Exporters should investigate opening business in New Zealand as a test bed for the rest of the world after new agreements between the local and New Zealand governments will allow more money to be invested in the country without regulatory approval.
Australian Institute of Export executive Ian Murray says businesses wanting to move to other countries should consider trying New Zealand first.
“A lot of people never really think about New Zealand as being an export market but there are plenty of opportunities. It’s a good place to start if you’re thinking about exporting,” he says.
Julia Gillard made the announcement yesterday during talks with New Zealand Prime Minister John Key. The agreements allow Australian firms to invest $358 million – $NZ477 million – in the country without regulatory approval compared to the previous threshold of $NZ100 million.
New Zealand firms will be permitted to invest $1 billion in Australia before the Foreign Investment Review board becomes involved, an increase from the previous threshold of $231 million.
The thresholds will be updated annually based on changes in GDP.
“Foreign investment always has its detractors but we’re stronger because of the ability to invest in each other’s economies,” Key said.
“I believe that it has enhanced New Zealand’s economic growth.”
There have been some issues with trade between the two nations, with some Australian farmers complaining about New Zealand products entering the country, but there are also strong opportunities.
New Zealand is Australia’s sixth largest export partner and nearly 25% of all New Zealand exports are sent to Australia, with some New Zealand companies becoming involved in the Australian resources sector.
“There are quite a lot of financial services going into New Zealand among other things. It’s a sizeable market, very close to ours and the regulatory regime is good,” Murray says.
“There will always be opportunities such as the World Cup Rugby that are going to provide opportunities for investment.”
Murray highlighted the Australia New Zealand Free Trade Agreement that came into play last year which covers 12 nations and reduces tariffs on a number of agricultural exports including dairy, horticulture and metals businesses.
He says trade agreements between the two countries are broad and allow for a number of different industries to benefit.
“The free trade agreement is one of the best in the world. It’s comprehensive and pretty much covers everything and is reviewed on a regular basis. There are good opportunities for Australian businesses to enter New Zealand,” he says
Julia Gillard said in a press conference yesterday the deal is not meant to dominate small businesses but rather to increase investment and productivity.
“I don’t think it’s a question of big dominating small … I think it’s a question of partnership and a sense of family and working together that our two countries have,” she said.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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