Cover Story
Vision
10 Companies changing the Pacific
| What
makes a Pacific Islands business innovative? This is a question we have been tossing
around the extended Pacific Magazine team for some months as we planned this profile
on visionary Pacific businesses. And the answers we arrived at are as diverse
as the region itself. For a start, it's not always about size or turnover. While
some of the businesses featured here are modest in size, none of them are modest
in ambition. They all distinguish themselves in some way, either through the nature
of their product, innovations in finding new markets, the promotion and distribution
of their products in new ways, or in their management structure. Finally, they
are all making a contribution to changing the way business is being done, not
only in their country of origin, but more broadly in our region. 1.
A Global Leader This June a Fiji company became the first in the world to capitalize on the emerging global carbon trading market, through a bank-brokered renewable energy deal under provisions of the Kyoto Protocol on climate change. Sustainable Energy Limited (SEL), a joint venture between the state-owned Fiji Electricity Authority (FEA) and the Australian renewable energy company Pacific Hydro, will sell all the carbon emission reduction (CER) credits created by its two hydroelectric power projects in Fiji.
SEL will sell about 5,000 tonnes per annum of CERs to the Dutch bank ABN Amro in London over the next seven years. ABN Amro in turn has contracted to sell these credits to Accord Energy Limited, the trading arm of the FTSE 100 energy and home services provider, Centrica plc, parent company of the UK's largest residential energy supplier, British Gas. Under the Kyoto Protocol, industries in developed countries are allowed to off-set their emissions of carbon dioxide by investing in alternative and cleaner energy projects in developing countries under a scheme known as clean development mechanism (CDM). SEL's two projects - the 6.5 megawatt Wainikasou hydro plant and the soon-to-be-operational three megawatt Vaturu hydro - has been approved under CDM to create carbon credits. "Fiji is at the forefront of CDM, because there have been very few deals done under CDM," says Ron Steenbergen, the Fiji Electricity Authority's general manager for major projects and strategy, who is involved in SEL projects. "And of the few that have been done, we're the first one that's actually had a bank brokering the deal." "In addition to what we sell as electricity, just simply for
the fact that they are green projects and we're selling carbon trading credits
will bring us about F$250,000 (US$145,000) a year in green income," says Steenbergen. 2. Bridging The Pacific Express Electronics, Inc. is a computer systems retailer and software developer that is home-based on Tutuila, American Samoa. The company was organized and incorporated in 2001 by the entrepreneurial husband-and-wife team, Gerhard ("Gary") and Lori-Ann Sword, both American Samoans. Express Electronics serves two markets: it retails computer systems (hardware) primarily in American Samoa and it now offers software development locally and regionally. The company is currently enjoying the success of its Border Management System (BMS), a software program developed in-house in response to common immigration problems facing all the island nations of Oceania. The BMS essentially consists of a software program that connects passport scanners at the airport and/or seaport with the country's main immigration office. The program can also link the immigration office to other government agencies, particularly those concerned with law enforcement. The company counts among its growing client list, the governments of American Samoa, the Republic of Palau, the Commonwealth of the Northern Marianas and the Republic of the Marshall Islands.
The first year, the couple worked out of their home. The second year, business growth required that the fledgling company have its own home and more employees. Ten percent of the ownership is now divided among Electronic Expresses' employees. The Swords retained the other 90 percent. "Financially we really struggled
in the first few years as there was a lot of travel involved to meet with people
and build relationships," Sword explains. "This year [2005],…we expect to finally
break even enough to pay off our bills and come out of the red into the black.
It was really a road less traveled and it takes it toll as I was away from home
for long periods of time. There was not only financial stress, there was emotional
stress for my wife and I and our kids. Through it all, we never would have reached
this point without the resolve and peace from God." 3. Immune From Pessimism Unicorn Pacific established themselves as Vanuatu's only export manufacturer in 2002. The natural pharmaceutical company produces TBL-12, an immunotherapy treatment that is proven to help treat patients with cancer. CEO Sam Grant is not a scientist; in fact he comes from an engineering background in central Queensland, Australia. "I got involved in the development of TBL-12 with my father, who was given six months to live in 1962. He's now 84, and apart from being 84, is in great health!" TBL-12 is made up of all marine ingredients, including sea cucumber, sargassum, shark fin, sea sponge and sea urchins. Similar products have been used in Chinese medicine for over a thousand years. Unicorn Pacific has spent over $US5 million researching the effectiveness of TBL-12. And it is now big business. At $364 for 28 days supply, Unicorn Pacific was exporting between $30-40,000 a month from Port Vila to Australia, USA and New Zealand in 2004. "We started out exporting about $10,000 a month in 2002/03, and the business has steadily grown," Grant says.
