is trying to roll out a programme where 400 million Indians get a solar panel the size of a briefcase. It costs 145 USD and you leave it in the sun for three hours and it can power three lamps, a small television and charge a mobile phone. The government and the people will split the cost over five years. The country is also trying to encourage biomass energy, but it does not have enough raw materials for production. We will only be able to move away from a fossil fuel economy gradually.

The 2015 Norway-Asia Business Summit had a panel assembled to mull over those very questions.

“India still believes oil will remain the world’s most important fuel for the next 25 to 30 years though. The Arabian Sea will be a key location for the next two decades and one Norwegian companies can look to target with their expertise in oil and gas services.

“Oil reserves stand at only 4% yet 50% of energy demand is for oil. I don’t think I am exaggerating by stating this is unsustainable,” said Narendra Taneja, the energy advisor for India’s Bharatiya Janata Party (BJP). “But what we are witnessing here is a renewable revolution. The Indian government has committed to produce 175 megawatts in renewable power over the next six to seven years. Some say it is too ambitious, but I say it is a start.”

“India still has 400 million people without power. There are 920 million mobile phones in India, so it is common to see people ride their bicycle to charge their mobiles out in the country. We are looking at every potential energy source, including nuclear. The goal is to become 100% green, but that is easier said than done. The country is also very high on solar, but when people hear nuclear some of them make a face. Well what is solar energy but sunlight fusing energy into solar panels? I am pretty confident that once nuclear fusion becomes 100% safe, this will be a viable energy alternative.

“We also see the potential for 180,000-240,000 MW of hydropower in Nepal and Bhutan. But coal still makes up 68% of India’s power generation, and energy comprises 25% of the country’s GDP. Even though aspirations are high and the middle class wants finer goods and political accountability, for many Indians they can’t afford anything other than coal.

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Thai-Norwegian Chamber of Commerce

“This is the gas century and the centre of gravity is in Asia”

“The demand for oil is now driven by Asia, not the West.

I think India has more oil and natural gas, as the Bay of Mumbai could be rich in resources. Other countries set to perform well in oil and gas are Bangladesh, Myanmar, Pakistan, Oman, Tanzania and Somalia.”

“The oil minister for Saudi Arabia admitted in 1986 the country kept oil prices too high in the past, driving up production demand and weakening consumption,” said Torbjørn Kjus, chief oil economist for DNB Markets. “Oil prices were weak for the next 17 years. Now the situation is different as demand is still there and production is quite high. DNB advised Saudi Arabia not to cut production despite the big drop in prices, and the OPEC leader has vowed to maintain production levels even if the price falls to 20 USD a barrel.”

“Saudi Arabia is a family-run country so the leaders are not worried about a panic from low oil prices because their power is entrenched. Their goal is to price others out of the market, and indeed the most expensive resources are being pushed out. We are seeing enormous cuts in global oil investments, which is going to hurt Norwegian expertise companies. Saudi Arabia wants oil to remain cheap so the oil age lasts longer.

“The cost to produce shale oil has fallen 30-40% in recent years, but Norway needs a high enough oil price in non-OPEC countries for non-shale oil production to continue. Offshore production costs are down 25% in the US. Global oil demand is mainly coming from oilsubsidising countries.

“Our outlook is the oil price will average 68-70 USD over the next 12 months. There are enormous negative factors in the system right now, and I don’t believe the price will hit 100 USD again for a long time. The new normal will be in the 60-80 USD range as production dips, there is vast spare capacity, and big drops in investment in Arctic areas, deep-sea drilling, Canada’s oil sands and some of the more exotic shale oil methods.”

“This is the gas century and the centre of gravity is in Asia,” said Hilde Merete Nafstad, president of Statoil Asia Pacific.

“Even by 2040, oil and gas will still make up over 50% of global energy use; it is not realistic to expect otherwise. We are trying to be as efficient as possible, but unfortunately coal is making a comeback, even in Europe, because it is so cheap. We also want to have a foothold in renewable energy going forward and are a joint partner in a giant windmill project that is placed in a remote area where it will not affect people or birds, yet there are very powerful winds.”

expand through the value chain and become a producer in Asia. India is not on the radar at this time, but Tanzania has had some great discoveries in natural gas lately.”

Sanjay Joshi, the managing director for Aker Solutions in India, made a plea for Norwegian companies to head there.

“There is huge potential in India because 80% of the gas fields have not been explored,” said Mr Joshi. “Norway has the pipeline infrastructure, shuttle services and regasification that India definitely needs. If a company would take the risk, this is a great opportunity. My suggestion would be to focus on gas because no one is talking about natural gas prices. Norway has the technical expertise to help out in India.”

As for other power sources, Mr Taneja noted that in one stretch of India in the Himalayas, about 50 to 60 dams are planned. “The locals hate it and are protesting like mad.

They say it is going to ruin their lives,” he said.

“Hydropower has to be sustainable,” said Tima Iyer Utne, senior vice-president of international hydropower for Statkraft AS International. “A great percentage of building a dam is consultation — you have to talk with the locals.

Unfortunately many hydropower developers in Asia are not consulting, including for projects in China, India, Myanmar and Laos, which is going to make their jobs that much more difficult.”

“This gives the industry a bad reputation. The Himachal Pradesh government needs to deal with the locals and set up meetings. Dealing with non-governmental organisations is about being open, telling a story. You need to be ready for criticism.”

