Rong Hui Kan
Rong Hui Kan is a finance and economics professional with a successful career in the investment industry. He has held various positions in different countries and companies, including the World Bank, Beacon Fund, an impact fund focused on SEA and with renewable energy investment experience at Green Giraffe. He also developed fundraising strategies for Lingua Custodia and conducted due diligence for Patamar Capital. He holds an MBA in Finance from HEC Paris, a Master's degree in Economics from Boston University, and a Bachelor's degree in Economics from Peking University,
I was also thinking about questioning a fundamental assumption we had: that we would assess a company only based on its financial stability. But we should consider both the impact and financial sustainability of a company before investing. We recently saw a company that did not perform well, despite being picked up by a spider. However, if a company has a positive impact on society, we should still consider financing it.
— Rong Hui Kan
Interview transcript
I'd like you to share a little bit about yourself. What are you currently doing and how did you get into, you know, your current role? And just so you know, we're very interested in your personal story. We'd like to understand how people get motivated to make an impact, and we're curious about how you do it. If you're able to do it, like PJ said, we'd love to talk more with you. Of course, we'll go with trust, but we're not just here to learn about financial mechanisms. We're also very interested in people's journeys and personal experiences. Ultimately, it's often about that - how people can spend their time on things that matter, for example. So feel free to share anything from your childhood up to now.
Wow, that's great! It requires some memory, but I'm really happy to meet you. I had a really good impression of CIID after visiting PJ in Copenhagen. I was impressed by both the food and the interesting buildings in Copenhagen. Additionally, I was struck by the different types of people who attend CIID as opposed to MBA. CIID attracts a unique crowd of people that creates an infectious energy. After my first visit, I liked it enough to go back again and take a closer look.
Regarding the impact angle, I think what sparked my interest was going to China to study for my undergrad at Peking University. Over the four-year span, China transformed significantly, especially due to the Olympics and the construction of many metros. As an economics student, I was focused on macro-level concepts. After that, I pursued a master's degree at Boston University where I had the chance to meet and learn from distinguished economists, including Abhijit Banerjee. At the time, I didn't realize their significance.
It was held at a university in Boston, where I had access to amazing professors. I enjoyed being a student and became even more interested in the topic. When I started working at the Economic Development Board, I actively looked for work related to development. My goal was to help countries transform their economies, capturing new industries and trends. However, I did not find this kind of work at the Singapore Economic Development Board, where I was working. Instead, the focus was on sustaining the economy and making it more efficient. I learned about governance through the World Bank, where I spent two years working on infrastructure private investment policy in the Singapore office. I flew around ASEAN, meeting with government officials to help them prioritize where to put their infrastructure money. Along the way, I also worked on projects in China, which I found interesting. I enjoyed interacting with local officials, who were often confused about private investment. I went on to do an MBA to understand more about finance, as I was working on infrastructure policy and finance. During my MBA, I also studied strategy and entrepreneurship, and went beyond Asia to study at HEC in Paris. After graduation, I worked at a renewable energy finance company in Paris for about one and a half years, until COVID hit. Then, I learned about a friend who set up an index investing in Southeast Asia, focusing on the base of the pyramid of businesses. I was intrigued by the opportunity to support businesses that allow more people to access services they didn't have before. She was setting up a new fund to focus on women and from a gender lens, which I found very interesting.
Yeah. That's right. The purpose was also focused on the same countries, with a slightly different focus on women and gender, and not just broad companies but also SMEs such as bakeries or restaurant chains that needed capital. The type of capital required was different from venture capital, which is equity. Instead, it involved a variety of products that were tailored to meet the needs of smaller businesses that were not necessarily high-growth businesses. I worked there for less than two years and left late last year because I wanted to get back into the climate space. However, along the way, a friend of mine who specializes in medical technology approached me about starting a company with him. Medical technology really spoke to me because it involves working closely with people, and I have felt a connection to medicine for quite some time, but I just didn't have the right opportunity before. So, I am probably going to start a company with him to pursue this field. Yeah, I think medicine has been something that I felt for quite a while but I think I just didn't have adopters. You know, I felt it was impactful.
Great! Thank you for sharing. It's really interesting to see how all these different positions are related to impact, but in different capacities.
I have a few follow-up questions. First, when you were working in China with local communities and also with Beijing, it seems like you were acting as an intermediary between groups. How did you facilitate that collaboration?