Grant says all businesses looking to invest somewhere look for the same thing: No tax, no government interference and a self-regulating industry. He says Unicorn Pacific found that in Vanuatu. "Any talk about Vanuatu being unstable is ridiculous. We work with the Department of Fisheries, the Vanuatu Investment Promotion Authority and haven't had any concerns. We've got great local staff, are well supported by Air Vanuatu; there's no other place we'd be." Unicorn Pacific was previously located in Townsville, but moved to Vanuatu because of the quality of products available. They pay local fishermen 150 vatu (US$1.34) a kilo for cleaned and gutted sea cucumber, sticking by their philosophy that foreign investors should put back in to the community. "We employ seven Ni-Vanuatu staff. 90 percent of our material comes from Vanuatu; we're very proud of that," Grant says. The future is looking bright for the young company, with a planned $3 million investment in Port Vila to expand their production capabilities. Turnover is expected to dramatically increase from last year's $480,000. "We're currently exporting
a very small amount, really. With the new investment, a new factory and more research,
we will be able to supply a lot more people around the world." www.unicorn-pacific.com 4. A New Friend Chutneys, jams, greeting cards and a whole range of products bearing the "FRIEND" brand are the public face of an innovative new non-government organization in Fiji which aims to help low income earners work their way out of poverty. The "baby" of development worker, Sashi Kiran, the Foundation for Rural Integrated Enterprises 'N' Development, (FRIEND), was founded in 2001 and is based in Lautoka, in Fiji's western division. FRIEND has three categories of programs: governance, income generation and the "FRIEND Save Scheme", which is essentially a microfinance program. Their philosophy is to "use existing skills and existing resources,"- hence the harnessing of raw materials such as mangos and tamarind for chutneys and masi (tapa) for cards. Once a community has identified which product it wants to produce -and this is a long and involved process-FRIEND makes "an initial investment."
FRIEND estimates it is already directly supporting 1200 people. It has eight volunteers, two field staff, two trustees, three board members, and what Kiran calls "a whole circle of friends" from KPMG which does its audits, to media outlets who provide free advertising, free couriers, and substantial help from Punjas (a Fiji based manufacturing and distribution company). Kiran says the market is largely local, about 80 percent from Fiji and 20 percent for visitors and overseas sales. In the pipeline is honey, jams, cushion cover designs, and coasters, the list seems endless. "We have 35-40 trials (underway)," Kiran says. FRIEND is also looking for a good distributor in Australia, where they believe there is great potential. "I've got on my desk enquiries from Kiribati, Tuvalu and
Samoa, but we don't have the resources to help them at the moment," Kiran says.
That interest is a clear indicator however, that FRIEND is a business model that
has wide attraction across the Pacific Islands region. 5.
Riding The Turtle's Back Fiji has long been seen as one of the tourism industry leaders in the region, but a Samoan company has grand plans to export its knowledge of ecotourism and open up a whole new market in Fiji. Green Turtle Holidays is launching its Fiji operations on August 1, and Managing Director, Steve Brown, says he has the support of the Fiji department of tourism, and the Fiji Tourism Resource Owners Association. The support of the later is at the heart of what they are doing. "Community tourism can be so profitable, but at the moment, all they (landowners) are getting is a peppercorn rent. Landowners have billion dollar tourism assets, but they are hamstrung. We can do better than that," Brown says. Green Turtle Holidays started in Samoa in 1994. The Green Turtle "product" is a series of tours, of various duration, concentrating on giving people "a very comprehensive, enjoyable, culturally sensitive holiday." Green Turtle's key marketing tool is the Internet. Any search of Samoan tourism keywords will turn up one of their websites fairly quickly. In Samoa, Brown says they work with 30 villages in Samoa, and 10-20 people in each village, so that is up to 600 people directly, "plus of course their families." In Fiji, the plan is to work with 100 villages across the country and to build four Green Turtle Resorts for landowners. "We have some advance bookings off the Internet," Brown says, and "20,000 brochures printed and ready to go into Nadi and Suva hotels." He says their market is divided almost evenly between Europe (including the United Kingdom), Australia, New Zealand and the United States. "We've taken a very focused approach in Fiji. We don't rely on tourism and trade agents to market us, we've taken a very Internet based approach, and Internet marketing is our answer." www.GreenTurtleHolidays.com 6. Reaching For The Sky Blue Sky American Samoa's Blue Sky Communications has its eye on regional expansion. Chief Technology Officer, Fay Ala'ilima-Rose says they have tendered to provide mobile services in Samoa, and a three-way merger with a "business solutions and professional services company" with regional reach is in the pipeline this month. Blue Sky provides four types of services; a cellular communications network, an ISP -dialup service, broadband and a pre-paid long distance service.
