Norway-Asia Business Review 2016-02 by Thai-Norwegian Chamber of Commerce

ISSUE 2 2016

NORWAY-ASIA BUSINESS REVIEW

ISSUE 2 2016

NORWAY ASIA BUSINESS REVIEW The Magazine of the Norwegian Business Associations in South and Southeast Asia

EDB helps Norwegian Companies Succeed and Prosper Philippine Elections: Donâ&#x20AC;&#x2122;t Fear the Reaper Building a Global Fashion Empire Seafood Exporters Showcase Norway at ThaiFex 2016 S P E C I A L

R E V I E W

Norway-Asia Business Summit 2016

NORWAY-ASIA BUSINESS REVIEW

ISSUE 2 2016

NORWAY-ASIA BUSINESS REVIEW

ISSUE 2 2016

NORWAY-ASIA BUSINESS REVIEW

ISSUE 2 2016

NORWAY ASIA

BUSINESS REVIEW The Magazine of the Norwegian Business Associations in South and Southeast Asia

EDB helps Norwegian Companies Succeed and Prosper Philippine Elections: Don’t Fear the Reaper Building a Global Fashion Empire Seafood Exporters Showcase Norway at ThaiFex 2016 S P E C I A L

R E V I E W

Norway-Asia Business Summit 2016

Cover Story

Norwegian Prime Minister Erna Solberg and Singapore's Minister of Trade, Lim Hng Kiang opened the sixth NorwayAsia Business Summit. The gathering attracted more than 200 leaders in industry and government from both Norway and Asia. The summit took place at the Fullerton Hotel in Singapore from 12 to 14 April this year and was a astounding success. Pages 6-35 Editor: Axel Blom Journalists: Eric Baker, Anton Bentzon, Sofie Lisby, Henri Viiralt and contributions from guest correspondents Operational Management: Vibeke Lyssand Leirvåg Director of Sales: Anders Magnusson Art Director: Pansak Chintanapakdee Production: Graphics-Related Co., Ltd. Concept Design: Spaulding & Associates Published by: Thai-Norwegian Chamber of Commerce in co-operation with Norwegian Business Association (Singapore) and other Norwegian Business Associations in Asia Editorial & Advertising: Norway-Asia Business Review, Thai-Norwegian Chamber of Commerce Mahatun Plaza, 14th Fl., 888/142 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330, Thailand Norway-Asia Business Review reaches Norwegian-related business executives and decision makers throughout the region including the diplomatic missions as well as government ministries in Norway and Norwegian sector-based organisations. Business Review is a quarterly business magazine and the contents reflects this. Each magazine has a main theme and the articles are centred around this theme. The magazine focuses on Norwegian-related stories from the region and issues that have impact or interest for Norwegian related businesses. Business Review is available in print as well as digital form through Issuu and Pressreader. Copyright © Thai-Norwegian Chamber of Commerce

NORWAY ASIA BUSINESS REVIEW ISSUE 2

2016

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5 FOREWORD

Thai-Norwegian Chamber President Vibeke Lyssand Leirvåg sums up experiences from the Norway-Asia Business Summit 2016

6 SPECIAL REVIEW NORWAY-ASIA BUSINESS SUMMIT 2016 8 Prime Minister Erna Solberg opens the summit and discusses Norway’s place in the Asian century 9 Trade and Industry Minister Lim Hng Kiang acknowledges Norway as a trusted partner 12 NHO’s Kristin Skogen Lund shares her views on what Norway can learn from Asia 15 Anita Krohn Traaseth, Head of Innovation Norway, encourages Norway to develop a strategic playbook 18 Start-up Lessons from Asia: Scale up and go global 24 DNV GL’s CEO Remi Eriksen is glimpsing a LowCarbon, Digital Future 26 Divining the Future for Oil Prices: Where will it end? 28 Any Port in a Storm: Shipping companies jump to new sectors to survive 30 Riding the Violent Waves of a Downturn: Advice from three different segments

CONTENTS

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32 Telenor’s bold ambition to become a digital service provider 33 Surveying Asian Business Trends: How will the One Belt, One Road policy affect maritime trade?

10 ARTICLES

Business Sense: Singapore’s EDB helps Norwegian companies succeed and prosper

11 The Double Taxation Agreement facilitates Norwegian investments in Singapore 20 Building a Fashion Empire: Zalora is Asia’s largest fashion e-commerce site 22 Sun Salutations: REC has grown to become a world leader in clean energy

40 Foster to Prosper: nurturing homegrown tech talent to tackle the nation’s problems 42 Philippine Election Special: Don’t Fear the Reaper 45 Overseas Expansion: Perspectives from a seafood industry trainee

34 SNAPSHOTS

Norway-Asia Business Summit 2016 46 ThaiFex 2016

51 STATISTICS Norway and Asia

52 DIRECTORY Norway in Asia

NO RWAY A SIA BUSINESS S U M M IT 2016

The Summit offered a chance for the 200+ leaders in industry and government to gauge where they think the Norwegian economy should pivot and reinforce that country’s strong ties to this region. Norwegian Prime Minister Erna Solberg acknowledged Asia was indispensable to her country’s economy.

NORWAY-ASIA BUSINESS REVIEW

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NORWAY-ASIA BUSINESS REVIEW

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FOREWORD

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Thanks to Singapore for a WellExecuted 2016 Summit

ear readers, This April marked the resounding D success of the sixth Norway-Asia Business Summit in Singapore. Since the inception of NorwayAsia Business Summit, it has become increasingly better with more high-level participants from both Norway and Asia. This year was certinaly no exception.

As the first Prime Minister ever to participate in the Norway-Asia Business Summit, H. E. Erna Solberg graciously opened the summit and gave her valuable insights on Norway’s Place in the Asian Century. The venue for next year’s summit has yet to be decided, but representatives from Thailand will certainly be there, wherever it is. And we will be happy to help, support and nurture next year’s event, the most important meeting place in terms of Norwegian-Asian business relations. A common denominator for many of this year’s speakers was the state of the Norwegian economy and what Norway can learn from Asia. An inspiring Kristin Skogen Lund from NHO talked about lessons we can take home, but also highlited the underlying problems with education and job opportunities in Norway. The fact that there are almost 100,000 people in Norway under 30 that are outside work or training is mindboggling, considering Norway’s wealth. From Thailand, we pushed for an increased SME content at this year’s summit. Several entrepreneurs, both Norwegian and Asian, shared their experiences, challenges and successes with the audience. This magazine contains several examples.

PHOTO: THAI-NORWEGIAN CHAMBER OF COMMERCE

Thailand has lots to learn from Norway in terms of support to the SME sector. While large foreign companies are welcome to Thailand, the SME sector, both local and foreign, struggle with challenges similar to Norway, but without much government support. Access to credit is almost nonexisting and potential difficulties facing start-ups are scaring entrepreneurs from starting businesses built on new ideas. It is therefore highly commendable that private sector initiatives are starting to appear; dtac accelerate, widely regarded, as the nation’s leading incubator is a shining example. You can read more on the programme on pages 38-39 in the magazine. Summer is just around the corner and many are going home to enjoy the summer holidays back home so let me end by wishing you all a happy summer! Sincerely, Vibeke Lyssand Leirvåg President Thai-Norwegian Chamber of Commerce

SPECIAL REVIEW

NORWAY-ASIA BUSINESS REVIEW

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NORWAY-ASIA BUSI he 2016 Norway-Asia Business Summit this April in Singapore offered a chance for leaders in industry and T government to gauge where they think the Norwegian economy should pivot and reinforce that country’s strong ties to this region. ERIC BAKER

Norwegian Prime Minister Erna Solberg pointed out that Singapore and Norway’s strong shipping ties lay a framework for future collaboration. She welcomed the chance to address the conference as she acknowledged Asia was indispensable to her country’s economy. Parag Khanna, managing partner of Hybrid Reality, said ASEAN is the one part of the world still working to develop its infrastructure across national borders. He noted there is more foreign direct investment coming into ASEAN than China,

suggesting there is no better time to build up the region than when the rest of the world is slumping. Remi Eriksen, president and chief executive of DNV GL, shared his prediction of a lower-carbon energy scene in Asia, one that moves away from coal and digitises. “We are at the onset of the fourth Industrial Revolution. R&D has to be a part of your organisation’s cultural DNA in order to keep up,” he said. Anita Krohn Traaseth, chief executive of Innovation

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Norway, quoted scientist Nils Roar Hareide predicting “in the next 30 years, value creation in ocean space will be at least sixfold, meaning the Norwegian economy will be even more blue”. A frequent refrain was that Norway has several competitive advantages it can use to position cross industries — health and democracy; ample clean water; a safe and inclusive society; transport on land and sea; clean energy; sustainable cities; food and bio-based products. Norway could do well to emulate summit host Singapore, which facilitates a pro-business community, ranking first globally in ease of doing business and second for intellectual property protection.

Torger Reve, a professor at the BI Norwegian Business School, urged the country to invest in more innovative ocean industries such as ocean foods, fish farming, maritime technology, finance, ocean mining, renewable energy and biotech through its cluster development system. Kristin Skogen Lund, director-general of the Confederation of Norwegian Enterprise, was still inspired by the keynote speech given by Nobel Peace Prize winner Kailash Satyarthi at the 2015 Norway-Asia Business Summit, where he said business can solve more of society’s problems than it thinks it can.

PHOTO: SHUTTERSTOCK

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PHOTO: NORWEGIAN BUSINESS ASSOCIATION (SINGAPORE)

Prime Minister Erna Solberg discusses how trusted partnerships in Asia can help the country in its economic retooling.

Norway’s Place in the Asian Century

rna Solberg, the prime minister of Norway, gave the opening address E at the 2016 Norway-Asia Business Summit because she feels so strongly about her country’s economic partnership with the region. ERIC BAKER

“There are over 5,000 Norwegian companies in Asia employing some 60,000 people, and Singapore is by far the leading location for these firms,” she said. “One of the reasons why I think it’s important to attend this meeting is in a globalised world, we will continue to become more dependent on growth and development happening in Asia.” The focus of her speech was how Asia will factor into the restructuring of the Norwegian economy. “The rise of Asia is the most dramatic change in the world economy of the last 40 years,” said Mrs Solberg. “In 2015, the global economies achieved one of the UN’s Millennium Development Goals of lifting 50% of the world’s poorest people out of poverty. Growth in Asia is the main reason that was accomplished. “I come from Bergen with all its maritime roots, so it’s an impressive view to arrive in Singapore and see that immense amount of boats. “Norway is the fifth-largest European investor in Singapore as Norwegian companies recognise the country’s status as a shipping hub. “2015 was a year of disappointing economic growth globally. All countries

with a large oil and gas sector suffered from the severe drop in the price of oil. Global growth was only 2.4%, which missed expectations. We need to have higher economic growth if we want to continue development to lift people out of poverty, especially here in Asia, including creating more new jobs. “The drop in oil prices has consequences around the world, as thousands of people have lost their jobs globally. If you look at the Arab Spring, one of the reasons it happened was the young people there felt like they had no future prospects. Not only were they not able to express themselves, but they didn’t have any hope. We have to increase growth so we can create jobs for the disaffected because it increases stability. “The Norwegian economy is at a turning point. Global demand for oil and gas is down and it will provide a test of our ability to adjust the economic structure. The current situation is not similar to the financial crisis of 2008, when our responsibility was to keep the banking sector strong until the financial issues were resolved. “Today the challenge is structural because we need to change the industrial

framework. In the short term, we have to meet the challenges that come with higher unemployment, and in the long term, Norway has to create new productive jobs to secure future welfare in our society. “Norway still has its strengths, as half the economy still has low unemployment and many sectors that previously suffered because the krone was so strong now can gain market access with a weaker currency. And we have skilled workers and a flat, open work structure that leads to high productivity and innovation. “My government’s goal is to stimulate the readjustment process and promote competitiveness. We give priority to education, industrial research and development, tax reduction and infrastructure projects. “No one knows today where the jobs in the new Norwegian economy will come from, as it’s up to investors and access to new markets to determine that. But we know robotics, automation and digitalisation will affect our economy. We still will have to ship goods, but there are already changes in the global economy based on digital services. “The role of industry in creating low-emission societies will play an important part in years to come. Industries in Norway are at the forefront of innovative environmental technology. In fact, many of the technologies we are using for oil and gas exploration now can be adapted to be more environmentally friendly. “Investing in knowledge, innovation capabilities and technology is never a waste because you can always use that basic knowledge to transfer to other types of industries. Green industry and technology must continue to grow to meet our ambitious environmental policies.

PHOTO: NORWEGIAN BUSINESS ASSOCIATION (SINGAPORE)

The Prime Minister took time to engage in some lighter moments; here for a selfie with Innovation Norway’s man in Beijing, Knut R. Sørlie

NORWAY-ASIA BUSINESS REVIEW

“Maritime has a special place in Norway’s history, as some would call it our first great industry dating back to the Vikings. Leif Erikson was the first to discover America; Americans just choose to forget that in celebrating Columbus. But we need to be innovative and forwardlooking in that sector as well, with a new industry strategy presented in Norway last year. The main goals are sustainable growth and value creation. There are huge opportunities in making shipping greener. We have our first electric ferry operating on one of the western fjords. “There are also exciting opportunities in the new ocean industries. We know for both the maritime and marine sectors there is a large future. Norway is the world’s largest producer of salmon — even if some producers were bought up by other companies. And even American salmon grown on the Pacific coast is genetically from the Atlantic Ocean — it was brought to the other side of the world from the North Atlantic. “We know from Asia you can get a lot of other products from fish besides food, so we are really looking into some of these exciting opportunities. We also know there are options at the bottom of the sea, such as different types of minerals that can be produced. Maritime research and development is an area where Norway has a long history of collaborating with Singapore, and I think we can do a lot more with Asian countries. I’ve already met with some countries in Asia and they’ve indicated they want to cooperate with us on marine and maritime resources. “The trend is clear: Asia will only continue to grow in importance for the Norwegian economy going forward as it makes up a larger percentage of our exports. Norwegian companies gain a lot by investing in Asia, but we also have a lot to learn from Asia as we develop our economy going forward. We have trusted partners in the region with whom we can have an ongoing dialogue to create policy that meets our joint challenges. “Back home in Norway, we are finalising a tax reduction package in parliament for investment in job creation and economic activities in the hopes of revitalising the country.”

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Facts

Singapore ranks as the second-most innovative country in the world Both Norway and Singapore are early adopters of technology, which is going to be a tremendous advantage Singapore does not set limits for sales of start-ups supported by state funds to another Singaporean company, or require a return on its investment Norwegian start-ups are being sold when they are still small, meaning scale is not being priced into the valuation

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The trade and industry minister for Singapore acknowledged not only the long history the country has with Norway but also potential for future collaboration based on similar competencies.

Singapore: A Trusted Partner im Hng Kiang, the trade and industry minister for Singapore, L gave an introductory talk to participants at the 2016 NorwayAsia Business Summit on why his country is such an appropriate ERIC BAKER

host for the conference.

Norway is Singapore’s eighthlargest trading partner in Europe, and its fourth-largest investor from that continent. Norwegian foreign direct investment in Singapore as of 2014 was SGD 23 billion. “Singapore is home to the largest concentration of Norwegian businesses in Asia. DNV GL, the world’s largest marine and offshore classification society, launched its first independent test centre for substation automation outside of Europe in Singapore,” he said. “Kongsberg has its regional headquarters in Singapore for dealing with aerospace and offshore oil and gas in Asia.” Both countries have benefitted from a European Free Trade Association (EFTA) trade agreement, with total trade last year reaching almost SGD 10 billion. Singapore is the largest trading partner for both Norway and EFTA in ASEAN, making it the gateway to the region. “The global economic slowdown has prompted companies to look to ASEAN as its outlook remains relatively optimistic,” said Mr Lim. “The Asian Development Bank predicts the middle class will rise from 24% of the population in ASEAN in 2010 to 65% in 2030.” “Southeast Asia is becoming perhaps the most exciting final demand market in the world. “The ASEAN Economic Community [AEC] will make the region a more compelling market and production base. The AEC promotes

greater economic integration among ASEAN member countries, making it easier to do business. “But Southeast Asia remains a mix of unique cultures with differing levels of development. Singapore’s proven track record of doing business with Norway makes it a natural partner to help Norwegian companies navigate the complexities of the region’s markets.” He described Singapore as a reliable launchpad to manage regional operations with its robust intellectual property regime, transparent government, and consistent and predictable pro-business policies. Singapore’s arrangement of 21 freetrade agreements can help Norwegian companies gain preferential access to markets in Asia and beyond, said Mr Lim. Singapore is a signatory to the Trans-Pacific Partnership and is taking part in the Regional Comprehensive Economic Partnership, both of which aim to make free trade a reality for much of Asia-Pacific. “Both Singapore and Norway realise the importance of innovation and harnessing technological advances to remain competitive,” he said. “The two countries should continue to pursue strategic partnerships in advanced manufacturing technologies such as robotics and added-value production. Our countries have synergies in the maritime, oil and gas and clean technology sectors.”