I can imagine that trust is a key factor when it comes to facilitating collaboration. How did you build and maintain that trust? Yeah, um, I would say that the local officials were trying very hard to figure out what was coming up and what they were facing, but I realized that everybody was also trying to figure it out. Even the Beijing official, there is an official circular that comes from some important government body, and then it filters down to the Ministry of Finance, and everybody else is trying to understand it. So I just felt like at the World Bank, we were trying to understand those documents and also communicate them to the local officials. So we probably had a better understanding because we were closer with Beijing. Also, I didn't see a lot of officials in Beijing travel down to the local county, for meetings that often. So I think a lot of things were lost in translation. At the World Bank, we had Q&A sessions, for example, directly with the county officials. The name of the World Bank made them trust us, I guess. Honestly, we didn't really have to do that much. We just had to say, "Hello, we're from the World Bank," and then there would be that, "Okay, you're an expert. Okay." And then they would trust us. Just because they knew so little about it, I think they were trying to find out more about what public-private partnership was, whether it was used in agriculture, and whether we had seen it before in other countries. It was quite easy to share all those things. So I don't think we needed to buy anything when we met with the local officials. I think they were pretty good. They did a lot of backsliding. Yeah, this was, I guess, in the earliest stages of the project where we were trying to educate the other side.
Could you share a little bit more about the decision-making process in these projects? Who are the actors involved? It sounds very top-down, but I wanted to confirm if that's a valid guess or not.
Back then in 2016, there was a lot of emphasis on diversifying sources of funding for infrastructure projects, trying to get the private sector to participate. China didn't really have much of the framework. Even now, I'm not super sure. I haven't kept abreast of what's been happening, but obviously, China is not the most open economy. There are a lot of things that happen in secrecy, for example. At that time, they were more open to thinking about foreign collaborations. They saw the World Bank as that kind of partner with foreign expertise, so we had to involve them. However, having a foreign party in Beijing is never straightforward. When the World Bank enters, you need a lot of cover from large government agencies, like the Ministry of Finance and the NDRC National Development and Reform Commission. These are the two decision makers in China, and you need their approval to work with other people. For financing infrastructure, we needed to talk to them to make sure we had the list right. They had lists of infrastructure projects and areas of potential investment. We wanted to make sure we were dealing with the right lists. After we got the approval of either or both of these organizations, we worked with other ministries to reach out to the provinces or the companies for public-private partnerships. We worked more closely with less powerful entities within the government to identify projects that might be of interest. The local governments would have the freedom to pick which projects they wanted to include in the list. It wasn't like Beijing could pick the projects. Then there was two-way communication. Not everything was understood, so they would try to interpret and issue local circulars to clarify. If something went wrong, after a few weeks or months, we would have a meeting to say, "This needs to change." The dynamics were interesting. People at the local level would try to interpret what was wanted, but sometimes without fully understanding. There was substantial guidance given by the bits in government to implement those changes and check back at that time. I'm not sure, but I'm sure a lot of things have changed.
And, if you reflect on your past experiences, how could you make communication more open and effective? What actions could be taken to establish more effective communication and policies amongst each other?
Right. So let me think about my most recent job, the Beacon Fund. At the beginning, in Vietnam, I wondered how I could get everybody to be open at the negotiating table. When you're trying to make a loan on one hand and the other side is trying to get a loan on the other hand, there are some things that you don't really want to share. You don't want to share from the fans' point of view how exactly you assess the party at times, so that they don't, you know, prime the application. And then, I guess also, the other party will want to keep some things from you. It's quite an interesting question. I think maybe to get people to be open. The thing is also, why do you get people to do that? I've heard of people who have been very open, but then the other way encourages openness like bosses who encourage openness and use it to their advantage or the employees' disadvantage. They try to build a trusting environment, and then the employees share something, and then the employer uses it in a way that wasn't very beneficial for the employee, for example. I feel that this could potentially also be something that you'll see when there's a power dynamic, that is, a power asymmetry between the lender and the borrower. In any instance where there is a power asymmetry, it would be interesting to consider how to have openness without letting one party take advantage.
And that leads me to my next question: how can we empower the receivers, or the people on the other side?
Yeah, it's a good question. I think that binding the power of the more powerful party is going to be quite important. This can be achieved by making the less powerful party feel like they can be open and that they will not be taken advantage of. So, in some ways, I guess it's about empowering the less powerful party.