Fay and her husband, attorney Barry Rose, own a 30 percent stake in Blue Sky, with the Texas-based Stanford Financial Group owning the remaining 70 percent. Ala'ilima-Rose says they were inspired to buy into the company because it had just started turning a profit when the original parent company folded in 2002. She was the company's Director of Engineering at the time, and had spent some years working with American Samoan based staff to set the system up. Blue Sky Communications now with 54 employees, many of them in a customer service call center and retail outlets. In 2004 it had a healthy turnover of some millions. "American Samoa is one of the first competitive models of a telecommunications industry in a small Pacific island, and it is because the U.S. has the regulatory structure in place to enable that," Ala'ilima-Rose says. "In Samoa the World Bank is funding a reform process and is setting up conditions to allow a competitive Telco, (which will) allow us to bid for the mobile license (there). We believe if it works for Samoa it will be a model for other Pacific Island nations." www.bluesky.as 7. Chamorro Style The Che'lu® store in Hagatna, Guam is as much a mission for the Rosario family as it is a business. In addition to the tee shirts, caps, stickers and key chains that make up the bulk of the store's sales, visitors can purchase pieces done by a number of Guam artists, see cultural artifacts on display and engage in conversation about the products as well as Guam's culture and history. Ten years ago, retired teacher Jose Rosario was selling his artwork-carvings and jewelry based on ancient Chamorro artifacts-at craft fairs and cultural shows. Lee Rosario, then 16, told his father he needed a catchy logo to promote the work. As the family was dining out on Valentine's Day 1995, Jose's wife, Elizabeth, prodded Lee, an artist, to stop procrastinating and get the logo finished. Within minutes, the logo which launched the business was sketched onto a paper placemat. That logo combines a traditional fishhook, sling stone and Chamorro chief's head into a simple, contemporary design. "We knew we had something special," says Jose Rosario. "It's so deeply rooted in the culture." Younger son Christopher convinced the family to begin selling stickers and tee shirts featuring the design. Elizabeth Rosario, also a retired teacher, added the word che'lu to the logo since the two brothers were the originators. The Chamorro word che'lu refers to a brother, sister or friend. In October 1995, after registering their trademark, the family set up a small table with 50 tee shirts at a local art show, sold out and found themselves taking orders. For eight years they have rented a shop space in the Chamorro Village, a popular lunch spot for workers in the Hagatna area. The company also operates a Web site www.cheluguam.com. Customers from Japan and elsewhere often seek out the store after viewing it online or hearing about it from friends. After several years of surviving Guam's recent economic downturn, 2004 saw a 25 percent increase in the company's sales. They
see a new, permanent location in the future. And they will continue to introduce
customers to what they see as a beautiful part of Chamorro culture. "Che'lu is
not just for us," says Lee Rosario. "It's for everyone." 8.