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PHOTO: SHUTTERSTOCK

With more than 250 Norwegian companies based in Singapore, it is the largest Norwegian hub outside of Europe.

Business Sense To

SOFIE LISBY

help Norwegian companies succeed and prosper is the Singapore Economic Development Board. Singapore is the largest Norwegian hub outside of Europe and the city state attracts an increasing number of Norwegian companies operating in everything from logistics to tech and IT. To attract and support these companies is the Singapore Economic Development Board (EDB), the lead government agency for planning and executing strategies to enhance Singapore’s position as a global business centre. “Singapore has undergone a rapid economic transformation in the last 50 years based on an investments-led growth strategy,” explains Lim Kok Kiang, Assistant Managing Director, EDB. “EDB has played a significant role in this transformation journey. Much of this success can be attributed to our ability to bring in top companies, capital and talent to keep our economy growing and vibrant. Going forward, Singapore is calibrating its strategy to yield high quality, sustainable growth that meets an advanced economy’s needs.” The work of the EDB can be summarised as Attract-Transform-Create (ATC). In the area of attract, the EDB pursues investment opportunities with existing and new companies by targeting investments that complement the city’s existing industry strengths, as well as

look for growth opportunities in new areas or adjacent to key industries. This helps the city expand its portfolio of profitable niche sectors. “Transform is about keeping our firms and industries highly productive and competitive,” explains Lim Kok Kiang. “We hope to work with companies who have large and established operations in Singapore to raise labour productivity through better deployment of technologies such as robotics and other interventions catered to our more mature industrial sectors. Where there are suitable opportunities, we would also like to help firms improve their land productivity, energy use and carbon emissions. “Create is about catalysing innovation-driven growth in the ecosystem. EDB aims to support companies in growing new businesses. We believe that Singapore is well-placed to drive this initiative, moving from being a value-adding to value-creating partner,” says Lim Kok Kiang. Since 1990, Singapore has steadily grown the government’s investment

in building up R&D capabilities and the annual budget is now equivalent to 1 percent of the GDP. “We not only invest in our universities’ R&D but we also have an extensive network of government funded research institutes that work closely with industry to solve practical problems and to commercialise discoveries in the laboratories. Moving forward, the government has earmarked a further investment of S$19 billion for R&D from 2016 to 2020,” says Lim Kok Kiang. Apart from R&D, as the EDB expects transformation in the global manufacturing landscape with the adoption of advanced manufacturing technologies, the EDB is also working with leading manufacturers and enablers in various sectors to co-innovate advanced manufacturing solutions with EDB research institutes, institutes of higher learning and supplier ecosystem in areas such as additive manufacturing (3D printing), robotics, industrial internet of things (IIoT) and advanced materials. It is within this framework that the EDB supports the Norwegian business community in Singapore. As of end-2014, the stock of Foreign Direct Investment (FDI) into Singapore from Norway was estimated at S$23 billion. More than 250 Norwegian companies are based in Singapore, making the city state home to the largest concentration of Norwegian businesses in Asia. Norway is Singapore’s eighth largest trading partner from Europe and its fourth largest investor from Europe. According to Norwegian Prime Minister Erna Solberg, who visited Singapore during the recently held Norway-Asia Business Summit, Asia boasts some 500 Norwegian-controlled companies, providing jobs for about 60,000 people. “Singapore’s success is due in large part to four attributes we possess as a nation: ‘Can-do’ spirit, forwardlooking, partnerships and ingenuity,”

PHOTO: EDB

Lim Kok Kiang, Assistant Managing Director, Singapore Economic Development Board

NORWAY-ASIA BUSINESS REVIEW

says Lim Kok Kiang. “Many companies also establish a presence in Singapore as they place great trust in Singapore due to our strong IP protection and rule of law, knowledgeable talent and institutions as well as connectivity, both physical such as land, air and sea, and trade connectivity in the form of Free Trade Agreements.” Norwegian companies have made significant contributions to Singapore’s economic development. DNV-GL, the world’s largest marine and offshore classification society is a prime example. With the presence of diverse industries in Singapore, DNV-GL chose to establish its Asia Pacific Headquarters here to serve companies from the Maritime, Oil & Gas, Energy and Business Advisory sectors. DNV-GL’s Deepwater Technology Centre has been driving innovation in areas such as maritime safety as well as deep sea equipment and transportation since 2011. Last October, DNV-GL launched its first independent IEC 61850 Test Centre for Substation Automation under its Clean Technology Centre in Singapore. This Test Centre is DNV-GL’s first centre outside Europe, and will provide grid security and reliability testing services for the Asia Pacific region. According to Singapore Minister for Trade and Industry, Lim Hng Kiang, Singapore is a natural partner for Norwegian companies looking to seize the opportunities of a growing middle class in Asean. The Asian Development Bank (ADB) predicts that the proportion of the middle class in Southeast Asia will increase from 24 percent of the population in 2010 to 65 percent in 2030. Speaking at the Norway-Asia Business Summit, Lim Hng Kiang said that this increase in the middle makes Asean an increasingly important market for Norwegian firms to grow consumer-eccentric activities.

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Facts

Singapore has an extensive network of 21 free-trade agreements, which can help Norwegian companies gain preferential access to markets within Asia and beyond. One of them is the European Free Trade Association (EFTA)-Singapore Free Trade Agreement (ESFTA), which came into force on 1 January 2003 and has since benefited Singapore-Norway economic relations. The ESFTA has facilitated trade and investment between Singapore and EFTA States. Singapore is the largest trading partner and investment destination in ASEAN for both EFTA and Norway with a value of approximately SGD 10 billion in 2015.

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PHOTO: ISTOCKPHOTO

In order to break down barriers for Norwegian businesses to operate in Singapore, the Norwegian and Singaporean governments have agreed on a double taxation agreement.

Avoidance of Double Tax

he agreement for the prevention of double taxation and the T prevention of fiscal evasion with respect to taxes on income was signed in Singapore on 18 October 1984. SOFIE LISBY

“Effectively these agreements are intended to further international/ cross border trade and investment,” explains Are Zachariassen, Partner, Wikborg, Rein & Co. Advokatfirma DA, located in Oslo. “Both Norway and Singapore are small and open economies dependant on international trade and the entering into of the agreement has eased such trade and investment between the two countries. The double tax agreement between Norway and Singapore is based on the OECD Model Tax Convention, and both Norway and Singapore have entered into approx. 90 such double tax agreements with different countries – most of them based on the Model Convention. “From the perspective of Norwegian investors and businesses the key point is the use of the exemption method for dividends received by a Norwegian company from a Singapore company where it holds a qualifying shareholding (i.e at least 25 percent),” explains Are

Zachariassen. “Such dividend is tax exempt in Norway regardless of the effective tax rate and business of the distributing Singapore company, which is very unusual when comparing with the other double tax agreements Norway has entered into.” According to Are Zachariassen, the double tax agreement in principle benefits all cross border investments and investors, as well as individuals, expats etc. who work and/or invest in both Singapore and Norway. “But in a tax planning and optimisation context the tax exemption for dividends is of course especially attractive,” says Are Zachariassen. The existence of a double tax agreements is a good thing, thinks Are Zachariassen. “I would say all cross border investors and individuals benefit from the existence of the agreement. And quite a number of companies benefit from the specific dividend tax exemption, although I do not know how many.”

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Kristin Skogen Lund advised Norwegians to build on their strengths while making it easier to do business, but to never forget the power of business to solve society’s ills.

Asian Lessons for Norway’s New Economy ather than focus on global problems, Kristin Skogen Lund, directorR general of the Confederation of Norwegian Enterprises, began her speech at the Norway-Asia Business Summit 2016 with a laundry list of ERIC BAKER

risks Norway faces at home.

There is economic decline based on lower oil prices and lack of competitiveness. There is also a demographic concern, as Norway is an ageing society and that will put a burden on its welfare system. “We knew about this and were prepared for it, unlike the migration situation we now face,” she said. “But one facet that is not talked about is there are 71,000 people in Norway under 30 that are outside work or training. Many of them are outside the system because they are not sufficiently skilled to contribute in a high-productivity economy. This is one of our society’s failures and we don’t like to address it.” Transformation to a low-carbon

society will also be difficult but requires swift action to meet the 2030 goalpost. “Finally there is technological change, the industrial digitalisation we have heard so much about at this conference,” said Mrs Skogen Lund. “It will change how we work and what type of jobs we do. There are risks, but I believe for Norway there are huge opportunities with this shift. I really hope we can see the opportunities and act in time, because when it’s obvious to everyone it’s going to be too late to take those positions. The Swedish prime minister put it very succinctly recently, ‘It’s not the new technology we should fear, it’s the old.’” “Like most economies, we are in great need of transformation. Norway

There are 71,000 people in Norway under 30 that are outside work or training.

PHOTO: ISTOCKPHOTO

has had such growth and prosperity the past few decades we haven’t really felt the same shocks as many of those around us. I recommend we play to our strengths and acquire new ones. “Our fundamental strengths are our flat organisational structures; gender equality, because we use more of our workforce; empowering people, giving them the chance to master certain skills; high productivity; and good work-life balance with ample access to nature. One aspect that is critical to our society and our economy is trust, and this must not be broken down even in a digital economy. In fact, in such an economy this trust is going to prove even more essential and we must nurture it. “We are at the technological forefront in some key business areas and are swift followers in others. We have solid public finances and vast natural resources. “But I believe we’re not very good at selling our culture of empowering employees to other cultures when we try to attract talent.” She said there are important lessons to be learned from Asia as Norway tries to acquire new strengths. Singapore has consecutively been named the easiest place to do business in the world, while in Norwegian public opinion the interests of business are not always at the forefront of discussions, said Mrs Skogen Lund. “Asians are also very good at cultivating an innovation spirit and zest for knowledge,” she said. “They excel at attracting talent and capital, as well as thinking and executing strategically over the long term. For example, I had dinner with our prime minister and several Singaporean leaders last night, and they had read our country’s Productivity Commission report. The difference is their country has a similar commission and takes action based on its findings. In Norway we will talk about the report’s suggestions, then we will talk about it some more.” “That Norway has increased interaction with Asia and the markets here is very fortunate. Just by doing business here you can dive into the competence and innovation that can be sourced from these markets. “As we interact you could say that globalisation is one big process of efficiency, a project of scale. Businesses can learn so much just by dealing with Asian businesses. “As countries grapple with the UN Sustainable Development Goals going forward, business must be at the forefront of that challenge. With global warming, business played a large part in causing that problem, but many businesses are now leading the charge to adapt to a lowcarbon society. In Norway since 1990, carbon emissions from process industry have been cut by 40%. For the world, we are finally starting to see global growth and CO2 emissions decouple.

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Kristin Skogen Lund, Director General of Confederation if Norwegian Enterprise delivers her observations.

“I serve on the New Climate Economy commission, which aims to prove that making low-carbon societies and economic growth go hand-in-hand is the only way to survive. There is too much of a perception that business looks at society as something that is hindering its production efficiency when it hands welfare back to society. Society tends to look at business as greedy and selfmotivated, interested only in profits at the expense of society. We need to move away from that myth if we want to develop sustainable economies. “DNV-GL recently launched its sustainable development report and asked 5,500 global leaders how to reach their goals. These leaders were from every sector of society, but there was one clear answer: business needs to be the major problem solver. “I still remember the NorwayAsia Business Summit from last year in India. The keynote speaker was Nobel Peace Prize winner Kailash Satyarthi, who advocates for children’s rights and against child labour. He said business tends to solve more of society’s problems than we tend to think, and that was so inspirational to me. “Business gets a lot of bad press, whether it is the Panama Papers or corruption, but I would like to quote Parag Khanna from the ASEAN economy panel at this conference. He said, ‘the greatest force in fighting corruption in this region is the involvement of foreign

business,’ and that is a powerful message that needs to be sent back home.” For Norwegians doing business in Asia, Mrs Skogen Lund hopes there will be room for Norwegian competence in execution here when certain sectors develop, such as clean technology. Norwegians making the move to Asia have to guard against being a bit naïve, she advised. “It is incredibly important to find the right partner here and find your position in that partnership,” said Mrs Skogen Lund. “Back in Norway, tackling the displaced youth issue is not so easily handled. Job training is a start and we are speaking with the unions about a wage subsidy scheme so they can get a foothold in the economy. We need to spend our funds getting people involved in the economy. “Our prime minister was asked a few months back what was her biggest worry for the country, and she replied the mathematical skills of Norwegian students, because they provide the foundation for so much of what we need to do for science, technology and engineering. I think she’s right. We need to have a different mindset towards competence; we need to respect competence. “The government can do its part by making it attractive to be a teacher, improving their pay and requiring high standards. You have to start at the

PHOTO: NORWEGIAN BUSINESS ASSOCIATION (SINGAPORE)

beginning of the value chain. But we have responsibility as parents too. We need to teach our kids the value of constant learning and curiosity. This spirit has gotten Norway to where we are today but it doesn’t keep coming by itself.” For business to transmit a positive message about the good it accomplishes, she suggested a three-prong strategy. “First, we have to work to clean up our act in business so there are fewer negative stories,” said Mrs Skogen Lund. “But we also have to do a better job of telling our story. We’re not very good at marketing our role in society. And we have to create alliances to get others involved in the same interests as our businesses. It is hard for me to get my message across as an advocate of business when that message is interpreted on a backdrop of greed.”

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Facts

There are 71,000 people in Norway under 30 that are not educated or trained Norway’s strengths: flat organisational structures; gender equality; empowering people, giving them the chance to master certain skills; high productivity; and good work-life balance with ample access to nature Singapore has consecutively been named the easiest place to do business in the world Since 1990, carbon emissions in Norway have been cut by 40%

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NORWAY-ASIA BUSINESS REVIEW

ISSUE 2 2016

PHOTO: NORWEGIAN BUSINESS ASSOCIATION (SINGAPORE)

The head of Innovation Norway explains why it is important for the country to develop a strategic playbook for where it wants to focus as the country’s economy restructures.

Developing an Innovation Mindset

he goal of Innovation Norway is not to pick winners, said Anita Krohn T Traaseth, the chief executive of the organisation. Rather, it is to enhance areas where Norway has competitive advantages, she said on ERIC BAKER

the sidelines of the Norway-Asia Business Summit 2016. “We invest or reduce the risk for established industries that need to transform, for example to more sustainable solutions. Some 70% of our funding goes to those adaptations, while 28% goes to grants and loans that support start-up companies under three years old,” said Mrs Traaseth. “We provide what we like to call competent capital, such as global training arenas for both growth companies and start-ups where they can be part of a training programme. For example they can go to London and learn about smart cities, or New York and learn about pitching high-tech solutions from the very best. We have different hubs that provide training in areas where that region excels. We do this because Norwegian companies have to be out there — we are

5.2 million people, we need to export and reach new global markets. “Norwegian companies need to learn how to scale their businesses. Innovation Norway also works on opening doors in other markets along with the embassies. This involves making connections, learning about new cultures, understanding intellectual property, tax and investment laws in other countries. All of this is building competent capital.” The company transformation may involve shifting to a clean technology, and typically there is an initial study phase that can be very costly if the whole industry doesn’t chip in. “We have specific funds to focus on environmental technology. We help out those that are ambitious, those that have international growth potential, and those that focus on

environmental sustainability,” she said. The major focus of the organisation is to get investment to come to Norway, to attract visitors, and to get people to scale business opportunities there. “As a government vehicle, we want the value creation to get back to Norway. There are many ways to do this, and if you have competent partners and you can connect to another company that can help with research and development, that can still add value to Norway even if the company is not Norwegian-owned,” said Mrs Traaseth. “Our offices abroad don’t invest in Norway. It’s our locally based offices that offer grants and loans to businesses based there. For example, a huge percentage of the processing industry in Norway is owned by Asians. We can offer them assistance for a R&D programme as long as it is based in Norway because that offers value creation to the country in terms of jobs, building competence and

NORWAY-ASIA BUSINESS REVIEW

profitability.” Norway has several advantages it should remember when deciding strategic initiatives for investment. “The counrty is highly democratic with a flat organisational structure, which in a globalised, highly networked world should allow adaptability, she said. “These are competitive advantages for Norway. There is also a trust connected to being Norwegian that we can see travelling around the world. Water technology is another advantage for us, as is our health and welfare system, and we have prioritised using welfare technologies that can help deal with ageing societies. But first and foremost, we are an energy country, and we have a lot of knowledge related to oceans and ocean space.” “You need a playbook to specialise in specific areas because you can’t be everything to everyone. This is true for every nation. We can look for inspiration to other countries, but we need to look for what is unique in our own country. This concept was introduced to me by Julie Hanna, who is the global entrepreneurship ambassador for President Obama. She said, ‘Stop looking at Silicon Valley as a solution to everything. Silicon Valley is a mindset. You need to have your own local playbook, which involves setting vision and direction.’ “You must communicate what the strategic direction of the country’s innovation playbook is, while also Zwipe_A5Brochure_NEW_4P_v2_PRINT.pdf

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understanding the needs of the countries you are visiting to see what you can offer them. “One of the most impressive messages I heard over the past six months was from a government official in China who said ‘Our vision is to go from made in China to invented in China’. That is a strong statement on changing your direction. The key advantage for Europe the past few decades has been quality and invention, but there is no reason China cannot take over that position. “Setting a strategic direction is more important than ever for Norway because our economy is in transition, but I recognise it is a hard sell. In a way we have been lucky to be blessed with hydropower, fish and oil and gas, all resources we could sell. We have had innovations in those industries, for instance the reason the world can eat sushi is Norwegian farmed salmon. And our position as an oil and gas leader is not going to disappear, but we have to build a much more diversified economy because it is vulnerable to rely on so few industries. “I’m not worried whether Norway will be able to adapt because we’ve done it before. When we found oil in the late 60s, we didn’t know anything about this industry. We built up competence over time, partly from our experience in maritime, and it taught us to work with international partners. Norway should capitalise on the networks we already have going forward.

