Friends Through Difficulties, For New Opportunities

NUSANTRA BALLROOM, HOTEL SHERATON IMPERIAL

Deputy Prime Minister Anwar, Tan Sri-Tan Sri, Dato'-Dato', distinguished guests.

It is a considerable pleasure to be here today as your guest, in such distinguished company, and, at the head of an extremely high calibre delegation from New Zealand.

Many of you will already know former Trade Minister and now chairman of Asia 2000 Hon Philip Burdon, who is often in this part of the world, former Trade Minister and current Opposition spokesman for Foreign Affairs and Trade Rt Hon Mike Moore, Reserve Bank Governor Don Brash, Sealord Group Chairman Sir Tipene O'Regan, Dairy Board Chairman Sir Dryden Spring, Opus International Consultants and NZ Educational Chairman Basil Logan, ANZ (NZ) Ltd CEO Dr Murray Horn, Pacific Retail Group Director Sir Roger Bhatnagar, and Massey University Auckland campus Principal Professor Ian Watson.

The multiparty make-up of this delegation, and the fact it involves so many of the top tier of New Zealand business, underscores the genuine commitment we have to our relationship with Malaysia, and interest in this part of the world.

And this relationship is in good heart.

It is long-standing, multifaceted and substantive, with strong connections across a wide range of areas, including trade, investment, education, defence, and most recently, Antarctic scientific co-operation.

Our close and friendly links have grown out of early Commonwealth ties, the Colombo Plan and shared security concerns.

They have been built on and enhanced considerably over recent years.

For instance, more than 13,000 Malaysians have studied in New Zealand over the years and around 3000 are currently there.

Many now occupy senior positions in business, the professions and government administration.

Two Cabinet Ministers and one Deputy Minister are New Zealand alumni, and a Chair of Malay Studies has been established at Victoria University in Wellington, our Capital city, which is jointly funded by the Malaysian and New Zealand Governments, and the private sector of both countries.

In the year to February, more than 16,000 Malaysians visited New Zealand - though this figure will probably drop as a result of recent developments in Asia - and Malaysian Airlines provides three direct services between New Zealand and Malaysia a week.

But most of all the purpose of this visit is to clearly signal New Zealand's commitment to expand our links with Malaysia and to underscore the value we place on those links.

It is not the way of my country to abandon friends when the going gets tough.

We are in a region of crisis and together we can work our way out of it by helping each other, relying upon each other and broadening that co-operation throughout our region.

Difficulties often mean new opportunities and we want to lay the ground work for future partnerships. Immense difficulties brought our two countries together in the first place.

Shortly after our respective addresses, your Deputy Prime Minister and myself will sign an Open Skies Agreement aimed at improving even more our international air links.

New Zealand has benefited enormously by its Asian linkages, and much of the economic growth we have achieved in the last three years can be attributed to our near neighbours to the north west.

Malaysia is New Zealand's largest export market in ASEAN, worth just over half a billion dollars in the 12 months to December.

And you are our ninth most important trading partner with two-way trade running at just under a billion dollars.

New Zealand companies are involved in some 50 joint ventures in Malaysia, covering everything from electrical switching gear to milk production.

This delegation will be visiting the NZ Milk Products plant at Shah Alam, whilst we are in the area, for instance, as well as witnessing the signing of the letter of intent by PEC and Caltex. The letter will cover the use of New Zealand smart technology here in Malaysia.

Increasingly, New Zealand is proving itself to be a country not just of top quality primary products, but of high technology.

Some of our joint ventures here are now breaking into third countries with their Malaysian partners and that is exactly the sort of activity we are keen to promote on this visit.

To maintain strong growth, it has been estimated that in the region of $75 billion to $100 billion of new investment will be required in New Zealand over the next five years.

It is unlikely that a flow of capital of this order could be achieved by onshore sources alone.

That is why we look to overseas investment in New Zealand on a partnership basis. Investment is critical to our economic progress.