Can I ask, sorry to interrupt you there? You said "the less powerful sides." Yeah. So, of course, you know, I'm just stopping here and pausing because it is a strong statement and also a strong provocation for our work. We're looking into how to create more engagement and distributed governance during decision-making. In fact, even the receiving side, which may be financially less powerful, might have the tools, strengths, and time to implement the actual farming or other types of activities. Regardless of the topic, funds are given to the receivers for them to do something. They're also fundamentally important in the equation, but as you said, they're perceived as less powerful. So, we would love to go deeper into this
Area. Yeah, absolutely. Um, I think that everybody has agency, so even if you're an employee or the lowest employee in a company, it doesn't matter if you have agency, you choose to be there and to be in that job, right? And you're contributing in your capacity. But I think the reality though is that, for example, a lot of people, I think, maybe because I did economics, for example, right? Like, you know, it's just industrial organization. When you think about it, you know, they're just consumers. The reason why you need consumer associations to represent them is just because there are so many of them and they don't band together, whereas companies have much more grouping ability, right? So they have more access to resources, etc. And that's when you want to level the playing field. I think in the same way for employment or the borrower, then the kind of a lead as a borrower, maybe you know, you have access to many different taxes. So it might be possible. So when you are an early-stage startup, or an early borrower or an SME, there aren't that many things available in the market for you. And then you know, every lender who is willing to talk to you becomes a focus. So think, in the Vietnam market, for example, in markets where we work, you know, where you do impact investing, generally, there is a lot more money chasing a few companies, right? So there is a lot more say, impact investing capital from developed countries like that or that want to be deployed in Vietnam or wherever, but there are a lot of companies that are not, I mean, they are trying to get financing, but not all of them will be able to meet the criteria, right? And I think just because so just like a lot of things that, for example, we take for granted in modern economies, like bookkeeping, or just understanding. Sometimes, you know, I think basic business sense obviously everybody has, but I think some of the things like bookkeeping or auditing or you know, just information infrastructure and things like that, not everybody does, right? So then unfortunately, the number of companies that we can invest in is very limited, and then this power dynamic comes into play because there are a lot more attendees than I didn't see, but they finance a lot of money that they don't want to deploy into that. So that is, therefore, our impact. And I think in the case of an employer versus an employee, as Badea, the employer generally holds more power, right? The employee could also oppose, like, look for another job elsewhere, but you know, that is quite a high personal cost. And so generally, they don't like to do that. Right? But then, at the same time, the employer recognizing that building up a safe environment is perhaps the best thing for the business, you know, it's like aligned with the business, happy employee, blah, blah, blah, then perhaps, you know, that could be something, you know, an enlightened employer, I guess, like we would have in his perspective, but it has to be, I think, quite educated.
How can we empower all stakeholders and ecosystem members to have more agency, regardless of financial or human resources. Do you have any specific suggestions on how to achieve this goal? Perhaps we can explore new ways of leveraging knowledge, time, and skills while also considering financial rebalancing. Based on your experience, do you have any practical ideas to share that can help us achieve this goal?
Yeah, I mean, definitely, right, I think. One of the issues we faced at my previous job in Vietnam was trying to understand the market. We knew that everyone needs financing, but what are the conditions under which people would take it? It's both a business question and one that intrapreneurs really need to answer. So, we thought about co-developing products with them. However, I didn't speak the language, so I left it to my colleagues. They were already trying to have close interactions with investors and potential followers, but I think they didn't manage to understand what people really wanted. In addition to products, financial plans and other value-adding services, such as coaching for female entrepreneurs, were also important. We hoped to fund these services using development aid money. However, the team was too small, and we didn't have much time to figure out the market. We needed one or two people to focus on this. The rest of us were tied to just a random financial model. We were always thinking about what kind of things we could offer, but we didn't manage to progress much beyond one. I thought there might be a lot of potential for employees or potential borrowers. Another thing was that we weren't sure exactly what kind of services would be useful because we didn't have the time to develop anything. I was also thinking about questioning a fundamental assumption we had: that we would assess a company only based on its financial stability. But we should consider both the impact and financial sustainability of a company before investing. We recently saw a company that did not perform well, despite being picked up by a spider. However, if a company has a positive impact on society, we should still consider financing it. There may be different sources of funding available to finance the right companies, as many of our current investors have requirements that exclude companies with a certain rate of return. For example, we are raising money from other people to invest in companies, and all these investors have specific requirements. Even development agencies, such as the Asian Development Bank, have high return requirements. If we cannot meet these requirements, we will not be able to work with them. However, some European investors are more open to having a little bit of a trade-off between impact and finance, while others are not. It was interesting to have individual meetings with investors who were interested in the kind of fund we wanted to create. At the beginning, the priority was on financial sustainability and finding companies that would provide decent financial returns. We did not have the luxury of bringing together investors who were solely interested in impact.
Can I ask a question? You said, "Of course, we cannot make a loss," when you have money from people who are expecting a return when deciding what to invest in, and so on. You also talked about the stability versus impact when you're looking for businesses that are viable, so they can sustain and be supportive and stable. But then, you know, sometimes stability and impact have two different kinds of dichotomy. Anyway, going back to the "we can make a loss" in a provocative way, if actually, we did make a loss or we designed things to make a loss, what would make your shareholders, like the people who are giving money to the fund, compensate? They didn't know the financial loss. Look into other types of values. If you had a loss, what would be other elements of the operation we could leverage? Whether it's branding, I don't know. Since you know these people very well, what would be equally or at least an acceptable return if not financial? And my advice is to really think of the people because ultimately, it's very much down to the personality and the behaviour and the people and so really think of specific cases.