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“We’ve just scratched the surface on what we can do with ocean industries. There’s a lot more fish in the Norwegian Sea than salmon. Setting an innovation playbook for investment will be a hard sell in Norway because it has been many years since the country tried it. The last time was 1971 with the 10 oil commandments. The path is not as clear as last time, but if we are really going to restructure our economy, we have to make some investments. “For example, we need to determine how to build an industry around the health sector. This involves prioritising it politically and funding a large effort. The Norwegian people are extremely pragmatic, but we are perhaps not known as a country of visionary thinkers. We are good at solving problems, but capitalising on the solution we created is not our best asset. “Norway is behind other European countries in reported R&D spending. A lot of innovation is happening in Norway, but it is not reported as R&D because we just look at it as problem solving. Norway has been cited as a good place to invest in start-ups, especially from American investors. We produce brilliant items but we’re not so good at the pitch. “Part of our deficiency is you don’t get credit in Norwegian culture for having big ideas. If you ask a 12-year-old girl in Norway what she wants to do when she grows up and she says a skiing champion, this will be encouraged. But if another says she wants to be the next Elon Musk,

CMY

An example of Innovation Norway’s support to Norwegian industry is Zwipe, a contactless card that uses fingerprint technology for authentication. The card can be used for payment and no passwords or PINs are required.

GRAPHICS: ZWIPETM

NORWAY-ASIA BUSINESS REVIEW

Norwegians will ask ‘What kind of values are those? What makes you think you have the background for that?’ In the US a child will open a lemonade stand and use the proceeds to buy a bicycle. In Norway the child would be expected to donate the proceeds to the poor. “There are several international Norwegian companies that do well and don’t fit into this stigma, but on the other hand this culture feeds into the brand the country has developed.” Innovation Norway offers several types of services to companies operating in Asia. For example, there is a cluster of companies in Norway doing digitalisation of maritime, or smarter shipping. “Seagull Maritime contacted us about organising a seminar in Japan because it realised the cluster needed contact with employees other than the purchasing department to sell their products,” said Mrs Traaseth. “They hadn’t been in communication with business development directors in the past, and we collaborated with three other companies on a conference.” “REC Elkem solar panels produces steps one and two in Norway, and then the rest of the value chain is manufactured in Singapore. This is a hybrid business model that we’ve helped encourage. “Brett King, a futurist in banking, visited Norway in 2014 and shook up the industry by giving a speech saying banking will change more in the next 10 years than it had in 100. The industry is being disrupted from areas that do not have such a protected position as banking. One of the best examples we have in Norway is Zwipe, a contactless card that uses fingerprint technology for authentication. The card can be used for payment and no passwords or PINs are required. The founder used probably every kind of grant and loan Innovation Norway offers in building up his company, and he is getting deals from around the globe now. His technology is used by MasterCard and has multimillion USD agreements with China, while the company has 200 employees in Europe and Asia. “The founder was a student from Norway with no background in banking who took courses in entrepreneurship. This is an example of how financial services are changing.” Innovation Norway is a part of the Team Norway initiative that encompasses the embassies, the bilateral chambers of commerce, Norwegian Seafood Council, INTSOK (Norwegian Oil and Gas Partners), INTPOW (Norwegian Renewable Energy Partners), Norwegian Research Council and the export credit organisations which all work to assist Norwegian companies abroad.

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Creative industries and tourism

Bioeconomy

Smart societies

Clean energy

The ocean space

Health and welfare GRAPHICS: INNOVATION NORWAY

After a broad dialogue with industry, organisations and the public sector, Innovation Norway has identified six areas in which Norway and Norwegian industry has great opportunities.

Six Areas of Opportunity

n 31 May 2016, Mrs Anita Krohn Traaseth, CEO of Innovation O Norway, held the annual Innovation Speech where she summarised the work done through Innovation Norway’s Dream ERIC BAKER

Commitment project in 2016. The outcome of this process is a clear message in regards to Norway’s strengths and particular advantages forming a base for future direction of Norwegian industry.

The six areas are: • Bioeconomy • Clean energy • The oceanspace • Health and welfare • Creative industries and tourism • Smart Societies Mrs Traaseth furthermore delivered ten recommendations to the Norwegian Government and the Norwegian Parliament on how the public sector can collaborate with the private sector in order to develop new long-term sustainable industries in Norway. Innovation Norway suggests that Norway sets a clear direction based on the six above areas. Mrs Traaseth further challenged the state authorities and municipalities to design requirements and regulations specifically for the sake of development and implementation of sustainable solutions, and that Norway could become the best in the world on this. In addition, Innovation Norway requests the Norwegian Government to invest in extra measures over the coming five years at a level equal to

neighbouring countries, in order to boost exports. The boost is needed to replace lost export revenues and to create new jobs. Innovation Norway also believes that Norway as a country in years to come needs to prioritise commercialisation of results of research in order to build new businesses, industrialise new industries and to create new jobs in Norway. This is especially applicable within the health sector. In other areas Innovation Norway suggests the government to focus more on research, which later can give rise to profitable companies. This year's Innovation Speech was delivered in collaboration with Norwegian Research Council and Siva. “This is the first time we co-organise such an event. This is of significance since economic development require us to support companies through all phases, through research, development and commercialisation. And that is exactly what we are doing”, said Mrs Traaseth.

NORWAY-ASIA BUSINESS REVIEW

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PHOTO: NORWEGIAN BUSINESS ASSOCIATION (SINGAPORE)

Norway’s biggest challenge for entrepreneurship is not access to funding but rather ability to scale up and eventually take companies global.

Start-up Lessons from Asia ingapore and Norway have much in common — both have a S commitment to innovation and are small countries with strong sovereign wealth funds as well as currencies. Norway’s rise, like ERIC BAKER

Singapore, started in the 1960s.

William Klippgen, an early stage tech investor based in Singapore, moderated a panel at the Norway-Asia Business Summit 2016 about the island nation-state’s meteoric rise and what Norwegians can learn from Asia. “In the past decade Singapore has made itself into an entrepreneurship hub, now ranking as the second-most innovative country in the world,” he said. Poon Hong Yuen, chief executive of SPRING Singapore, the government agency tasked with helping enterprises grow, tried to shed some light on this emergence. “It is standard practice in Singapore for civil servants to shuffle jobs every few years to a new post that seemingly has nothing to do with the previous one,” he said. “The country doesn’t want you to become too entrenched in any one position, and this keeps you nimble.” “I was just reminiscing with a banking friend about how 15 years ago if you put money in a start-up in Singapore, more or less it was gone. But there have been several recent successes here, including a USD 1 billion exit by Lazada thanks to the purchase by Alibaba, and

we’re seeing the quality of start-ups improve here as well. “We want to make Singapore a conducive environment for start-ups to thrive, including for foreigners. Most of the start-ups in Singapore have at least one foreign founder. Our launchpad has been described as the densest for startups in the world by The Economist. “Our start-up launchpad happened almost by accident, as there was a cluster of old buildings that were due to be demolished. But the government agreed to rent them cheaply to start-ups and the neighbourhood grew quickly from there. The government is now adding buildings to the hub.” Per Gunnar Borhaug, president of Bandak Group AS, believes Norway can build from its strengths in trying to encourage entrepreneurs. “I don’t think Norway needs to necessarily move away from its traditional industries of maritime and oil and gas as we’ve built up core competencies in these sectors,” he said. “It’s more important to look at how new technologies can add to this strength and work to become more international. That means working to

bring some of the clusters we’ve built up in Norway around the world.” Sigbjørn Dugal, chief executive of Pickatale, said start-ups need an overseas focus from the start. “Norway should have started innovating 10 to 15 years ago when we were on the cutting edge of the oil and gas industry,” he said. “We can do proof of concept there and then take it out to the world.” “There is no domestic market for start-ups in Norway. To be successful you have to take your company international to the big markets like China and the US. I think there are a lot of smart people in Norway producing a lot of innovation, but the issue is we don’t have a platform to get them out to the world. “I don’t think money is the issue; I think the problem is the way the country is becoming a little too fat and happy. Innovation Norway spends a lot of money helping start-ups, but the key today is distribution. It’s getting clients or users and starting to build revenue. That’s how you build a company. Silicon Valley is in the US, it has a big market, firms there build proof of concept and then get money from investors.” Mr Hong Yuen suggested Norway might look at its cultural strengths to determine investment opportunities. “Singapore has a platform culture — when people think of us they think efficiency, trustworthiness, maybe even too strait-laced. Because of that, we were able to build our finance and shipping industries. Norway needs to consider which industries are complimented by their cultural strengths,” he said. “Singapore is market-driven in terms of how we invest in start-ups because we are too small to create a market ourselves. Our strengths lie in medical technology, clean technology, the digital economy and advanced manufacturing. We were able to develop water technology because we don’t have any natural water resources in the country. “The most important document we signed after declaring our independence was our water agreement with Malaysia. We developed advanced water recycling technology out of need. We even recycle our waste water. When the technology was first perfected, the Malaysians were laughing at us because they said we were drinking our own pee, which is true, we were. But we’ve developed such expertise in the field Singaporean companies have been able to export this knowledge to a number of places in Asia.” Erik Knive, chief operating officer of SN Power, told the audience it isn’t necessary to reinvent the wheel to find successful entrepreneurs. “A Swede here in Singapore told me nobody ever invents anything new, rather just new combinations of old ideas,” he said. “I think Norway needs to support these kinds of companies rather than

NORWAY-ASIA BUSINESS REVIEW

trying to build something from scratch. My biggest concern is that Norway does Mickey Mouse stuff; it’s too small. We need to look at where we can have the biggest impact as a large industry internationally and put some real money behind it. “I think Norway needs to spend some of the money in its sovereign wealth fund to support entrepreneurs. There are still big structural changes in the energy sector around the world that haven’t been exploited, as many companies have gone bankrupt not realising them. As I look across Asia, there isn’t any country that has adapted to those market lessons yet so I think there’s an opportunity to take that expertise from the European and American markets and bring it here.” He agreed with Mr Dugal that Norwegian start-ups are being sold when they are still small, meaning scale is not being priced into the valuation. Mr Knive urged the Norwegian government to put some thought into how to help Norwegian founders build up scale. Magnus Grimeland, managing director and co-founder of Zalora and Global Fashion Group, shared a conversation he had recently with one of the richest men in Indonesia. “I asked him why he was investing so much in digital when his offline business was so successful. He pulled out some lists and showed me the 10 richest men in China from a decade ago, and they were from all the traditional industries. Then he showed me the current list for China and most of them were in technology or e-commerce. He didn’t want the same thing to happen to him,” said Mr Grimeland. “With my two companies, the founders didn’t really have anything in common except a passion for getting involved in e-commerce in a relatively undeveloped space. None of us had a

background in fashion. But one lesson to take away from the Indonesia story is both Norway and Singapore are early adopters of technology, which is going to be a tremendous advantage.” Mr Dugal thought Mr Grimeland was being too kind to Norway. “I don’t think Norway is an early adopter of technology anymore. When I came to China in the 1990s with Telenor we had meetings with all the large Chinese telecom companies because they needed our expertise. Now China has surpassed Norway on almost all technological fronts and I don’t think we could get those meetings. We need to speed up our adoption of technology,” he said. There seems to be a real need to nurture entrepreneurs as they scale up in Norway. “I’m a strong believer that money alone is not going to bring you entrepreneurial success. You really need innovators with a vision, perhaps reared through incubators,” said Mr Borhaug. “We’ve had a number of successful Norwegian start-ups, but they’re all sold when they’re rather small so we don’t have a leader who can stay on and build up an ecosystem,” said Mr Grimeland. “Norway needs to promote these success stories and offer support from the sovereign wealth fund so we can get people excited about entrepreneurship. At the business schools of both Harvard and Stanford, more graduates are joining start-ups than established companies for the first time in history because successful start-ups have been so celebrated there. That includes teaching that failure is a part of entrepreneurship, as most great entrepreneurs failed several times before they hit it big.” The Singaporean Port Authority has developed its own venture capital fund for start-ups, a tactic Norway has

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not adopted, said Mr Klippgen. Singapore does not set limits for sales of start-ups supported by state funds to another Singaporean company, or require a return on its investment. “This only discourages investment and entrepreneurship,” said Mr Hong Yuen. “Our goal is to encourage locals and foreigners to build start-ups here so we don’t put any limits on market exits.” Innovation Norway helps Norwegian entrepreneurs abroad in a variety of ways, and the panel shared some of their personal stories. “Labour in China is getting more expensive now, so I moved all my developers to Macedonia and was able to get a 10-year tax holiday while the government there pays for the social welfare of my employees,” said Mr Dugal. “The business card of Innovation Norway was very helpful in getting me meetings in Macedonia because of its government connection.” “Innovation Norway helped us with contacts to talk to the top levels of banks, where it otherwise might have taken five meetings to get to that level. They were very helpful,” said Mr Grimeland.

The summit featured several high-profile panels. Above William Klippgen moderating the panel on successful entrepreneurship in Asia.

. . . .

Facts

PHOTO: NORWEGIAN BUSINESS ASSOCIATION (SINGAPORE)

NORWAY-ASIA BUSINESS REVIEW

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PHOTO: ZALORA

Magnus Grimeland as co-Founder of Zalora built the company from zero to millions of orders in just four years. Recently, the company sold the rights for Thailand and Vietnam to Thailand’s Central Group.

