Speech to the ASEAN-New Zealand Business Council
ASEAN-New Zealand Business Council, Auckland
Ladies and Gentlemen,
Kia ora koutou katoa
Thank you Kenneth for your kind introduction, and for the opportunity to speak this evening. Business councils make an important contribution to fostering trade and connections, and in providing practical advice to governments.
I want to begin by acknowledging the work of the ASEAN-New Zealand Business Council, as well as the particular role you have played Kenneth, during your time as ANZBC Chair. I look forward to engaging with your successor.
I would also like to reiterate my congratulations to all of those that have been elected as Life Members of the Council. Thank you once again for your efforts to foster trade and connections between New Zealand and the ASEAN region.
The ASEAN and NZ relationship
I would like to first comment on the the relationship between New Zealand and ASEAN, and in particular the economic aspect.
At a macro level, the Indo-Pacific region will be the most important region globally to New Zealand’s prosperity for many years to come. In a time where the Indo-Pacific is gaining even greater attention from a strategic, geo-political perspective, we recognise the critical role that strong, enduring institutions like ASEAN have in upholding these values which have served all nations in the region well. This will in turn support our ability to manage the stresses and tensions that stem from great power competition.
It’s important to note too that the relationship goes well beyond trade and strategic considerations. Decades of links between our peoples have bound us together, and our vibrant and dynamic societies are increasingly connected through education, trade, and socio-cultural engagement. Generations of students have studied in New Zealand. One great example is Director General Auramon. After studying in New Zealand in the late 1980’s on a scholarship we provided, she is now a key official in Thailand’s Ministry of Commerce as Director General of the Department of Trade Negotiations, a department we work closely with on the implementation of our bilateral FTA.
More broadly, ASEAN nations have considerable expat communities in New Zealand which form part of our communities up and down the country – and likewise, New Zealanders regularly enjoy moving the other way, whether it be for travel or to live and work. While formal trade and political links are always important, perhaps sometimes the role of diasporas is underappreciated in bringing countries together and, through their own initiative and willingness to tread new paths, providing the impetus for nations to work together in that more formalised way.
New Zealand is committed to doing our bit to support a strong ASEAN, one which supports the four pillars of the ASEAN-New Zealand Strategic Partnership 2021-2025 – Peace, Prosperity, People, and Planet – as agreed by ASEAN Heads of State last year. They met to commemorate the 45th anniversary of relations between New Zealand and ASEAN, and make a plan for what we aim to achieve ahead of the 50th anniversary – a significant milestone.
This Partnership demonstrates the breadth and depth of our links – from defence cooperation and efforts to combat cybersecurity and organised crime, to a mututal dedication to disarmament, arms-control and non-proliferation of nuclear weapons – a welcome inclusion from my perspective given my Disarmament and Arms Control portfolio. Other key issues covered include climate change, food security, and educational links. It is an exemplar for multilateral cooperation in the 21st century and the ground nations must cover when forming and maintaining links in an increasingly borderless world.
And while there’s no need to explain to you the importance of ASEAN from an economic perspective, it’s worth noting for the record that ASEAN is New Zealand’s fourth largest trading partner. Exports to AANZFTA nations are worth approximately $5 billion annually, and make up almost 10% of total goods exports.
But what about the flipside? What is the value proposition of this small Pacific nation to ASEAN? Why would it bother with us? Not only are we ASEAN’s 2nd oldest dialogue partner – the Aussies beat us by one year – but we are also one of only nine strategic partners – ASEAN’s top tier of partnership.
The fact that New Zealand has achieved this in a part of the world where many of the world’s heavy-hitters are beating down the door, speaks to how the ASEANs see our partnership: as one built on shared understanding and respect; as a reliable friend that delivers on its promises and comes with limited baggage; and as a similarly sized state, one that sees the benefits in joining together to increase our collective strategic weight.
For most of the last two decades, our engagement took place while economic growth and dynamism were the trademarks of the Indo-Pacific region, where economic integration, and open trade and investment played a critical role in lifting prosperity right accross South East Asia.
COVID-19, of course, has challenged us and shaken these underpinnings.
We have all become familiar with the health challenges brought about by the pandemic, and how quickly the virus can grow from a few isolated cases to overrunning health systems. That is why the Government continues to take an approach of ‘go hard and go early’, to curtail the ongoing effects of COVID-19 and ensure New Zealand remains safe and prosperous.
