Volume 1, 2008

INTERNATIONAL MARKET & INVESTMENT SURVEYORS

ProjectsConvention Centre MalaysiaInterim Management ThailandFibriconUpgrading Wamena Airport

BenchmarkingWhy China?

BackgroundMIGA direct investment support

Knowledge NetworkOur experts in Poland: ASM

Many believe China is the place to be to outsource manufacturing, but other countries could fulfil that job much better. Why and when to go to China and if not, where should you go to instead?

Our clients are often large and small enterprises globalising their operations to benefit from the positive effects of a larger business scale. In the decades since our establish-ment we have developed many market entry strategies and prepared local establishments and direct investments for that purpose. Ever since China opened up in the early 1980s, foreign companies have been flocking there either for the great potential of its huge market or to have their manufacturing outsourced, to benefit from the low-cost conditions. However, we were and still are not always that satisfied with the results our clients achieved. With its population of 1.3 billion, China is certainly an enormous market, but it only gradually reached the stage where an emerging middle class with purchasing power could justify a distribution

A SPECIAL IST COMPANY FOR THE PREPARATION AND DEVELOPMENT OF D IRECT INVESTMENTS

and already has a large share of the world’s manufactur-ing of crop processing installations, like sugar mills, and oil-processing plants. But global business is changing fast, and the perception of a decade ago might no longer be the truth of today. When China opened its doors to the world in the early 1980s, many believed its huge number of people would make it the most sought-after market of the future. It had a

Why China? solid industrial background, although due to last century’spolitical developments, in many sectors outdated. However, this important skill base together with the vast and “eager to prosper” population makes a perfect combination for a strong economic development.

Low wages in China in relation to the workmanship offered have attracted an enormous amount of foreign investment, leading, together with the fast expanding local industry, to the country’s long period of sustained economic growth of over 10% annually .

But with economic growth and extreme pressure on the labour market for skilled workers, the coastal regions remarkably quickly changed from low-cost manufacturing

areas into today’s relatively expensive areas, more suited tothe manufacture of complex, higher-valued goods. However, a skilled labour force and management capabilities are becoming scarce in these regions and subsequently costly.Textile, garment, shoe and other low-tech industries forexample have already moved to inner areas of the country to meet the low-cost conditions required for making these goods.

China is still an extremely good place to invest in manu-facturing, if the aim is on selling products to the huge local market. If the products are for export, then there are better locations to invest in today; Thailand, India and Malaysia offer a more suitable infrastructure; less government red tape and substantially lower manufacturing costs.

developing countries too, in particular the newly industrialis-ing ones, are competing strenuously to be the destination of choice for western enterprises relocating their operations. India has developed a strong focus on the service sector (accounting, insurance, ICT), in addition to its traditionally vast textile, garment and jewellery export sectors to recall a few. Pakistan wants to become a major shipbuilding nation

channel to sell imported or even locally made (western) products. The relatively few very rich consumers nowadays are gaining strongly in numbers on their equivalent class in Europe and the USA, but the focus here is only on high-cost luxury goods. Some 97% of China’s vast population is still unable to pay for any imported western articles.

In recent decades, China has become the manufacturing workshop for many global industrial enterprises. But other

Interim Management for DriessenThailand

In October 2004 DeRuiter Consultancy was asked to fill an urgent management position for the duration of 3 months in the manufacturing and regional sales opera-tions of Driessen Aircraft Interior Systems in Thailand. Thus began an interesting period for Kees de Ruiter, since taking up the management of existing companies was additional to our usual international operations, namely the preparation and development of business operations in overseas countries.

However, at the end of that period Driessen, still without a permanent Managing Director, requested Kees de Ruiter to stay on a bit longer in the position to prepare and implement a plan for the complete turnaround of the company, by improving efficiency and effectiveness, planning and control

*The benchmarks indicate the results of a number of parameters from UNESCO, World Bank, UNDP, ILO and others, complied into the graphs.