Building a Fashion Empire

alora is Asia’s largest fashion e-commerce site, with branches Z in Malaysia, Singapore, Brunei, Hong Kong, Taiwan, Philippines, Vietnam, Thailand and Indonesia, as well as New Zealand and Australia. SOFIE LISBY

The company specialises in everything from clothing and accessories to footwear and beauty products. But it takes more than a wide reach and product selection to make a successful e-commerce site, according to Magnus Grimeland, co-founder of Zalora and managing director of Global Fashion Group, the company which acquired Zalora a little over a year ago. “I think what differentiates us from a lot of other fashion e-commerce sites in Southeast Asia is that we have invested a lot into the customer experience,” Magnus Grimeland explains. “For example if you are in Bangkok, Jakarta or Singapore, you can get your orders delivered the same or the next day, and in the rest of the countries we deliver very quickly and reliably. When we tell you

when we will deliver, we deliver at that time. In general, we make it very easy for the customer to return their purchase, which is very important to us because with online shopping it is very difficult to get the right sizing the first time around.” “Our strong local reach also allows us to do things like cash on delivery. In most of our markets in Southeast Asia you can purchase a product and only pay when it arrives on your doorstep. So you don’t have to bother with entering in credit card info. A lot of our customers also don’t have a credit card so it is a good solution for people without a bank account.” According to Magnus Grimeland, it is this combination of great customer experience and a huge and ever growing selection of products that have enabled

the company to expand so rapidly. “Our expansion strategy is to focus on the countries where we believe we can deliver a good customer experience. That means all of the Southeast Asian countries where we believe the infrastructure is in place,” he says. “Sometimes we work together with local partners to create that infrastructure but of course one of the main criteria is that there are a certain amount of people on the internet and that it is possible for us to build the infrastructure to deliver quickly and reliably. Secondly, we try to ensure that we expand as quickly as possible because in e-commerce both you and the customer benefit from scale. The bigger you are, the more products you can offer and the lower shipping costs you have, so you can deliver better prices to your customers. Also, with scale you can to do everything better and more effectively.” A little more than a year ago, Zalora was merged into Global Fashion Group and Magnus Grimeland went from being one of the founders and managing director of Zalora to becoming managing director of Global Fashion Group, The group operates in 27 countries, including countries in South America and the Middle East as well as Russia and India, amongst others. “We operate in very varied countries,” says Magnus Grimeland. “Some core characteristics are the same, however. What is very important in e-commerce is delivering a very good

NORWAY-ASIA BUSINESS REVIEW

customer experience – if you don’t deliver a good customer experience, the customer doesn’t come back. That means delivering on time, offering all the relevant payment methods, offering a wide range of good products. That stuff remains the same. Now what is different is the local characteristics and fashion sense. There are certain fashion that are more popular in South America than in Asia for example, and you also have strong local fashion brands that are very pronounced. It is important to carry these products that are important locally. In Indoneisa, for example, traditional and Muslim wear is a huge part of the market.” Zalora benefits from a huge regional presence, which makes it easier to operate on a local level. “I think we’re the only e-commerce player in Southeast Asia that has this combination of local and regional benefits,” says Magnus Grimeland. “We have local operations but at the same time a strong regional organisation that can talk to the big brands and deliver the same customer experience across our countries. We always set out to become a regional player. In four years we have gone from zero to millions of customers and we have grown from zero to more than 2,000 employees. It has been a rather exciting growth story and I think it shows that the concept works well with the customer.” With such a growth rate, the question is, how big is the potential of e-commerce? Will we see a 50-50 split between online and offline purchases in the future? Not in the near future, says Magnus Grimeland. “That will take a long time,” he says, “but if you are number one in a category and that category is growing to 20 percent penetration, it is still huge. It is humongous! So if we can be the leader in the countries that we’re already operating in, which is our aim, and if e-commerce penetration grows from where it is today to even just ten percent, the growth rate is still very high. There is so much value and so much growth and scale you need to manage to reach 20 or even just 10 percent. Right now in most of our markets penetration is in the low single digits. So even if it doesn’t reach to 50 percent in the near future there is still so much value to take. “I think there will always be offline retail because people like that. Offline and online can work very well together. I think there are some industries where there is more direct competition between online and offline but not so much for fashion because people like to go to the shop and try on clothes, as well as shopping online. Then sometimes they will buy online if they’ve seen it offline. So we just focus on getting more customers online in the countries that we are in and keep refining our customer experience. In most of our markets we’re just helping to build the whole fashion ecosystem.”

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PHOTO: ZALORA

Thailand’s Central Group recently announced it has bought the rights for Zalora in Thailand and Vietnam.

Teaming Up

fter just three years in Thailand, Zalora’s site is visited by A more than two million people each month and more than 45 percent of sales come through mobile devices. That makes the SOFIE LISBY

online fashion destination an attractive business for Central Group, which has announced plans to ramp up its online sales, which last year accounted for just 0.5 percent of total sales. “Central Group is a very strong group and a great new owner of the business in Thailand and Vietnam,” says Magnus Grimeland, managing director of Global Fashion Group, which acquired Zalora just over a year ago. “There are a lot of synergies between what Central Group and Zalora was doing there, so hopefully they can deliver an even stronger product in the years to come.” According to Magnus Grimeland, who co-founded Zalora, there are huge benefits to new group that Zalora now is part of – the Global Fashion Group. “We have gone from almost nothing to being part of a global group with access to 27 markets and we continue to see very healthy growth. There is a lot more value we can create both to our customers but also to the company as a whole and this is where partnerships are important. When we were running and building Zalora, we were learning from anyone we could learn from. Now we have six amazing e-commerce companies in the portfolio. Some things one

company does really well and other things another company does really well. You can take the best of the best practices and experiences and learn from them and deploy them in other parts of the region. “It is rare to have an e-commerce group that has a global presence across all these markets, especially for fashion, so we have a unique value preposition that we can offer to our suppliers and partners that again will benefit the customers. What I’m focussing on now is realising all that value and ensuring that we reap the rewards from all this potential that we have. Most of our markets are in are in the same situation as Southeast Asia: e-commerce penetration is low and growing and the fashion market is growing. We are in the middle of this, having already built a very good platform and a good customer experience that we can only make better. So I’m very positive about the future and I think we will just continue doing more of what we do today.”

NORWAY-ASIA BUSINESS REVIEW

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PHOTO: INNOVATION NORWAY/BERNT ERIK ELLINGSEN

Having produced more than 20 million solar panels since its inception in 1996, Norwegian REC has grown to become a world leader in the clean energy products.

Sun Salutations

ince 2010, REC has been based in Singapore where the company S employs 95 percent of its 2,000 employees. The Singapore operating headquarters and manufacturing plant produces wafers, solar cells SOFIE LISBY

and solar panels for customers worldwide. The production is based on multicrystalline technology.

“We considered 200 locations when we were selecting a site for REC’s stateof-the-art integrated factory,” says Torgeir Ulset, Vice President, Sales and Marketing for Asia-Pacific. “We chose Singapore largely because of the talent and the country’s proficiency in semi-conductor manufacturing, which is very similar to solar cell manufacturing. Singapore’s location and logistics infrastructure is also desirable for our supply chain. In addition, Singapore’s strong commitment to cleantech innovation makes it an ideal location for REC to channel new innovations and push the boundaries for solar solutions. We are very excited to share our roadmap for advancements in solar energy production as we dedicate resources for research and development into our game-changing TwinPeak solar panels with the latest announcements. We believe that Singapore will continue to be a source of competitive advantage for us as we commit to our long-term partnerships here.” The REC TwinPeak is REC’s latest innovation. Based on solar grade silicon, it provides high panel efficiency and power output, enabling users to get as much out of available space as possible. The panels also feature a unique “twin”

design, which enables them to generate electricity even when they are partially shaded. “We want to be a premium brand that competes on quality and cell efficiency, so as to appeal to customers in the commercial/industrial rooftop segment,” says Torgeir Ulset. “And we want every person to benefit from electricity directly from the sun. Therefore, we are continuously expanding our capacities and presence worldwide. “In the solar industry, it’s often easy to conduct experiments in the lab, and make announcements based on these experiments. But, when it comes to mass production of such products at low costs, many aren’t able to do that. And that is where REC’s expertise is; taking those laboratory eureka moments and making it available for the masses.” Being a fully integrated manufacturer, REC benefits from having complete control over the manufacturing process. “Through integrated manufacturing from solar grade silicon to wafers, cells, panels and turnkey solar solutions, REC strives to help meet the world’s growing energy needs. With such a proven track record, we are able to assure high performance

and reliability in our products including lowest warranty claim rates – well below 100ppm over the past few years. As such, REC offers a one-stop energy solution for commercial businesses,” says Torgeir Ulset. REC has a strong presence in Southeast Asia, with over 50 percent of regional sales in 2015 coming from Thailand. With the awareness of the importance and competitiveness of renewable energies, governments around the world are implementing or have already in place dedicated programs to incentivise a transition from fossil fuels to renewable energies. These include feed-in-tariffs, tax incentives, green certificates, tenders and auctions and net metering schemes. While most of Southeast Asia has been rather slow on getting on board with solar power, such government-led incentives have supported Southeast Asia on increasing their reliance on photovoltaic power (PV) systems in their energy mix. Vietnam and Indonesia for instance, are expected to announce new feed-in-tariff schemes for PV this year – which REC feels will be a key support to expanding its revenue. The Singaporean government also recently announced about SGD 900 million of R&D budget in Urban Solutions and Sustainability, one of four key technology domains to be funded under the national Research, Innovation and Enterprise (RIE) 2020 Plan. The figure includes REC’s SGD 50 million investment towards a five-year research collaboration with National University of Singapore’s Solar Energy Research Institute of Singapore (SERIS), to develop the next-generation solar panel after TwinPeak. Other places are following suit as well. “In India, we expect annual installations to rank ahead of Japan and to approach Europe by 2019 and are therefore further expanding our local team and activities there,” says Torgeir Ulset. “The Indian government has ambitious plans for the renewable industry, for example, increasing the current installation base by five times to 175GW by 2022. And the fast growing solar power industry is a major contributor to this national target.” REC supplies solar panel solutions to both private and corporate customers and while both groups have the same incentives for switching to solar power – saving money on the electricity bill and/or making their contribution to saving the environment – the break-up percentage is very different from market to market. In Europe, REC is seeing more and more commercials and residentials turning to solar, made more attractive by the cost reaching grid parity. “In SEA, distributed generation is almost exclusive to corporate customers with very low private residential penetration,” explains Torgeir Ulset. “This is due to mismatch between solar generation and

NORWAY-ASIA BUSINESS REVIEW

consumption. For a residential customer, solar generation happens in the day while usage are usually at night so in the absence of storage solution, which is still expensive today, the generation is not effectively utilised within the same roof.” In an open letter to COP21 participants, REC called for policy action in order to maintain the momentum of solar power for a safe climate. The company argued that in order to be compatible with economic growth, renewable energy sources have to be more affordable and efficient. “Cost is [...] decreasing at an impressive rate. Of all the renewable energies, solar is getting cheaper the fastest. With photovoltaic systems now costing half what they did just six years ago, solar energy is achieving grid parity – the cost level at which solar is competitive with conventional sources of electricity – in more and more regions,”REC wrote. With renewable energy all the rage, the question on everyone’s mind is what is the cost-benefit? There is no single costbenefit formula that fits every market, says Ulset. “The cost-benefits in general depends on a number of factors – how you finance it, federal and local incentives, your utility rate, amount of sunshine available on your rooftop,” he explains. “For a plain vanilla distributed (rooftop) solar installation without financing and incentives, the payback period will range from 6 to 10 years depending on the country’s retail electricity rates and irradiation or sun hours. In countries with low electrification rates whereby transmission cost is expensive the payback can even be further reduced. This is due to the fact that distributed, that is rooftop, solar energy is consumed where its generated so transmission cost

can be saved. “In the case of the new power purchase agreement model, whereby end users are not required to invest with any upfront installation costs, customers get to enjoy solar electricity at no cost at all – in many occasions the solar electricity rate can be competitive with retail electricity rates. This novel model has accelerated solar adoption in many countries, which in turn drives down costs further in the supply chain due to scale in demand.” During the Norway-Asia Business Summit in Singapore, CEO of Innovation Norway, Mrs Anita Krohn Traaseth, visited REC’s facility in Singapore. She was clearly impressed with the productivity of the huge production halls, all driven by fully automated and robotic processes. “Solar energy is one of the most promising sustainable energy solutions for the future. Norwegian technology, knowhow and expertise is world class and answers many of the global challenges facing the international community”, commented Krohn Traaseth. “Elkem is a good example of a company that has positioned itself strategically in relation to changing competitive conditions, both in terms of production capacity, cost structure, ownership and competition. As a result, the company is starting to see value creation back in Norway where it all started; with assistance from Innovation Norway and public authorities, Mrs Krohn Traaseth said. She also noted that the Singapore plant was well positioned for a closer cooperation with Elkem Solar’s facilities in Norway. Elkem Solar will start up new production in parts of the plant in Porsgrunn, Norway, leading to green

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growth through development of new renewable technology and thereby creating 70-80 new jobs in Norway as well as a number of indirect jobs with a potential for further growth. Elkem Solar’s factories in Porsgrunn and Kristiansand will become part of the world’s most climate and energy efficient value chain from quartz to solar panels and thereby enhancing the integration between Elkem Solar and REC Solar and hence both companies ambition to grow. Elkem Solar is currently verifying the need for technology development and equipment upgrades. The company has sought public R&D funding and support from both local and national authorities is needed to be able to realise the project. The costs of upgrading the factory equipment is expected to be several hundred million Norwegian kroner.

. . .

Facts

REC is the largest solar panel producer in Europe and the company has prodiced more than 20 million panels since its beginning in 1996. According to a Deutsche Bank report from February 2015, prices for solar energy could fall up to 40 percent by 2020, giving solar even greater appeal. Germany’s Fraunhofer Institute predicts solar will be the world’s most common energy source by 2050, powering 40 percent of global electricity needs, at generation costs as low as 2-4 eurocents per kWh. According to 2015 estimates by IRENA, the International Renewable Energy Agency, the photovoltaic industry is the largest renewable energy employer worldwide with 2.5 million jobs.

PHOTO: INNOVATION NORWAY/BERNT ERIK ELLINGSEN

Upper left: During the summit, Innovation Norway’s CEO Anita Krohn Traaseth and her colleagues Torunn Aass Taralrud and Dr. Per Christer Lund visited REC Solar. Here they are received by Torgeir Ulset, VP Sales, APAC. Above: Engineers from REC explain the finer details of solar wafers.

NORWAY-ASIA BUSINESS REVIEW

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DNV-GL sees demand in Asia leading the fourth Industrial Revolution, as innovations in energy used for transport and hybrid power grids are key technologies for the next decade.

Glimpsing the LowCarbon, Digital Future

uch of what is happening now in Asia will determine the future of M energy innovation, says Remi Eriksen, group president and chief executive of DNV-GL. Both he and his company have spent a lot of time ERIC BAKER

considering where the future of energy will take the market, and he shared his thoughts at the Norway-Asia Business Summit 2016. “I firmly believe we are on the cusp of a technology-led revolution, a new renaissance of industrial progress,” said Mr Eriksen.“In the coming years automation and data-driven insights will acquire real meaning and scale.” “Most of the technologies will be known to us, what’s new is the combination of advanced technologies from previously separate domains like physical, biological and digital. New combinations and the speed of implementation are the building blocks of the fourth Industrial Revolution.” Part of DNV-GL’s responsibility is to forecast and it believes over the next 10 years, the future will be electric, and decarbonisation and digitalisation

will be the dominant drivers. By 2025, renewable energy will have a major role as a source of electricity generation as a disrupter, potentially outstripping coal as an energy source. The company thinks renewable energy will be responsible for half of the additional power-generating capacity added over the next decade. “There will be a strong decrease in coal and oil consumption by 2025,” he said. “Around two-thirds of the reduction in oil consumption will come from the transport sector, which is what we mean by decarbonisation.” “Digitalisation will involve realtime data generated from massive deployment of sensors and will increase control, enhance resilience, reduce cost

PHOTO: NORWEGIAN BUSINESS ASSOCIATION (SINGAPORE)

and open new opportunities for the implementation of energy efficiency in a wide range of sectors. “There are two trends that I strongly believe will influence our future energy consumption. First is the use of alternative fuels in the transportation sector, specifically in shipping. Second is digitalisation in the power sector.” Shipping transports 80% of the world’s goods by volume and does so in a more energy-efficient way than any of the other options. Only 2.5% of global greenhouse emissions can be attributed to shipping. But shipowners and their clients will expect the sector to do its part, said Mr Eriksen. “The UN Environment Programme believes the shipping industry must decrease its emissions by 30% from present levels in order to help stay below the two-degree warming ceiling,” he said. “One solution is the use of a different fuel type. Historically shipping has preferred one fuel type, which is currently oilbased. In the future there will be no silver bullet solution, but instead a higher degree of diversification. We believe each shipping sub-section will choose its fuel based on safety, affordability, reliability and sustainability.” “Today the leading alternative fuel for ships is liquefied natural gas (LNG). There are about 75 ships operating using LNG now and another 85 under construction. More container vessels and oil and chemical tankers are starting to use the fuel, showing LNG bunkering infrastructure is expanding beyond shortsea shipping. “One recent example of the promising development of LNG as a marine fuel is an agreement between Qatargas, Shell and Maersk Line, which are the largest LNG facility, the largest LNG producer and one of the largest shipping companies. The trio signed a memorandum of understanding to explore the use of LNG as a marine fuel in the Middle East. This shows there is a momentum building for significant change. “Singapore is well positioned to benefit from this shift as a major trading and shipping hub that recently invested in a LNG regasification terminal.” Mr Eriksen said LNG has the obvious advantage of eliminating sulfur oxides, reducing nitrogen oxides and particulate matter and cutting greenhouse gases. But LNG does not sufficiently reduce CO2 emissions to allow the 60% reduction required by the climate agreement. “Another technology that holds significant promise for energy efficiency and a smaller environmental footprint is ship electrification,” he said. “Today there are 34 vessels sailing with batteries on board, of which three are fully electric. We think fully electric is the most realistic solution for short-sea shipping, with an electric hybrid for used for deep-