“In India we say ‘let the elephant enter the forest first’, and there’s a little bit of that going on in the oil industry. Still two-thirds of Statoil’s production comes from Norway, and this will continue to be the backbone of our production.

We produce 600,000 barrels of oil per day in Norway and 200,000 barrels of shale oil. The company would like to

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Trying to Determine an Asian Investment Location through Speed Dating

By Eric Baker

T

he 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

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Thai-Norwegian Chamber of Commerce

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 wellorganised, 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

A country specific speed-dating session at the Norway-Asia Business Summit 2015. Photo NBAI

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.

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Summit Snapshots A proud Norway-Asia Business Award 2015 winner Jotun China represented by Erik Aaberg flanked by Minister Helgesen and outgoing NBAS Chairman Erik Borgen and the runners up from Aker Solutions Malaysia and DNVL-GL Clean Tech Centre Singapore. In addition snapshots from both formal and more leisurely activities at the summit. Close to 200 delegates were represented at the summit including 12 Norwegian heads of mission seen on stage.

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Penguins in Asia: Jotun’s Expansion Strategy Abroad

By Eric Baker

By Eric Baker

A

W

sia is so vast many of its economies are at different points along the development curve. But one common characteristic is that almost every country needs an element of manufacturing if it is to grow.

hy does a global leader feel the need to set up production in every market in which it sells? Jotun chief executive Morten Fon took the microphone at the 2015 Norway-Asia Business Summit to provide some insight on his company’s unusual foreign expansion tactics.

The 2015 Norway-Asia Business Summit had a session on manufacturing in Asia with speakers from some of the biggest economies to focus on what the challenges are for industry and where the sector can go from here.

Tejpreet Singh Chopra is the chief executive of Bharat Light & Power and the former chief executive of GE in India. His primary concern is innovation in India.

“The biggest challenge at GE was the lack of a foundation in India,” said Mr Chopra. “I had to go to GE and lobby them to set up shop in India instead of running it from the US because the needs are so different here than in the US.”

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Parsing the Trends in Asian Manufacturing

Tejpreet Singh Chopra, CEO of Bharat Light & Power.

Photo NBAI

“I think anyone considering setting up a business in India that relies on innovation needs to understand that people here have different needs than in the US and Europe.

That means the innovation that is likely to take place here will be radically different than in the West. But India still needs to improve its innovation standards to meet global requirements.

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The nature of our business Our relationship to Norway I was introduced to the Chamber by:

“In Asia we are going through some of the biggest demographics changes in centuries. China uses 49% of the world’s output of coal for thermal power, and I am worried that India will take the same path”

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“GE wanted to focus on technology, not creating a foundation. So four and a half years ago I decided to leave GE so we could try to solve the problem ourselves. Our company sets up wind and solar generation around India.

“India suffers at traditional innovation, but it is excellent at frugal innovation, that is making things smaller and cheaper. In fact, we might be the best in the world at it.

“In Asia we are going through some of the biggest demographics changes in centuries. China uses 49% of the world’s output of coal for thermal power, and I am worried that India will take the same path. That is why I set up my company.

“Over 50% of India’s population is under 35. The agriculture sector employs 53% of workers here now. The country simply has to develop its manufacturing sector if it wants to survive, let alone grow.”

Jotun has made a name for itself by declaring they are going to have a manufacturing presence in every market where it sells, quite unconventional in this age.

“At least half of our total production is in China now,” said Erik Aaberg, vice-president of Northeast Asia for Jotun Coatings. “Our employees take more responsibility with this business model, and our employee turnover has only been 7-8% in China’s fast-growing economy. We think this is quite good.”

“Why are we in Asia? We follow our customers. It is that simple,” said Mr Fon. “Our logo is a penguin, and we think it is fitting because it is an animal that can take harsh weather, is very loyal and take care of its community. Our leading sector is marine, so our coatings have to be able to handle harsh weather. And our staff, who we like to call penguins, get sent in to different communities where we try to build something from the ground up.”

“Our main strategy is organic growth.

We don’t often buy other companies.

And we like to start everything from scratch”

“Our main strategy is organic growth. We don’t often buy other companies. And we like to start everything from scratch. This means we can build up using our values, we don’t have to try and mix them with other cultural values, which can sometimes water down the values. This is why we send in our penguins initially to get the message across.

“We also follow growth figures internationally. As economies become more developed, in general they use more paint.

“Another facet of our strategy is we are in it for the long haul. We started a factory in India in 2008 and I just received an e-mail from our country manager there last week that the plant finally broke even.

Opening of Jotun’s Color Center in Yangon in 2012. Norway’s Minister of Foreign Affairs, Espen Barth Eide (second left) and Jotun CEO Morten Fon (rightmost). Photo: Kristine Hasle

“We believe in order to succeed, we have to produce locally for each market. Paint has a lot of water in it. It doesn’t make sense to ship water around the world. But we also do it because it gives us a better idea of what the local market wants, meaning what we produce in that country is to be used in that country.

“You have to adapt to the local market. For example, in Norway we don’t dilute the paint much, but in China they mix paint with 50% water. So you have to make sure the kind of paint you are selling is appropriate for the market.

“Yes, we pay local wages in the countries where we operate but we also sell at local prices. Jotun still does its research in Norway.

