Opportunities For Investment In New Zealand For Overseas Businesses

Shanghai Delegation
Otago Museum, Dunedin

Your Worship Sukhi Turner. John Christie from the Otago Chamber of Commerce. Councillors. Ladies and gentlemen, good morning.

And to Mr Chen Haiyong and members of the Shanghai Delegation. A very warm welcome to New Zealand and to your sister city of Dunedin.

I had the opportunity to visit Shanghai in 1995 in my capacity as Minister of Police. It was a fascinating city and a very worthwhile visit. The hospitality was superb and the exchanges that took place underscored the co-operation and goodwill that exists between our two countries.

One of the highlights for me was the opportunity to have an extended meeting with Shanghai Deputy Party Secretary Wang Liping. I also met with the Assistant Minister of Public Security Li Runsen who I hosted here in New Zealand on a reciprocal visit.

So it is a pleasure to be here today to renew those links between our two countries.

Foreign Direct Investment New Zealand, like all other countries today, welcomes Foreign Direct Investment.

FDI is a key economic driver. It is growing at 3.5 times the rate of world trade. It is a critical element in the growth and development of the New Zealand economy which is why the Government actively encourages overseas investment. We cannot afford to ignore it.

There are several direct and measurable benefits from FDI.

-Investment creates jobs - currently one in three jobs in New Zealand is a result of overseas investment.
-Higher salaries and wages - on average New Zealanders employed by overseas companies are paid more than employees in New Zealand owned firms.
-Our businesses benefit from the transfer and importation of overseas technology and skills. -Increased competition means a greater range of goods and services at better prices. An example of this is the apparel industry.
-Infrastructure development - injections of capital and know-how into our regions and our manufacturing base.
-Improved opportunities for access to international markets
-And of course there is a multiplier effect, which flows on from the overseas investment to the local economy because of increased demand for local goods and services.

The Government welcomes overseas investment in New Zealand across a range of sectors and throughout all regions.

In fact it is a key element of our five-point plan for the future which is shaped around our vision of making New Zealand the best place in the world to do business.

World class leader New Zealand is a world-class leader in many sectors including agricultural commodities, processed foods, telecommunications, banking and financial services. We are a significant timber producer from renewable softwood forests. And we have world-class research and development capabilities in high-tech sectors especially software, information technology and biotechnology.

Our economy is suitable for a wide range of business activity. New Zealand is an excellent location for a range of office operations including call centres, research centres and data and transaction processing for example airline and rental car reservations.

Overseas companies have gained business interests in New Zealand through acquisition of existing companies. There are also continuing opportunities for investors interested in acquiring Government assets such as Contact Energy.

Internationally competitive The World Economic Forum recently ranked New Zealand as one of the most competitive international business locations. It noted the economy was well adapted to long term competition and is a truly competitive international location.

Last year a Harvard Report also stated that New Zealand 's government is the best in the world. The authors of the report said that the country performed extremely well in three main categories:

-protection of individual and property rights;
-efficient delivery of quality goods and services; and
-protection of democratic freedoms.

When compared to others, our public service was efficient and almost corruption free. Our economic reforms were found to be inventive, and brave, but perhaps most importantly, in the face of a stormy world economy, they had worked.

The Government has worked hard to build an open and internationally competitive economy, supportive of innovation and enterprise. And to ensure the business environment is right.

The Government is also committed to ensuring that the regulatory environment encourages investment and minimises costs to business and consumers.

The FDI market globally is very competitive. We need the larger investors and we have to make our investors feel welcome.

The regulatory environment One aspect that makes New Zealand attractive to investors is our regulatory framework. It has been designed to:
-enable local business activity;
-promote the confidence of investors in the capital markets; and
-ensure that the securities market is internationally competitive.

New Zealand's regulation of its securities markets, is based on stringent disclosure requirements. They are focused on ensuring that investors have access to all the relevant information required to make informed business decisions.

The disclosure regime aims to assist investors in assessing risk, but it does not attempt to eliminate risk altogether.

The Securities Commission administers the disclosure-based regulatory regime. This disclosure-based regime makes New Zealand attractive for investors by minimising unnecessary compliance costs, while maintaining the integrity of the market.

Other factors There are a number of other factors that make New Zealand an attractive investment destination.