Labour cost of industrial workers in US$/hr (1/3/2008)

17.57

15.13

14.11

13.39

12.38

11.55

11.39

10.5

9.85

9.62

9.36

8.92

6.72

6.3

5.93

5.13

4.07

3.55

3.28

3.02

2.46

0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 18.00 20.00

South Korea

Slovenia

Singapore

Taiwan

Czech Rep

Brazil

Turkey

Hong Kong

Poland

Hungary

Russia

Slovakia

Malaysia

Argentina

Romania

China

Mexico

Thailand

India

Philippines

Indonesia

Wage cost refers to the compensation of skilled industrial workers (with vocational training and about 10 years’ experience) in major agglomerations. Wage cost includes (a) holiday and vacation pay and (b) taxes and social security contributions by the employer.

Infrastructure

1.000

0.881

0.837

0.818

0.705

0.704

0.548

0.474

0.387

0.380

0.362

0.342

0.232

0.209

0.195

0.156

0.119

0.075

0.056

0.056

0.000

0.000 0.200 0.400 0.600 0.800 1.000 1.200

Singapore

South Korea

Hong Kong

Israel

Slovenia

Czech Rep

Slovakia

Malaysia

Russia

Hungary

Thailand

Poland

China

Romania

Mexico

Turkey

Argentina

India

Indonesia

Brazil

Philippines

Based on indices of (a) paved roads as a share of total roads (weight = 0.25), (b) energy use per capita (weight = 0.25), and (c) the availability of a telecom infrastructure (weight = 0.50). Values of individual indices are first normalised and then converted to composite score values (from 0.000 to 1.000).

Skill base

1.000

0.867

0.787

0.783

0.745

0.740

0.725

0.718

0.570

0.524

0.501

0.498

0.392

0.360

0.352

0.351

0.351

0.324

0.269

0.197

0.121

0.000 0.200 0.400 0.600 0.800 1.000

South Korea

Slovenia

Russia

Taiwan

Hungary

Poland

Singapore

Argentina

Czech Rep

Romania

Slovakia

Thailand

Hong Kong

Turkey

Malaysia

Philippines

Brazil

Mexico

China

Indonesia

India

Based on Harbinson-Myers Index values for enrolment in secondary and tertiary education. Index values are converted to score values (from 0.000 to 1.000).

Government

1.000

0.909

0.521

0.500

0.436

0.420

0.370

0.358

0.351

0.306

0.262

0.248

0.241

0.230

0.178

0.167

0.153

0.112

0.104

0.085

0.076

0.000 0.250 0.500 0.750 1.000

Singapore

Hong Kong

Taiwan

Slovenia

South Korea

Czech Rep

Slovakia

Hungary

Malaysia

Argentina

China

Poland

Thailand

Mexico

India

Turkey

Russia

Romania

Brazil

Philippines

Indonesia

Contribution to an environment supporting international business activity

Based on indices of (a) macroeconomic stability (weight = 0.40), (b) market openness (unimpeded cross-border flows of goods and capital; property rights protection; weight = 0.30), and (c) ‘rule of law’ (absence of corruption; weight = 0.30). Values of indi-vidual indices are first normalised and then converted to composite score values (from 0.000 to 1.000).

the problems were never just the concern of the individual ultimately causing them, but also of the group or even the whole organisation effected by them. Problems are now solved by committees of people that in one way or another are related to the problem.

The Company Culture

The first part of the assignment was to establish a commit-ted local management team, enhance team skills and create an open management culture throughout the organisation, promote a mutual vision of future operations and build trust in the process of change.

Ample time was also given to changing the ineffective way problems were dealt with by incorporating awareness that

The Thai Culture

The Thai culture in large organisations as Driessen Thailand is, necessitates a form of leadership that is clear and decisive, nowadays in developed industrial countries char-acterised as somewhat patronising, while relations between management, staff and workers, and amongst each other, are founded in the country’s strongly embedded Buddhist philosophy: attitudes of respect and service towards each other. This philosophy can be very well utilised to the good to enhance teamwork and cooperation and as a reference in matters of collective responsibility.

