S2 Ep1: Doing Business in Timor-Leste

Building a Brewery from Scratch in Timor-Leste, with Vinay Mathur

In 2012, Vinay Mathur was doing mergers and acquisitions for Heineken out of Singapore, chasing billion-dollar deals. An accidental $15 million acquisition in Solomon Islands changed how he thought about small markets — and set him on a path to Timor-Leste, where he built Heineken's greenfield brewery from the ground up.

In this conversation, Vinay walks through the whole journey: the macro research that convinced Heineken's board, negotiating the special investment agreement and excise duty, securing land and relocating families the right way, digging up a factory floor with no rebar in it, and the grind of the early operating years. We then turn to what he's built since: Halodili, Timor-Leste's largest e-commerce platform; Think Forward Consulting; and coaxis.ai, bringing AI to SMEs.

In this episode:

  • The accidental $15 million Solomon Islands deal that changed everything

  • Why Timor-Leste's Petroleum Fund was the signal Heineken needed

  • Negotiating excise duty: how 40 cents and 20 years came out of an Excel model

  • Securing land in Hera — and compensating the families on it the right way

  • The rebar disaster: making the contractor dig up the factory floor

  • Building trust with government through proactive engagement and letter-writing

  • Halodili and why cash payments are the biggest limiter on e-commerce

  • Think Forward Consulting: Big Four standards, built in Timor

  • coaxis.ai and what AI can do for SMEs in markets without formal data

  • A failure he's grateful for, and why he's never been more bullish on Timor-Leste

About the guest:

Vinay Mathur is a chartered accountant who started out as an external auditor, then moved into prominent roles with PepsiCo and Heineken. He came to Timor-Leste to set up Heineken's operations here, built a greenfield brewery from the ground up, and has since gone on to co-found Halodili, Timor-Leste's largest e-commerce platform, and Think Forward Consulting. He's also co-founder of coaxis.ai.

Links:

Transcript:

Steve Pocock: Welcome to the Steve Pocock Podcast. This series is about doing business in Timor-Leste. My guest today is Vinay Mathur. Vinay is a chartered accountant who started out as an external auditor, then moved into prominent roles with PepsiCo and Heineken. He came to Timor-Leste to set up Heineken's operations here — he built a greenfield brewery from the ground up. He's since gone on to co-found Halodili, Timor-Leste's largest e-commerce platform, and he's a partner at Think Forward Consulting. Vinay is also the co-founder of coaxis.ai. All right, let's get into it. Vinay, thanks so much for joining me. Fantastic to have you here.

Vinay Mathur: Thanks for having me.

Steve: We're going to get into your experience doing business in Timor-Leste, which is what this is all about. But before we get there, I want to understand the man. Can you tell me — what experience in your life would you say has shaped you the most?

Vinay: Quite honestly, it is the experience in Timor. Because until then, I was an employee working for large corporates. I started my career with Arthur Andersen as an auditor, moved on to PepsiCo and did various roles there, the last being a CFO back in India. I joined Heineken as CFO for India, and then that got into a bit of an M&A situation, where we took an equity stake in one of the largest brewers. That got me some of the chops for an M&A role out of Singapore, so I moved to Singapore in 2010 to do M&A in the region.

I came in with a very Indian point of view — that a meaningful business is a business which caters to at least 100 million people. Less than that doesn't matter. So I came with the aspiration of doing a few billion-dollar deals and then moving on to a larger CFO role. It took me a few months in Singapore to realise there wasn't much appetite for a billion-dollar deal, and interestingly, I didn't have much to do — which was new for me, because as an operating CFO you're always busy. But life was great. Singapore is a beautiful place. Family was happy.

Then along came an Australian guy — a real estate chap from Brisbane, as I recall — talking about an odd brewery on a strange island called Solomon Islands. He'd reached out and I decided to meet him post-lunch, and I can tell you I had a hard time keeping my eyes open, because he was talking about a country with 250,000 people in it. My immediate locality in Mumbai, where I used to live, had 3 million people. So I was least interested.

Steve: Can I go back quickly, Vinay, just to backtrack a little? You're sitting in Singapore doing M&A — mergers and acquisitions. So in that role, you're looking for companies you can purchase and add into your portfolio. And that's how this all came about, right?

Vinay: That's right. Business development, mergers and acquisitions — new markets, buying businesses. That was the brief. So this guy talked about this brewery on this strange island, with diverse owners and so on, and I had a hard time staying awake. At the end, he says, "Would you be interested?" So I simply asked him how much. He says, "You tell me." And for lack of a better number — because I wasn't particularly focused on the conversation, I just wanted the meeting to end — I told him 20. He said, "20 million?" I said, yeah, 20 million. He said, "Sing dollars or US dollars?" And then I woke up a little bit.

Steve: And what's the difference there between the US dollar and the Singapore dollar?

Vinay: The Singapore dollar is lower by about 30 percent. So obviously I told him Sing dollars, which turns out to be 15 million US. And he said yes. I said, wow. Anyway, I came out of the meeting, went up to my boss and said, "Hey, you know what? We've got work to do." And he said, "Are you kidding me? Why the hell would you take on a transaction worth 15 million dollars?" Because whether it's a transaction worth 15 million or 150 million, the work to be done is the same.

But anyway, having done that, I took my first trip to Solomon Islands, and it was absolutely life-defining, because I never realised you could build successful businesses on such small islands. Here was a business where even the owners didn't know how wonderful it was — perhaps because they'd brought in a young Australian general manager a few months earlier and the shareholders weren't really tuned in. And here was this youngster laying out plans — beer, new categories, RTDs, soft drinks, water. And I was like, wow, the way this GM is laying out plans, this business can potentially make seven, eight million dollars. And guess what? It's only for 15 million.