“I feel it is very important for our company to get into Myanmar now. In 1991 India opened up and asked us to come invest. I wish we would have because we would have had a leading market position much earlier. You need to get in early and develop with the country if you want to build your brand. Maybe we can put some paint on the buildings there and brighten life during their growing pains.”

Jotun is a Norwegian chemicals company that deals with paints and coatings. It has 36 production factories in 21 countries and 9,500 employees. The company’s products have been used on the Eiffel Tower, the Petronas Towers and Burj Khalifa in Dubai.

Fax this form to 0-2627-3042 or to email: secretary@norcham.com

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Norway’s Entrepreneurial Outlook on Asia

By Eric Baker

K

ristin Skogen Lund is Director General of the Confederation of Norwegian Enterprises, the main representative organisation for Norwegian employers. She gave a talk at the 2015 Norway-Asia Business Summit in India, offering words of wisdom for entrepreneurs potentially looking abroad as well as expatriates keen for guidance on where Norway stands.

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“The recent drop in oil prices has affected Norway, as it has many countries,” she said. “But we are not in a crisis, rather a rebalancing. We know we cannot develop as an isolated country. Norway has only just begun to diversify its economic portfolio, but we will continue to see success in the oil sector.

“Yet moving beyond doesn’t mean dropping everything you’ve been good at. You can gradually shift in some areas where you already have an advantage. Some of these can be country-driven, such as energy and maritime for Norway.

Some are company-driven, such as the changes taking place at Telenor, Jotun and Yara.

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“Norway’s climate is harsh, which has led Norwegians to be good at extracting resources from this environment and adding value to them. With the new global focus on climate change, Norwegians ability to extract the most from scarce resources will be in high demand.

“The spirit of Norwegian business is innovative because it has been forced to be. Norway has a high cost level, so we need to work that much harder to stay competitive.

“Norwegians are also good at adapting, being a small country and not very imperialistic. We are lean and mean, not very bureaucratic, and keen on street smarts, all of which should be an advantage going forward.

“Norwegian businesses in Asia receive too little recognition for representing Norwegian entrepreneurship abroad.

Norway depends on these businesses, as the view back in our home country is too insular. Norwegians often only

Director General of Conferation of Norwegian Enterprise (NHO) addressing the Norway-Asia Business Summit 2015.

Photo: NBAI

look at the Norway perspective on matters, which is too provincial.

“We are not sufficiently good enough at rewarding businesses that succeed in Asia because there is such a great deal of risk involved with doing business here. It is important for us to sell others on Norway, but also to try and bring the world to Norway. We sometimes forget there is so much talent outside of Norway that we could use.

“As for specific countries, the situation in China is worrisome. It doesn’t seem to be calming down with time, and to some extent it may be getting worse. Many Norwegian businesses are good at dealing with this tension in a difficult environment, but the dialogue at a high level is not functioning.

“Norwegians have a lot to learn from India as competitiveness is something you pick up in the market, not in a lab or an office. If you can compete in India, you can do it anywhere, I think.

“Elsewhere, Norway’s new relationship with Myanmar has proven to be an advantage in business dealings, while our development programmes in Vietnam have been received positively. For the most part, Norway is seen as neutral and easy to deal with.

“I would close by reminding you that business can solve more of society’s problems than we think and we should always be on the lookout for ways we can help.”

Making it possible Nordea Bank S.A, Singapore Branch is part of Nordea Group, the leading financial services group in the Nordic and Baltic Sea regions. Some products and services may, due to local regulations, not be available to individuals resident in certain countries and their availability may depend, among other things, on the investment risk profile of persons in receipt of this publication or on any legislation to which they are subject. Nothing in this publication should be construed as an offer, or the solicitation of an offer, to purchase, subscribe to or sell any investment or product, or to engage in any other transaction or provide any kind of financial or banking service in any jurisdiction where Nordea Bank S.A., Singapore Branch or any of its affiliates do not have the necessary licence. Published by Nordea Bank S.A., R.C.S. Luxembourg No. B 14.157 on behalf of Nordea Bank S.A., Singapore Branch, 3 Anson Rd #20-01, Springleaf Tower, Singapore 079909. www.nordeaprivatebanking.com subject to the supervision of the Monetary Authority of Singapore (www.mas.gov.sg).

Thai-Norwegian Business Review

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Newcomer Leads Jotun Thailand’s March of the Penguins

By Christopher Caillavet

A

fter one month at the helm of Jotun’s Thai arm, Michael Shum is still feeling his way around. The newly christened managing director, a Hong Kong native, is no stranger to the paints and coatings business, having served as sales director at Jotun Marine Coatings in Shanghai for over a decade. Still, he admits to a slight case of culture shock in the Land of Smiles.

“I’ve just survived one month,” Mr Shum jokes during an interview in his office on the outskirts of Bangkok. “It’s brand-new stuff for me. I’m very excited. Obviously, quite a lot of things to learn, like the culture, the business culture here. It’s a different challenge. A lot of good food here.”

The company he leads is part of a worldwide network originating in Norway. Founded in Sandefjord in 1926, Jotun Group has representation in over 90 countries and employs more than 8,000 people. The Thai operation took root in 1968 with the opening of Jotun’s first paint factory in the Far East. In 1978, Thailand became home to the group’s first powder coatings company outside of Norway.