A great number of structural and operational improve-ments were able to be incorporated in the manufacturing organisation within the interim management period (see the contribution from Paul Verheul, CEO of Driessen in this issue) and although fine-tuning requires more time, the Thai manufacturing organisation is now fully capable of dealing with the requirements of its clients: on-time delivery, and high and flexible productivity and output - all supporting low manufacturing costs and a responsive organisation.

Thailand for Group’s parts making

One notable aspect of Driessen’s “view of the future” was the prominent position entrusted to the parts-making depart-ment. The growth and profitability of the facility in Lamphun was targeted for parts-making predominantly and large volumes of orders are now received from the company’s aircraft galley manufacturing organisations in the US and the EU. With large investments in CNC milling, the facility is now ready to supply the majority of parts for Driessen’s galleys. The assignment was finally completed at the end of 2007 and we consider it one of the finest we have ever received been commissioned to perform byform our clients to perform.

Driessen engaged Kees de Ruiter of DeRuiter Consultancy in 2004 as Managing Director ad interim of its operations in Thailand. The original three-month term was soon extended to a three-year ‘interim’ position to give Mr. De Ruiter sufficient time to direct the facilities, professionalise the operations and improve profitability in the longer run.

Driessen Aerospace Group is a leading supplier of gal-leys, galley equipment, cargo equipment and services. Its customer base includes virtually all the world’s airlines and airframe manufacturers.Driessen is headquartered in The Netherlands and has manufacturing facilities in Thailand, USA, the Czech Republic and the UK. Its seven sales offices and 29 service stations are strategically located in Europe, Asia Pacific and the Americas.

A testimonial by Driessen CEO Paul Verheul

and business and work culture. A renovation plan focusing on the company’s galley equip-ment manufacturing operations and later also its cargo business in Thailand was agreed upon. Because Kees was also managing the daily operations of the company, a time span of two years was considered necessary to implement all aspects of the programme. Driessen in Thailand had experienced years of fast growth, partly due to overall growth of the business, but mainly because many of the company’s activities were being transferred there from The Netherlands, its home base. This transfer of the business to Thailand had taken place in a somewhat haphazard manner, leading to quite sub-optimal operations with a more or less provisory manufacturing and

management organisation structure. Moreover, the manu-facturing processes were limited to some extent by the local environment. Production interruptions due to breakdowns could only be countered by large over-capacity, not by redundancy or a keen maintenance philosophy.

Thailand is the location of Driessen’s largest manufacturing facilities. At the company’s factories in Lamphun and Bangkok respectively galley equip-ment (trolleys, drawers and food containers) and cargo equipment (containers and pallets) are manufactured. Galley (aircraft kitchen) parts are also produced there.

Driessen employs over 1,750 professionals, of which approximately 1,000 are located in Thailand. In 2006, 39% of Driessen’s revenue was generated by products manufac-tured in Thailand. Under the management of Kees de Ruiter many improve-ments took place, including:

The culture, job motivation and work ethics at the facili-ties in Thailand were changed and elevated, resulting in a management team that is now more open and enthusiastic to continuous improvement of the opera-tions. This is crucial for Driessen’s successful continuity.A centre was opened for training new employees and for regular updating of the skills and knowledge of our Thai professionals. Galley equipment and cargo equipment production was separated and dedicated facilities introduced, resulting in greater focus and substantially improved efficiency.The facilities in Thailand were upgraded in order to facilitate further growth in capacity. Profitability was improved by separating the CNC machines from the line production in a departmental configuration.Mr. De Ruiter initiated the production of galley parts in Thailand, resulting in considerable savings in the overall production of galleys. The Thai Board of Investment subsequently awarded tax holiday and other privileges for these activities.

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•

•

•

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The facilities in Thailand won numerous awards from several Thai ministries, which, thanks also to Kees de Ruiter’s excellent public relations skills, greatly enhanced Driessen’s image.

On behalf of the Driessen Aerospace Group, I would like to express my gratitude for the professional support we received during Mr. De Ruiter’s 3-year term in Thailand. And more generally, we will certainly miss hearing the many colourful expressions he picked up in the cavalry during his time of military service. Hopefully, his successor will never have any reason to use one of his most memorable expres-sions, “When I first arrived here, it was like having to ride a horse without any reins”.