Steve: And that's in a country of 250,000 people.

Vinay: And that's possible in a country of 250,000 people, absolutely. So — a long answer to your short question — that was truly inspiring, because I felt that that's entrepreneurship. Yes, of course there's entrepreneurship in leading and building large-scale businesses in strategic markets like China, India, Indonesia, Vietnam. But there are these rather entrepreneurial opportunities in such islands. And then you go back and look at Heineken's own history — one of the very successful Heineken businesses in Asia-Pacific is in Papua New Guinea, an island you know so well.

Steve: I remember SP Brewery there. Was that Heineken?

Vinay: Dead right. SP Breweries was set up, if I recall, in the 80s, and that business in Moresby makes close to 100 million dollars every year. There are similar businesses in Fiji and some of the other Pacific islands, and for Heineken there are many such businesses in the Caribbean — Jamaica, Bahamas and so on. So there is opportunity — but it requires slightly different thinking. You cannot be doing large-company thinking. I'm grateful to Heineken for that.

Steve: What do you mean by that — you can't be doing the large-company thinking?

Vinay: Large-company thinking is about entering markets in a strategic manner, where there are supply chain synergies, large-scale efficiencies and so on. This requires slightly different thinking, where you're trying to build something more community-based.

Steve: I get it. You're doing everything from the ground up, pretty much.

Vinay: Pretty much ground up.

Steve: You've got to establish a lot of the enabling pieces — and I guess we'll get to that when we talk about what you did with Heineken in Timor-Leste. So let's move there. To enter the Timor-Leste market — there was no large brewing company or beer manufacturer here. How did you come across this and have the idea for Timor-Leste? Talk me through how it all came about.

Vinay: Again, inspired by the experience from Solomons. I found similarities between Honiara and Dili, honestly, and I also found similarities in some of the habits of the people you see on the streets. Dili did look quite different back in 2012 than it does today. So there were similarities — at least in my mind there were — and therefore an opportunity.

And beer is a 3,000-year-old industry. There are breweries in every country in the world. That's why at Heineken, M&A meant buying businesses — you don't usually enter a country which has no brewery. You would largely acquire somebody, like we did in Solomons. Solbrew existed from before, and we bought into it.

Steve: Totally — let them do all the hard work.

Vinay: Absolutely. You pay them dollars, and then you take it to the next stage of evolution, so to speak.

Steve: But so how did you even hear about Timor-Leste? How did it enter your radar?

Vinay: Because some folks from my exports business mentioned Timor-Leste as a market where we were exporting Tiger beer. Before me, there were some people who had visited Timor as a potential market for a brewery, but they went away with nothing much.

Steve: And that didn't discourage you? The fact that somebody had come, assessed the market and decided it wasn't worth it — what changed your mind?

Vinay: I guess I was thinking more entrepreneurially rather than the big-company thing.

Steve: Okay, so talk me through this then. You're in an M&A position, looking for companies to buy. Suddenly you decide, let's rather go and establish a brewery from scratch in Timor-Leste. Maybe you have that idea — but how do you convince your company to allow you to do that, and then actually back you to kick it off?

Vinay: First of all, it was about the economy, as with any new market you enter — you want to look at macro indicators. And Timor is oil-dependent. So what were the attractions? The biggest draw was the Petroleum Fund. Here is a country of a million people, but it had — back in the day — 16, 17 billion dollars, I don't recall exactly how much, in the Petroleum Fund. Which also indicated there was a lot of fiscal discipline, and a certain kind of thinking within the governance. We're all familiar with what happens in places like Angola with natural resources. But here was this Norway kind of approach.

Steve: A sovereign wealth fund that's been well set up and managed well by the government.

Vinay: Managed well, and the US dollar as currency, on a small island in your neck of the woods, looking at it from a Singapore perspective. So that was the draw. Timor Plaza was a big plus. I always say that to Tony — he was quite an inspiration in getting Heineken here.

Steve: This is Tony Jape, the owner of Timor Plaza.

Vinay: It was just reflective of how it could be.

Steve: So they were a business that was coming in and investing for the long term.

Vinay: And sinking a large amount of capital into the vision. And there's a little bit of a story, because the importer wasn't too happy with me getting excited about it — that meant the end of his gold rush.

The other inspiring thing was that in all this, I saw a branch of ANZ somewhere near the Discovery Inn area. And I was like, hang on, there's ANZ Bank here. Then someone tells me, actually, the main branch is in Timor Plaza. I'm like — are you kidding me? There are two branches of ANZ? So I came over to Timor Plaza and met the country head of ANZ Bank at that point, and he's the one who gave me all the macro insights. I'm much thankful to them for that.

So there was this country, the market was there, the population was a few times more than Solomons, and it's got a culture of music and dance and food — so it fits the profile. And a young population, so a growing user base.

But the risk was that it was still very, very oil-dependent. So we went around doing a whole lot of macroeconomic research on how much oil is there, how much gas is there, and so on. That took a fair bit of time. And at the end, after a year or so, we came to the conclusion that — look, how much gas, who knows? No one's an expert on this. Malaysia has been crying that they're running out of gas for the last 30 years; they still seem to find some. What we do know is that they have 15, 16, 18 billion dollars in the bank. So that is a good place to be. That settled the macroeconomic deep-dive matter.

