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Timor-Leste Investment Paying Off For Vinod Patel

The family-owned company entered the Timor-Leste market in June, 2015 after oper­ating in Fiji for over 55 years.
07 Sep 2019 17:16
Timor-Leste Investment Paying Off For Vinod Patel

Fijian hardware giant Vinod Patel re­cently opened a branch in Timor-Leste and the investment is paying off so far, a company director says.

The family-owned company entered the Timor-Leste market in June, 2015 after oper­ating in Fiji for over 55 years.

What started out as a market exploration mission in 2013 quickly turned into an in­vestment opportunity two years later.

The firm’s consultants noticed gaps in the small nation’s hardware market despite the focus on infrastructure development.

They were certain Vinod Patel could meet the demands.

Dili-based director Jatin Patel says the company wanted to become Timor-Leste’s leading supplier of hardware and building materials.

“When we first visited Timor in 2013, there was an opportunity to open up a cement plant. But obviously after we did the feasibil­ities, it didn’t make sense to have a cement plant in Timor at that time,” he said.

“We then thought to first come in and start off with the retail.”

Back in Fiji, a proposal was made for the firm to venture into uncharted waters and open a branch in the Timorese capital, Dili.

Mr Patel, 37, was part of the team that sur­veyed the market and volunteered to lead the project, admitting that he was seeking a new challenge.

“They specifically wanted someone from the family to be based here full time so that other opportunities could be looked at as well, especially in the manufacturing sec­tor,” he said.

Branch

The branch, located in central Dili which is the capital of Timor-Leste, employs 39 staff, four of whom are Fijian.

Mr Patel believes moving to Timor-Leste has been worthwhile so far despite the chal­lenges in the market, including lack of en­forcement and corruption.

“The profit margins are a bit higher just be­cause inventory turnover takes much longer than in Fiji. It’s close to 300 days here; in Fiji it would be like 100 days or even less,” he said.

“And plus we have only one branch, so just to keep the prices down we have to im­port one whole container of like six to eight months stock because we have no choice.”

Timor-Leste’s largely gas and oil driven economy is projected to grow by 4.8 and 5.4 per cent in 2019 and 2020.

According to the Asian Development Bank, those figures are among the highest in the Pacific, second only to the Cook Islands.

Australian deal

A recent maritime border deal signed with Australia could further unlock billions of dollars of offshore gas and oil revenue for the country of roughly 1.3 million people.

As the Timor-Leste Government ramps up infrastructure development spending as part of its 2011-2030 strategic development plan, businesses such as Vinod Patel stand to benefit.

“When we came, we kind of saw an opportu­nity where no-one was really dominating the market in terms of just retailing hardware and construction materials,” Mr Patel said.

“Personally, it (Timor) kind of reminded me of Fiji 20 to 30 years ago. But apart from that, the gov­ernment is quite rich in terms of the reserves that they have from oil and gas, the population is big­ger than Fiji and they’ve still got a lot of other untapped natural resources.”

As a small country that official­ly gained independence in 2002, Timor-Leste’s markets are still developing.

They are ranked 172nd on the 2019 economic freedom index which measures 12 freedoms within a country’s economy – from property rights to financial freedom.

Market conditions

According to Mr Patel, the mar­ket remains largely unregulated, apart from a consumer protection law, with little to no price control measures in place.

“For us, because there is no en­forcement in terms of the stand­ards of material that you can im­port, it really depends on what the customer knows,” he said.

“For example, in terms of gov­ernment regulations, like build­ing permits, they really won’t look at how you’re going to build your house and all that.”

Apart from the market condi­tions, getting technically skilled staff has also been difficult, Mr Patel said.

The business community also keeps a close watch on the politi­cal environment in Timor-Leste, which has been prone to instabil­ity in the past.

History

The nation recently celebrated the 20th anniversary of the refer­endum that won it independence from at times a brutal 24-year In­donesian occupation.

But the post-independence pe­riod was also fraught with unrest, factional violence, assassination attempts and other serious secu­rity concerns.

Despite the history, Mr Patel is optimistic about the future, say­ing safety was not a concern for them at this stage.

“In terms of stability or changes in government, that’s very unsta­ble,” he said.

“Governments can change very quickly. I think there have been two or three government changes in the last three years. And there’s not really one political party that’s dominating so there’s a lot of power sharing and compromis­ing so a lot of decisions can’t be made.”

There are also some ethical con­cerns that have the potential to disrupt businesses.

Corruption

Mr Patel says corruption is a ma­jor problem in Timor-Leste, given that most transactions are almost exclusively cash-based.

“We’ve also experienced collu­sion between staff and customers where staff might load a bit extra for friends or family or some cus­tomers will pay them something to get a bit more,” he said.

Looking ahead, the company intends to continue investing in Timor-Leste with plans to explore manufacturing and LPG and in­dustrial gas opportunities.

Mr Patel says his expansion plans also include opening a new branch in the country.

“It’s not an easy market. There are a lot of challenges. But the market has a lot of potential al­though it’s still not that big. If you want to come here, you have to come with a long-term view,” he said.

What the staff say

Vinod Patel has recruited four Fijian staff for key supervisory roles for their Timor-Leste opera­tions.

They are technician supervisor Nemani Savumiramira, branch manager Shalendra Rattan, ware­house supervisor Shamal Chand and branch supervisor Navin Chand.

Mr Savumiramira, 32, has been in the country for five years and joined Vinod Patel in 2016.

He speaks the native Tetum lan­guage and is responsible for tech­nical repairs and other field main­tenance work, as well as training local staff.

The Nabavatu Village, Dreketi, native says moving to Timor-Leste was challenging in the be­ginning until he fell in love with the country.

His colleague, Shamal Chand, had a similar experience. The 26-year-old came to Timor-Leste last year and became home-sick almost immediately.

He says he was able to adapt with the support of the company and the Fijian community and isn’t planning to return to Fiji anytime soon.

Branch supervisor Navin Chand has been in Timor-Leste for three years.

The 27-year-old’s father died shortly after he arrived and he al­most returned to Fiji as a result.

But after a break with his fam­ily in Fiji, Mr Chand returned to Timor-Leste and is enjoying his time there. And so too is Vinod Pa­tel, despite the challenges. It’s so far so good.

Feedback: sheldon.chanel@fijisun.com.fj

 

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