Andrew Henderson

Andrew Henderson

Founder of Nomad Capitalist and the world’s most sought-after expert on global citizenship.

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Investing

The birthday card that reaffirmed my faith in emerging markets investing

Dateline: Kuala Lumpur, Malaysia I learned an interesting business lesson over the weekend. To celebrate my thirtieth birthday, I took a few of our Nomad Capitalist team members to the Hard Rock Hotel in Penang here in Malaysia. Penang is the only non-Muslim majority state in Malaysia and is popular tourist destination for those seeking beaches, outdoor activities, and an amazing assortment of street foods. If you’ve ever been to Las Vegas, you are likely familiar that the Hard Rock Hotel there is home to quite a bit of debauchery. It’s famous for weekend pool parties where scantily clad revelers engage in all kinds of crazy stuff while hung over from the previous night. So while I believe that an easy way to achieve overseas business success is to simply take an idea that’s working in a more “developed” country like the United States and copy and paste it into a new market, you still have to take inventory of what the local market wants. For instance, the Hard Rock Hotel in Penang had none of the dental floss bikini models or overly buff, over-tanned bouncer types. Instead, it was filled with Chinese couples and German families. Nobody even looked intoxicated. I was speaking with the staff at the hotel who seemed shocked at the idea that Hard Rocks elsewhere were synonymous with the kind of craziness that happens in the western world. For them, the beaches on the outskirts of Penang are a family friend getaway for Asians who wouldn’t want to spend Sunday morning at 10:30am wading in a pool of drunken humanity. It just wouldn’t work there. At least not yet. After our weekend getaway, though, I returned to my home base to find a rather surprising birthday card waiting for me. While it arrived by email, the mere thought of it alone not only got me excited, but reaffirmed my belief that investing in the world’s emerging markets is the right thing to do. The card was from the immigration office in Cambodia. A few months ago, I visited Phnom Penh scouting out real estate opportunities there, and I chose to get an online e-visa to get into the country. In recent years, Cambodia has made it easier to get a visa. Today, many nationalities can simply show up, pay $25, and get one at the airport. It’s gone from a big hassle to super simple. I’m so used to getting my visa through the similarly simple Cambodia visa website, and that’s what I did this past August. Apparently, the Cambodia e-visa people decided to do what no other country I’ve ever been to has done: send birthday cards to former visitors. While I’ve grown weary of the tacky, informal birthday emails I get from former car insurance agents and other salesmen, being wished a happy birthday by some bureaucrats stood out a lot more. As they say, it’s the thought that counts, and the people responsible for attracting tourism to Cambodia decided it was worth a few mouse clicks to create a system that takes the data they already have (name and birthday) and send people a little card that also serves as a reminder to visit Cambodia again. It went like this:

Best Wishes to you for a very Prosperous, Successful, Healthy and Happiness in your life. On your birthday we are, Cambodia e-Visa team, wishing you have a good luck and have another year of accomplishments, opportunity, and personal growth. We send you our sincerest wishes for a Happy Birthday. Wishing you many happy returns of the day! Finally, thank you very much for using our e-Visa service always to Cambodia.

Think about it for a moment: high-end hotels and casinos frequently reach out to their best guests by sending handwritten notes and even calling them on the phone. The highest volume gamblers, called “whales”, get their own casino host to be available to them any time they want to come back to the casino. And my father credited a long list of ultra-loyal clients in his financial services business to an act as simple as calling them and wishing them a happy birthday. So why is it that governments don’t do the same thing? Why doesn’t the IRS or HMRC send taxpayers well wishes on their birthday? Considering the IRS is one of the most hated institutions on earth, you’d think they could turn a few people by sending a card with a cute puppy on the front of it. Kidding aside, the answer is simple: your local government figures it has you under its thumb. They know that 99% of people in the country you live in either (1) love the system and embrace their slavery, (2) aren’t aware of said system of slavery, or (3) say they believe in freedom but vow to “stay and fight” out of some sense of patriotic duty. The bottom line is that your local tax authority knows they have plenty of people willing to pay them no matter how poorly they treat you. They figure they can boss you around. That’s why even benign correspondence from a western tax authority is filled with threatening language. Meanwhile, emerging markets don’t have that option. Cambodia has seen incredible growth in recent years – heck, in just the last year – due to welcoming investment to its territory. Cambodia realizes, whether it likes it or not, that the people investing there have plenty of options. The wealthy Russians leasing the islands off the coast of Sihanoukville could take their money anywhere. The world has no shortage of islands. So Cambodia had to figure out a way to make their islands worth investing in. As always, it comes down to my five magic words: go where you’re treated best. Capital naturally does go where it’s treated best, because that’s how humans act. And that is what the bobbleheads on CNBC don’t understand. The media has been rambling on about how the emerging markets are doomed because the United States is finally slowing down the printing presses on its dollars. Never mind the fact that Wall Street is freaking out when such an announcement caused the stock market to fall a few percentage points… emerging markets are just bad. The financial media has aligned itself with the 99% of westerners who don’t have a clue about where the world economy is headed. They value the alleged “safety” of western markets when it is those very markets where almost ALL property expropriation and wealth confiscation is occurring. These are the people who still harken back to the days of the Khmer Rouge forty years ago to decry Cambodia as an investable market all while refusing to harken back to the days of stagflation or the S&L scandal in the United States. Yet they fail to take into account that investment decisions aren’t all made by overpaid bankers in ivory towers. Most decisions are made by average investors who want a better life for themselves and their children. Those investors respond to simple things, including how they are treated. While a birthday card may be a very small gesture, it is a sign that Cambodia knows it has to impress those who want to visit or invest in its country. They “get” that they have to put out an effort to get something in return. They realize there is no free lunch. No matter where you choose to live, pay taxes, start a business, or invest, ask yourself a simple question: does this place realize it needs my business? Or do they think I need them; that without their benevolence, I’d be poor? Ask yourself: does the country you pay taxes in care enough to send you a birthday card?

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