Then came the second matter, which is all about unit economics. None of us thought this was going to be Papua New Guinea in a hurry. The size of the market was what it was — it should grow, for sure, but it would still be what it is. And therefore the need to get the unit economics in place.

Steve: You're going to have to explain unit economics, because I've got no idea what that is. I assume it's making sure you can buy a beer at the right price.

Vinay: You're dead right — it's about making sure you can buy beer at the right price, but from a producer's perspective, to make sure you make some money on every litre of beer you sell. Your overheads are going to be a certain dollar value. The market size is of a certain volume. So in order to recover your overheads, you need a gross margin per unit of a certain size.

Steve: Totally makes sense. Because you're producing a smaller amount comparatively — it's a smaller market — you've got to be making more money per unit.

Vinay: You need to make more money per unit of your product. And that of course has its own challenges, because everything is imported — other than water, of course. And therefore the need for a favourable excise became imperative.

So all this was happening in parallel. And in parallel I was also coming over often enough, meeting different stakeholders within the Ministry of Finance, Ministry of Commerce, and so on. And there was the beginning of what is today called TradeInvest. All these folks were very welcoming, very positive, very open to discussions — but they were equally apprehensive, because many like me probably have in the past, and probably still today, come in on the Monday flight, talk the big game, fly out Thursday, and then either never come back or come back with something a little bit in the air.

So one thing I wanted to be very sure of: before we engaged in any manner with the government, I wanted internal clearance. I didn't want to play with two variables.

Steve: Which is hard, right? My experience is Zimbabwe and Papua New Guinea, and particularly developing projects in Zimbabwe — it felt like you have a hundred different stakeholders to engage with. They can say no, but they probably won't. At the same time, you need people to say yes, but people aren't really willing to put themselves on the line and say, "Yes, I back this." So you're working in an ambiguous space, working out what that clearance or go-ahead actually looks like. Sorry — keep going.

Vinay: No, absolutely. So we made a paper for the board asking for an approval subject to one, two, three things.

Steve: That the government would provide.

Vinay: Absolutely — that we as a team would get from the government before we actually went and invested. And those were things like a certain reduction in excise duty, and land on lease from the government. Those were the two key ones.

Steve: Just to be clear, when you say excise duty — is that on imports you're bringing into the country, or excise applied to the alcohol you're selling?

Vinay: Only for what we would produce here. Excise duty was, if I recall, $1.90 per litre of beer, and we were asking for a lower number. And quite honestly, it was a discussion between the person helping us on the ground and me. He says, "We have to give a number, right?" So I'm like, what number do we give? To me, it was the feasibility model in Excel, which had $1.90 and resulted in a certain return on investment. And the moment you made that number 40 cents, it resulted in a return on investment which I knew met Heineken guidelines. So that's how we came up with the 40-cent number.

Then he — and he was a good man — said, "Look, you can't ask for an infinite period. You have to ask for a finite period." So I said, okay, how does 20 years sound? He said, sure, let's go 20 years. Because nobody can give you an open-ended benefit — it's unfair to even ask for one. So that's how we came up with it: instead of $1.90, it should be 40 cents, for 20 years.

And then we said we also will remain committed to moderate alcohol consumption — Heineken is a responsible alco-bev company. Most of our beers are 5% across the region; we said here we'll make them 4.5%. So we wanted the 40-cent excise duty, but only for beers under 5% alcohol. Anything more than 5%, you double it. We volunteered a disincentive for selling higher-alcohol beers.

Steve: So the ABC beers — the stout, which is a very heavy beer — that's not getting the excise.

Vinay: That's 80 cents, as against 40 cents. Even though, of course, it's lower than $1.90, we put that on ourselves. It comes across as fair play, right?

Steve: How do you look at this now, though, for any potential competitors wanting to come into the market? Does this mean there's an uneven playing field — and I know this is a very specific example, and there might not be space for a competitor — but how do you see that?

Vinay: There's been some debate on it — is it a level playing field or an uneven playing field? But as I understand it, the government is open to extending the same benefit to anyone who would want to produce locally. The entire incentive of lower excise duty is to create local manufacturing. Clearly, the benefit is not available if you just want to import and sell. I mean, why would it be?

Steve: Yeah, makes sense to me. So TradeInvest — or the equivalent at the time — they approved the special benefits for you to come and unlock the investment. Where do you start?

Vinay: We signed a special investment agreement in January of 2015. The next task was to look for land, which took us a few months — to finalise the plot in Hera. But in parallel, during that period, we started the process of building our brands: bringing our products in from Indonesia and Singapore and selling them into the local market.

Steve: Okay — growing the market before you even started production?

Vinay: That's right. That was the whole idea. And then to start hiring people — sales and marketing folks, setting up the organisation so we'd hit the ground running once local production started.

The other risk of building the market with imported brands — imported Bintang and Tiger and so on — is that the moment you produce locally, it may not taste the same. Beer is not Coca-Cola; it's a natural process, so things do change. And if you're a startup brewery, your staff is still not as well trained, so there could be ups and downs. Our biggest risk was that if our locally produced product was very different from what the consumer was already used to, we'd have a huge consumer backlash — the usual would come out: "Obviously what's produced here is not good enough."

And therefore we hired folks for the brewery very early — a year and a half, even a couple of years for some of them, before local production — and we seeded them in two of our breweries in Indonesia. We eventually sent 50, 60 of them to Indonesia to work alongside the staff in those breweries so they'd get hands-on experience. There's only so much you can do in a classroom. So that when they came back, they were experienced enough to produce similar quality.