Jotun specialises in paints, powders and coatings found on everything from phone booths and TV sets to oil rigs and ocean liners. In Thailand, it competes locally with well-known names like TOA Group. Jotun divides its business into four product segments as follows: Marine coatings. Jotun offers sophisticated products that effectively prevent corrosion and fouling on oceangoing vessels. Over 15,000 vessels are protected by Jotun, which holds the No.2 position in the segment for the Thai market.

Protective coatings. Jotun is a leading manufacturer and supplier of high-performance coatings. Its specialities are corrosion protection and passive fire protection of steel, as well as protection and decoration of concrete. No.1 position in Thailand.

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Decorative paints. Jotun sells and distributes interior and exterior paints to consumers and professionals. No.4 position in Thailand and growing fast.

Powder coatings. Protection and beautification for massproduced metal articles. Architectural, industrial and functional applications. No.1 position in Thailand.

In a note for Jotun’s in-house magazine, group CEO Morten Fon praised 2014 global sales that reached an all-time high after a slow start: “Like our competitors, Jotun struggled in the Marine segment, mainly due to weak orderbooks at shipyards. However, we retained our leading market share in the global marine coatings market, improved our position within the maintenance market and recorded growing success with Jotun Hull Performance Solutions [a service that helps improve fuel economy and emissions control in ships].”

Going forward, Mr Fon predicted a rise in global demand for coatings in all segments, with especially strong growth in the Middle East and Southeast Asia. The company’s rapid growth over the past decade “has helped finance the expansion of production capacity in existing markets, our entry into promising new markets and investments in R&D, business modernisation and recruiting and training”.

“The result,” he continued, “is that Jotun is one of the fastest-growing companies in a high-growth industry with a strong balance sheet. Of course, Jotun is sensitive to political unrest or changes in local economies in markets where we are active. And as a global company, we can be impacted by broader economic trends, such as changes in currency values, the price of oil or raw materials. But by remaining active in four segments in multiple markets, we have shown that we can weather just about any crisis.”

Jotun pursues what it calls a differentiated approach: a global view with a regional and local focus. The group favours an organic growth strategy over mergers and acquisitions, preferring to develop new and existing markets.

A bird-eye view of Jotun’s Thailand factory. Photo: Jotun

“For Asia, we divide the business into two regions, Northeast Asia — China, Japan, Korea — and Southeast Asia,” Mr Shum says. Jotun sees Myanmar and Cambodia as countries with strong growth potential. Other major markets include the Philippines, Vietnam, Australia and Singapore, with Jotun’s strategy tailored to the maturity of each economy.

How does Thailand fit in the picture? “It’s still developing, not mature yet,” Mr Shum says. “We see it as a stillgrowing market, but in my own opinion it will depend on the political situation. Because from time to time [Thailand has] political issues. The pulling back on economic growth will affect our business. In general, we are one of the sectors being affected.”

Jotun’s logo consists of a globe and a prominent penguin.

The aquatic bird, evoking Jotun’s background of selling paint to the whaling fleets of the Antarctic, does double duty as a marketing mascot and a cherished symbol of the corporate culture. “We call ourselves Penguins,” Mr Shun says. It’s a nod to the sense of collaboration and camaraderie that Jotun tries to foster — a spirit that Jotun Thailand’s new boss hopes to channel as he leads his team into the future.

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Nera Seeks to Cash In on Thailand’s Move to Plastic

By Christopher Caillavet

N

era Telecommunications bills itself as a leading global communications company and a premier IT solutions provider. The Singapore-based group with Norwegian roots recorded revenue of SGD 182.4 million and a pretax profit of SGD 20.2 million in what it termed “a relatively positive” fiscal 2014.

Q: Who are some of your big clients?

Nera’s focus in Thailand is electronic payment solutions, providing end-to-end support for brick-and-mortar, internet and mobile commerce in the banking, financial services and retail industries.

A: Actually, it’s the policy of the central bank to try and push the debit card. If you’re going to do that, you have to have a system that’s ready for that. You have to have the machine that’s able to check the credit line or transfer the money from one account to another, obviously. Because of fraud, I believe that in the future, in five years’ time, we’ll see a change in this business.

Maj. Choakdee Dhamasaroj, a senior vice-president of Nera and country manager for Nera (Thailand) Ltd, has more than three decades of work experience in engineering and management in the telecommunications field.

A past president of the Thai-Norwegian Chamber of Commerce and veteran of the Royal Thai Army, Major Choakdee spoke to the Business Review about Nera technology and how it’s put to use in Thailand.

Q: In a nutshell, what does Nera Telecommunications do?

A: Nera originated as a Norwegian company, but now the head office has moved to Singapore. We do manufacturing of microwave equipment; not the microwave oven, but microwave communication. We also do other business like IT and credit card terminals. Wi-Fi, all these things.

Q. How many employees work in the Thai operation?

A: Right now it’s a very nice number, 111.

Q: And most of these workers program the credit card terminals for retail clients?

A: Yes. If you go in the shop and see the Nera sticker on top of the equipment, that’s by us. By the end of this year, we expect to have about 200,000 terminals all over the country.

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Thai-Norwegian Chamber of Commerce

A: The biggest client at the moment is Kasikornbank.

Q: Do you think Thais are becoming more open to credit cards and electronic transactions? It’s such a traditional, cash-based culture.

We believe that in the future the plastic card will disappear. It will all be on the phone. You might have a picture of your credit cards on the phone and swipe for the one you like.

Q: How so?

