Business/Economy > 2nd episode: Tunisia vs. Taiwan

Sounds like a game of soccer eh? Football that is! If it was the case, we’ll certainly beat them, but not in this post unfortunately.

Tunisia, my dear republic, and Taiwan have got a lot in common; form the ‘T’ in the country name to the size of their population, the date of their independence, the reserves of their natural resources – though Tunisia has a slight edge here - and the human capital.

Taiwan and Tunisia are most of the time cited in comparative studies by the UN on development and emerging countries. Yet, Taiwan seems ahead of us by more than 50yrs in terms of development and entrepreneurship.

Oh yeah, that’s the word I was looking for, Entrepreneurship which leads to enterprise, venture, innovation, capital, profit, investment, human resources, all what drives an economy.

• In Taiwan, the ratio of companies per capita is 100 times more than of Tunisia,
• In Taiwan, the rate of internal & external investment is 100 times more than of Tunisia,
• In Taiwan, the productivity index is 500 times more than of Tunisia,
• In Taiwan, the ratio of virtually anything is X times more than of Tunisia,

And keep in mind, Taiwan, is not even recognized as a country yet, and has no diplomatic relations with the rest of the world. Taiwan can disappear anytime if not for the 7^th fleet stationed around the island, with AWACS in the air and SSNs under water watching the PRC’s mighty army that is standing by to invade by order from beijing.

So why Taiwan is so prosperous compared to Tunisia?

First: Our investment habit, REAL ESTATE ALL THE WAY
A typical Tunisian family normally thinks about investing in real estate for their first house which is pretty standard in any society, but when disposable income grows, the family goes for a second house, a third house, sometimes an apartment building or even a hotel, well anything that is build with mortar and brick. Monopoly (the game) style investment :-)

Such investment is considered dormant money with steady income & low risk, but when that type of investment becomes too excessive, the economy takes a hit because:

Investment 101 for emerging countries: is about puting your money in busineses, that is large caps as well as small caps, however the best investment is into VC, ah that’s another magic word i was looking for: Venture Capital (Capital Risque, SICAR, etc) .
FYI: Taiwan’s VC rate is 1000 times (one thousand) more than of Tunisia, therefore we clearly lack local VC, people's VC., especially that we have lots of rich people in Tunisia that can lift our VC rate 10 folds, but...

Second: Ok, I got the money, now I want to invest, but where?
Nowhere!!! Because there no big pool of companies to invest in.
In fact, looking at the Tunisia’s NYSE equivalent (we wish we had one), L’indice BVM, you will notice that only a handful of companies are listed (which means publicly traded), yet Taiwan, has 100 times our rate.

So in Tunisia, you can either invest in banks (classical boring type of investment) or Hotels, now it seems like few Airlines are publicly traded too, aside a handful of utilities companies and the beer company SFBT.

What about the others? The big players in the industry? Well, they’re private and private companies are no good for investment, because the average investor needs to know the P/E, X/Y, the EPS and all those financial indicators that help assess the value of a corporation in order to predict where it is heading.

Well private companies have no obligation to release financial statements and be accountable to the financial regulators; therefore you will never know if they’re in the black, the red or going bankrupt tomorrow.

So what’s left? Real estate and government bonds, so now we’re back to square one and the looser is? The economy again!!! Needless to say, that the economy means average Joe! That is, you and me.

Third: Ownership
God, how much I dislike how companies in Tunisia are owned or started, from the small grocer to the big conglomerate.

You got the father, the grand father, the son, the step-son, the son-in-law, the daughter-of-the-son-in-law, down the entire genealogy!!!
In addition to the company being private, you end up with a system that is opaque, and lacks strategy and direction, except probably for the desire to be BIG and crash the other competitors.

And god forbids, if the grand father dies, the company is split among 24+, and becomes so weak that it’s quickly put into bankruptcy, why? Because the son and the grand-son, care less about the business, they didn’t go to a business school, and everyone wants to restart his OWN thing, everyone wants to be a BOSS, a BOSS at any COST!

As a side note, I know few people in the US who were sent by their fathers to study aeronautics so they can display their diploma later while being a COO of a shoe manufacturing company. Actually, allow me to be rude here and say that these were sent abroad to escape MILITARY SERVICE in Tunisia!

Fourth: I’m a buinessman with a business card wearing an Yves Saint Laurent tie
FACT: The success rate of startups in Tunisia hovers around 20-30%, mostly towards the 20%, such a number is so low that the state is loosing millions of dollars in initial funding; millions that are not even raised from taxes but through loans, foreign loans (ouch!!!)

Why is such rate so low you would ask? You would think that with IHEC, ISG around and, a huge talent of resources, especially with an armada of elite educated and experienced abroad, things should look brighter right?

Well, here’s the deal, some entrepreneurs have no concept of real entrepreneurships whatsoever, and they got their priorities screwed up from the beginning.

In fact, the first thing a typical ‘would be chef d’entreprise’ would do is buy the FURNITURE. Oh yeah, the EXECUTIVE LEATHER CHAIR, then the black, fully loaded BMW, next, the 2 direct phone lines + the fax line and the fancy flat screen PC and last but not the least the HOT, BIG-breasted, round-ass Sexy Secretary! (Women no offence)

With 60% of the money spent, Mr. Executive realizes that it’s time to get to work and complete that bashed business plan, the marketing plan and the production plan, yet, By the time most of the plans are in half decent shape, accounts run dry.
So instead of cutting spending and speeding up revenue, Mr. Executive prefers to go into default, then to debt and finally, inevitably, bankruptcy.

Conclusion:
Changes need to happen and happen NOW; change should not stem from the GOV either, coz the GOV - to its credit - has gone above and beyond their mandate in helping jumpstart the entrepreneurs. It’s the people that need to evolve and get their priorities straight….probably a simple Google on ‘Taiwan’ would help.