Vita Rice: Singapore firms eye Mauritius potential

June 8, 2011

Straits Times
Li Xueying

First-ever visit by Singapore business delegation to explore opportunities in island nation.

There is a rice farm just north of the airport in Mauritius with Singapore’s name on it.

Opened in 2009 and spread over 500ha, Vita Rice is the island nation’s largest agriculture development outside the production of its traditional mainstay – sugarcane.

Vita Rice’s boss Graeme Robertson is aware of the irony of Singapore company growing rice in Mauritius. He told The Straits Time: “Singapore does not have rice farming skills. But is does have the engineering, administrative, marketing and financial skills without which the farming is unlikely to proceed on a commercial basis”.

His Singapore-based private equity firm, Intrasia Capital, is the project’s major shareholder, along with the Mauritian Government. It has big plans: to provide one-third of Mauritius rice needs by 2014, as well as export to Singapore. Like Singapore, the nation of 1.3 million people imports all its rice – some 75,000 tonnes a year.

There is also a chance of Crocodile polo shirts making a splash in this sunny isle. The Singapore clothing label is in town to sass out the market for its apparel. Said assistant General Manager Lim Keng Boon: “Though the population is small, it has attractive incentives for investors and it seems Mauritius is a favourable place for tax planning in respect to venturing into India and African countries”

He is also looking for a factory in this country, which is known for its textile industry. Crocodile currently makes its apparel in China, Thailand and Indonesia but costs there is rising, he said.

This first-ever visit by a Singapore business delegation has generated substantial interest: 24 companies signed up for the trip with the Singapore Business Federation (SBF).

Some, like Intrasia have already dipped their toes into Mauritius waters. But most, such as Crocodile, are exploring options.

Their presence here is in conjunction with President S R Nathan’s state visit. Today, he will witness the signing of a memorandum of understanding between the SBF and the Mauritius Board of Investment to enhance business ties. Last year, Singapore investments here totaled US$15.1 billion (S$18.6 billion), although much is ultimately channeled to India.

There is a potential for more, said SBF Chairman Tony Chew, who added that Mauritius was “a promising business hub” with remarkable similarities to Singapore. It has political stability, a pro-business environment, good infrastructure, a robust banking system and treaties that grant companies residing here preferential trade and investment benefits with Africa and beyond, he said.

As more adventurous Singapore firms look beyond traditional markets to place like Africa, Mauritius – just off the continent – is a good starting point. Exports from Africa to Asia have tripled in the past five years, noted Standard Chartered Bank’s regional Chief Executive for Singapore and South-East Asia, Mr. Ray Ferguson. Mauritius with membership of trade and political groupings like the Common Market for Eastern and Southern Africa, offers companies “preferential” access to a market of 380 million consumers, representing an import potential of US$90 billion”.

With its eye on this pie, spice company Nomanbhoy and Sons is exploring the feasibility of a logistics handling and transport facility here for spices sourced from Madagascar, Comoros, Zanzibar and other islands. It is also considering establishing an essential oils extraction plant.

But there are challenges too, said Mr. Chew. One is the small domestic market. Firms may need to explore an export strategy to gain economies of scale. “The small population also means that certain industries, such as labour intensive ones, will need to depend heavily on imported manpower” Mr. Chew added.

More also needs to be done to the infrastructure. The road network, for instance, is in need of expansion. Still companies like Intrasia have their sights on the longer-term horizon. A combination of government support, land availability and an excellent financial regime was why it chose Mauritius to further its rice-growing ambitions.

Also, as Mr. Robertson noted, “it is Africa that is the fastest-growing rice consumer in today’s world”.