Steve: Can I go back to the land? Land is often cited as a major impediment to setting up a business in Timor. People say there could be three title deeds over any given piece — from Portuguese time, Indonesian time, or the present Timor government. Can you talk through the process of how you secured the land? And actually, let's set the scene as well — what were the time frames? When did you enter Timor, and how long did the market research and the negotiation over the special investment agreement take?

Vinay: So I visited Timor first in 2012. We started engaging deeper with the Ministry of Finance and Ministry of Commerce in particular in 2014. We signed the special investment agreement in January of 2015. We signed a land lease in June of 2015, and we started construction around September, October of 2015.

Steve: That's really quick. That's flying. Okay — so talk through that land piece. How did you do that?

Vinay: Someone's backside was on fire to get it all up and running! That period was when the government was committed to giving us land, because that was as agreed in the special investment agreement. In the end, for the size of land we wanted, there was only one option — the current option, where the brewery is. And it had a few squatters. The government said the land was owned by them, but when we went to the land, there were these seven, eight families on it.

Steve: And they had houses? Quite established, and some livestock?

Vinay: Some livestock, and some small agriculture happening there. So obviously we deferred it to the Ministry of Justice to resolve before we did anything else. And in all fairness, they were all there — but they didn't know how, because the land and property part of the Ministry of Justice said they didn't have a budget. And we were very clear that you need to fairly and squarely compensate relocation for the families. This is not about throwing them out; it's about relocating them.

Steve: Do it the right way.

Vinay: The right way. You have to value their property, the elements of impact on their livelihoods, everything else — there's a certain value to it, and you've got to compensate them for that value. And they did that, in all fairness, and they did it well. Let's say the value was, if I recall, about $30,000 that needed to be paid to them. So I said, all right, now you need to pay them, because we're going to lease the land from you. And they said, "We agree, but we don't know how, because we don't have a budget for payment."

So it was a bit of a stalemate — everyone agrees, but no one can do anything about it. So we came up with an alternative: we said, look, we will pay, based on your directive; however, we will treat that as advance rent to you. We got all those families to open bank accounts — because the last thing I wanted was finger-pointing at some point about how much was paid and why it was paid in cash. That process took a while. Then we transferred the money to them, made sure all the paperwork had signatories from all sides, and it got enshrined as advance rent to the government.

Steve: And how are you communicating this back to your superiors in Singapore? When you're having to explain — we have the land, it's all good, we just have to move these eight families and pay $30,000 into individual bank accounts. What's their response?

Vinay: I think any company that's used to getting into new markets knows there are challenges in each market. They were on board. Previously, back in India, when I was CFO for Heineken there, we set up a greenfield as well, and we had similar issues — there were 100-plus landowners. Unless there's an established industrial zone, where you go in and there are plots cut out and infrastructure like electricity, roads and drainage already in place — which, by the way, exists in a lot of African countries at this point — in most other places, if you pick up any land, there'll definitely be some complexity. Either it'll be agricultural, which needs conversion to industrial, or it might be part of some zoning law. There'll be some issues with every piece of land you buy for industrial use.

Steve: You've got to accept those issues, work through them, factor them in. Were there any points through this development process where you thought it was all going to fall over — where you were ready to walk away? I'm sure there must have been a few.

Vinay: Actually, it was more after the brewery started. The process of setting up the brewery — the challenges, of course, there were many. Civil construction, the quality of foundations, the rebars. I remember the Chinese contractors who built the brewery — they were flown in from China, a large, reputed company back there — they did not put rebars in the foundation. So we actually had them dig the entire factory floor out.

Steve: How did you discover that?

Vinay: We had this Chinese company doing the turnkey project —

Steve: So they were engaged, when you say turnkey, to do everything from start to finish. Here are the specifications, you manage it.

Vinay: They were doing that, but we also brought in a Kiwi company to oversee what they were doing, particularly with regard to quality. Those guys were there, and they said these were not the right things to do. The Chinese had really built everything in a few weeks — and we actually had them redo it. I must say that Lehui, the Chinese company — they're actually equipment suppliers — did a pretty good job overall. We also ensured there were sufficient translation skills within our team to bridge any communication issues. That was at our cost. So the brewery was well and good.

Then we focused on getting production started. Quite honestly, there was a point in time when I said, I don't care whether there's a roof or not — I want the line running.

Steve: Feeling thirsty?

Vinay: Feeling thirsty, yeah! We can cover the roof later. So the brewery started, and the roads and the offices and all that — none of that was done. We reprioritised everything, because with the flooring and foundation issue we were behind schedule. We made everyone focus on getting production started, because that was vital to even start getting to profitability — the lower excise duty only applied to local production. We weren't making anything by importing and selling at that point. So it was about prioritising what is important versus what is good. The office, I think, came up a year after that.

But after that, the challenge was the grind. Here we were, up and running — and being part of a large global company, the systems and processes, the reporting expectations and so on — we weren't treated any differently than any other operating company. That led to a lot of costs; we had to add a lot of expats. There was a point in time we had as many as 20 international staff.

And we also weren't sure which brands would stick, so we launched almost six or seven brands, spending the marketing dollar behind each of them. We were spending a fair amount on marketing — which, even with the benefit of hindsight, I think was the right thing to do. Today the brand recall of Bintang, for instance, or ABC, is in good part because of the initial investment that went in behind them. And the fact that Heineken Timor operates today with two internationals, if I know it right, is also because of a lot of the systems and processes built during that period. So those challenges were there. There were expenses that dragged the profitability, which got me into a bit of trouble. But if you look at it from a long-term perspective, it's what was required.

