Exports, investment, infrastructure and security likely to on the agenda for Christopher Luxon on trip to Singapore, Thailand, and the Philippines

Prime Minister Christopher Luxon seeks to strengthen ties in South East Asia with six-day trip to Singapore, Thailand, and the Philippines this week.

On the agenda: Infrastructure, foreign investment, export diversification, and the spill over from heightened tensions between the United States and China.

In a statement, Luxon said the region was crucial to New Zealand’s prosperity and security. The visit would help the Government deepen its relationships.

Simon Watts, Minister of both Climate Change and Revenue, and Kiwi-Filipino MP Paulo Garcia, are accompanying Luxon, alongside a business and media delegation.

This is the first major trade mission in what is planned to be a series of trips seeing him visit other countries in the region, as well as India later this year.

A senior Government official said the three countries on this trip were “the first cabs off the rank” for a range of both practical and strategic reasons.

Singapore, the first stop, will likely be the highlight for businesses and policymakers as it's New Zealand’s most “like-minded partner” in the region.

It has become a hub for finance and investment both into and out of the Asia region, as well as being a world-leader in infrastructure development.

Luxon will want to use the visit to attract more foreign investment into New Zealand and sound out the possibility of leveraging Singaporean infrastructure expertise.

Businesses will be wanting to build connections with investors and regional experts that can help them expand into various South East Asian markets or fund their projects.

Charles Finny, a former trade official, said Singapore already had sizeable investments in New Zealand and would be very welcome to invest more. 

“This big push for more infrastructure upgrades and expansion in New Zealand might offer good opportunity”.

Another expert in both infrastructure and Asian economics said New Zealand lacked a ‘tier one’ infrastructure constructor that was capable of building big projects.

Something like a second harbour crossing in Auckland would need to be built by a firm with international skills and procurement abilities. Luxon should be signalling New Zealand is open to new infrastructure providers, they said.

The Coalition is already attempting to imitate Singapore’s long-term approach to infrastructure with a focus on a 30-year pipeline and centralised agency.

Near acquaintances

The other two stops on the Prime Minister’s tour are countries New Zealand has not had a particularly close relationship with in recent years.

Thailand has shifted up the list of priorities after electing its first civilian Prime Minister last year, having been ruled by a military government for the past decade.

Migrant workers from the Philippines have become an important part of the New Zealand economy and population, increasing the need for more diplomatic relations.

Natasha Hamilton-Hart, director of the New Zealand Asia Institute, said this part of the trip was largely about adding substance to fairly thin relationships with these two countries.  

“NZ has comparatively greater depth and history in its engagement with Singapore, so one general challenge in the relationship with Thailand and the Philippines is to deepen our knowledge and broaden points of connection”.

New Zealand has generally been lagging behind in South East Asian diplomacy, but has been making more of an effort amid increased geopolitical pressure in the region.

“Showing up in a high-profile way is good, but we need to show it is not just a passing stroll-through and that we will follow up in meaningful ways,” she said.

Putting these more political factors to the side, Thailand and the Philippines are also large markets that could be good options for exporters. They are our 10th and 23rd largest trading partners, respectively, with total bilateral trade valued at $5.9 billion in 2023.  

Finny said there was already “very good architecture” in place which would allow the trade and economic relationship to expand.

NZ has bilateral trade deals with Singapore and Thailand, as well as a handful of multilateral agreements with the region more generally.

“Singapore is a CPTPP member and Thailand and the Philippines are potential members.  That will no doubt be a topic of discussion in Manila and Bangkok”.

Luxon’s visit would hopefully encourage major exporters to think more about the opportunities in South East Asia, he said.

“Particularly as growth in the Chinese economy, and increasing self-sufficiency there mean that China might not always be the highly lucrative market it has been until recently”.

An NZ official said the Philippines was a “really big” economic opportunity, but they were also interested in how it was building its defence relationship with the United States.

New Zealand’s navy often runs patrols in international waters near the Philippines, where they have had close encounters with Chinese naval vessels.

Hearing the Filipino perspective on regional security may be relevant to ongoing discussions around whether NZ should take part in the AUKUS military arrangement.

The region is feeling fragile about US-China trade tensions and have to stay connected to China economically and to the United States for security. NZ has these same challenges.

There are also worries that China will try to stave off its economic slow down by ramping up its export volumes.

This could push down commodity prices and possibly provoke tariffs from the United States. Both these actions could hurt other economies in the region.

David Capie, the director of the Centre for Strategic Studies, said it was good Luxon was prioritising a trip to these countries early in his tenure.

“Given a NZ Prime Minister hasn’t visited Thailand or the Philippines for more than a decade, I think showing up and listening to concerns in Bangkok and Manila will be a positive outcome in itself”.