On the economic front, the pandemic has proved extremely disruptive to trade. It threatens to roll back decades of progress, unwinding improvements to prosperity right across the Indo-Pacific.
The Government’s Response
The Government’s objectives in responding to COVID-19 are to ensure the safety of New Zealanders, to accelerate our economic recovery, and to lay the foundations for a better future.
As imports and exports are New Zealand’s lifeblood, trade is integral to this. Exporting firms tend to be more productive, pay better wages and have more capacity. By supporting our tradeable sector, we can help boost our economic recovery as a whole; by securing employment, incomes, innovation and productivity. This was evidenced by the continued strong performance of our export sector throughout the pandemic – something which was vital to our economy performing as well over this time as it did.
The Government’s Trade Recovery Strategy sets out how we are going to achieve this, and the strategy can be broken down into four pillars.
Firstly, retooling support for exporters. It is important that the Government can assist business in managing such a massive disruption. We have launched a genuinely cross-agency approach to help you build and maintain trade access for your goods and services. For any barrier you face, there will be a dedicated agency standing by to help.
We have worked to make these services more accessible, and to ramp up our in-market support. For firms like Fertility Associates, which has faced difficulties in visiting key markets in ASEAN due to travel restrictions, this has proven especially useful – NZTE has been able to help by providing market updates and facilitating relationships locally.
For many other New Zealand businesses, they have been able to draw on MFAT’s exporter helpdesk service or make use of market insight reports prepared by overseas posts. I hope you’ve found these services useful, and if you’d like any further information, I’d encourage you to come and have a chat with me or our team following this.
It would be remiss of me also not to acknowledge the Council’s role as well in supporting businesses and ensuring our trade links with ASEAN nations remained strong despite the difficulties caused by the pandemic. Government cannot do it all in situations like these and your efforts are much appreciated.
The second pillar in our strategy is reinvigorating the international trade architecture. This is to ensure that New Zealand businesses continue to benefit from a solid set of rules that the international trading system guarantees. A focus here is on advancing new or existing FTAs through negotiations and full implementation. When it comes to ASEAN, the Government’s focus has several strands.
We are committed to implementing the Regional Comprehensive Economic Partnership, “RCEP”. A key benefit here is the establishment of a single rulebook covering all 15 markets within RCEP. As I’m sure you know, this agreement was signed last year by ASEAN countries, Australia, New Zealand, China, Japan and Korea, and means less red tape for our exporters, specifically on rules of origin certification.
We are also working to upgrade our existing FTA between ASEAN, Australia, and New Zealand; AANZFTA, an agreement which you will all know well. Signed over ten years ago, AANZFTA is the foundation of our economic partnership with ASEAN, and has been a major boon for exporters active right across the region. The Government hopes current upgrade negotiations will ensure AANZFTA remains a modern and relevant agreement, with our negotiators exploring how lessons learnt from the pandemic can assist with this.
In addition to these two FTAs, we are also keen to work with ASEAN on defending the rules-based order and in particular the WTO. This has been one of the focuses of our year as APEC host economy, and it was pleasing to see a strong attendance, including from ASEAN members of APEC, at the Ministers Responsible for Trade meeting, which agreed on the need to rejuvenate and enhance the WTO, increase momentum on a number of trade negotiations, and push for a conclusion on the long-standing issue of fisheries subsidies.
Refreshing key trade relationships is the third pillar of our Trade Recovery Strategy. The Government has been extremely active in attempting to diversify the range of market options for exporters.
ASEAN, with its combined population of 650 million people, and a growing middle class, is – in my view – critical to New Zealand’s plans to diversify our range of trading destinations. It is a region full of dynamism and energy. And at a time when many parts of the world are looking inward, ASEAN - like New Zealand – is committed to better economic integration and the rules-based international system.
The final pillar in all of this is building our resilience to weather future global disruptions. New Zealand needs to strive to be a resilient society, economy and country, and be agile in responding to changing circumstances. But this resilience will not – and cannot – be built solely within our own borders. We need to cooperate, partner and to trade with others for our own prosperity, and recognise different conditions may require new approaches.