Steve: How many years was that, to get through that dip?

Vinay: Definitely the three years I was at Heineken Timor — from 2017 until just before COVID, when I left. And you could already see certain international positions we were starting to shed — to localise. It was already beginning to happen. Then of course I left, and COVID came in, which I'm sure posed a completely new set of unexpected challenges on the business. But honestly, after that I'm not really connected. All I know is Heineken's still here and the business seems to be doing all right.

Steve: Can I go back — one thing that's occurred to me is things like operational licences, environmental licences. These are things you have to adhere to in Timor-Leste, and it can be a complaint of some that these processes are quite burdensome. How did you manage that? You're the first person coming into this market, so there aren't clear government systems established for a lot of what you're doing, I imagine. How did you clear those obstacles?

Vinay: Ambiguity still exists, but it was a lot more then. Things have become a lot more streamlined since TradeInvest came in, since the private investment law. And not just TradeInvest — even the Ministry of Commerce and Industry is a lot more structured now. SERVE is a lot more structured now.

Steve: SERVE is the business registration.

Vinay: The business registration. Things have changed, as they should. But back then, there were a couple of things. Firstly, a certain level of trust was built with the government and different stakeholders within the government. One of the ways was to proactively go and engage with them — as against waiting for them to come and ask for an update, or approaching them only when you were in some need. My approach was to go and share with them proactively. Ever so often, I would just go and present to different stakeholders. And then they'd say, "How can we help?" So there you were. It's a little different than rushing in in times of trouble, or going in complaining.

Steve: So actually invest in those relationships.

Vinay: To build that trust. Trust is a two-way street. And my view was — hey, I'm the variable here. I'm the foreigner, the international. So it's incumbent on me to proactively go and build that trust. I think that helped. There were never any surprises springing up on us from anywhere, because we were proactive. We would proactively go and engage, ask for suggestions, implement them, and then go back and say, "This is what you suggested and this is what we've done — and this is what we haven't done, because this is why we don't think we can do it." That created a constant dialogue with different stakeholders within the government.

Steve: I love that approach. Makes so much sense.

Vinay: And the other thing is — in many instances, Timor-Leste is still an evolving environment, whether it's environmental laws or labour laws. So to expect that everything is in black and white may not be the case. The other approach that worked for us: I was a letter writer. I used to write letters all the time. I don't know if the modes of communication have become different now.

Steve: Oh, now we have AI to write our letters for us, I guess.

Vinay: This was pre-AI — trust me, there was no Claude writing those letters. It was ourselves. But whatever we would do, any SOP we would implement, we would summarise in a letter and send to whoever we thought the stakeholders would be. And at the bottom we'd say we'd be happy to discuss it. Whether it was to do with effluent treatment, labour — working hours, what we give people to eat, transportation — anything that could remotely be sensitive. Labour is usually sensitive. Environment is usually sensitive. Health and safety is sensitive. Anything somewhat sensitive, we would proactively write to the respective ministries explaining what we were doing.

Steve: So this is your risk management — so if any issues emerge in the future, you can say, well, hang on, we engaged with you, this is the step we took, we outlined this two years ago, we're ready to engage.

Vinay: That's right. It was at least putting ourselves out there — we can't do more.

Steve: And you're trying to do the right thing at the end of the day. I think that's what underpins it — when you have the right intentions, having that two-way correspondence and transparency is a fantastic approach.

Vinay: That's right. It wasn't just form — it was substance as well.

Steve: Love it. Okay, so you mentioned you left Heineken around COVID time — call it 2020. Keen to know what was behind moving on from Heineken, and what you went on to. When I met you, I didn't know any of your background with Heineken — I got to know you without any of that. So let's talk a bit about the present-day stuff you're doing.

Vinay: Well, there was an interesting opportunity out of Suntory.

Steve: Suntory is another drinks manufacturer.

Vinay: A Japanese global beverage company. It was a regional role — chief strategy officer, based out of Singapore — but then they parachuted me into Indonesia, which was great, because that was the troubled business. And I thought that was cool, because it was still closer to Timor. Because the other thing I wanted to do was start building entrepreneurial opportunities for myself in Timor. I was okay to leave Heineken, but I was not okay to leave Timor — I felt this was a place where I could explore entrepreneurial opportunities.

So while I was in Jakarta, I invested in Halodili, which was then a startup e-commerce. The thinking behind Halodili was: yes, Timor is a small country, but retail is still a large space — say 300 to 400 million dollars. It's a consumption economy; retail is big. So what can we do in that space? Do we want to go the department store route? The distribution route? I wasn't so sure about those, because those weren't really our wheelhouse — that takes a lot of large infrastructure, warehouses, a lot of feet on the street, which I didn't think I was capable of cobbling together. And there are many already in the game, and they're bigger boys.

Steve: You don't want to go compete with East Timor Trading or those types of traders.

Vinay: Some of them are great friends, and they were distributors in the past — and clearly, they would have blown us out. So Halodili was an interesting proposition because it was about creating a new channel — the digital channel. Of course, it came, and remains, with its own set of challenges: internet speed, connectivity, habit. Typically e-commerce works very well in a high-density environment like Jakarta or New Delhi, where it's impossible to get to a place ten metres away in less than an hour. In Dili, you don't have any such challenges. But eventually it's a lifestyle option. Sometimes, Steve, you're sitting right next to the US Embassy — Castaway is 300 metres from here — but sometimes you just want to sit at home and order a pizza, right?