Paul VerheulCEO Driessen Aerospace Group

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Paul Verheul

A SPECIAL IST COMPANY FOR THE PREPARATION AND DEVELOPMENT OF D IRECT INVESTMENTS

Driessen’s 2006 revenue split

Gallery Equipment Services Cargo Galleys

33%

46%

6%15%

A Gemstone Exhibition and Convention Centre in MalaysiaHowever, in 1998, after completion of the preparation phase, Amsterdam RAI withdrew from the investment and the venue’s management contract, to give priority to opportunities elsewhere. Convex Malaysia Sdn Bhd, a joint venture company between KLCCH and Ogden International Facilities Corporation Pty Ltd from Australia, now operates the Centre.

The execution of the assignment was a typical example of the cooperation our company strives for, with civil engineer-ing and marketing expertise from RAI, marketing and legal experts from KLCCH, structural engineers from DSBV, architecture and engineering consultants of Rotterdam, and Davis Langdon & Seah, quantity surveyors and construction cost consultants from Kuala Lumpur. The temporary coop-eration of the survey team covered a period of 6 months.

Besides determining the various functions, number of attending people and defining the related size of direct and service areas to be configured and built, a model to calcu-late detailed multi-year revenues needed to be developed to facilitate evaluation of the many alternatives at hand. The model therefore was purpose-built and successfully inte-grated into our standard model for 10-year financial feasibil-ity projections. Later, in 2001, the same model for revenue calculations was used for a similar project, the Cape Town Convention Centre in South Africa.

Because our company was not involved in implementing the investment, it was a great pleasure for us to recently be invited by the present management to visit the Centre and to see and experience the building. But more importantly it was also an opportunity to compare today’s reality with the assumptions our survey team had once made about the different functions and revenue earn-ers the Centre should have in order to make it a financially feasible and attractive investment.

It turned out that our estimations about the total investment had been quite correct, although a number of deviations from the initial plan had been made (smaller exhibition areas and larger convention spaces, predominantly a larger, very well-equipped auditorium next to a smaller one). Although well within the overall estimations made in 1997, the revenue projections that were made differed widely in the various categories from the actual revenue composition. This was partly due to the different purposes and configura-tion of the space, and partly due to various Malaysian

cultural aspects. Paying to park a car, for example, is not widely accepted yet, so the revenue from this fell far below the estimates. Typical mass consumer shows do not allow substantial revenues to be earned from visitors’ entry fees. Large Chi-nese wedding parties appeared to be very sensitive to Feng Shui building layout and location rules (for some Malaysian Chinese, the architectural layout was not considered ideal for happy weddings!). In addition, more and smaller trade shows and a larger number of conventions than anticipated resulted in substantial variations from the revenue projec-tions made earlier.

The location of the Centre is extremely well positioned in the heart of Kuala Lumpur, while the anticipated high traffic circulation through the area (a well-surveyed aspect of the study) has been thoroughly and effectively taken care of by the municipality and KLCC. These factors, together with the almost boundless hotel capacity nearby, makes the Centre a real gem in comparison to rival centres in South East Asia.

This unique opportunity to re-evaluate the original assump-tions made in the early conception phase of this major

The official opening of the Kuala Lumpur Convention Centre - “the Centre” as it is nowadays called - took place in June 2005. Years earlier, in 1997, our company was awarded the contract to prepare an extensive feasibility study and subsequent business and invest-ment plan for this remarkable real estate project in Malaysia. Recently we had the opportunity to compare our original plan with the reality of today.

The project to build a high-quality convention and exhibition centre was part of an immense real estate and land devel-opment plan initiated by Kuala Lumpur City Centre (KLCC) to create a landmark on the 40 hectares (100 acres) of the former Selangor Turf Club and Race Course.

Eventually the overall development plan provides for an area of more than 1.6 million m2 (18.3 million sq ft) of commercial, retail, office, hotel, residential, entertainment, convention and exhibition facilities, as well as a mosque within a park setting.The KLCC site is strategically well located, within the Golden Triangle of Kuala Lumpur, the very heart of the city.