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PHOTO: FJORDLINE/EHRENBERG KOMMUNIKATION

MS Bergenfjord is a cruise ferry owned and operated by the Norwegian ferry operator, Fjord Line who use her on their Hirshals-Stavanger-Bergen-Hirtshals route. Like her sister MS Stavangerfjord, she runs exclusivley on liquefied natural gas.

sea shipping.” “As with LNG, infrastructure is key. Building infrastructure for the charging of ships can also catalyse the use of cold ironing, meaning ships can utilise shore power while in port. This can lower emissions and improve human health in urban areas surrounding ports. “A few years from now, power grids will have omnipresent sensors, providing real-time data that allows them to learn and adapt to the use of renewable energy sources. These grids will have self-configuration for resilience, loss reduction and self-adjustment for voltage variations. They will also dispatch automated demand-response actions to avoid capacity limitations in the grid. “In effect, power grids will become cyber-physical systems: physical entities managed by local, digital control systems. Singapore has started this journey already, hosting a living lab to test new ideas for smart energy infrastructure using sensor networks and big data analytics.” In order to accommodate an increasing share of renewable energy, electricity will need to be transmitted over increasingly longer distances, said Mr Eriksen. High-voltage DC is the lowest-cost solution for this task. “In 10 to 20 years, we will see supergrids that combine ultra-highvoltage DC and AC systems,” he said. “This will allow integration of renewable energy while ensuring security and sustainability of the grid operations.” “In the meantime, there will be hybrid grids that see an uptake in flexible AC and high-voltage DC. We are seeing the development of this already in the US, Europe, India and China. But hybrid

grids also involve increasing levels of complexity, such as combining slower, mechanically controlled AC systems with faster, electronically controlled high-voltage DC systems. To do this you also need high-voltage DC circuit breakers, which DNV-GL is partnering with 33 energy players to test. “History tells us there is always a time lag between the breakthrough technology discovery and large-scale uptake. But we believe the lag between the current innovations and uptake will be shorter than usual, so we must be agile to act on these new technologies. “I believe the key ingredients of the future energy technology innovation will be invented here in Asia. A McKinsey report projects a USD 7 trillion shortfall in infrastructure in Asia until 2030. The fact that the region’s infrastructure is not that advanced here can provide opportunities in the energy sector to leapfrog a couple of technology iterations straight into the next generation. Because there is not a heavy investment in the current infrastructure, I think it’s a benefit to Asia going forward.” DNV-GL spends 5% of its budget on research and development, which is currently EUR 120 million. In the next five years, Mr Eriksen believes it will have to spend half of that on the digitalisation trend. “I would recommend shipping and oil and gas industry follow the same R&D budget allotment,” he said. “We don’t know where this R&D journey will take us, but for sure it has to be baked into your organisation’s culture and DNA. It has to be a part of your value proposition.” “Our company in the future may

not provide the same services we do now because the platforms and technologies are changing. Though it may sound extreme that we can quickly change from shipping and oil and gas, which make up 70% of our revenue, to more energy grids and digitalisation, but we have already acquired many of these competencies from previous acquisitions. And we think these synergies can be easily transferred to other sectors. “While we think the time lag will be shorter for new energy technologies, most economies are going to need to use oil and gas for many years to come. At some point the oil price will eventually rise because it is all related to supply and demand. I think right now the low price is partially related to low activity, meaning there is less demand for oil.”

. . .

Facts

DNV-GL believes by 2025, renewable energy could exceed coal as an energy source Renewable energy will be responsible for half of power-generating capacity added over the next decade Around two-thirds of the reduction in oil consumption will come from the transport sector Shipping transports 80% of the world’s goods by volume and does so in a more energyefficient way than any of the other options, emitting only 2.5% of global greenhouse emissions In 10 to 20 years, we will see supergrids that combine ultra-high-voltage DC and AC systems that allow integration of renewable energy while ensuring security and sustainability of the grid operations

NORWAY-ASIA BUSINESS REVIEW

Two oil analysts take varying approaches to reach the same conclusion for global oil prices over the next few years, noting the inconsistencies inherent in predicting the market.

Divining the Future for Oil Prices

orbjørn Kjus was one of the first oil price contrarians, heralding T in 2012 that prices would stabilise and eventually drop as shale oil became more prevalent. But Mr Kjus pointed out at the Norway-Asia ERIC BAKER

Business Summit 2016 that he still operates in a murky field. “Oil data is difficult to come by in global markets because it’s always wrong. OPEC, the International Energy Agency [IEA] and the US Energy Department never even agree on the historical numbers,” he said. “The IEA reported an oversupply of 2 million barrels per day in its fourthquarter report for 2015. Then in February it raised the figure for that period to 2.2 million, meaning the IEA found an extra 200,000 barrels per day in the system. And the OECD inventories are increasingly explaining less about what is happening with the oversupply, which is suspicious because such a shift should be gradual. “Something strange is going on with the IEA data, as there are massive amounts of missing barrels. In the second quarter of 2015, the IEA originally reported an oversupply of 3.3 million barrels per day. Now they report an oversupply for that same quarter of only 2.3 million. “Based on these trends, and with my projections factoring in China, we think

demand is still understated based on several hundreds of thousands of missing barrels per day. The fundamentals of oil market supply and demand haven’t weakened since the last OPEC meeting in December, yet the oil price fell from USD 50 to 27. “We have argued the long-term Brent crude oil prices fell too much, down to USD 48 per barrel, which is the supply destruction price. Supply has indeed fallen since 2014, but now we need to see a supply creation price. The only way you could justify long-term oil prices dropping from USD 100 to 48 is if oil companies cut their structural costs by 50%. But these firms have only cut costs by 20-25%, and part of that is cyclical. “With oil at USD 40, already 300,000 people have lost their jobs in the oil industry. Oil states are applying for crisis loans for the IMF and World Bank. It is not a sustainable price for the industry. “But the price is gradually increasing and will continue to work its magic. The key factor was US shale oil

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producers finally reducing their output, which should continue for the rest of this year. The major US shale oil producers have guided capital expenditure [capex] cuts of 58% this year, but if they want to live within their cash flow at a WTI [West Texas Intermediate] price of USD 40 per barrel, they have to cut their capex by 74%. “Global capex is projected to be cut another 27% this year after a reduction of 25% last year, which is unprecedented, worse than even the 1980s. We could see more capex cuts in 2017 — a third straight year — even with oil at USD 60, which has never happened. “Much of the deepwater production projects have been suspended until the next decade, which particularly hurts Norway as an offshore producer. “Demand on the industrial side has weakened, but the consumer products such as petrol, jet fuel and LPG [liquefied petroleum gas] have performed well because the price is so low. In the US consumers have started to buy 3.6% more petrol for driving and 58% of new vehicle sales there were light trucks, up from 50% the year a couple years ago. The lower oil price led to an immediate rise in the purchase of larger vehicles. “Global electric vehicle sales in 2015 numbered 460,000 units, but in China they are selling 800,000 SUVs in just one month, so it’s going to take a bit of time to get a change in the global car fleet. Electric vehicles will eventually make a large impact on the market, but for predicting oil prices the next five years, the segment is still too small to factor in. “Our 12-month oil price forecast is for USD 65, meaning we are optimistic about the market.” Narendra Taneja, chairman of the

NORWAY-ASIA BUSINESS REVIEW

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PHOTO: KONGSBERG GRUPPEN ASA

Energy Security Group of the Federation of Indian Chambers of Commerce and Industry, was more concerned with why oil prices fell so low. “Why did nobody predict the drop in oil prices? Analysts like to point to only supply and demand, but where was the demand reduction? Nobody can point to any example of this. Politics seems to play a part, as the US tried to force its hand with Russia and Saudi Arabia,” said Mr Taneja. “I believe it was a hysteria that brought down oil prices, as exuberance for renewable energy caught fire. Undoubtedly the share of renewables in the energy mix will grow, but it will be a gradual process, as this transition is going to take 40 to 70 years. “Low oil prices help certain countries such as India that are major importers, as we can spend more of our annual budget on schools and hospitals. But is the short-term gain worth it in the long term, as weak oil demand is in part because of struggling global economies, and India’s exports are down across the board. “Also, can India, China or Europe handle it if persistent low oil prices cause the Middle East to go up in flames economically, socially and maybe politically if key regimes buckle under the pressure? “I think the right price for the next two to three years is USD 50-68. This is a price that will keep the Middle East stable. “Oil will remain the king of energy for at least the next 30 years, but in my view, from 2080 and beyond the energy space is going to be all about nuclear power once we make it safe. I know it is not fashionable to say this, but I honestly believe this because I include solar as

nuclear power since the sun is a nuclear reactor itself. “The talks in Doha [in April] on an oil freeze are more about trying to find a trick to raise oil prices rather than lowering production because continued low prices are not sustainable for the Middle East, Russia and several other producing countries.” Mr Kjus noted some of the commentary on a showdown between oil powers was misguided. “While the showdown has been pitted as OPEC versus US shale production, with the former trying to keep prices low to drive the latter out of the market, I would contend the Saudis have known for some time they can’t put US shale oil out of business because of its low production costs,” he said. “The Saudis’ goal was to drive the expensive, sticky oil out of the market, such as the deepwater projects and Canadian oil sands. This will leave the market for a long time as the investment horizon is seven to 10 years, so in that respect the Saudis have been successful in driving excess capacity out of the market.” Mr Taneja is still quite bullish on oil demand over the medium term. “We have 2.7 billion people living below the energy poverty line,” he said. “There are another 2 billion people who have access to energy, but not of the same quality as in developed economies. Both groups want to move up, which means demand for energy is going to go through the roof.” “The IEA predicted renewables will make up only 30% of the energy mix by 2040, so I think fossil fuels will still have a big role to play going forward. But I think 50% of power producers will go out of business eventually as more power consumers use renewable energy

to produce their own power. Mr Kjus said it is important to draw distinctions in the fossil fuel-renewable energy debate. “In these debates people always want to lump all fossil fuels together against renewable energy,” he said. “But in the OECD we don’t use oil to generate power, unlike wind and solar. They are not direct competitors. Oil is used mainly for transport. Electric cars are making inroads, with Tesla’s new model selling like mad, but it’s coming from such a low base it will take at least a generation to make an impact on the total figures.” “For coal, you see it already being affected as renewable energy takes a larger share. It’s actually a positive for renewable energy if the oil price rises, as that means gas prices in Asia will increase and there will be more incentive to develop renewable technology quickly.”

. . . . .

Facts

In February the International Energy Agency found an extra 200,000 barrels per day of oil in the system for the fourth quarter of 2015, which is suspicious The fundamentals of oil market supply and demand haven’t weakened since the last OPEC meeting in December, yet the oil price fell from USD 50 to 27 Global capex is projected to be cut another 27% this year after a reduction of 25% last year, which is unprecedented, worse than the 1980s 2.7 billion people live below the energy poverty line The IEA predicted renewables will make up only 30% of the energy mix by 2040

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Shipping companies are jumping towards several new sectors to survive, but it is critical Norway not lose it core maritime competencies to compete when the industry does rebound.

Any Port in a Storm

turla Henriksen, chief executive of the Norwegian Shipowners’ S Association, knows enough about maritime’s long history in Norway to reckon it will still be around when the current generation of seafarers ERIC BAKER

hang up their boots.

“I like to say the shipping industry goes in vicious and virtuous circles,” he said. “It just happens we are in the former.” Mr Henriksen doesn’t mince words. “We believe the worst is still to come because cash flows are drying up and contracts expiring that were signed before the downturn,” he said. “This means a major restructuring, with some firms going out of business, as well as mergers or new owners. But Norway has been through this all before and we are confident we will come out stronger when the industry finally rebounds.” “These are going to be very tough times in the near future. Yet Norway has

one of the largest shipping fleets in the world and one of the most diversified. And this is one of the most adaptive industries to change in the world. From oil tankers to gas tankers, ro-ro ships, selfloading devices, offshore and specialised vessels, we have absorbed whatever the market wants. Our history demonstrates the industry has the capacity to deal with sea changes to the market and new opportunities. But this will not be a frictionless process as a number of companies are struggling to survive. “While some companies are moving towards massive cost cuts, others have shifted to offshore and renewable energy such as wind farm maintenance and servicing. Ocean mining and fish

farming are now being developed. Some shipping companies are in desperation mode, but at least it’s a way for them to stay afloat. “We also believe energy efficiency in the maritime industry is poised for major improvements, whether it be new fuels or hull designs, so this will help with costs. Shipping is already the most environmentally friendly form of transport. I think in the future we will be seeing more Teslas of the sea.” The main reason Mr Henriksen is optimistic is Norway has built up strength in specialised and technical skills. “Going forward it is critical not to lose this critical mass of competencies, nurturing and adapting to market changes. Cost controls, increasing efficiency, layoffs and laid-up ships are all already a reality. This is a fiercely competitive international industry, meaning it is especially sensitive to small changes in national maritime policies, which the Norwegian government should note when devising its new strategy,” he said. “The solution to this down cycle is not regulatory. Shipping is one of the most liberal, global industries in the world, so I believe the solution is supply and demand. But of course we support uniform global rules, uniformly implemented and enforced to give everyone a level playing field.”

“How China exerts its newfound geopolitical power will greatly affect small, open, affluent nations like Norway and Singapore who depend upon a UN-led world order that replaces might with right”

PHOTO: NORWEGIAN BUSINESS ASSOCIATION (SINGAPORE)

Mr Henriksen is much more concerned about what he sees as a splintering of international consensus on issues that affect every country. He noted that China was playing a larger role in maritime. “Though Norway now has a special political relationship with China, I think we should celebrate their economic success because it has improved the lives of so many of their people. China led the last economic recovery after the Great Recession. Norway should not be wary if China wants to become a bigger player in maritime,” said Mr Henriksen. “But how China exerts its newfound geopolitical power will greatly affect small, open, affluent nations like Norway and Singapore who depend upon a UNled world order that replaces might with right. So Norway is concerned with how China is trying to affect that order through its military and behaviour via the World Trade Organisation. “I’m concerned that the UN has been sidetracked in important debates

NORWAY-ASIA BUSINESS REVIEW

about the climate fight, as it was really the US and China that paved the way for the Paris accord. Also there seems to be momentum toward regional trade agreements instead of using World Trade Organisation protocols. This is worrisome because if it indicates a fragmentation of world trade it will be detrimental to global economic growth and could mean a more protectionist mood, and in the long run we would all suffer from that.” He regularly fields plenty of questions about the promise of the Northeast Passage. “The route is a very compelling proposition because you can cut marine distance by about one-third,” said Mr Henriksen. “First, I believe we should regret that the polar ice caps are melting because of climate change to open up this passage. But our association believes there has been too much hype about the Northeast Passage. The reality is only a handful of ships the past few years have run that route while 90,000 ships have gone through the Suez Canal and 40,000 through the Panama Canal.” “I think it will be a while before it will comprise a large part of maritime trade. What is of immediate concern is the Arctic contains a vast amount of natural resources both in the sea and polar land areas. We expect to see oil and gas exploration there along with maritime support services. The permafrost is melting, which means infrastructure such as roads, railways and pipelines are becoming more vulnerable. These areas also have some of the most powerful, large rivers in the world, opening up a new avenue of transport. “Norway is hosting the Arctic Business Secretariat in part to show how seriously we take this development. Close to 80% of the vessels that transit the Arctic Ocean go through Norwegian territory. The country is playing a responsible role in the development of the Arctic for business purposes as there is a need for global standards such as the UN Polar Code. There is a need for large infrastructure development, communication, navigation, weather forecasts, ice monitoring, contingency planning, search and rescue support, and services. I believe there is substantial scope for public-private partnerships in this realm. And we need to develop industrial standards for these operations. “The Norwegian shipping community can play a role which is why we helped establish the Arctic Business Council in 2014, with 200 executives from around the world attending our conference last year. The goal is to safe and sustainable development of the Arctic.”

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PHOTO: INNOVATION NORWAY/HEIDI WIDERØ

Norway should embrace the oil and gas slowdown as an opportunity to innovate and focus on its strengths as many industries lean into digitalisation, say economic leaders.