Steve: I was giving my boss a hard time, because he was saying his Halodili spending is through the roof — and he lives literally 20 metres from Castaway and those restaurants. But he said to me, that's half an hour of a Friday or Saturday night. You've got to go down, maybe wait for your food, then talk to somebody you maybe don't want to talk to. As you say, it's a lifestyle thing — you're buying your time. So Halodili — what I know of it, it's pretty much an Uber Eats, an Amazon, a bit of a trip.com where you can book travel, and then you've got a commercial arm where you can buy office supplies or whatever else. Tell us a bit about it.

Vinay: There's a B2B and a B2C. B2C is as you described — you want to order food, home delivery, groceries, furnishings as well. We generally don't keep inventory — we have one of our people go and pick it up from one of the vendors and deliver it to your doorstep. We do keep some inventory of fast-moving items, but the entire idea is that it's e-commerce.

The other vertical is B2B. Because of our access to over 200 suppliers in Timor and our network in China and Indonesia, we can source anything at the most reasonable, efficient prices and timelines. So we're the trusted partner for a lot of large organisations in Timor — the private sector, bilateral agencies, and the government. If you have a large requirement for tables, chairs, hand sanitisers and shovels all at the same time, instead of going to three different vendors, you could come to us.

Steve: One common issue I hear cited is digital payments — people not being able to pay by credit card to a range of local suppliers in Timor, whether that's tourism companies or hotels. What's been your experience with Halodili, and how have you got around that issue?

Vinay: That's a big challenge. In fact, it's a big limiter to the growth of e-commerce, because most transactions are in cash — and that's a big mess. All our delivery guys have to be employees, because they have to get cash back home. And there are leakages in the system because of that. It's very, very messy. For e-commerce to get to scale, it's imperative that the mode of payment becomes digital. And furthermore, I'd think this is also a crying need for the central bank — or for that matter, for VAT implementation in the country.

And by the way, in every single country, this is how it all sounds at the beginning: "This is a cash economy — it's impossible for it to become any other way." That's how they all started. I originally come from India, and I can tell you India was an absolute cash economy — most people dealt in cash because they wanted to save 30% income tax. And from there, it's now pretty much all digital payments — the instant payment systems, the e-wallets, not so much the credit cards, though they're there too.

Steve: I'm keen to understand — Mandiri has their Livin' by Mandiri app, right? Are people not using that on Halodili?

Vinay: People do. At Halodili we accept bank transfers, we accept Mosan —

Steve: That's the e-wallet.

Vinay: That's the e-wallet. We also have a way of accepting credit cards through PayPal and Alipay. But all that is very, very small — Mosan would be a fraction of our monthly collections. It's still mostly cash, other than a few internationals who might use their credit cards. And bank transfer — this is not really quick commerce, right?

Steve: Yeah, it's got to be tap and go.

Vinay: Tap and go. You can transfer $100 from your Mandiri account to my Mandiri account, which I might get by this evening, or I might get tomorrow. But that's not instant commerce. For that, you need the instant payment settlement system — the IPS — at its core. Which means, let's say Steve walks into Gloria Jean's coffee: you instantly tap, and $5 gets deducted from your Mandiri account and gets into Gloria Jean's Mandiri account instantly.

Steve: So is that a central bank limitation?

Vinay: It's an infrastructure limitation. For instant payments you need an infrastructure, because the usual infrastructure is a TT/RTGS sort of transfer, which is not quick commerce.

Steve: Okay, so it's not necessarily the central bank — it could be the banking platforms individually, or how the banks work together, essentially.

Vinay: Exactly. Either the central bank takes ownership to put that infrastructure in place — which I gather is the case here — or all the commercial banks set up some sort of structure to participate in instant payment settlement.

Steve: Just back to Halodili — it occurs to me there have been two interesting and yet different entrepreneurial journeys. With Heineken, you're coming in as an "entrepreneur" — and I say that with inverted commas, because you were pioneering, but you had the machinery of this massive company behind you. You could send staff to Indonesia to be trained, and a whole bunch of other things. With Halodili, you're coming in and investing, doing it with a small team, largely on your own. How do you assess Halodili's progress — where you're at now compared to where you hoped to be — and where do you see it getting to on the current trajectory?

Vinay: Honestly, I'm not involved in the operations of Halodili. I'm more of an investor. My co-investor — she's the founder, and she's the one who runs the business. I'm usually an audience to the challenges she faces; other than commiserate with her, I don't do much else.

But obviously, capital is a limiter — we don't have endless dollars. When we set it up, there was a lot of cash burn in the initial few years, which has relatively stabilised.

Steve: Why were you burning cash in the early days?

Vinay: Again, because of unit economics. The scale wasn't there, margins are small, operating costs are there. We're also increasingly building trust with large companies and institutions on institutional orders, which works efficiently — a B2C customer might order $20 worth of stuff, but an institution may order $20,000 worth. Even if your percentage margin is the same, delivering product worth $20,000 is, needless to say, more efficient. So the B2B side gives us a certain leverage, which we invest back.

One of the things we do want to do is build the Halodili brand, because it's a consumer brand — and my experience, having been in consumer products most of my life, is that your brand has a value. How would that value translate itself for us? I have no idea at this point, like any entrepreneur. But we truly believe we have to build the brand, so we invest back into it — and into trust. We are not the best. We are not the most efficient. We have our hiccups; we handle a whole host of complaints. But the underlying thing in all this is to build trust. Even if, let's say, the coffee got to you a couple of hours late — how do we handle you in that situation? You may not like it, but at least there should be some level of honesty that comes across. That's what we're trying to build with the consumer.

Steve: I love it. You guys are certainly pretty well known around Dili, and it seems to be growing — so congrats.