A: In Europe you have chip and PIN. You have the chip on your card and have to enter your PIN. In Thailand we have different rules. You can have chip and sign, chip and PIN, chip only. At the moment it’s mostly chip and sign in Thailand. You use the card and leave your signature. In the future it will be chip and PIN. Q: Is Nera involved with radio frequency identification?

A: Your phone and my phone, one of the features is called NFC — near field communication. It works similar to RFID. We believe that in the future the plastic card will disappear.

It will all be on the phone. You might have a picture of your credit cards on the phone and swipe for the one you like.

Q: How is the company doing in Thailand?

A: Frankly speaking, in the past few years I think we’ve been like Superman, surviving in a country with an unstable situation.

Q: Flying above it all?

A: Yeah. The office here is Nera is promoting the use of poratble credit card terminals for the peace of mind of cardowners located on Asok [Road]. The other side of the street was Q: Is Nera poised to grow in Thailand? closed down [during the 2013-14 protests]. It’s not that easy to survive. But we’re in a niche area of business, so there’s A: We see growth of credit card terminals in the provincial not much to compare with other people. areas. Before, it was 60% or 70% deployed in Bangkok and Q: Who are your competitors?

A: In wireless infrastructure it’s Nokia, Siemens, AlcatelLucent. In payment solutions it’s local companies, but I don’t think they’re big like us. We are considered one of the biggest for the number of units we service. We are the biggest in Thailand. More than 50% market share.

Q: Does Nera have a factory in Thailand?

A: No. Here we just do the service. The equipment mostly comes from China. The client buys the terminal from us and we have to write the program in. After that we deploy the machines to the shops, and if anything is wrong we go and service them.

Q: Are all of your local employees Thais?

A: Yes, all 111.

30% or 40% upcountry. But today we see it’s starting to be 50-50.

Q: What are your thoughts on Thailand’s situation right now?

A: I think the problem is the trust of the foreign countries.

I think the statement of General Prayut [Chan-o-cha, the prime minister] was okay, that this country has a different situation, different conditions. The military, I believe them.

I’m ex-military, so I fully understand that no one wanted to make a coup. Because, first, it’s risky. The U.S. is trying to say, oh, martial law. But during the Democrat protests, one to two people died every night at the protest areas. But after martial law, nobody died. So, you have to consider which one is better for you. To me, I’m happy with the martial law.

During the Democrat period, I was scared to go anywhere because somebody might shoot me. Every time I meet with commanders of the armed forces, they say “Not again! I didn’t want to do it. But I had no choice.” Otherwise, if they didn’t stage a coup, people would be killing each other.

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Finnair’s New Airbus A350 Sets a Course for Bangkok

By Christopher Caillavet

F

innair is poised to become the first European airline to operate the Airbus A350 XWB. The next-generation jet offers a spacious cabin, better fuel economy and a quieter ride. The interior, by Finnish design house dSign Vertti Kivi & Co, will feature panoramic-view windows and ambient LED mood lighting. Finnair has placed orders for 19 of the planes.

The maiden A350 flight is scheduled for Oct 25 from Helsinki to Shanghai, with Beijing, Bangkok, Hong Kong and Singapore routes to follow shortly.

Chanchai Wangyuenyong is Finnair’s country sales manager for Thailand and Indochina. He joined Finnair a year and a half ago after 30 years with Japanese airlines.

The Bangkok native enjoys collecting old coins, but new aircraft were top of mind during an interview with the Business Review.

Q: Besides Thailand, what are some of the biggest markets for Finnair in Southeast Asia?

A: We have flights from Helsinki to Singapore, to Bangkok and to India in this area, and in the upper part of Asia is Hong Kong, China, Japan and Korea.

Q: Is Finnair happy with Suvarnabhumi airport and the facilities there?

A: So far it’s okay, no problem. We have some seasonal flights from Helsinki to Phuket and Krabi, only in the wintertime. Most of the time we operate out of Suvarnabhumi in Bangkok. During the summer season there is one daily flight; for the winter season there are two daily flights.

Q: What has been the impact of falling oil prices on the airline’s recent operations?

A: Most of the carriers hedge their fuel. In terms of Finnair, we haven’t had much impact from the falling oil price.

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With the currency exchange between the euro and the U.S. dollar, the U.S. dollar has appreciated.

Q: Looking beyond Asia, what is Finnair’s strategy for Europe and the Americas?

Q: Does Finnair have any partnerships with other airlines serving Scandinavia from Thailand?

A: We have a network between Asia and Europe, and then Europe over to the U.S.A. So between Europe and U.S.A., we are now operating to Chicago, to New York, and on seasonal flights to Miami. And on that network, which is across the Atlantic, Finnair has a strategy to collaborate with fellow oneworld members American Airlines and British Airways under what we call an Atlantic joint business agreement. Between Asia and Europe, we have joint agreements with Japan Airlines using the transSiberian routing over Russia, and also British Airways and Iberia. Between Asia and Europe we have many destinations, we fly to 14 destinations in the Far East and take advantage of the fact that we are one-two time zones closer to Asia than the rest of Europe. Our tactic is to double frequencies by 2020 from 2010. Last year in the wintertime, we changed the Phuket and Krabi charter flights to scheduled flights.

A: No. The Nordic airlines here are Finnair, with regularly scheduled flights, and Norwegian, a low-cost carrier. We don’t have any collaboration with them.