KLCC (Holdings) Sdn Bhd (KLCCH), the initiating company together with major KLCC shareholder, MAI Holdings Sdn Bhd, took up the redevelopment of the whole site in 1993. The most notable development on this famous site is certainly the 88-storey, 452-metre-high Petronas Twin Towers, for a few years the world’s tallest building until the “Taipei 101” building took over in 2004.

investment, gave us some very valuable feedback. It was exciting to see how the Centre, now in its mature state of operations, is in fact functioning beyond the expectations then formulated. Both the inventive and imaginative architect and the qualified and resourceful management of Ogden International have succeeded remarkably well in diverting to alternatives where determinative factors changed, or where assumptions made have proved to be no longer valid.

The assignment to draft the investment and business plan for the Centre was granted to us in 1977 by Amsterdam-based RAI Exhibition and Convention Centre in cooperation with KLCCH. Amsterdam RAI and KLCCH aimed for coop-eration to invest, develop and manage the new exhibition and convention centre on the basis of the plans to be made.

From bright idea to marketplaceFibricon Winconcrete The basis of a successful idea is simplicity. Concrete mixed with fibres under the trade name FIBRICON Win-concrete is such an idea. Even though the concept of fibrous concrete is known to have been applied by the ancient Egyptians, FIBRICON multi-fibrous concrete still represents a real innovation in the world of concrete today. The FIBRICON concept has now been patented worldwide as a multi-fibrous ready-to-use concrete mortar with predefined strength specifications. At the moment it is only supplied by licensed concrete-mixing plants in The Netherlands, but will soon be provided by suppliers worldwide. Because FIBRICON multi-fibre concrete benefits from significantly improved specific tensile strength, it can be

Evaluation

applied to replace traditional wire mesh or being additional to it, depending on the application. Constructions can be thinner, slimmer, or proportionately more robust.

A SPECIAL IST COMPANY FOR THE PREPARATION AND DEVELOPMENT OF D IRECT INVESTMENTS

designated market segments. The application for road con-struction in The Netherlands has picked-up the fastest. The market segment for industrial flooring will most likely be the hardest to conquer, since long-established practices in the use of low-grade fibres may well prevent the acceptance of a high-grade and more costly ready-mix FIBRICON product.

An average of 50% of mortar produced in the industrial world is used in concrete prefab products like sewerage tubes, concrete building components, piles and many more. These products often need complicated wire mesh constructions that in many cases can be avoided by the use of FIBRICON’s 565-37 purposely composed multi-fibre concrete.This product is expected to become another cornerstone in the product range. Because Verwaard is a long-time supplier of fibres to the Indonesian company PT Karunia Power Abadi, a FIBRICON test of ready-made concrete was also conducted in that country. The assignment concerned the supply of high-strength concrete for a bomb-resistant wall in one of the embassies in Jakarta. A testing procedure by the principal concluded that FIBRICON 565-37 (for prefab products) would serve their requirements best.

We consider the work we performed for FIBRICON to be a good example of an all-encompassing product develop-ment assignment, because we were engaged in managing both the development process and its content. Managing a research team of high-calibre experts is a challenging task especially in the cautious world of concrete. It was also a project with a significant component of strategic marketing.

FIBRICON is assured of a successful future because it represents a remarkable technology upgrade of one of the oldest materials in the world.

The fibres in the mortar do their work in particular during the concrete’s hardening process: due to a balanced hardening of the inner and outer sides of the concrete, cracks from hardening can be completely avoided while at the same time the forming of internal stresses is suppressed. Moreover, due to the three carefully selected fibres, shrinkage from hardening is almost non-existent. This is why the boundaries of the size of a concrete application can be firmly extended. It is now possible for roads to construct concrete slab lengths of over 100 metres without any seam to be made in one pouring. Verwaard Handelsonderneming BV, being partly owned by the large Netherlands-based Dyckerhoff Basal Betonmortel BV, initially and for many years already traded several steel fibres used in concrete, before its main shareholder Johan Verwaard started to seriously investigate the effects and specific contribution of the various fibres in use at that time in the mortar industry.