Vinay: It's all thanks to Vinny, who runs the business, and the team.

Steve: Nice. Vinay, we've been going quite a while — up to an hour now. I'm just wondering, do you have time to talk a bit about what you're doing with AI, or do you want to save that for another discussion?

Vinay: I'd love to talk about Think Forward Consulting first, which is our audit and advisory firm — which is where I spend my time. Like I mentioned, Halodili is more my investment.

Steve: And it's through Think Forward that I got to know you.

Vinay: That's how we know each other. It's been a great journey there, because it's all about lifting Timorese organisations. How do we build their capacity? How do we build their organisational muscle? Whether through doing quality audits, giving quality recommendations as a consequence of those audits, building systems and processes where relevant — all towards building capability. And training, which is the other thing we do, particularly around accounting, reporting and financial management.

I think we bring a fair bit of IFRS and IPSAS expertise.

Steve: What are IFRS and IPSAS?

Vinay: These are international standards on financial reporting and public sector accounting. Whether it's government-owned companies, government agencies, NGOs or private businesses, we bring a certain level of international standards right here in Timor, because the team is all from the Big Four background — I was at Arthur Andersen, my partner is ex-KPMG, and the rest of the Timorese staff are all masters in finance or CPAs. We're trying to build a firm which supports clients the way a global Big Four would — but right here in Timor.

Steve: Tell me about your AI work. I feel like six months ago you were telling me you didn't really use these tools, and now you're up on the latest and greatest in AI. What's been your shift, and what are you doing in the space?

Vinay: We set up coaxis.ai out of Singapore a few months ago. The focus is implementing AI, machine learning and data analytics solutions for SMEs. It's an interesting time, because almost everybody understands the value of AI. People are individually using it — business owners, employees — people are using Claude, people are using ChatGPT, and they see the power of it. But how do you bring that within your enterprise, and how do you benefit from it? It's one thing to say, okay, now I'm writing more articulate emails — but how do I drive top line?

Steve: And the big corporations have the funding and the teams to explore this, and they're actively doing it. The SMEs don't have the budget and don't necessarily have the expertise.

Vinay: SMEs have budget constraints, and in good part they don't even know where to start. And there's a lot of fear within SMEs around data privacy — a lot of SME owners are paranoid about confidentiality.

Steve: You're saying the SMEs care and the big corporations don't?

Vinay: Well, SMEs more so, because they feel more insecure about their data getting onto any public platform. Large companies have a greater understanding, and they've probably already built a lot of security layers. So what we do is build orchestration layers to make your environment secure, even though some of your solutions could be leveraging the frontier models — the LLMs.

Steve: LLMs — that's like a Claude or a ChatGPT.

Vinay: Correct. We build in an orchestration layer to make sure your data never leaves you. To put it in layman's terms: let's say you have an Excel sheet of data. What is shared with the LLM is just the headers of that Excel sheet, not the data. That's what's called the schema — it's only the schema for that data that's shared with the LLMs. If any other data is to be shared, it's redacted by default.

Steve: But if you're redacting and not sharing all the data, how is the ChatGPT or the Claude actually doing the work without the data being provided?

Vinay: That's where our systems integration comes in. You're leveraging the LLMs but keeping your data within yourselves. Even if there's a back-and-forth between the LLM and yourself, it's all redacted — but when it comes back to you, it's restored for your interaction.

Steve: Okay — so it does the analysis on largely anonymised data, and when it comes back to you, it de-anonymises it and you can use it.

Vinay: That's right. That's typically data analysis — what we call data readiness and data insights. There's a lot of work that needs to be done on your data to be able to do this. Data readiness means getting your data ready for AI to sit on top of it. And that's hugely impactful, because now you can get insights out of AI on your data which you never had before. You can get dashboards out of it.

The other thing we do is bring a lot of unstructured data into the data lake — data sitting in images, text, PDFs, emails, WhatsApp. All that can be brought into your structured data — bank statement data, layout drawings, whatever else.

Steve: So this is all to get insights, to better understand your business. How about automation of business processes — are you working in that space?

Vinay: That's the other part — and that's where agentic AI plays a role. It's a very new concept, new for everybody — where agents come in and play a role. Repetitive processes, processes which take a lot of human intervention — those can be done more accurately and more efficiently by agents, keeping a human in the loop, of course. That's workflow automation.

Steve: And are you doing any of this deployment in Timor-Leste, or is it mainly overseas?

Vinay: Overseas for now. But I really believe organisations in Timor have the most to gain from it, because most organisations in Timor are SMEs — whether government-owned or privately owned, NGOs or bilateral, it doesn't matter. They all have similar challenges. And I think AI and ML adoption would really accelerate some of these organisations in Timor. In fact, you leapfrog.

Steve: Do you have any examples, though? What type of SME in Timor could really leverage AI?

Vinay: For instance, we're doing demand forecasting and data insights for a distribution company in Singapore — a company with over 300, 400 SKUs. There are a whole host of distribution companies in Timor dealing with a similar number of SKUs. Demand forecasting is a key challenge in Timor, especially where it takes three to six months to get product in — and getting that wrong is make or break for you. Back in the day, even we would be forecasting supply chain by the seat of our pants, frankly. With this technology available — which brings in multiple variables before giving an output, and learns for itself, so it gets better every time — distribution companies are clearly set to gain.

Then any large investment in hospitality and tourism. There's software all the hotels are using, and AI solutions sit on top of that software to give you dashboards, reporting and insights which are unparalleled.

