Govt wants to double real value of NZ exports by 2025, increasing exports from 30% of GDP to 40%; But warns of fall in short term

By Alex Tarrant

The government wants foreign investors to know New Zealand is open for business as it seeks to help local enterprise attract the capital needed to double the value of exports by 2025.

Releasing a report on the government’s Business Growth Agenda, Finance Minister Bill English said the capital required to achieve the 5.5-7.5% annual export growth desired between 2016-2025 could not be supplied entirely by local sources.

“We simply just don’t save enough, so we need others to help us,” he said.

English, along with Economic Development Minister Steven Joyce and Trade Minister Tim Groser, on Wednesday released a report titled Building Export Markets, the first of six reports to be released on the growth agenda.

“We are looking to make sure people who want to bring capital here to create jobs, and lift incomes, know that we’re open for that sort of businesses,” English said.

“Foreign investors can be easily scared by a bit of controversy, New Zealanders can be easily worried by one or two investments,” he said.

“We understand the need to protect the things New Zealanders are really concerned about, but equally, if we want to get the capital that’s going to give us this export growth, and the higher incomes that go with it, then New Zealanders can’t supply it all.”

While the growth agenda policies would not provide incentives for new capital investment in export-oriented companies, Joyce said the government wanted prospective investors to know it was “on their side.”

“We are prepared to do the sensible things that will allow them to make their investments, and actually encourage them into these areas, as against what they’ve been historically involved in, which has been very much property and retail,” Joyce said.

Export boost

The government’s bid to double the real value of New Zealand exports by 2025 would require a huge effort to develop more internationally competitive businesses in both the commodity and high-value technology sectors..

English and Joyce today reaffirmed the government’s goal to boost exports from 30% of GDP to 40% by 2025.

But a soft global economy and the level of imports required for the Christchurch rebuild could mean some decrease in the percentage of exports to GDP was likely in the short-term before that growth occurred.

Meeting that target would require real export growth on average of between 5.5% and 7.5% a year from 2016 to 2025, on the back of Treasury’s expected 1.8% average growth over the next three years.

Releasing the government’s first Business Growth Agenda progress report on New Zealand’s export sector on Wednesday, English and Joyce said the government was focused on supporting firms to grow exports.

“Achieving our 40% target will require a shift of investment away from the production of goods and services for the domestic economy, and towards international markets,” it says in a booklet released by English and Joyce titled Building Export Markets.

“It will require investment to flow to opportunities in the export sector, as well as the ability of labour and skills to shift in response to changing demand,” it says.

“International experience suggests a shift of this magnitude is possible with concerted effort and supportive macro-economic conditions.”

The government would help strategically position New Zealand companies to take greater advantage of international opportunities, and manage any risks, it said in the booklet.

That would help drive improvements to the operating environment for exporters, and help ensure that the services and assurances the government provided made it easier for Kiwi businesses to succeeded internationally.

English and Joyce highlighted seven initiatives focused on helping build export markets:

Delivering a more compelling New Zealand story; Improving access to international markets; Increasing value from Tourism; Making it easier to trade from New Zealand; Growing international education; Strengthening high value manufacturing and services exports; and Helping businesses internationalise.

The report mainly reiterated existing policies like the ultra-fast broadband roll-out, creation of the Advanced Technology Institue in Auckland, and free trade negotiations.

NZ Story

Two new initiatives were also announced.

One was developing a broader 'New Zealand Story' to try and boost New Zealand's reputation and branding in overseas markets to complement Tourism NZ's 100% Pure brand.

"Businesses have been telling us of the need to better tell the ‘New Zealand Story’ overseas. Smaller exporters particularly emphasise that it is New Zealand’s reputation that gives them their initial market entry point as they are too small individually to secure brand recognition for their product or service,” Joyce said.

"A tool kit will be developed for Kiwi businesses and the public sector to draw on to help tell the New Zealand story, including consistent branding, narrative, and photos,” he said.

The second was an announcement from Groser that New Zealand would join the World Trade Organisation's Government Procurement Agreement.

The total value of worldwide procurement covered by the Government Procurement Agreement was estimated at US$1.6 trillion in 2008 – representing 2.64 per cent of the world’s gross domestic product, Groser said.

“Member countries have agreed to revised coverage that will see this amount increased by US$80 – 100 billion each year. The value will also go up as new countries, including China, come on board," he said.

Business Growth Agenda

The government announced it would form a business growth agenda in March this year ahead of creating the new Ministry of Business, Innovation and Employment (MoBIE), which combined the old Ministry of Economic Development, Department of Building and Housing, Ministry of Science and Innovation, and the Department of Labour.

The agenda would focus on six key areas, English and Joyce said: Capital markets, Innovation and ideas, Skilled and safe workplaces, Natural resources, Infrastructure (including electricity, broadband, transport); and Export markets.

Following today's release of the progress report for export markets, reports for the remaining five areas would be released by the end of the year.