After his own basic research, Verwaard decided to embark on a more detailed and comprehensive innovation process in order to relate market requirements for concrete ap-plications more firmly to specific types of fibre concrete, ultimately to result in a unique fibre concrete product line.

Such development process should be backed up by exten-sive research for the exact justification of the characteristics of the products offered as well as its patenting. A consistent marketing and promotion plan should support penetration of the respective market segments and, by a step-by-step approach, capture the world market in the long run.

The results, however, confirm the initial idea of Johan Verwaard: to obtain the best results from fibre concrete, all elements should be in balance with each other; it’s wasting potential to just mix fibres with any kind of mortar.

By this stage, all the products have been launched in their

Partner in Poland: ASMSince early 2000, DeRuiter Con-sultancy and ASM have worked together successfully on a number of projects focusing on executing market surveys, developing market entry strategies and preparing for foreign direct investment in Poland.

Based in the centrally located Polish city of Kutno, ASM Market Research and Analyses Centre Ltd. performs specialist services in the field of market determination and valuation. The company has great knowledge and experi-ence of business data and opinion gathering by professional interviewing techniques. Foreign companies consider this well-developed service very convenient for their assessment of the Polish market. ASM’s operations include appraising and comparing prices, the appreciation of products and services offered, the rating of competition and assessment of overall market potential. All these services contribute to a more successful approach to capturing Poland’s increas-ingly attractive consumers and B2B market.

Significant assignments have been carried out for our clients who are active in the development of Polish infrastructure (traffic information systems and control equipment, road construction), food processing, assessment of outsourcing the manufacture of industrial parts and components to local industry, and many more.

Before establishing your market entry strategy, take into consideration analysis of the market, the competition, pric-ing systems and distribution channels, as well as seriously evaluating business practices and consumer behaviour.”

Poland is the largest country in East-Central Europe and one of the most attractive markets for investors either relocating their business for exports into the EU or setting up a

Mrs. Maria Góreczna, Manager of ASM’s International Department: “It is important that foreign companies prepare themselves well before starting a business in Poland. To benefit most from the opportunities offered, the typical Polish business culture should be well understood, while detailed knowledge of the local situation of a certain busi-ness provides unmistakably for a better negotiating position.

Mrs. Maria GórecznaManager, International Department, ASM

business for the fast-growing local market. In recent years, Poland has been realising relatively high economic growth. In 2006, GDP growth stood at 3.4% and, according to forecasts, is set to reach at least 4% by the end of 2007. A remarkable success of reform was the reduction of hyperin-flation from 600% in 1990 to a level of just 2% today.

Given Poland’s geographic location, an investment in Poland also provides easy access to neighbouring markets in Russia and the Ukraine. Since the early 1990s, the inflow of foreign capital into Poland has exceeded USD 80 billion and is expected to grow on average to more than USD 8.5 billion annually by 2010.Commercial services have grown rapidly in the past decade and are now one of the main drivers of the economy. The ability to hire highly educated and trained local personnel, coupled with the relatively low cost of employment, have also precipitated a flood of investors looking to relocate their global operational support facilities to Poland. The country has seen a growth in technical research, IT, call centres and accounting services. In addition, numerous initiatives exist for new investments, including 14 Special Economic Zones and a large number of technology parks.

The cooperation between ASM and DeRuiter Consultancy has proved to be very successful during the past seven years. It has proved competent and effective in assisting companies to measure the scope of the business in Poland, and especially to define the market in terms of those companies’ parameters and characterisation, such as sales volumes, price structures and nature of the competition. In addition, several existing clients are increasingly making it good practice to perform annual updates on customer satisfaction and market position. We are very happy with this very prospering venture with ASM.

