Mathieu Hervillard on investments in Vanuatu, new developments and local real estate market
Mathieu Hervillard, French investor and business owner, in this exclusive interview for Vila Times talks about doing business in Vanuatu, relationships between Western and Chinese investors in the Pacific, potential for growth in tourism, and what Vanuatu has to learn from Thailand and Mauritius to become a highly developed country fast.
‘My family has been investing in Vanuatu for decades’
– Hi Mathieu! Let’s start with your story, why you came to Vanuatu in the first place?
I have some relatives here. The cousin of my father is married to a local who used to live here. And my family has been owning some property in Vanuatu for many years. My grandfather used to come here every year for a one month vacation. He started to invest in this country buying land, and then my father and uncle continued his work and kept investing in Vanuatu.
– When was it? Around 1970s?
Before the Vanuatu independence and right after. 1980s. So I knew our family has some properties here in Vanuatu, even though we hadn’t been visiting this place for many years. In France after I finished my studies I used to work in the wealth management company, and at some point I’ve gotten really bored and tired of France, so I decided to come here. It’s been around 15 years since the members of our family been here last time, so I thought I should come to see this place. I saw the potential here – what I could do. And just the last year I started to properly work here with a number of business projects.
– So what are the properties your family has been investing into?
Real estate investments mostly. Some agricultural properties also. Next month I’m going to clean one of the old plantations and start growing pepper there, and some other crops this country needs – ginger, for example. Prices on these crops are high in Vanuatu because the supply is limited. So I think having those plantations operational will be good for me and good for the country, specially since we will of course hire local people to work there.
– A pepper plantation? What kind of profit you would expect to get from such a plantation?
It is not a pepper plantation, it’s a pasture for cows and veal, and I will start growing pepper and noni there. For pepper I’m expecting a profit of around 3 to 4 millions vatu per hectare every two to three years.
– And now you are also about to open a new restaurant in Port Vila, right?
Yes. Last year I have acquired the business of the Hotel Olympic. Originally we owned the building, but the hotel was not ours. So I bought this business from the bank, renamed it and completely renovated. There is a restaurant inside the building now, on the ground floor, but I have decided to open a new Thai restaurant upstairs, on the first floor. There are already three Thai restaurants in Port Vila, but we decided to make a different one, with real Thai chef, barbecues and other unique features.
– You bought the Hotel Olympic business from the bank. What was the amount of that transaction?
I can not disclose the amount. The bank seized the hotel trying to recover the debt of the hotel’s owner. He left Vanuatu having around 60 million vatu in debts to the bank and a number of suppliers.
– So right now this hotel is profitable? I’m wondering how profitable a hotel like this can be in Port Vila.
Yes, it is profitable. Right now we are getting between 500,000 to 1 million vatu profit a month and intent to increase the profit soon after a number of improvements.
– You have any other projects in Vanuatu?
Yes, I have a project of a shopping mall in Port Vila. One building in town was for sale, so I made an offer, but apparently VNPF made a higher offer, so they got the building, but I have another one in my mind for this project now.
– A shopping mall?
Yes. Stores, office space, conference rooms and parking of course.
‘I am more positive than other investors here’
– I have interviewed a number of other investors in Vanuatu before. When it comes to general views on Vanuatu, future potential and how everything works here, you seem to be the most positive one.
Yes. I am more positive than other investors here. I see all the people here who are really negative, and I’m wondering why they are thinking this way, when you really can see the potential of this country. And I think if you are really focused on how to achieve your goals here, you will be able to do it.
But of course you have to understand the perception of locals, their way of doing things, because it is really different from any other country. So you need to keep that in mind, and maybe partner with someone local who knows how to get through the administration, how to meet the right people, who will assist you in moving things faster, and then you will be able to achieve what you want to achieve.
– So that’s what you call it – “a different way of doing things”?
You know, administration in any country is shitty. Even France. I’m French, and if you want to get something done in France, it also takes a lot of time. If you really want to do something here, you can. You just need to know who’s in charge in the government administration, and if you can’t find the way to reach him, you can reach someone else who knows this person well and will help you. And then everything will go faster. So it is like anywhere else, except here everything is on a smaller scale, so it is actually easier to do a lot of things.
– You have a hotel, opening a new restaurant. Those are the businesses relying on tourists a lot. So you believe in “great future” for tourism in Vanuatu?
Yes. I think with development of economy, the airport renovation and other big infrastructure developments, the number of tourists will be growing every year. Although, our Olympic Hotel is not really a hotel for tourists, more for the business visitors, since it is located in the heart of town and has no swimming pool. It is more for the businessmen. Actually, we have a number of regulars, who stay there every time they are in Port Vila – for the last twenty years or so.
‘The history of Vanuatu, customs and local traditions is one of the reasons tourists should come here’
– Ok, so in your opinion, what should bring tourists to Vanuatu?
Vanuatu doesn’t advertise its tourist offers properly right now. The history of Vanuatu, customs and local traditions is one of the reasons tourists should come here, because there are no such things in other places. It is a unique culture. I think local culture is quite interesting. For example, a lot of people visit Cuba for rum, here they have kava, and it can be a tourist attraction too.
– Local customs, culture, kava and all that. You think this is what should be the main selling point for tourists?
Yes, this should work for those who are interested to discover a new place. Now the country almost fully recovered after TC Pam, so I think everything will be getting better and better.
– So you basically started your operations in Vanuatu just last year. What are the main difficulties you have been facing?
The most difficulties we have are with getting the proper papers fast enough. For example for the restaurant I hired one company to get us all the necessary permits and papers, and they couldn’t get anything done as fast as they should have! If I would have done it myself, it would be faster. You need to do a lot of paper work to open a business here, but you can do it yourself, no need to hire some firms for that, especially since some of them are very unprofessional.