Norwegian Keys to Success

f this is the Asian Century, how can Norway succeed in it at a ITraaseth, time when its economy is cratering? Simple, said Anita Krohn chief executive of Innovation Norway: focusing on ERIC BAKER

digital, the so-called fourth Industrial Revolution.

“Finally it is time for my generation to contribute,” she said at the Norway-Asia Business Summit 2016. “We’ve never had a national crisis during my time, but export development since 1998 in Norway has been worse than Denmark, Sweden and Switzerland.” “The average lifespan of a Norwegian company for the previous generation was 60 years. Now it is 13. “Fortunately Norway is wellplaced to succeed as its innovation strategy is based on clean technology, sustainability, whole system designs and renewable energy. We have competence in all these areas already and a proven system of industry clusters that helps new companies develop. “I see six sectors that offer strong opportunities for Norway: clean energy, ocean space, health and welfare, bio-economy, smart societies, and tourism and creative economy. It is essential that we

export, internationalise and compete as Norway is a small economy.” Mrs Traaseth called on the country to work on industrialising the medical technology industry as well to take advantage of an increasing number of ageing countries. “The key driver for innovation is competition and fear of failure,” she said. “This will be a challenge for the public sector and monopolies, but we cannot afford to sit back as almost every entrenched industry is being disrupted by technology.” Walter Qvam, president and chief executive of Kongsberg Gruppen, echoed her sentiments that industrial digitalization is the wave of the future, pointing to big data analytics, the Internet of Things, robotics, 3D printing, software, autonomous vehicles and connectivity as technologies that are already affecting its clients across a number of sectors.

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PHOTO: KONGSBERG GRUPPEN ASA

Three leaders from different segments of the shipping industry offer advice on how to weather a huge storm that is leading to structural changes in the business.

Riding the Violent Waves of a Downturn

he Norway-Asia Business Summit 2016 in Singapore focused on the T maritime and oil and gas sectors. Unsurprisingly, one of the sessions was about how to survive a particularly deep market trough. ERIC BAKER

“We know maritime is a cyclical industry and we always come out of every down cycle stronger,” said Michael Chia, managing director of Keppel Offshore & Marine Ltd. “Opportunities are there in shipping and further ocean industries.” “We are addressing the elephant in the room,” said Walter Qvam, president and chief executive of Kongsberg Gruppen. “Conferences like this are important so we can talk to each other about which buttons to push, which is better than trying to solve these problems in isolation. I am what we would call a paranoid optimist about the future of the industry because the big question is how long will the downturn last. I think shipping will come out of this cycle structurally different than we came into it. You have to prioritise where to put your resources in order to survive.” Sturla Henriksen, chief executive of the Norwegian Shipowners’ Association called for perspective on the matter. “I think it’s important to realise we are captured by what is close to us, which for Norwegians shipowners is the collapse in oil prices that has hit our industry very hard,” he said. “The reason is the composition of our fleet is

different from that of the other maritime majors. Typically if you look at the fleet of other leading shipping countries, they have 40-80% of their fleet transporting large commodities through tankers and bulkers. That segment makes up less than 10% of the Norwegian fleet.” “We are very heavy on the offshore side, with about one-third of our fleet and one-half of our companies related to that sector. So low oil prices are affecting us disproportionately. But lower commodity prices will be a challenge for the whole industry. “This year and next are gone for all practical purposes, with a major restructuring of the offshore sector expected. We will see some mergers and others will go out of business. There is a major structural overcapacity that has to be dealt with, though we are hopeful in a few years activity will pick up again. It will take time for the rates to rise again because of this overcapacity. “Norway has been a maritime nation for years so it is used to riding the waves of violent business cycles. But we will maintain the same advantage Singapore also has even in down times: high-level competency in a very wide

maritime sector. Though Norway is heavy on offshore, it has a very specialised but also diversified fleet, which means there is an element of hedging there.” Mr Chia said deciding on the right size for the industry can be tricky. “It is hard to speculate how long the down cycle will last, but what is important is to ask what we can do,” he said. “When demand is weak how are you going to cope? You have to be very careful not to cut into the bone because you still need your competencies to carry you into the future.” “We have lots more shipyards coming into the market as people who made money in the property market in China decided to invest in shipyards. We have investors who don’t know anything about drilling — we have 80 rigs in China without contracts. That is a desperate market, but it is a reality. “The market is already restructuring and some of the speculators are dropping out. This is healthy for the market. “Both Norwegian and Singaporean companies are niche players meaning we have to have comparative advantages that will allow us to be winners in the industry. One of those advantages is technology, and that should be a first priority for these companies.” Mr Qvam said Kongsberg spends 10% of its budget on research and development, much higher than most companies, because it is the lifeblood of the company. “For us it is a holy rule to stay invested in technology and R&D. But in such lean times, it can certainly lead to interesting discussions while determining the budget,” he said. “I do not agree with the sentiment that you need to stay put in times like this — you have to get more creative. You have to get closer to your customers and partners to survive; you have to be more active. “The biggest technological opportunity we see for the maritime industry is optimisation using digitalisation and big data analytics. You need to look at this from the client’s perspective, and in our case our biggest clients are oil and gas companies. They have already cut costs by 25-30%, but we see this in every downturn. Then oil prices eventually go up and they ramp up everything again and haven’t learned anything. “This time is different, as oil companies look like they need to cut 4060% of costs. You can’t take that high of a percentage out of the supply chain and still survive. So oil companies need to make these leaner changes permanent. And there are new technological solutions already out there, but the oil companies have been so conservative they haven’t adopted many of them yet. “We believe industrial digitalisation can make a big difference in the maritime sector as advances in connectivity, software, 3D printing,

NORWAY-ASIA BUSINESS REVIEW

augmented reality, the Internet of Things, big data, automation and robots, and underwater autonomous vehicles (UAV) enable numerous improvements. There is particular promise for this last application — UAVs — and Kongsberg is the market leader in this segment. Shipping also generates enormous amounts of data, much of which has not been analysed. “There is demand for surveillance around the South China Sea, and UAVs can monitor in that area. Other potential fields for maritime include wireless communication under water, connecting various sensors, and mapping and surveillance for research, minerals and security issues.” Mr Chia pointed to deep-sea mining, where devices pick up polymetallic nodules on the seabed some 3,500 to 4,000 metres below the surface, as another ocean option. The Singaporean government has a concession in the Pacific Ocean between Hawaii and California to extract these potato-sized nodules from the seabed surface. There has been much publicity about the new Northeast Passage, an Arctic shipping route following Russia

and Norway’s coasts that used to be covered by ice. Global warming has caused part of this ice pack to melt, enabling a maritime route some 33% shorter between Asia and Europe. “Right now much talk concerning the Northeast Passage has been about politics and security, but maybe Singapore and Norway could meet about business opportunities in the Arctic because Kongsberg is getting so many inquiries about natural resources, oil and gas, maritime support services and tourism opportunities in that region,” said Mr Qvam. “We also run polar satellites from Svalbard and there is lots of interest in that island.” “I think the Northeast Passage has been overhyped thus far because only a tiny fraction of the total shipping volume takes that route,” said Mr Henriksen. “Having said that, Norway is working within the Arctic Business Council to develop standards for doing business there, including for the vast natural resources.” Sharanjit Leyl, moderator for the session, said the World Wildlife Fund estimates the global fishing fleet is twoand-a-half times larger than oceans can

ISSUE 2 2016

support. She wondered how maritime could play a part in environmental change. “We know the global fishing fleet is too large to be sustainable so one opportunity is the use of surveillance devices to monitor violators,” said Mr Qvam. “This technology already exists so we just need enforcement.”

The summit panel on opportunities in the ocean industries, from left to right: Sharanjit Leyl with Panellists: Michael Chia of Keppel Offshore & Marine; Sturla Henriksen of the Norwegian Shipowners’ Association and Walter Qvam of Kongsberg.

. . . . .

Facts

Less than 10% of the Norwegian fleet transports large commodities while up to onethird is involved in oil and gas, quite different than most maritime majors There is a major structural overcapacity that has to be dealt with, as mergers and bankruptcies are expected There are 80 drilling rigs in China without contracts Kongsberg spends 10% of its budget on R&D, quite high for a company Oil companies look like they need to cut 40-60% of costs this time, much more than before, requiring permanent lean measures

PHOTO: NORWEGIAN BUSINESS ASSOCIATION (SINGAPORE)

NORWAY-ASIA BUSINESS REVIEW

ISSUE 2 2016

PHOTO: NORWEGIAN BUSINESS ASSOCIATION (SINGAPORE)

The Norwegian company that operates mainly in Asia aims to become a digital service provider in addition to offering mobile connections.

Telenor’s Bold Ambition elenor relies on Asia, with over 80% of its customers in the region. T And while it is primarily a mobile operator, Jon Gravråk, chief digital officer for the company, gave a presentation at the Norway-Asia ERIC BAKER

Business Summit on why the company wants to branch out as a digital service provider. “Some 3 billion people are connected by their phones and another 1 billion will be soon, many of them in Asia,” he said. “By 2020, 80% of adults on the planet will own a smartphone.” “Telenor has 203 million subscribers globally. Going forward it will require a lot of new work as the mobile industry is saturating, despite these new growth numbers. But mobile now offers opportunities in a lot of industries in countries that lack the infrastructure for development: finance, banking, commerce, healthcare, education and agriculture. All of these industries will be disrupted by mobile connectivity and we hope to be at the forefront of not only providing connectivity but also these new services.” The company started its Asian adventure in 1996 with some bold moves, starting out in Bangladesh with a goal to enrol 500,000 subscribers. Today it has 56 million in Bangladesh. “We entered Asia when others were exiting, during the Asian financial crisis,” said Mr Gravråk. “We are extremely proud of our newest greenfield, entering

the Myanmar market 18 months ago and already reaching 15 million customers. We can truly say we are changing that country.” “Telenor entered Asia because there was a fundamental belief in mobile early on that it would be able to connect people from all over. It took a gamble, but we also believe in the excellence of our execution and our long-term commitment once we enter a market. The Scandinavian culture and our flat business structure that empowers employees has found great traction in Asian cultures. Telenor has 20,000 employees in Asia.” The company expects underlying connections will double and people will eventually use 10 times more data, all of which is enabled by using smartphones. “Consumer behaviour is changing,” he said. “We conduct survey data in many of our markets and in Bangkok the average smartphone user spends seven hours per day on their device. Seven hours! Are they even doing any work? Of those Bangkok smartphone users, 100% of them use the Line messaging app or

Facebook, beyond the levels we see in Scandinavia. This seven hours is the future of digital and consumer business, because when you spend that amount of time on an online interface and don’t need to go through a store, you have to be on mobile to get the customer’s attention.” “Voice calls are a very small part of that seven hours, and we haven’t figured out a way to communicate to our customers during voice calls. So during their data usage we need to let them know which services we provide. “Over half of smartphone users globally use a messaging app developed in Asia, so you can see why Asia remains vital to our growth outlook. Bangkok is often referred to as the Facebook capital of the world, with the highest penetration of users globally. This year we’re expecting a doubling of Series A funding for start-ups in Southeast Asia, so investors are serious about the region. “We also see this potential so Telenor is establishing a digital hub in Singapore. We will look for partners to enter new territories, and they may be from different industries. Industry lines are starting to blur, as we see with advertising, a USD 500 billion global sector, meshing with telecommunications, a USD 1 trillion industry. “We need to compete on some fronts and collaborate on others. Line, the Japanese and Korean app, has an average employee age of 27. They get it, and we need to learn from their model. “Telenor will look to add new capabilities that we cannot provide as nimbly through mergers and acquisitions. For example, this year we added Tapad, which was founded by a Norwegian entrepreneur and delivers unified crossdevice marketing solutions that give publishers and technology providers a view of consumers across screens. They will help us as we start to add more services to know which consumers we have that use more than one of our

. . . . . .

Facts

Over 80% of Telenor’s customers are in Asia Some 3 billion people are connected by their phones and another 1 billion will be soon, many of them in Asia By 2020, 80% of adults on the planet will own a smartphone In Myanmar, Telenor is adding 1 million customers per month and already has 15 million In Bangkok the average smartphone user spends seven hours per day on their device, with the highest penetration of Facebook users in the world Advertising, a USD 500 billion global sector, is meshing with telecommunications, a USD 1 trillion industry

NORWAY-ASIA BUSINESS REVIEW

services, because if we know it’s the same person we need to communicate in a consistent way to that consumer. “We will not only build new services that can fit on top of the mobile framework, but also standalone businesses where we think we can provide a service more successfully, perhaps building on our 200 million subscriber base. For example, we released the Capture app for mobile that automatically saves your photos when you take them. We believe it’s better than Dropbox for mobile. In the past year it has grown four- to five-fold.” Mr Gravråk admitted the company must prove its apps and services are better than the competition. “We cannot just sit back and assume because we are the mobile connector people will use our services,” he said. “In Thailand, we have the Accelerator incubation programme where we invite in start-ups and help them, sharing office space, provide mentors from both inside and out of dtac [its Thai subsidiary], and chip in a little capital to help get them running. The beauty of it is the creator of this programme proved through the market the PR value dtac gets from operating this incubator exceeds the cost to run it. “Now we are scaling up this programme, and one of the companies to emerge from the Accelerator is Claim Di. In Thailand there are 15 million vehicles on the road and about 14 million accidents per year. Fixing the insurance claims related to those accidents is a big hassle. If you get in an accident, this app allows you to bump your smartphones together to exchange information, take some photos of the accident, and the insurance companies do the rest. It is now undergoing a Series A funding round with some big investors from Silicon Valley. “In Myanmar more than 75% of the population does not have access to the power grid. We aim to have more than a 25% consumer base in that country, so one solution is we know how to build a mobile base station with solar panels and a battery. This will provide surplus energy we can use for mini-utilities around the base station because we can use the Internet of Things. This requires metering to prevent fraud, payment solutions and so on. So technology can help solve this power grid bottleneck in Myanmar and several other countries facing development challenges. “Solar panels are not new; the problem has always been with the battery. You can use diesel aggregates but people tend to come around with diesel tanks and siphon off the fuel. But new battery technologies are coming along that enable a more closed system.” Editor’s Note: Dtac’s incubation centre is featured in another article, “Foster to Prosper” on pages 24-25 in this issue.

ISSUE 2 2016

PHOTO: ISTOCKPHOTO

Market analysts dissect how much One Belt, One Road, the AEC and the TPP will affect maritime trade in Asia.

Surveying Asian Business Trends

ne of the key drivers for maritime growth in Asia will be China’s ambitious One Belt, One Road scheme, the signature O foreign trade strategy of President Xi Jinping, said Julian Bray, ERIC BAKER

editor-in-chief of TradeWinds magazine.

“The goal is to revive flagging economic growth in China, find new markets for capacity in its industries, and reinforce the country’s expansionist ambitions across Asia,” he told the Norway-Asia Business Summit 2016. The belt refers to a land-based new “Silk Road” while the road is a maritime route through the Indian Ocean, with both aiming to focus on Eurasian cooperation and connectivity. A budget as high as USD 225 billion has been floated for the long-term success of the strategy, said Mr Bray. While One Belt, One Road attempts to impose a regimen from an external source, this year also saw the implementation of the ASEAN Economic Community (AEC), noted Mary Boyd, director of the Economist Corporate Network in Shanghai. There is a “noodle bowl” of trade agreements already in place for ASEAN members, but the AEC hasn’t made a large impact yet as the process has been bureaucratised for the most part, she said. “It’s important to note what the AEC isn’t when comparing it to other regional economic blocs: it doesn’t have a customs union, labour market standards, a single currency or professional accreditation,” said Ms Boyd. One trend The Economist spotted in Southeast Asia through surveys is an integration of corporate approaches to urban markets across the region. Another 90 million people are expected to transfer to cities in ASEAN by 2030.

A second trend is supply chain manufacturing has shifted from North Asia to ASEAN, with Japan, Korea and China outsourcing their investment to this region, which will affect maritime routes, she said. This means more short-haul shipping services. China comprised 19.1% of ASEAN’s total trade in 2014, and has been the region’s largest trading partner since 2009. China’s overcapacity and deflation are then a significant concern for Southeast Asia, as my publication puts that country’s risk of a hard landing at 40%, said Ms Boyd. The Trans-Pacific Partnership has led to much speculation about its effect on global trade, and Vietnam has used its membership in much the same way China did in the 1990s as it prepared to join the World Trade Organization: to push through domestic reforms that had been difficult, she said. For Vietnam, that means higher protection of intellectual property, upgrading labour standards and improving the business environment.

. . . .