A SPECIAL IST COMPANY FOR THE PREPARATION AND DEVELOPMENT OF D IRECT INVESTMENTS

FIBRICON® Application

Types

FIBRICON® 225-55 2.5 N/mm2 Industrial floors

FIBRICON® 335-55 2.8 N/mm2 Industrial floors (high load)

FIBRICON® 535-37 3.0 N/mm2 Fluid tight floors

FIBRICON® 445-55W 3.2 N/mm2 Roads and highways

FIBRICON® 565-37 4.1 N/mm2 Prefab concrete products

Calculation value

tensile strength

FIBRICON 445-55W

Despite its huge insurance portfolio of guaranteed proj-ects, totalling US$ 17.4 billion in coverage, the Multilat-eral Investment Guarantee Agency (MIGA), a member of the World Bank Group, is relatively little known among the increasing number of companies taking up global activities, particularly in developing nations.

In countries where political turmoil is escalating (Thailand, Pakistan, Venezuela) the risk of expropriation, sudden change of law at the expense of the investor, breach of (Government) contracts is a real possibility. For such circumstances, MIGA has great tools in place that no other insurer can match. MIGA, established in 1988, already offers political risk insurance for projects in a broad range of sectors in 147 developing member countries, covering all regions of the world.

MIGA insures new foreign (cross-border) investments originating in any MIGA member country, destined for any developing member country. New investment contributions associated with the expansion, modernisation, or financial restructuring of existing projects are also eligible, as are acquisitions that involve the privatisation of state-owned enterprises

Types of foreign investments that can be covered include equity, shareholder loans, and shareholder loan guarantees provided the loans have a minimum maturity of three years. Loans to unrelated borrowers can be insured, provided a shareholder investment in the project is insured concurrently or has already been insured. Other forms of investment, such as technical assistance and management contracts, and franchising and licensing agreements, may also be eligible for coverage.

In keeping with MIGA’s objective of promoting economic growth and development, investment projects must be financially and economically viable, environmentally sound, and consistent with the labour standards and other develop-ment objectives of the country hosting the investment.

MIGA prices its guarantee premiums based on a calculation of both country and project risk. Rates for the SIP guarantee (three coverages) range between (0.45%) and (1.75%) basis points per year.

Coverage is for up to 15 years (possibly 20 if justified by the nature of the project). MIGA cannot terminate the contract unless the guarantee holder defaults on its contractual obligations to MIGA, but the guarantee holder may reduce or cancel coverage on any contract anniversary date starting with the third.

Investors may choose any combination of the four types of coverage offered by MIGA. Equity investments can be covered up to 90 percent, and debt up to 95 percent. MIGA may insure up to $200 million, and if necessary more can be arranged through syndication of insurance (see also http://www.miga.org/).

MIGA Investment Insurance

Investors in today’s dynamic investment climate understand the potential benefits of investing in emerging markets. The even smarter ones also understand the critical importance of addressing the political risks that may accompany an investment in an untested environment. MIGA guarantees offer much more than just the assurance that losses will be recovered.

Three Awards for Driessen ThailandOver 2006 and 2007, Driessen in Thailand received as much as three prestigious awards! It is a clear recogni-tion of the success of Driessen Thailand over the years in which period it became one of the largest Dutch multinational companies in the country. NTCC Business Excellence Award

The first award was received for Business Excellence. The joint foreign chambers of commerce of the Benelux countries in Thailand established this award in 1998 to honour Benelux companies in Thailand for the way in which they excel in business and for their contribution to the Thai society.

The Ambassador of The Netherlands, HE Pieter Marres presented the prestigious award to Kees de Ruiter MD of Driessen in Thailand, in a gala dinner event in Bangkok. Driessen received the award for its achievements in 2005. During this year the facilities in Thailand were restructured, production processes were adjusted, and decision making responsibilities were brought to lower levels in the organisa-tion. This resulted in greater commitments on performance. To reach these goals, an in-company Education and Training Centre was established. The continuous training of staff and workers is made a key element for success in Driessen’s manufacturing facilities. The measures taken have lead to an improved cost effectiveness in the opera-tions.

Employer of the Year 2006

Users. The other award was for having an effective learning centre that incorporates instruction for employees on how to prevent using drugs.