As many of you will be aware, the New Zealand economy has undergone significant structural changes in recent years. Once we were:

overtaxed, with a top rate of 66%
inefficient
dominated by government, subsidisation and protectionism
near crippled by Government deficits and debt
burdened by high inflation and at times hyper-inflation, and
plagued by high unemployment and falling living standards.
All six maladies at the same time.

The reform process has been difficult, but through a growth orientated and business friendly development strategy, it has produced strong, sustainable economic growth and improved New Zealand's international competitiveness.

Today in New Zealand we have:

lower taxes
a much simpler and more transparent tax regime
lower debt, with net public debt having been halved from 52% to 25%
continued government operating surpluses - a rare event throughout the OECD
improving economic growth
inflation well and truly cemented in below 2%
a lower exchange rate for exporters
higher educational standards and
a government that supports business
New Zealand now enjoys sustained economic growth, with growth of 2.7% forecast in 1998/99 - despite recent events in the region - picking up to 3.9% in 1999/2000, and 3.5% the year after.

Surpluses are projected to move from $1.3 billion in the coming year, to over $2 billion in 1999/2000.

According to the Fraser Institute of Canada, which I addressed just two weeks ago, we are third in the world for economic freedom behind Hong Kong and Singapore and ahead of the United States in fourth.

And according to the World Competitiveness Yearbook rating on Internet, we are the 13th most competitive nation in the world in general terms and the fourth most competitive when it comes to Government.

We are good to do business with as New Zealand operates:

a completely free floating exchange rate (which is set by the market)
a strong and effective financial disclosure regime
effective and well developed bankruptcy laws
and a Fiscal Responsibility Act whereby the state of the public accounts is fully disclosed and updated during the fiscal year and at other specified times.
The New Zealand Government is committed to maintaining a tight line on fiscal policy, continued low inflation, reducing public debt and continued surpluses.

New Zealand offers no short-term incentives to potential foreign investors. But what we do offer is an open economy, sound long-term fundamentals, and a commitment to ensure our economy remains on track.

Our tax system is competitive and transparent, we have sound fiscals, solid growth, free flowing capital, and an efficient labour market.

Our rules for foreign investment are among the most rational in the world, but we do insist that the control and ownership of certain strategic assets, such as electricity generation, postal, television and radio, already owned by the Crown, should remain with New Zealanders.

On the surface New Zealand by itself may seem a small market, but investors have the chance to take advantage, not only of our strong fundamentals, but also the opportunity to access that much larger market across the Tasman through the CER agreement we have with Australia.

Our combined Australia-New Zealand market consists of 22 million people.

It is true that an economic tsunami has rolled over the region in recent months and that no country is immune from its effects, and the worst may not yet be over.

The New York based credit rating agency Moody's has changed the outlook on the foreign currency ratings of a number of Asia Pacific economies, including Australia and New Zealand's reflecting concern about the impact of the regional economic crisis.

Despite this, New Zealand's foreign currency rating still remains higher than Australia's and our Aaa rating on domestic debt - the highest rating available - is not in question.

Our major exports into Malaysia - meat, dairy, pulp and paper and selected machinery - have certainly been affected, but no where near as much as into some other parts of Asia.

Some may question why undertake an investment mission at this time, but I would argue that now, especially, is not the time to sit back and wait for things to get better.

As mentioned before tough times should be a catalyst for fresh initiatives and commitment. That is why New Zealand is represented here today in strength by many of the most senior of our captains of industry, the Opposition spokesman on Foreign Affairs and Trade, as well as the chair of New Zealand's Asia 2000 Foundation.

They represent many key sectors of the New Zealand economy. They are people of vision, all with proven track records, and their presence is a mark of our commitment to seeking future partnerships with Malaysia that are of benefit to both our economies.

We are a long-standing, reliable partner for Malaysia; innovative and successful. We see ourselves as friends and we are serious in our resolve to take our relationship - bilaterally, regionally and multilaterally - from strength to strength.