“We fly to 14 destinations in the Far East and take advantage of the fact that we are one-two time zones closer to Asia than the rest of Europe. Our tactic is to double frequencies by 2020 from 2010”

A: Yes. This type of aircraft will be put into operation from this year. Currently we are operating Helsinki to Bangkok using a fleet of Airbus A330 and A340. In summertime we fly mostly A340 on Bangkok, while during winter we operate a combination of A330 and A340. However, this coming winter, passengers on the Bangkok route will have an opportunity to experience the new Airbus A350, a totally new technology wide-body aircraft from Airbus.

Finnair will be operating this type of aircraft starting with China and Bangkok will be the third destination to use this aircraft. It’s a bit bigger than the A330, with our configuration having nearly 300 seats. It’s going to replace the A340, but we’ll still keep the A330 in the fleet.

Q: What are Finnair’s busiest routes?

A: We fly from Bangkok to Helsinki, our hub, and from there we feed to 60 destinations in Europe. Most of the traffic is going to Helsinki and some European destinations.

Q: The past year has seen some high-profile aviation disasters. What steps is Finnair taking to maintain its excellent safety record?

Finnair’s first A350 XWB takes shape at Airbus’s final assembly line in Toulouse, France.

Photo: Airbus S.A.S./A. Tchaikovski

A: Finnair is one of the European Union carriers, so standards are maintained according to the very strict EU standards.

Q: Let’s talk about the fleet. Specifically, Finnair’s exciting new Airbus A350.

Q: The A350 will be the workhorse for long-haul routes eventually?

Q: What is Finnair’s pricing strategy?

A: We have several types of pricing in the market. In business class, we have very, very flexible or restricted fares depending on availability. In economy class, we go with whatever suits the market according to demand. Our pricing is set according to the benchmark in the market.

Q: Would you say that Finnair is in a growth phase?

A: As far as Bangkok, we just finished Q1. The first quarter of the year 2015, we expect to produce results close to the target set by our head office. Then we have another three quarters of challenge, and I feel it’s not too easy under the present economic situation. Especially when the euro is maybe 20-25% devalued compared to the previous year. The competition in the market is very tough. Most of the airlines have to survive under unfavourable economic conditions.

And in Thailand itself, we are facing economic downturn to some extent. The government is trying its best to boost the economy, but it’s not easy. So the market situation is not in the favour of the airline business, I believe.

A: Yes. In the initial stage we will have crew familiarisation in Europe, then put them into long-haul operation.

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Continued from page 27

to contain China, but the world is very much different than it was during the Cold War when containment was viewed as a legitimate strategy.

“It is true that whether there will be armed conflict in Asia mainly depends on China. Can it innovate? How nationalistic is it? There may be minor skirmishes, but I don’t expect any major conflicts. Japan and China have pulled back from the brink as they have economic stakes in each other.

“India looks at the West as the wellspring of several of the ideas we use: a social welfare state, democracy and free markets. We need to adapt those ideas for India. We see the West as leaders in innovation and technology, and technology is going to drive progress in the 21st century going forward.

“The impetus for change in Eastern societies must come from those countries, not from the outside. India believes it can help with democratisation by building institutions, and we want Western engagement in Asia. But dominance by any one country is not good for the region.

“Myanmar is coming out of a long dormant period and the international community and businesses need to be there to help smooth the transition. The key is they need to be patient, though, as it will take time.”

Dane Chamorro is the managing director of ASEAN for Control Risks, a global consulting firm. He highlighted his takeaways from dealing with clients in the region.

“Understanding the market you’re going into is essential.

Your business can collapse if you don’t truly understand the market, which can be different for the same product in another country,” he said.

Manufacturing quality collection requires free flow of creativity, understanding, knowledge and a lot of support.

They say, behind every great designer, there is a great manufacturer.

HIGH END JEWELRY MANUFACTURER 48

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Thai-Norwegian Chamber of Commerce

“Compliance has become a buzzword. It means what you must do, while ethics denotes what you should do. This message plays very well in every market in the world, and companies are starting to put more of an emphasis on ethics.

Roundtable discussions on Geopolitics. Photo: NBAI

Indonesia elections and the speaker was ranking the top ten candidates for President. Joko Widodo was not even listed. Firms need to be able to change quickly when the environment shifts.

“For example, in China a top Chinese oil company refused to put air quality as one of its top ten priorities despite several warnings. When Xi Jinping came to power, many of the company’s executives were put in jail and all of its employees had their passports revoked. Companies must pay attention to which way the political winds are blowing.

“For Thailand, I don’t believe this coup is the same as those before. Almost every minister is a uniformed officer, which has never happened before.

“I often get asked ‘How do you maintain your company’s value system when going to a different part of the world?’

Often this is a euphemism for making payments, bribery.

It can be harder to stick to your principles operating in another country, but I think it is to your advantage to do so.

This is the only sustainable way to run a business, but you have to be nimble. The reason I say this is if you get caught, the damage done is not worth any amount of lost deals.”