More Than A University If education is a tool for national development, these days it is also a business, as demonstrated by some of the newer initiatives at the University of the South Pacific. USP, under the leadership of new Vice-Chancellor, Professor Anthony Tarr, has recently announced it will offer software consultancy and training, initially focusing on "reversing the brain drain of computer experts from Fiji." The new entity will operate under the name Stepstone Pacific Ltd. and is a partnership between USP and Stepstone Technologies Inc., a U.S. based software consulting firm which has relocated to Fiji. Darryl Duke one of the co-founders of Stepstone Pacific, says: "We will …(forge) a bond directly between private industry and the university and through this bond provide ongoing input for improving the university curriculum, as well as provide students with opportunities for real-world industry experience before they graduate." Meanwhile the USP has done a good job of building demand for its own services, by changing the way it delivers some of its courses. A recent review of the 'Internet Course Development Project' by USP's School of Law found "there is a present and rapidly increasing demand for these courses of law delivered via the Internet" and that the course "has become a model for other disciplines of the USP." The review by the Pacific Legal Network identifies
sufficient infrastructure at USP offices around the region as the main threat
to the sustainability of the ICD project-along with the availability and costs
of Internet services. But if the attitude of Professor Tarr and his team is anything
to go by, the success of the project won't be for lack of effort. 9. Patience Equals Good Business In the mid-1980s, Robert Reimers, the owner of a Marshall Islands mega-business, took a radical departure from the corned beef and rice retail norm of the time, launching the first privately-run clam farm in the Pacific. Although many questioned his sanity at the time, his company successfully demonstrated its ability to grow giant clams and then, in the 1990s, moved into the aquarium market trade, growing and exporting the smaller and prettier 'maxima' clams. Nearly two years ago, a Florida-based company, Oceans Reefs and Aquariums (ORA) bought the operation from the Reimers company, and is in the process of a major expansion that will triple the capacity of the renamed Marshall Islands Mariculture Farm. ORA bills itself as the biggest producer of marine ornamentals in the world, and is aiming to take the Majuro farm to a new level by expanding exports to include live coral and trochus shells. The company is currently exporting clams and coral, but manager Tom Bowling says that the farm cannot meet demands for its products from U.S. and European aquarium markets, and regularly has to turn down potential customers.
In the near future, the farm aims to be totally self-sustaining by spawning and growing all of its marine products. While it's ecologically-friendly to grow their own clams, coral and trochus, it also makes business sense because "they're healthier and have a higher survivability rate (for export) if we grow them here," says Bowling. "We plan to develop (the Majuro farm) into a world class marine facility that is unmatched in the Pacific," says Bowling. In the longer-term, the company hopes to develop relations with residents on outer islands who can grow some of the marine products spawned at the farm in the sheltered lagoons of Marshall Islands until they are mature, and then sell them back to the farm for export. It would allow for significantly stepped up production beyond what the farm can grow in its land-based tanks in Majuro. The company employs
eight Marshall Islanders, with plans to increase that number when the farm completes
its expansion at the end of 2005. While ORA has infused the capital needed for
the expansion, the Majuro farm is "holding its own" financially through its exports,
Bowling says. It is the only commercially viable business in the Marshall Islands
that is generating jobs and revenue by exporting marine products in a sustainable
manner. 10. On Safari Sam 'Gumbie' Crocombe owns and manages the first inland safari tour company in the Cook Islands - Raro Mountain Tours. He started the company when many Cook Islanders were looking for business ventures after the national government decided to streamline the public service and laid off more than a thousand workers in 1995. Most of the displaced workers took to traditional tourism ventures but Crocombe decided otherwise. He wanted tourists to see more to the Cook Islands then the sand, sea and sun. "I started off with repairing cars in Rarotonga in 1995 but during a quick short visit to Tahiti to visit my in-laws in 1996 showed me how I could provide more activities for tourists then just swimming under the sun," he says. "Our forefathers lived inland we only moved down to the coast when Christianity arrived on our shores. Otherwise we are from the hills and some very remarkable true history of the Cook Islands Maori are inland," he says. The tour takes visitors to the Ara Metua or the ancient road that runs around the island, but inland, and which is still used to this day. The road was built and paved with volcanic slabs by a powerful ancestral chief. Visitors stop at ancestral village sites or maraes and during the tour one can hear the most fascinating history of ancient Polynesians of Rarotonga by the tour guide while attacking steep tracks with four wheel drives. What started off with just a four-seater jeep has now grown to a fleet of 12 ten-seater jeeps. Visitors pay NZ$60 (US$41) for the three hours-plus tour and tours are conducted twice a day except on Saturdays. How well is
he doing financially? "That's a secret but I can say that I have managed to buy
more vehicles through the years." The company employs three full time staff while
drivers/tour guides are on contract basis. In a small economy looking increasingly
to tourism, Crocombe's business provides a valuable alternative. |