A great example of this is Dunninghams, a company supplying a wide range of products for food production which recently celebrated its 100th year of operation. Dunninghams worked with NZTE to redefine its go-to-market strategy and identify other potential local partners. Being flexible and willing to change with the tides meant that Dunninghams was able to re-enter the Singapore market with a new distributor – and already, two shipment orders have been placed.
ASEAN and Business
I would like to turn now the role the business community plays in fostering our relationship with ASEAN, and what the Government does to create the space for this. As a region that was originally brought closer together through its strong trading links, it is our business ties that bring alive true ‘regional economic integration’.
This applies whether you are a large company making use of regional value chains to export milk powder for reprocessing and re-export in Malaysia, or an SME like New Zealand Fresh, selling grass-fed Kiwi meat and fresh seafood direct to the family table in Singapore.
My role – and that of officials – is to ensure that our network of FTAs and our efforts behind the border make it easier for these ties to form. I talked earlier about RCEP and AANZFTA. But they are far from alone in the network of New Zealand FTAs covering South East Asia, which includes bilateral agreements with Singapore, Malaysia, and Thailand as well as the P4, and of course CPTPP. On top of this, we have also negotiated a Digital Economic Partnership Agreement with Singapore and Chile, which establishes new rules and best practices for supporting trade in the digital era, and is a new format of trade agreement that we are particularily excited about.
This work in maximising the benefit of our trade framework in the region includes being proactive when issues arise, such as those experienced by our onion industry when exporting their goods to Thailand. A strong growth market for onions, the removal of tariffs in January 2020 should have been a moment to celebrate for the industry, but unfortunately coincided with the introduction of regulations restricting what onions were eligible for tariff-free access. Our response has been comprehensive – including dialogue with Thailand by both ministers and officials – and I have met earlier this year with the industry body. While the issue is not yet resolved, there has been progress and engagement from the Thai Government, and I’m optimistic about a satisfactory outcome being reached.
From Volume to Value
Another reason why ASEAN is so important to New Zealand is a shared understanding of how business operates, and a common belief in the need to ‘move up the value chain’. We know that in order to excel and collectively improve productivity, we will need to focus on value, not volume.
Many of the larger economies in the world have mass – mass material, mass production and mass amounts of people providing services. New Zealand, by its nature, will not be able to compete with this scale, and neither will many of the ASEAN nations.
Instead, our economies are primarily made up of small to medium sized enterprises. On the one hand this provides huge advantages: smaller businesses are often more adaptable, they are often more innovative, and as such are often more digitally minded. E-commerce platforms in places like Indonesia offer enormous opportunities for our firms to tap into.
But to leverage these opportunities, SMEs need to be operating in an environment that is conducive to doing business. It means governments need to streamline processes and think carefully before introducing non-tariff measures that distort trade. This is an area where New Zealand has been working closely with ASEAN, and one where both sides remain keen to continue the conversation.
One of the Government’s initiatives in working with the Asia New Zealand Foundation, is the Young Business Leaders Initiative. Part of the work they do includes running tech tours, which has resulted in many successes for New Zealand businesses. One of these success stories is Aware Group. They are an artificial intelligence company originally working out of a modest sized office in Hamilton and that now trades throughout ASEAN.
One of Aware Group’s projects, LittleBot, empowers agents to provide faster and more reliable information to customers – while doing business on live calls. LittleBot is able to recognise sentiment within the call to help sales teams nail down opportunities. I am pleased to hear we have programmes such as the Young Business Leaders Initiative who are helping New Zealander’s innovate beyond our borders.
New Zealand is fortunate to have such a vibrant relationship we have with ASEAN and the many similarities between us helps establish a solid foundation, for which we are able to springboard off. By working together, I hope that we can continue to ensure our regions peace, security, prosperity and friendship – and to do so in an innovative way which recognises the rapidly changing environment – whether it be due to the pandemic, globalisation, or strategic competition – and adjusts to suit.
Finally, I encourage you again to make use of the services we provide. I am very keen to engage with you, hear your stories and learn more about what you do. The Government’s focus is to ensure businesses are best placed to succeed and find new opportunities. The Government’s intention is for us to move forward as a resilient society, deepening our relationships and uplifting all our communities.
No reira, tena koutou, tena koutou, tena koutou katoa.
Please note: Speech as delivered may differ from these notes.