‘Vanuatu’s real estate market is not regulated properly by any laws’
– You said your family has been mostly investing in Vanuatu’s real estate. Give me some insider views on the real estate market here.
Here the real estate market is not regulated properly by any laws. I know some real estate businessmen who tried to establish an association of real estate businesses, and that was a good idea, because such an association could be regulating the market. Even if there will be no law from the Parliament, if there is a business association of all the real estate companies, they will be able to regulate themselves. But at the moment there is nothing like that.
Here the land never belongs to you, it’s always in some lease, and sometimes you have problems with local customs, if you didn’t do things properly. And then there are also different real estate agencies fighting each other for customers. There are a lot of stories about small agencies trying to steal clients from big agencies, often lying to clients, spreading false rumors and things like that. I personally think there is only one real estate agency here that works properly, and I will only work with them.
‘Many big investors are happy to be here’
– What you think of the other foreigner investors here?
As of many big investors here, and even the smaller ones, they are happy to be here.
– Happy to be here? Seriously?
Yes, at least the ones I know. They are happy to be here, and to develop their projects. Because there is no income tax in Vanuatu, yet.
– Right. Any other reasons to be happy?
As for me, I love being here, and I don’t want to go back to Paris. You wake up every morning, look at the sea, go to the beach, drive around the island. It is a tropical paradise, isn’t it? People have the tendency to forget where they are. And where they could be. People here always complain about everything. But I think they are still happy here. Locals are happy, investors, at least some of them, are happy. You need to be positive to do good things.
– What about the Chinese investors here? You communicate with some of them?
Yes, I am happy to be good friends with a lot of Chinese investors here. I am happy to know them and they are happy to know me. I helped some of them to schedule meetings with several local ministers as they had difficulties reaching them. I might be the only expat investor here who actually talks to them and spends time with them, otherwise they just stay in their own circle. I mean not just business relations. Sometimes they invite me home for tea or dinner, and we talk about Vanuatu and what would be good to do here. So it’s not really a business relationship, it’s more like friendship.
‘Chinese investors tend to look long-term’
– Have you noticed any tensions between Chinese and Western investors?
There are no tensions, they just don’t really talk to each other. Westerners do not know what is in their minds and how they see future. Of course, in any national group there are the good ones and the bad ones. I hear a lot of bad things about Chinese, but who really knows them? I don’t think Australian investors or French investors go and talk to them. They just don’t understand them, and have no relationship with them. It is a very different culture, they don’t talk about themselves much, so you really need to get to know them well, and then they will open to you.
Chinese investors tend to look long-term, that’s why you can see at least three or four real estate developments of 400-500 rooms hotels, shopping centers. You don’t see the market for that yet, but they look long-term.
– I know you are the Vanuatu Trade Commissioner to Thailand. What you do there as the Trade Commissioner?
Yes, as the Trade Commissioner for Vanuatu to Thailand I have had some meetings with Thailand officials in the Ministry of Foreign Affairs, I’ve met the Thailand Foreign Affairs official who is responsible for trade with the South Pacific region. I have also met some Thai businessmen and managers of some big companies there, trying to convince them to come to Vanuatu and see the opportunities for investments. One of the previous Prime Ministers of Thailand, Thaksin Shinawatra, was really keen about Vanuatu. He invited many politicians from Vanuatu to Thailand before. I think it would be good for Vanuatu to open its embassy in Thailand to develop diplomatic relations between the two countries.
– What kind of Thailand companies are interested in Vanuatu?
Mostly import-export companies based in Bangkok. I’m already working with one of these companies, we are importing goods here. There are a number of companies here interested to import goods from Thailand. I helped them to establish connections. Some companies in Thailand also interested to import kava, locally-produced oil and some other products. Several high end restaurants in Thailand wanted to try Vanuatu beef. They are already importing beef from Australia, so I told them Vanuatu’s beef is way better, but the problem is – at the moment there is not enough beef in Vanuatu even for the local market, so we can’t export it.
There is not enough beef, not enough pork. For the last two months now you can not find fresh pork in any butchery or any store, because one group is not managing its resources properly.
Last month when in Thailand I had a meeting with one very big investor close to the current government of Thailand. I can not name these investors now, but they are clearly interested, so we will see how it goes. I think now it would be easier for Vanuatu and Thailand to develop business and diplomatic connections.
There are a lot of things that Vanuatu could learn from Thailand. They are really good and advanced in agriculture and tourism, among other things.
‘I think in ten years Vanuatu will be like Mauritius now’
– You believe Vanuatu could someday become a mainstream tourist destination like Thailand?
Yes, I think in ten years it will be like Mauritius now. Someone made this comparison, and I think it’s a good example. Mauritius went from something like what Vanuatu is now to a really developed country, really fast. A lot of resorts popped up very quick, many offshore companies have chosen that place as a base.
‘We need companies to compete with UNELCO in electricity supply’
– You mentioned new resorts popping up. Some people here don’t really want that, because they think it will hurt the environment and basically spoil this place.
You can do a development without hurting the environment, if you do it properly. My uncle in France is an MP in the French Parliament for the Green Party and also the President of Circular Economy research group. It is possible to have no waste in any industry, recycling the waste materials to make sure there is no pollution and no damage to the environment. I think Vanuatu can be the first country in the world to use exclusively renewable energy for all of its needs. There is not much waste in a small country like Vanuatu, and it also doesn’t need a lot of electricity, so I think there is a potential for Vanuatu to become a first country relying on renewable energy exclusively.
Especially when we are talking about electricity. There are so many ways to produce electricity. And right now there is only one company that controls everything, charging very high fees – UNELCO. We need more companies in this field, because we need competition.