“Companies have to be resilient because markets are not transparent here. That means being able to adapt. I was at a political presentation less than a year before the

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Thailand’s Economy at a Glance

Thailand’s Economy at a Glance

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2

4

Thai Consumer Price Index

Thai GDP Growth (%) 10.0

6

8.0

5

6.0

4 3

4.0

2

2.0

1 0 -1 -2

2008 2009 2010 2011 2012 2013 2014

Q1/15

Q4/14

Q3/14

-4.0

Q2/14

2014

2013

2012

2011

2010

0.0

Stock Exchange Index (SET)

Exchange Rates 7.00 6.50 6.00 5.50 5.00 4.50 4.00 3.50

1,800 1,600 1,400 1,200 1,000 800 600 400

2000=100 1200 1000 800 600 400 200 0

200 180 160 140

Oct14 Nov14 Dec14 Jan15 Feb15 Mar15

2007 2008 2009 2010 2011 2012 2013 2014

120

THB/NOK

Bilateral trade 2014

Manufacturing Index

Sources: 100 Basic Figures: BOI. Comparisons: Wikipedia.

GDP/Capita and Thai Population: Wikipedia/IMF. Thai GDP and CPI: Bank of Thailand. Quarterly GDP: NESDB. SET: Stock Exchange of Thailand. Exchange Rate THB/NOK: OANDA. Manufacturing Production Index: Thailand’s Ministry of Commerce. Bilateral Trade: Statistics Norway. Petrol and BigMac prices as of 1 June 2015

Female

0801 0807 0901 0907 1001 1007 1101 1107 1201 1207 1301 1307 1401 1407 1501

2

WWW.VNRESIDENCES.COM

80

Male

Import 1,348 (1,550) MNOK Export 3,906 (2,494) MNOK

Chemicals Fish Pulp Engineering Others Metal prod Electronics Food Cloth/Text Machinery Cars Computers Others

2

TO READY IN MOVE

10

80+ 70-74 60-64 50-54 40-44 30-34 20-24 10-14 0-4

0501 0507 0601 0607 0701 0707 0801 0807 0901 0907 1001 1007 1101 1107 1201 1207 1301 1307 1401 1407 1501

Geography Geographic Area: TH 514,000 sq. km Geographic Area NO: 385,199 sq. km Highest peak TH: Doi Inthanon 2,565 m Highest peak NO: Galdhøpiggen 2,469 m Inland water areas TH: 2,230 km Inland water areas NO: 16,360 km Coastline TH: 3,219 km Coastline NO: 25,148 km Demographics Population TH: Population NO: Population Bangkok: Population Oslo: Life expectancy M/F TH: Life expectancy M/F NO:

12

100

-2.0

Some comparisons

Thai Population 2012

120

2009

Top 10 Exports Jan-Feb15 %/value USD bill Motor Cars and automotive 11.9%/4.1 EDP equipment 8.6%/3.0 Precious stones/jewellery 5.4%/1.9 Polymers etc.

3.9%/1.4 Refined fuels 3.4%/1.2 Electronic integrated circuits 3.3%/1.2 Chemical products 3.2%/1.1 Rubber products 3.0%/1.1 Machinery and parts thereof 2.7%/1.0 Iron and steel and their products 3.0%/0.9

GDP/Capita 2014 (TUSD)

2008

Export Growth 2014 -0.3% Export Growth 2015 projected 3.5% Trade Balance USD 24.6 bill Current Account Balance USD 14.2 bill International Reserves USD 157.1 bill Minimum wage (Bangkok) Baht 300/day Unemployment 0.7% Corporate income Tax 10-20% Withholding Tax 0-15% Value Added Tax 7% Personal income Tax 0-35%

Oct14 Nov14 Dec14 Jan15 Feb15 Mar15

Basic Figures Thailand (2014)

Thai-Norwegian Chamber of Commerce

Thai-Norwegian Business Review

51

Membership Directory

Honorary member H.E. Mr. Kjetil Paulsen Ambassador Royal Norwegian Embassy Tel: +66 (0) 2204 6500 Fax: +66 (0) 2262 0218 Email: emb.bangkok@mfa.no

Honorary member and Senior Advisor to the Board Dr. Kristian Bø 234/237 Discovery Place, Soi 23 Khlong 7, Pathun Thani, 12110 Thanyaburi Tel: +66 (0) 2957 0111 Fax: +66 (0) 2957 0222 Mob:+66 (0) 8 9129 9993 E-mail: kristbo@truemail.co.th

Board of Governors President

Treasurer

Ms. Vibeke Lyssand Leirvåg Felicia (Thailand) Ltd. Tel: +66 (0) 2637 6981 Fax: +66 (0) 2637 6997 Email: president@norcham.com

Ms. Aina Eidsvik Aibel (Thailand) Ltd. Tel.: +66 (0) 3300 4040 Fax: +66 (0) 3300 4041 Email: aina.eidsvik@aibel.com

Vice President

Ms. Piyanuj (Lui) Ratprasatporn Tilleke & Gibbins International Ltd. Tel: +66 (0) 2653 5555 Fax: +66 (0) 2653 5678 Email: lui@tillekeandgibbins.com

Mr. Tom Varghese Telenor Asia (ROH) Ltd. Tel: +66 (0) 2637 04700 Fax: +66 (0) 2637 04726 Email: tom.varghese@telenor.com

Dr. Paisan Etitum, Ph.D Thai Transmission Industry Co., Ltd. Tel: +66 (0) 2678 6640 Fax: +66 (0) 2678 6649 Email: paisan@tti-mail.com

Mr. Sverre Pedersen Total Access Communications PLC Tel: +66 (0) 2202 8000 Fax: +66 (0) 2202 8828 Email: sverre.pedersen@dtac.co.th