There was a government agency that granted money, and obviously they wanted us to be financially sustainable. We did something pretty out there and they were happy with it, but we needed to justify that it was for impact and quantify that impact. How to quantify impact and justify assessments differs according to each organization. As implementers, we had to decide what we meant by impact. We were already diverting a lot of resources to developing the ecosystem, for example, $1 went to each entrepreneur. Honestly, there is less research into that. My main point is that more work needs to be done in assessing whether or not to make grants based on promised impact. Even after investing in a company, the impact may change as plans develop. For example, a company may try to employ fewer people, which is good for the business, but not so good for the number of women who benefit. This is an important consideration.
Great, thank you, Ron. I'm a little conscious of time, so I have one more question before we wrap up. Simona might have more questions based on what you shared with us. Have you been able to apply what you've learned while working with the World Bank or in governments to develop any investment frameworks or policies while at Beacon Fund? How did you translate the learnings from those government or agency experiences to the Impact Fund?
Right. Yeah, it's a good question. You're asking about very different kinds of organizations, one very large and the other very small. I don't think there was any translation of the headings. I think one thing I did pick up from the government was to enroll a lot. One thing I would have liked more was stakeholder engagement. It's really what the World Bank listed, and it's also something that simple governments relatively like to do. They just do it. I think stakeholder engagement would have been very useful for getting the right user needs and understanding how the market actually looks like, etc. But we maybe weren't super sure of how to do it very quickly. We had a limited ability to even write, so we were talking to five people and trying to figure out how to reflect the market. But are these five entrepreneurs really representative of the larger need? You can develop a product for these five people, but after that, nobody really is a leader. So there's always a bit of operating in the dark, quite a bit, I think, in a small part. That's so yeah, I guess, by like, whereas I think the Singapore government, also, it's easy to get contacts and talk to large companies or other government agencies. If you have a question about the industry, for example, it's very easy to make your rounds and talk to 10 or 20 people very quickly. Whereas as a small independent, sometimes people may or may not want to talk to you. I think doing more outreach beyond your unapplied is helpful. So I guess that's more representative of the market, and then there are other sets of stakeholders, like the Vietnamese government, who might have their own views. So we were trying to engage associations, for example, but it took a lot of resources and investment to develop relationships. Whereas we were very small and had very little time, so at the end of the day, we needed to allocate our resources. I don't know if there's a way to tackle that, maybe having some kind of event where everybody came together and brainstormed and built some kind of action. Personally, I think making it easy to lower the barriers to meeting could actually be quite useful.
Great, thank you very much. Our last question is: if you had a magic wand, what would you use it for to create impact?
Is that where PJ got his magic wand question? Yeah.
Simona That's my fault. I do it since. Yeah, I've been teaching for many many years and I always ask this question sometimes to PJ.
This question could also be phrased as: "Where do you see the biggest barriers? What are the situations you want to unlock?" This is the critical question, as we are not asking for the solution, but rather the key issues that we need to focus on in order to have maximum impact.
If there is a way to reach out to people with very limited resources, the impact should be characterized by using few resources to achieve successes, both on the provider and the patient side. If there's a way to provide global financing to people with limited resources, like the MBSR program in Africa, which was designed to provide financial assistance to elderly individuals, it could have a significant impact. There may be an opportunity to reach out to services that may not have strong bookkeeping skills, but could still benefit from loans that could transform their practice. I think this would be very helpful.
Thank you for spending time with us today. We appreciate you sharing your experiences in the impact space, especially your transition from a government agency to the private sector. We would love to stay in touch and may have follow-up questions in the future. Simona, is there anything else you would like to add?
No, just a big thank you. It has been a very inspiring conversation for us. And, as Diana just said, we would love to keep in touch. We'll let you know about the output of this research, but there will be situations where we gather with the other partners of the research, maybe PJ as an advisor, and then have local conversations about what should be the next steps, looking at opportunity space. So, if you come up with any new ideas or thoughts or references that you have not shared yet, feel free to reach out to us and share them. We always want to learn about interesting cases, regardless of size or location, with impact-driven initiatives that have seeds for new and innovative ways of doing things that are ultimately better than what we have now. If you could also think of some interesting examples in the space that we discussed today, such as one financial vehicle or community-led governance, feel free to follow up. Thank you. Thank you so much.