-Inflation is under control.
-The value of the New Zealand dollar makes this an attractive time to invest.
-News on the macro-economic front is improving.
-We have a flexible and competitive labour market.
-We have affordable electricity and efficient telecommunications and transport systems
-We have a responsible fiscal policy.
-We have a broad base, low tax regime (and most importantly for investors no capital gains tax) all of which supports investors who are in New Zealand for the long term.
-Our minimal and transparent regulations make investing in New Zealand a straightforward process.
-We have a consistent and fair political environment where investors are treated on the same basis as domestic investors.
-Our economy is increasingly integrated into the global economic system.
-The Government is committed to the promotion of FDI. We doubled our financial commitment to the promotion of FDI in the Policies for Progress package announced last year.
All in all the economic climate for promoting FDI is very good.

APEC and other events 1999 is a unique year for New Zealand because we have a number of events which will provide more chances to promote New Zealand and more opportunities for FDI.

-Hosting of APEC enables New Zealand to be showcased to the world as never before.
-The America's Cup is focussing attention on the skills and technology available in New Zealand, and the events themselves will bring large numbers of potential investors to New Zealand.
-The Millennium events being planned will also focus attention on New Zealand, and on the lifestyle and resources available here.
-The preparations for the Rugby World Cup and the prominence of the New Zealand All Blacks will also help to keep New Zealand in the spotlight.
APEC, and New Zealand's Chairmanship in September, provides a unique opportunity to promote New Zealand in the international arena.

The 21 economies from around the Asia-Pacific region, includes the world's two largest economies - the US and Japan, two of the world's largest developing economies - China and Indonesia, and the three economically most significant aspirants to join the World Trade Organisation (WTO) - China, Russia and Chinese Taipei.

Together these economies make up over 50 % of world GDP and account for around half the world's trade.

For New Zealand, 70% of our two-way trade is with APEC economies. APEC provides eight of our top ten markets and 12 of our top 20 tourist sources.

80% of our investment comes from within APEC.

Both in the short and long term, New Zealand is set to gain from chairing and participating in the APEC process.

A study by New Zealand firm Infometrics Consulting, shows that New Zealand's GDP will be boosted by around $30 million, as a result of APEC events. This is over and above what the Government will spend on providing goods and services for APEC meetings.

There will also be significant publicity spin-off from the intense media coverage of New Zealand during the course of the meetings, equivalent to substantial advertising investment.

In the long-term, trade liberalisation will bring New Zealand considerable gains. For example in the fishing and forestry industries alone (which are very important to these regions) it is estimated that removal of tariff and non-tariff barriers will add around $130 million a year to our $3 billion a year trade in these commodities. Full removal of all tariffs in these sectors is now being considered by the WTO as a result of APEC.

It has also been calculated that free trade within APEC will grow our country's export volumes by 4% and GDP will be around 1.3% (approx $1.3 billion) higher each year.

Altogether around 10,000 APEC visitors will come to New Zealand throughout the year with around 7000 expected for the Leaders Meeting alone.

APEC economies are striving to enhance the security, stability and prosperity of its peoples.

During our time in the Chair, the New Zealand Government will be promoting three key themes:

-expanding opportunities for doing business in the APEC region; -working with other economies to strengthen the functioning of markets; and

-broadening support for, and understanding of APEC in the community.

All of these objectives will help our trade and investment strategies.

The New Zealand Government recognises the need to provide a positive environment for investment and the need for active promotion to attract potential investors.

This booklet, 'Invest in New Zealand -The Right Choice' emphasises New Zealand as one of the world's most competitive and open business environments.

It has information on business migration and offers opportunities across a wide range of investment possibilities. It is a true platform for showcasing New Zealand's strengths and highlighting our 'competitive advantage'.

It answers the question a lot of you may have 'Why should I invest in New Zealand'' And the answers are provided by investors in the case studies contained in the booklet.

The Government is doing its part by creating the environment that will make New Zealand a viable investment location.

Government agencies such as the Ministry of Foreign Affairs and Trade, Trade New Zealand, the Ministry of Commerce and the New Zealand Immigration Service also play a role in promoting and assisting FDI activities when they can.

But we need all of you here today - the investment professionals, the business sector, and community leaders - to help us spread the word about what New Zealand has to offer.