Mr. Alejandro Vollert Yara Thailand Tel.: +66 (0) 2664 9498 Fax: +66 (0) 2664 7488 Email: alejandro.vollert@yara.com

Mr. Trond Tønjum Wallenius Wilhelmsen Logistics (Thailand) Tel: +66 (0) 2677 6400 Fax: +66 (0) 2652 6401 Email: trond.tonjum@2wglobal.com

Mr. Axel Blom Blue Business Solutions Ltd. Tel: +66 (0) 2627 3040 Fax: +66 (0) 2627 3042 Email: axel.blom @blue.in.th

Mr. Michael Shum Jotun Thailand Ltd. Tel: +66 (0) 2022 9888 Fax: +66 (0) 3821 4373 Email: michael.shum@jotun.com

Observer Mr. Erik Svedahl Minister Counsellor Royal Norwegian Embassy Tel: +66 (0) 2204 6500 Fax: +66 (0) 2262 0218 Email: emb.bangkok@mfa.no

52

Thai-Norwegian Chamber of Commerce

Vice President Major Choakdee Dhamasaroj Nera (Thailand) Ltd. Tel: +66 (0) 2664 1464 Fax: +66 (0) 2664 4002 Email: choakdee@neratel.com.sg

Thai-Norwegian Business Review

53

Continued from page 7

“DTAC believes 80% of Thais will be active internet users by 2017, up from 30-40% now. And by 2020, we predict the digital economy will create 30,000 new businesses and 58,000 new jobs.

“For the government, the state-owned enterprises [SOE] have poor infrastructure in building a national fiber network, so they need to be overhauled. The government also needs to digitise key public services and facilitate mobile agricultural users.

“Companies need to continue to invest in high-speed mobile networks, contribute to spreading digital literacy and safeguard customers by introducing consumer best practices.”

Pairoj Waiwanijchakit, vice-president of digital product management for AIS, said the government needs to look into rural coverage sharing for optimum network utilisation if it wants to meet its broadband coverage goals for 2016.

“Universal access to fixed broadband is going to open up a whole new segment of services to consumers such as smart TVs, smart homes and the Internet of Things being used in households,” said Mr Pairoj. “I think the Internet of Things is going to drive mobile penetration past 108 million here.

By 2020, we anticipate 55% of mobile data traffic will be video, which would be 45% growth annually.”

“The government needs to prioritise mobile payments and payment gateways if it wants to drive e-commerce in a digital economy. This means updating financial regulations.

“And we need better data protection, as there are 900,000 known types of malware on Android. An estimated 15 million mobile devices are infected worldwide, and 59% of malware is capable of stealing the user’s money.

“But my main worry is that SOE ownership of frequencies on the 2300- and 2600-MHz spectrums is going to delay developing a digital economy.”

When Wanawit Ahkuputra, deputy executive director of Thailand’s Electronic Transactions Development Agency, looks at the future of the internet here, he sees a paperless vision.

“We spend 10-12 million baht in Thailand per month for paper VAT forms that everyone throws in the trash.

We need to be able to do this electronically and archive documents,” he said.

68

Thai-Norwegian Chamber of Commerce

“In a couple of years we will be able to e-invoice across borders. The future will see new generic top-level domain names such as .rice, .khaosan, .silk or .art. Domain names are moving away from English as well, and this will eventually happen in Thailand. Mobile numbers will not exist — users will be registered by name.”

Part of building a digital economy is getting users to trust in the system. Based on the experience of other countries, this is proving to be a difficult task.

“The Internet Society believes the internet cannot be regulated in a top-down manner and there must be an accepted code of conduct for it to work,” said Komain Pibulyarojana, founder of T-Net Company. “Without trust on the internet, people won’t use it, which means no e-commerce.”

“When you read a printed newspaper, no one else can see what you read. When you read the same stories online, Facebook, the NSA, ad network groups, an ISP — everyone can see what you read. People need to trust in the technology and the process for something like e-government to work. They need to trust the information they receive, their privacy rights, their WiFi connection and equal access to information for e-commerce to work.

“But e-commerce holds so much promise because you could eliminate under the table payments and make competition fairer for SMEs.” Sebastian-Justus Schmidt, managing director of CNX Creative, noted that US officials recently acknowledged that Russian hackers read President Obama’s unclassified e-mails. “We are not safe. Everything we do over the internet must be considered open. Maybe there is trust in technology, but there is not trust in the government,” he said.

“In Europe, there is a trust committee now monitoring government internet actions. Governments are sometimes even worse than hackers about intruding on privacy.

Hungary just cancelled an internet tax last year after mass protests against the draft.”

“China recently announced it was going to track everything online, from taxes to social media,” said Poomjit Sirawongprasert, an ICT projects consultant. “You need participation from all parties to make the internet work, not just the government.”

Bringing Internet for All with scandinasian passion

Mobile connectivity is for the many, not just the few.

Bringing Internet for All means rolling out and managing vast mobile networks in far-flung areas, distributing SIM cards where where few people have set foot, and delivering digital services that people find useful and entertaining.

Manisha is one of 21,000 Telenor employees in Asia who share a mission to bring the power of digital communication to as many people as possible. Looking after our supply chain sustainability, she has helped bring our Indian supply chain to award-winning quality levels. Now she is ensuring the same Telenor quality and sustainability in Myanmar. www.telenor.com