Facts

Long-term budget of up to USD 225 billion for One Belt, One Road scheme 90 million more people are expected to transfer to ASEAN cities by 2030 China comprised 19.1% of ASEAN’s total trade in 2014, and has been the region’s largest trading partner since 2009 The Economist puts the risk of a hard landing for China’s economy at 40%

SNAPSHOTS

NORWAY-ASIA BUSINESS REVIEW

Norway-Asia Business Summit in its sixth edition this year, was held in Singapore in April. This year’s summit set a standard for future summits, earning a visit from Prime Minister Erna Solberg in a nod to the importance of the region to Norway’s economy.

Norway-Asia Business Summit 2016

ith over 250 participants, the summit was the biggest ever W gathering of Norwegian-related high-level industry practitioners in Asia as well as diplomats and top government officials sharing experiences and thoughts for Norway’s future in the region.

ISSUE 2 2016

NORWAY-ASIA BUSINESS REVIEW

ISSUE 2 2016

I SSSNUAEP 2S H2 O0 T1 S 6

11 1. H. E. Lim Hng Kiang, Singapore’s Minister for Trade and Industry delivers his opening address. 2. Smiles from Thailand: H. E. Ambassador Kjetil Paulsen and Summit MC Sharanjit Leyl, flanked by Thai-Norwegian Chamber of Commerce Executive Director Thitikul Opdal and President Vibeke Leirvåg. 3. H. E. Ambassador Tormod Endresen and BI Professor Torger Reve sharing a lighter moment during a coffee break 4. No summit in Singapore is complete without the traditional lion dance. Here at the Lantern Bar at the Fullerton Bay Hotel on the first day of the summit. 6. H. E. Lim Hng Kiang and Prime Minister Erna Solberg seated at summit 7. The opening night at Clifford Pier featured a ostentatious seafood buffet dinner 8. Accolades to Una Skram and Ingvild Doyle of NBAS who led the work behind the scenes and secured the highest profile summit ever. 9. Team China led by ambassador Svein O. Sæther at the Summit during the speeddating session 10. NBAS President and Summit Host Hilde Nafstad of Statoil and Board Member Vidar Andersen, head of Asia at DNB, off to a good summit start. 5./11. Delegates enjoying the networking opportunities at the summit.

9 ALL PHOTOS: NORWEGIAN BUSINESS ASSOCIATION (SINGAPORE)

SEB GROUP Singapore Branch

SEB is a leading Nordic bank which is serving corporations and financial institutions with corporate banking, trading and capital markets and transaction services. The international nature of SEB's business is reflected in its presence in some 20 countries worldwide. The bank’s focus in the Asian region has since 1979 been to serve Northern European clients. SEB helps its customers in entering and establishing operations in Asia as well as Asian companies expanding operations into Northern Europe and Germany. 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, provides a seamless experience. With almost 200 employees in the region we have the knowledge and competence to meet customer needs.

SEB’s corporate banking services in Singapore:  Trade and Export Financing  Commercial Loan Facilities including Working Capital and Capital Investment Financing in global and local currencies  Broad range of Cash Management and Treasury solutions  With a 24 hour Foreign Exchange network service we offer a full range of FX products tailored to the specific client needs.  We provide a locally based research team covering the major Asian economies.

Mr. Jan Stjernström General Manager Phone

: +65 63501 381

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: Jan.Stjernstrom@seb.se

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: +65 63501 384

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Skandinaviska Enskilda Banken AB (publ) Singapore Branch 50 Collyer Quay #12-03, OUE Bayfront Singapore, 049321 Phone: +65 6223 5644 Website: www.mb.seb.se

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ISSUE 2 2016

PHOTO: TELENOR GROUP

How a Thai telco nurtures home grown tech talent to tackle the nation’s various problems.

Foster to Prosper

he Thai startup industry has witnessed exponential growth in recent T years. In 2015, the investment in Thai startups reached USD 35-40mn, with more than 20 deals. Part of the success can be attributed to dtac, a HENRI VIIRALT

company in the Telenor Group and the second largest telco in Thailand, which over the past three years has become a key pillar in the startup ecosystem. dtac accelerate, widely regarded as the nation’s leading incubator due to its strong training curriculum and mentoring by leading experts from Silicon Valley, launched the fourth season of its startup incubator program this March. It can count some of the most successful Thai startups in recent years among its alumni, many of whom have managed to raise funds from venture capital (VC) firms and spread their wings outside the nation’s borders. “I think the local ecosystem has developed very rapidly – three years ago when we launched it was almost non existent,” said Andrew Kvalseth, EVP, Head of Strategy & Innovation Group, dtac. “Access to quality mentorship has improved thanks to us and a few others, but also a lot of Thai startups have received VC funding, meaning that Thailand as a whole has become more attractive for VCs in finding talent and potential future acquisitions.”

dtac’s startup and innovation group operates on a belief that the more people have access to the internet, the better the society becomes, the more GDP grows and problems get solved. “When we surveyed the people to find out whether the price of internet access was too high, it turned out that many people simply didn’t have a compelling enough reason to use it. A lot of that has changed with LINE and Facebook, even if it’s simple communication. Of course, both of those are foreign companies and we believe that once more local entrepreneurs get involved with startups, they will start solving local problems and giving people more reasons to use the internet on a regular basis.” Kvalseth sees the increased VC funding as the first level of validation in attracting talent and capital, but says that Thailand has yet to see any big exits. While there have been a few

“decent sized” ones in the past by the likes of Agoda (acquired by Priceline in 2007 for an undisclosed sum) and Ensogo (acquired by LivingSocial in 2011 for an undisclosed sum) there has been a gap in recent years. The reason for this, he believes, is that at the time there were a core set of entrepreneurs who are now focused on other ventures and it will be awhile until these materialise into something large enough for a big exit. dtac sees its role within the ecosystem as a key enabler for startups at the beginning of their lifecycles and finding early success. This involves bringing experienced mentors and VC capital from overseas in the kingdom, but also in assisting the local startups with their marketing and distribution. By building a minimal viable product (MVP) and distributing that to dtac’s 30 million customers, the startups are able to prove that their product works and is able to gain traction on the market, which in turn helps them raise further capital from the VCs. As far as startup ideas go, the majority of them involve in taking concepts that have worked in other markets and essentially cloning them.

NORWAY-ASIA BUSINESS REVIEW

“I don’t think that’s a bad thing because if you want to zero in on what has the highest probability of success, take something that has previously worked and localise it. Thailand would likely not be the first choice of location to expand the operations of western companies in the region, and that actually works in our favour as it means there’s a lot of opportunity to be the first mover on the market. Also, when you localise something then you have an opportunity to innovate and potentially make the product better, and you can then export that to other markets.” That being said, some sectors like e-commerce - while representing a mere 3% online retail penetration across Southeast Asia - is already such a high stakes game that only those with the deepest pockets are able to compete in. This was demonstrated back in April, when Chinese e-commerce behemont Alibaba, a company with a USD 200 billion valuation, decided to acquire a majority stake in SEA’s leading marketplace Lazada for USD 1 billion. “We see opportunities elsewhere and one of the startups we invested in the current batch is called Fastwork (fastwork. co). Essentially what they do is match freelancers with businesses. This model has been around for a couple of years by international players like Upwork (www. upwork.com) and others, but there hasn’t been any localisation before. Most of the people who are buying and selling these services are working in the Thai language, so there’s a good opportunity in making that work here.” The overall quality of startups and their ideas has, according to Kvalseth, improved “dramatically” over the four batches at dtac accelerate along with the sheer volume of applicants – in 2013 there were 100 ideas presented and the number has climbed to 500 with the recent batch. This, he argues, leaves you with a wider array of good ideas to choose from in the end. The most successful startup to graduate from the program to date is Claim Di (www.claimdi.com), a mobile app providing an elegant solution to a unique problem in Thailand and elsewhere in the region. In case of a car accident in Thailand, all parties involved have to remain at the scene until the insurance company sends out a surveyor to arrive and document the scene. This amounts to a lot of lost time, not to mention inconveniencing everyone else by holding up the traffic. Developed by a team who were creating backend software for insurance companies, they came up with an app which allows the involved parties to photograph the scene of the accident and “shake” their phones together, meaning they agree to what happened. This info is relayed directly to the insurance companies, freeing up everyone to leave the scene and for the traffic to resume.

“Claim Di went up 15 times in valuation within a year after we invested in it and it has received additional VC funding since then as they saw an opportunity to take it overseas. Another reason for their success was the team itself as they had existing connections in the insurance industry, enabling them to grab a huge part of the market very quickly.” Even with these success stories, dtac’s mission in not to capitalise on these startups as the ROI is very small in relation to the size of the telco. Rather, it sees itself having a more important goal in helping the government realise its digital ambitions. The BOI “Digital Thailand” initiative where digital technology is used as a driver to grow the economy and apply innovation and technological expertise in all manufacturing and service sectors. “I think the government’s move to put the whole digital agenda on the radar is great and we can see it trickle down into some concrete things. One such thing is changing government policies and regulations to make it easier to do business in the digital landscape. That would be the most positive development we could hope for. Having this agenda give them an opportunity to prioritise some of these issues that can be bogged down by bureaucracy for years and I think the private sector has to help them with this prioritisation.” There are other roadblocks on the way. One of the biggest challenges the domestic startup industry in Thailand is facing is having a very limited talent pool, students that graduate with a computer science degree, and there are strong bureaucratic barriers to bringing in talent

ISSUE 2 2016

from overseas as well. Kvalseth believes that success stories from big exits may one day motivate more interest in Thai students to pursue technical skills and getting involved with the startup scene upon graduation. “I think Thailand has a lot of natural appeal to entrepreneurs from abroad, so if the government gets the regulatory environment for startups in place and manages to expand the talent pool, there is strong potential for Thailand in becoming a regional startup hub.”

. . . . . .

Facts

dtac accelerate - launched in 2013, considered the leading incubation program in Thailand. Startups from dtac accelerate have grown 3-15 times, with a total worth of 1 billion Baht. 70% of dtac accelerate startups have received funding. The market average is only 20%. 4-5 dtac accelerate startups are top-ten ranked in several Thailand’s top startup rankings. 500 TukTuks, one of the world-class and most active VC firms, has 50% of its budget invested in the dtac Accelerate family. ClaimDi, an auto insurance industryrevolutionizing software, received $2 million Series A funding, bringing the company’s total worth to $10 million, a 15-times growth in just 12 months. This is the largest ever Series A funding ever received by a Thai startup. ClaimDi is recently ranked as one of the World top 10 startups in insurance or Top 10 InsurTech.

The most successful startup to graduate from dtac accelerate programme to date is Claim Di (www.claimdi.com), a mobile app facilitating communication and claims between drivers and their insurance companies.

PHOTO: ISTOCKPHOTO

NORWAY-ASIA BUSINESS REVIEW

ISSUE 2 2016

PHOTO: BRO. JEFFREY PIOQUINTO, SJ FLICKR.COM

Rodrigo Duterte has already been formally confirmed as the winner of the Philippine presidential election.

Don’t Fear the Reaper REPRINTED WITH KIND PERMISSION OF CONTROL RISK. STEPHEN NORRIS, ASSOCIATE DIRECTOR, GLOBAL RISK ANALYSIS, ASIA PACIFIC AND BEATRICE TANJANGCO, ECONOMIST, OXFORD ECONOMICS

will be inaugurated on 30 June and replace Benigno Aquino, Duterte the darling of the foreign investor community for the last six years. Immediately before the vote, portrayals of the next president had been overwhelmingly negative, featuring pictures of a gun-toting Duterte and focusing on his un-statesmanlike delight in killing criminals. The narrative – shaped by Philippine tycoons who it turned out had mostly backed several wrong horses – was one of descending danger and doom. Those tycoons had plumped for candidates who could be depended on for high-level political access and generally preferential regulation, in contrast to the unknown quantity of Duterte. The Aquino administration and the business elite underestimated Duterte’s momentum. Too late they cried, how can a violent tyrant be fit to lead? Now he has won and there is business to be done, their doommongering has softened somewhat. Duterte himself flicks between parodies, from eccentric uncle who says what he thinks and cares not of the consequences, to movie tough guy riding to the rescue to sweep the scourge of drugs and criminals from the streets. This self-depiction was, foremost, part of the campaign show, a highly effective vote-

winner as well as a mask for his presumed lack of depth on policy issues. The electorate, with different views to foreign investors of the outgoing government and the country’s political trajectory in general, wanted a political wrecking ball. Duterte could yet satisfy both business and such voters. He could also, if things do not go to plan, please nobody, and, under pressure, lapse back into defiant caricature. The unease at Duterte’s rise is understandable given the Philippines’ traditional vulnerability to political upheaval, and the broader trends of increasingly authoritarian and ineffective governance in South-east Asia of late. His term will no doubt be tainted by offensive comments and reckless diplomatic gaffes, but actual implementation of unregulated violent crime-suppression tactics nationally is unlikely. His government will not ‘kill 10,000 criminals’ and the fish in Manila Bay will not be fatter for having gorged on discarded corpses of drug dealers. But even if he does resort to vigilantism to tackle crime, this alone would not destabilise the country or impact heavily

upon the economic and business spheres. Where Duterte diverges from other regional leaders that have at time pursued such policies – Thailand’s former prime minister Thaksin Shinawatra’s 2003 war on ‘dark influences’ springs to mind – is that he is a pure politician, not a businessman leveraging his political status. His record in Davao shows that Duterte is not going to be interventionist in business sectors, and that he does not direct policies to indulge cronies and relatives. His municipal administration’s actions suggest a surprisingly tolerant and inclusive figure, and not a repressor of critics, despite the crude public ranting. Lastly, Duterte has shown signs of being measured when questioned on economic issues, asking for patience while his experts develop such policies. He has generally avoided populist promises, with the exception of the vow made by all candidates to end labour contractualisation. Further, the actions of his predecessors stand him in good stead economically. Duterte stands to inherit a relatively healthy and growing economy. Over the last 5 years, economic growth in the Philippines has averaged a robust 5.9% per year, making it one of the

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best performers in the region. Much of this recent success can be attributed to policies pursued by the outgoing Aquino administration, and before that, president Gloria Arroyo, who brought the country back from the brink of economic crisis in the early 2000s. Duterte’s lack of economic policy experience and propensity to ‘flipflop’ on his statements raised concerns that his presidency could see all this good work undone, especially following a rather drama-fuelled campaign which contained very little substance on the economy. However, what we do know of his economic and business agenda is nothing to be afraid of, and what we know of his advisory team and likely future cabinet line-up indicates that he will get plenty of sound guidance. To mitigate concerns, Duterte has signalled a desire to hire experts and appears likely to defer to capable advisors to manage the economy, while the recent release of an 8-point economic agenda has assured people that the country’s short-term growth is safe by supporting the continuity of policies pursued under the Aquino administration. The business community and Team Duterte are aligned on almost every major issue. Duterte has repeatedly advocated amending the constitution to relax restrictions on foreign ownership of Philippine corporations (but not of land). He has promised to retain but accelerate the PPP-based infrastructure programmes under Aquino that were a central reason for the strong investor sentiment around his government. Duterte will likely get a higher number of such projects out the door by streamlining tender processes and allowing the deals to include more attractive financial incentives for bidders. The longer term outlook appears contingent on the success of Duterte’s mission to rid the country of crime as well as his plans to shift towards a federalist form of government. A stable investment climate due to peace and order should ensue, though the manner in which this will be achieved is controversial and may have the opposite effect. However, the shift in the structure of government will provide greater uncertainty. Though constitutional changes can take many years to implement, any significant overhaul of the status quo can have significant repercussions for the economy. The change in the structure of the government will necessarily come at considerable cost, but if successful, will lead towards a more inclusive growth path in the future. Another war – a war on red tape – will be gratefully received. Government approvals of permits and so on are handled within 72 hours in Davao City. If this model can be exported across the notoriously red tape-afflicted Philippines, the impacts would be significant. Agriculture development should open new investment opportunities, particularly if Duterte is able to rein in

the security threat posed by the New People’s Army (NPA) insurgency, not impossible given his relationships with prominent leftists. Adding his muscle to the new Competition Commission could also carve out ways into the largely sealed power and telecoms markets. Bureaucrats obstructive of reform or caught in corruption will be quickly removed, with much less tolerance than under Aquino. As a native of Mindanao, his victory may enable the leadership of the Moro Islamic Liberation Front (MILF) to hold its disenfranchised factions together long enough to allow one more round of back and forth with the new government on their precariously poised peace and autonomy arrangement, the Bangsomoro Basic Law (BBL). Keeping the MILF onside is an important part of containing terrorism risks and Islamic State (IS) influence. Nonetheless, political risk analysts will have to factor in scenarios that feature significant instability or even military intervention in their analysis of a Duterte administration, scenarios that would not have been applicable to his presidential opponents. The route to such outcomes would include several key landmarks: failure to deliver on crime and corruption promises, and resultant loss in public support; angry battles with Congress over slow-moving legislation and Duterte’s federalism proposals; a heavy purge of senior figures within the military and police; snarling hostility to international criticism of his crime policies and human rights record; and repressive retaliation to an increasingly negative local media. All of this could see Duterte veer toward a populistauthoritarian style, leading in turn to calls for his impeachment in Congress

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and leaving him atop an unstable and ineffective government. That is the meat of the doomsday predictions that were being touted before the election. They have – rightly, in our view – begun to recede, and are less likely than those involving the emergence of a pro-business administration along the lines set out above. President Duterte will be occasionally embarrassing and offensive but his rise is unlikely to signal the demise of the political stability and strong economic performance attributed to Aquino.