Steve: And how about smaller businesses? Those are medium-sized, established businesses — do you have any ideas for small, emerging, call them micro businesses, how they could leverage AI?

Vinay: Micro businesses would all be either making something, selling something or servicing something — and AI today is all-pervasive. It could be a microfinance institution, for instance. It could be banking. We're doing a lot of work in the financial institution space, developing solutions — in fact, we even have some almost ready-made solutions, though we believe in bespoke, because we truly believe a real solution is one tailor-made for your pain, not a pre-made solution that tries to fit your pain. But it's a balance with speed to value.

And in a country like Timor, where there are no credit rating scores available — especially in markets where formal data is hard to come by —

Steve: AI can play a real role in pulling it together.

Vinay: Exactly. What is Steve's credit score in Timor? There's none. So how do I lend money to Steve? I don't know — I like him!

Steve: I don't think I've got any bad debts.

Vinay: Exactly. So banking, MFIs — there's a lot they can leverage.

Steve: I've got one example — something I did just two weeks ago. I was with my parents in Brisbane, and my dad has set up a wellness centre — a sauna and a spa. They're looking at where to target this in the market. I said, Dad, let's just test it. In half an hour, I built three different websites: a very cheap product, a middle-of-the-road one, and a super premium product. Then we built Facebook advertising for each of those websites. Each website simply links to a Google registration form saying, thanks for coming — we're developing this product, register here, we're about to launch. Once that goes live, we push it out, people come and register for the product they want, and we have a market that's good to go. That took me less than half a day using AI — super simple stuff that anyone can do, and very little marketing budget. And I think these are the same types of opportunities. We have far more creative people than me in Timor who are going to leverage this in their business, whatever the industry.

Vinay: Absolutely. AI is not a passing fantasy — it's here for real, and it's already dramatically changing the way we live and work. I don't even see it as an option for individuals — and businesses particularly — not to get onto it soon, because soon they'll be competing with businesses which are leveraging it.

Steve: Vinay, to close, I've got two final questions for you. The first one: tell me about a failure that you're most proud of, or most grateful for. It can be business, life — whatever comes to mind.

Vinay: That's a good one, by the way. I would think Suntory. After the Timor experience — having tasted entrepreneurship while still being part of Heineken, and I owe one to Heineken for that, because they gave me the freedom to operate as an entrepreneur — getting back into a structured organisation, and Suntory is fairly structured, didn't work so well. And honestly, then there was COVID, so we were all stuck in our rooms, just pressing on with whatever was on the table.

And I'm so glad it didn't work out, because that pushed me to be an entrepreneur myself. When Suntory sort of crumbled, so to speak, I was like, okay — are you giving me some money for it? Great. I'm happy with this cash. That's all I want at this point in my life — and I'm not working for anybody but myself for the rest of my life. At least this one!

Steve: I love that. What a privilege.

Vinay: What a privilege. Now I can do what I want, when I want, where I want, with whom I want. So yeah, that was one clear failure — I have to confess, I wasn't the best Suntory employee. But it gave me a kick up the right places.

Steve: You've got the outlook now of how you want to approach the rest of your career, really.

Vinay: Though of course, after now four or five years on the entrepreneurial journey, every single day is a fresh ask of yourself: are you really doing the right thing? It's a question every single day — are you really doing the right thing, or what the hell are you doing anyway?

Steve: Awesome. Thanks so much. Final question for you: five years from now, what does an amazing outcome look like? This could be for you, for Timor-Leste, or for both.

Vinay: For me — I do believe that I'm gestating two powerful businesses with strong future potential. One is Halodili, right here in Timor-Leste. Clearly, e-commerce — you can't change it. It's a trend. Challenges, yes; whether it's five years more, ten years more, twenty years more, I have no idea. But I do think Halodili is going to be the next Gojek of Timor — whether it's Gojek themselves —

Steve: Gojek — that's the big Indonesian platform, right?

Vinay: Yeah. I really believe that, so long as we don't do something too awkward, we will get some value out of it, or we will get growth out of it. Similarly for coaxis.ai in Singapore — I believe that's going to be a hard one, because it's a competitive space, but there is a huge SME opportunity. And then opportunities in countries like Timor going forward. So it could be quite transformational. I feel very optimistic about these two opportunities — I have to say this, because every day you feel like you don't know where you're going, but I'm quite optimistic.

And I'm super bullish on Timor. I always have been — this optimism has been there for the last 15 years, since 2012. I really think Timor has never had it better than what it has now. And, coincidentally, it's when there is no oil. And you know what? It's fine. That's how we thought of it back in 2013 — what if oil stops one day? And we said, hey, you know what, it's all right. I think that's where Timor is today.

There's a lot of momentum — ASEAN, whatever else — everything is going for it. The government is doing a few good things. There is momentum on the street. And the bilateral agencies, which have focused largely on sovereign support, are now looking at the private sector — the ones from Australia, IFC, ADB, DFAT. I don't think anyone can now ignore the imperative of private sector development. With oil where it is — it's not out of the way, it's still there, but it's some time away, and mining, the true potential of it, is still some time away — no one can do meaningful work in Timor without private sector development. That's the imperative. So yeah — I am hugely optimistic about Timor.

Steve: I love it. Thanks so much, Vinay. Let's leave it there. Really appreciate it.

Vinay: Awesome. Thanks so much, Steve. And by the way, I really appreciate all that you're doing in Timor. I think you're really bringing together the bilateral agencies, the donors, the private sector. I wish you all the very best, and I hope to see you do a lot more in Timor — and for a long time. Thank you.

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