In September, Driessen was invited by the Ministry of Justice to come to a ceremony in Bangkok to receive two awards. The awards were for being Employer of the Year 2006 with a positive Attitude towards Rehabilitating Drug

Khun Pagorn, Production Manager of the Sheet Metal factory has been instructing new employees how to prevent on using drugs, for over four years. He does this in close cooperation with the Labour Welfare Office of Lamphun. This organisation coordinates in the Lamphun region the special programme called “White Factory”.

Last year Driessen started a policy to dismiss dealers of drugs immediately when caught. Users of drugs will have a second change. They have to follow again the newcomer introduction instructions and to undergo numerous tests at the hospital during a period of time. If they pass the test they can stay with Driessen. The whole workforce, moreover, is tested on unexpected moments throughout the year. This new policy has been very benificial for both the workers and the company.

Driessen (Thailand) honoured by the PrimeMinister Surayud Chulanont of Thailand

The Training Center of Driessen in its largest establishment Lamphun has received the official recognition from the Ministry of Labour in 2007 to provide professional training and the license to issue certificates and diplomas. His Excel-lency Surayud Chulanont, the Prime Minister of Thailand, presented an award to Driessen.

Driessen substantially enlarged its Training Centre in 2005 to further enhance the practical and theoretical skills of its managers, staff and workers. A broad training curriculum is now exercised on a full time daily basis. It includes language

training, basic and advanced manufacturing skills, team building, work process and environmental safety. Besides two professional teachers, most of the training is provided by the company´s own professional staff that received

lessons in teaching. The school has small and large class rooms and a practical training area on the premises.

A SPECIAL IST COMPANY FOR THE PREPARATION AND DEVELOPMENT OF D IRECT INVESTMENTS

Newsletter - Volume 1, 2008:DeRuiter Consultancy BVFrans Halslaan 8, NaardenP.O. Box 1373, 1400 BJ BussumThe NetherlandsPhone +31 35 6949022Mobile +31 653213924Fax +31 35 6952762E-mail deruiter@compuserve.comwww.deruiter-consultancy.com

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Cover photo:Kuala Lumpur Convention Centre, Kuala Lumpur, Malaysia

Upgrading Wamena Airport

Wamena Airport is a small but very busy airfield in the middle of the Jayawijaya highlands in Indonesia’s Papua Province (the so-called Baliem Valley), which is the main arrival point for all kinds of flights to the region, especially flights for religious missionaries. The airport acts as a gateway for tourism; the Baliem Valley is well known for its “stone age” characteristics, and about 50,000 tourists visit this area each year.

Moreover, most of the resources needed for (modern) living – food, fuel and equipment for the 70 x 70 km2 valley – are channelled through the airfield; there is no other practicable way to access this region than by air. The valley is home to about 500,000 people and is the most densely populated area in the Jayawijaya Regency.

Due to increased tourism and population growth, the Wamena airfield has already been at the limit of its capacity for several years. The turn-around time for planes has been kept to 20 minutes maximum, while flights take off mainly in the morning, because cloud cover in the afternoon often pre-vents good navigation through the surrounding mountains. Night flights are not possible at all, because suitable landing lights and beacons are not available, while during bad weather in daytime the airfield’s capacity decreases further. At the moment, most flights - passenger or cargo - from outside Papua to Wamena have to go through Jayapura where transfer to smaller propeller planes is necessary.

DeRuiter Consultancy was engaged by the Regency to prepare an appraisal and draft a provisional scenario for investment. Together with the Dutch airport consultants NACO (DHV Group) two scenarios were presented. The first proposed a restricted upgrading programme, aimed at improving the current technical infrastructure, in order to be able to fly under all circumstances (investment value € 10 - 12 million), while the second proposed making the airfield capable of receiving direct flights of small jet planes from within and, if required, from outside Indonesia (investment value € 20 - 24 million). The latter scenario included extend-ing and broadening the runway. Both scenarios have proven to be financially feasible in principle and are now being evaluated by BAPPENAS (the national planning agency of Indonesia), the Ministry of Finance and the Department for Transportation with a view to obtaining approval by the Regency for what is officially called “Foreign Regional Borrowing”, and ultimately improvement of the airport.

Investment and feasibility assessment forthe world’s most remote airfield

Long-term objective for Wamena

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Wamena