. . . . . .

Facts

Rodrigo "Rody" Roa Duterte, born on 28 March 1945, also known by the nickname Digong Filipino lawyer and first Mindanaoan president of the country. Entered the Presidential race in November 2015 and won a landslide victory, garnering 16.6 million or 39% of the votes Duterte takes office on 30 June 2016, for a term of six years Duterte was previous Mayor of Davao City for seven terms, totalling more than 22 years Nicknamed "The Punisher", vigilante groups tied to Duterte are thought to be responsible for the executions of drug traffickers, criminals, gang members and other lawless elements. Over a period of 20 years, he turned Davao City from the "murder capital of the Philippines" to what tourism organisations now describe as "the most peaceful city in Southeast Asia," and what numbeo.com ranks as the world's fourth safest place. SOURCE WIKIPEDIA

PHOTO: ISTOCKPHOTO

Above: Philippine flag raising ceremony to mark the 115th Independence Day. Upper left: Duterte (third from left) leading the Davao city-wide 2015 Torotot Festival.

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PHOTO: REMØ SEAFOOD

An Innovation Norway trainee programme may be the start of a seafood exporting adventure for 22 year-old Kristoffer Remø.

Overseas Expansion

ristoffer Remø has his eyes set on Asia. Having just completed K six months as a seafood industry trainee at Innovation Norway’s Singapore offices, he is back in Norway with a wealth of knowledge and SOFIE LISBY

hungry to use what he has learnt.

“What the programme does it is helps Norwegian seafood companies expand abroad and improve innovation,” explains Kristoffer Remø . “Innovation is critical for further growth of the Norwegian seafood industry.” The trainee program is organised by Innovation Norway, the Norwegian government’s most important instrument for innovation and development of Norwegian enterprises and industry. The organisation supports companies in developing their competitive advantage and to enhance innovation. Support areas include building competitive Norwegian enterprises at both domestic and international markets, promoting Norwegian enterprises, promoting Norway as an attractive tourist destination, transforming ideas into successful business cases and promote interaction between enterprises, knowledge communities and R&D institutions. “I got an office space at Innovation Norway’s Singapore office and they gave me guidance and helped me network,” says Kristoffer Remø . “They have a large network in Singapore so that is very helpful for a newcomer like me. They help you get feedback from the customers, and you can attend different focus groups with chefs to help you understand their needs and the market better. Innovation

Norway has been very helpful with this. Torunn Aass Taralrud, Innovation Norway’s Director in Singapore and her team do an amazing job, and I was lucky to get their help” Kristoffer Remø is the youngest son of a family with proud seafaring tradition. For the past 30 years, the family has run Brødr. Remø, a seafood company specialising in value-added products, primarily smoked salmon and trout. The company has received several awards for their products, and currently delivers seafood to customers all over the world. It is located in Ålesund on the Norwegian west coast, a region famous for its high quality seafood products due in large part to its location on the Atlantic coast. Home in Ålesund, Kristoffer Remø reflects on the differences between the Norwegian and Singaporean markets. “The difference between Singapore and Norway in terms of the customers is that the taste preferences are very different,” he says. For example, in Norway we love gravlaks or cured salmon, and that is not very popular in Singapore. Yet. We also use a lot more salt in Norway than we do in Asia. But we try to adapt to the markets we are operating in. We are always eager to hear if customers have any new suggestions.” Kristoffer Remø believes the seafood industry trainee programme has

helped his family’s company penetrate the Singaporean market, and he was able to forge a new network, a new importer and a few new customers. Brødr. Remø also attended FoodAsia2016, one of Asia’s largest international food and drinks exhibitions. Attracting thousands of exhibitors and visitors, FoodAsia2016 is a perfect showcase for producers in the food and beverage industry and exhibited products include everything from canned and frozen food to health and organic food, meat and poultry and seafood. “We gave out samples and met with a lot of customers and got really good feedback,” says Kristoffer Remø. So far, the company’s clients comprise mostly hotels and restaurants but Kristoffer Remø is hungry for expansion. “We are slowly expanding into other Southeast Asian countries like Malaysia and Vietnam,” he says. Singapore is a centre for Norwegian seafood exports to the region. The Norwegian Seafood Council, a government owned company established in 1991 under the Ministry of Trade, Industry and Fisheries to support and drive growth of Norwegian seafood exports, recorded a 16 percent increase from 2014 to 2015 in the volume of Norwegian salmon being exported to the region, now at 45,000 tonnes annually, and a 20 percent increase in value, now at 2 billion NOK. Yet the competition doesn’t deter Kristoffer Remø. “There is a lot of competition but what we experience is that it is still hard to get really high quality stuff in these markets. The very high end is relatively unexplored. People have low expectation so to speak. So that is where we are concentrating our efforts. We’re still in the beginning, but we are growing quickly.” With a growing business in Southeast Asia, Kristoffer is still undecided about where he will live. “I like Singapore and Southeast Asia,” he says, “and Norway can get very cold, so let’s see.”

. . . . .

Facts

Norwegian salmon take 2 to 3 years to reach a body weight of 4–5 kilograms, which is perfect for human consumption. Each kilogram of salmon requires approx. 1.2 kilograms of fish feed. In its total lifespan, a salmon will therefore consume 6–7 kilograms of fish feed. Norwegian Salmon feed consists of fish oil, and fish meal, vegetable oil and vegetable substances as well as proteins and carbohydrates. Each year 12,000 Norwegian salmon, which are ready for export, are randomly inspected by the independent National Institute for Nutrition and Seafood (NIFES). None of these inspections have ever found any residues of prohibited medications or illegal foreign substances.

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For the first time ever, Norwegian Seafood Council (NSC) participated with a booth representing 13 Norwegian seafood exporters at the ThaiFex 2016 exhibition 25-29 May. The exhibition covered 80,000 sqm. across seven halls with close to 2,000 exhibitors and 43,000 buyers.

ThaiFex 2016

he exporterâ&#x20AC;&#x2122;s programme featured a supermarket market tour, T a business seminar on doing business in Thailand, a networking dinner with importers in addition to the ThaiFex exhibition. NSC also

sponsored Norwegian seafood for the Thailand Ultimate Chef Challenge as part of the exhibition.

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I SSSNUAEP 2S H2 O0 T1 S 6

1./8. Norwegian Seafood Council’s stand at ThaiFex 2016 2. Norwegian Seafood Exporters visiting Thammachart Seafood’s counter at Siam Paragon 3. H. E. Norwegian Ambassador Kjetil Paulsen delivers his opening remarks at the seafood networking dinner at Westin Grande Sukhumvit 4. NSC Chefs Jimmy Chok and Markus Dybwad with Chef Dusit of the Westin proudly presenting their guests with a delicious Norwegian seafood dinner 5. Thammachart Seafood’s CEO, Julian Davies and his wife and Managing Director Sunsanee “Yeeran” Siriwatjananon arriving at the grand seafood dinner 6. NSC Chef Jimmy Chok demonstrates how to cook salmon at the Thailand Ultimate Chef Challenge 7. Exporters visiting Siam Makro’s flagship store in Sathorn 9. Big C Supermarket started its International Seafood Festival during the exporter’s visit. Here NSC Chef Jimmy Chok holding a fresh Norwegian trout flanked by Innovation Norway’s Axel Blom, H. E. Ambassador Kjetil Paulsen, NSC Regional Director Jon Erik Steenslid and Big C’s Chief Operating Officer, James Scott 10. NSC Regional Director for Southeast Asia presenting Norwegian Seafood Council to the dinner guests 11. Westin Grande Sukhumvit’s Altitude lounge created a perfect frame for the grand networking seafood dinner on 24 May 2016

9 ALL PHOTOS: NORWEGIAN SEAFOOD COUNCIL

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II SS SS U U EE 22 22 00 11 66

The Thai-Norwegian Chamber of Commerce hosted its Annual General meeting on 29 March 2016. Some 50 members and spouses attended the meeting as well as the networking dinner following the formal meeting.

TNCC Annual General Meeting 2016

he AGM marked the 20th anniversary of the Thai-Norwegian T Chamber of Commerce. A photo flashback to 1996 was shown. The AGM also signalled the completion of the rebranding project of the chamber, whereby all the chamber’s communication channels have been given a consistent appearance in line with the Team Norway profile

5 1

3. 2

4. 5.

A happy Ambassador Kjetil Paulsen flanked by Anette Anderson, Managing Director of Volvo Car Thailand and Chamber President Vibeke Lyssand Leirvåg The newly elected Board: from left to right: Brian Klafstad (dtac), Maj Choakdee Dhammasaroj (NERA), Trond Tønjum (Wallenius Wilhelmsen Logistics), Aina Eidsvik (Aibel), President Vibeke Lyssand Leirvåg (Felicia), Piyanuj Lui Ratprasatporn (Tilleke & Gibbins), Axel Blom (Blue Business Solutions), Senior Advisor, Dr. Kristian Bø, Michael Shum (Jotun) and Vegard Holmelid (Royal Norwegian Embassy). Missing in the picture are: Rajiv Bawa (Telenor Asia), Dr. Paisan Etitum (TTI), Tom C. Varghese (Telenor Asia) and Alejandro Vollert (Yara Thailand) The participants paying attention to the formalities Serious business conducted on stage Happy members enjoying a bite after the formalities

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Cool headed Warm hearted Banking the Norwegian way

Photo: Mari Svenningsen/Norwegian Seafood Council

Freshness Flown In Fresh salmon from the cold clear waters of Norway. Flown into Asia several times a week and available from major supermarkets in Asiaâ&#x20AC;&#x2122;s megacities. 48 hours from catch to counter.

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The Graphs to give the readers Ithenanorder understanding of where Asian countries are in their

development, we have assembled an overview of various indicators for Norway, USA and the most important South and Southeast Asian markets. The graphs in the two right columns are the result. Countries are listed by their two-letter ISO 3166-1 code. The data has been assembled from a number of sources. See below for a full list. Basic Figures Norway (2015) Export Growth 2015 2.3% Export Growth 2016 projected 2.4% Trade Balance NOK 233.7 bill Current Account Balance NOK 55.0 bill International Reserves NOK 520.4 bill Unemployment 4.3% Corporate Income Tax 28% Value Added Tax 25%

Norway’s Top 10 Exports 2015 %/value NOK bill Petroleum 29.1% 246,410 Gas 28.5% 241,538 Engineering products 13.2% 111,711 Seafood 8.5% 72,035 Chemicals 6.1% 51,727 Non-ferrous metals 5.1% 43,449 Scientific instruments 1.9% 16,163 Raw materials 1.9% 15,896 Iron and steel 1.5% 12,832 Others 4.2% 35,982 Total (-5.6% vs 2014) 847,744

Geography Geographic Area: 385,199 sq. km Highest peak: Galdhøpiggen 2,469 m Inland water areas: 16,360 sq. km Coastline: 25,148 km

Demographics Population Norway: 5.0 mill Population Oslo: 875,000 Life expectancy M/F NO: 80/84 Inhabitants per sq. km land area: 17 Population Growth: 1.1%

Sources: GDP/Capita: Wikipedia/IMF; GDP Growth: Wikipedia/CIA Factbook; Global Competitiveness: World Economic Forum; Inflation 2015: CIA; Ease of Doing Business and Days to Start a Business: World Bank; Corruption: Transparency International; Democracy Index: Economist Intelligence Unit; Mobile Telephone Penetration: World Bank; Electric Consumption: International Energy Agency; Norway Trade: Statistics Norway. Data has been downloaded from sources on 10 June 2016

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STATISTICS

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Norwegian Chambers of Commerce and Business Associations are established in most major Asian countries. The organisations work to create venues and channels for exchanging and sharing information, to improve local business conditions and opportunities for Norwegian companies and to increase trade between their respective host countries and Norway.

Norway in Asia Indonesia Norway Business Council

Norwegian Business Association (India)

Norwegian Chamber of Commerce, Hong Kong

C/O Royal Norwegian Embassy Menara Rajawali 20th Floor Jl. DR Ide Anak Agung Gde Agung Lot #5.1 Kawasan Mega Kuningan Jakarta 12950, Indonesia W: www.inbc.web.id E: execsec@inbc.web.id T: +62 2157 63343

c/o Innovation Norway 92, Golf Links New Delhi 110 003 India W: http://www.nbai.in E: nbai@nbai.in T: +91 1149 099200

Rooms 1510-1512, West Tower, Shun Tak Centre, 168-200 Connaught Road Central, Central, Hong Kong. W: http://www.ncchk.org.hk E: info@ncchk.org.hk T: +85 2254 69881

Norwegian Business Association (NBA), Korea

Norwegian Chamber of Commerce, Japan

Royal Norwegian Embassy 13th fl. Jeong-dong Building 21-15 Jeongdong-gil Jung-gu Seoul 100-784, South Korea W: http://www.norway.or.kr E: yky@mfa.no T: +82 0272 77157

c/o Innovation Norway in Tokyo, 5-12-2 Minami Azabu, Minato-ku, Tokyo, Japan 106-0047 W: www.nccj.or.jp E: michal.berg@nccj.or.jp T: +81 3344 09935

Malaysia Norway Business Council c/o Royal Norwegian Embassy, P.O. Box 10332, 50710 Kuala Lumpur, Malaysia W: www.mnbc.com.my E: malaysianorwaybc@gmail.com T: +60 3217 10000

Myanmar-Norway Business Council c/o Royal Norwegian Embassy Nordic House No. 3, Pyay Road, 6 Miles Hlaing Township Yangon, Myanmar W: www.myanamr-norway.com E: contact@myanmar-norway.com

Nordic Chamber of Commerce and Industry c/o Maersk Bangladesh Ltd. 4th Floor, Plot 76/A, Road 11 Block M, Banani, Dhaka 1213 Bangladesh W: http://nccib.com E: info@nccib.com T: +88 0171 5991907

Nordic Chamber of Commerce Vietnam Petroland Tower, 17th Floor No. 12 Tan Trao Street, Tan Phu Ward, District 7 Ho Chi Minh City, Vietnam W: http://nordcham.com E: contact@nordcham.com T: +84 85 416 0922

Norwegian Business Association Shanghai Royal Norwegian Consulate General Rm. 1701, Bund Center, No. 222 East Yanâ&#x20AC;&#x2122;an Road, Huangpu District, Shanghai 200002, China W: http://www.nbash.com E: nbash@nbash.com

Norwegian Business Association (Singapore) c/o The Royal Norwegian Embassy 16 Raffles Quay #44-01 Hong Leong Building Singapore 048581 W: http://nbas.org.sg E: admin@nbas.org.sg T: +65 6622 9100

Norwegian Business Association Sri Lanka (NBASL) c/o Exilesoft 201, Sir James Peiris Mawatha Colombo 02 T: +47 95923712

Norwegian Business Forum, Beijing (NBF) Rm. 1701, Bund Center, No. 222 East Yanâ&#x20AC;&#x2122;an Road, Huangpu District, Shanghai 200002, China W: http://norbachina.com E: secretary@norbachina.com T: +86 1305 1611164

Philippines Norway Business Council c/o The Royal Norwegian Embassy 12th Floor, DelRosarioLaw Centre 21st Drive corner 20th Drive Bonifacio Global City, 1630 Taguig City, Metro Manila Philippines W: http://www.pnbc.ph E: info@pnbc.ph T: +63 2317 2700

Thai-Norwegian Chamber of Commerce 14th Fl., Mahatun Plaza 888/142 Ploenchit Road Bangkok 10330, Thailand W: www.norcham.com E: contact@norcham.com T: +66 2650 8444

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