New Zealand Executive Government Speech Archive

Your Worship the Mayor, City Councillors, distinguished guests, ladies and gentlemen. I am pleased to have been invited to speak to you today. I have with me some senior businessmen who have interests in South Africa and who cover a wide spectrum of the New Zealand economy.

Tradenz, the New Zealand Governments principal trade promotion agency, is represented. So too is the New Zealand Dairy Board, Gallaghers Electric Fencing, Marine Air Systems, Sealord, New Zealand Airways Corporation and the New Zealand Tourism Board. Each one is well placed to talk about business in New Zealand and opportunities for alliances and ventures with you as their South African counterparts.

I hope that you will take the opportunity to do so over lunch and on other occasions over the next few days. Trade between New Zealand and South Africa has developed rapidly in recent years. In 1990, New Zealand exported just R48 million (NZ$16 million) worth of goods and services to South Africa.

For the year ending June 1996 that figure was R189 million (NZ$63 million).The growth in South African exports to New Zealand is even more impressive. In 1990 the figure was just R28.5 million (NZ$9.5 million). In June 1996 you exported R222.6 million (NZ$74.2 million) to us - an eight-fold increase in six years.

On both sides, we see diversification as well as growth. Manufactured goods, and services, as well as food and beverages, are attracting keen interest in both markets. I am confident that two-way trade will continue to grow. Our new High Commission in Pretoria and Tradenz in Johannesburg are keen to support new export trade opportunities.

Our open economy and South Africa’s own moves towards economic liberalisation each provide a sound basis for increased two-way trade and investment. Moves at the regional level are equally encouraging. The emerging initiative to establish an Indian Ocean Rim Association for Regional Cooperation is a case in point.

This will bring together the key economies of Australia, India, South Africa, Singapore, Indonesia and Malaysia. New Zealand has close links with all these economies, and we support open, liberal trade arrangements. As I told your new High Commissioner to New Zealand, Dr Ranchod, just a few days ago, New Zealand would endorse such an initiative if it fathers momentum.

You dont need me to tell you where the opportunities for increased trade lie. You can best identify those for yourselves. But on the New Zealand side it seems clear that niche marketing in the primary sector will continue to provide opportunities for us with perhaps particular growth coming from the manufacturing sector with radio communications equipment, plastics and chemical products showing particular promise.

I believe, too, that there is great potential for continued growth in services, particularly in tourism and consultancy work. Tourist flows are already increasing rapidly - both ways. The number of South Africans travelling to New Zealand is growing by 40 per cent each year. That is a welcome development. I hope that air services negotiations scheduled later this month will result in direct air links between our two countries. Such direct links will encourage tourist and people-to-people flows even further.

Consultancy services is another area where I believe we can work together. New Zealand firms have considerable expertise in such areas as tourism, accommodation, transport, postal services, education and forestry. Equally, I believe there are many opportunities for South African advantage in trading with and investing in our country.

The New Zealand of 1996 is a very different place from a decade ago. A comprehensive programme of reform, in all sectors, has achieved a stable macro economy so that business can plan and invest with certainty. To do this we have focussed on low inflation, controlling government spending and increasing the quality and transparency of government decision making.

We have removed agricultural subsidies and eliminated quantitative controls on imports. Border tariffs have been reduced so that New Zealand companies can buy the best of world products; at world prices. Extensive tax reforms have given us a broad base low rate tax system. According to the OECD our tax system is probably now the least distortionary in the developed world.

We have deregulated a wide range of sectors including financial markets, the transport and energy sectors and telecommunications. Significant reforms in the labour market have underpinned rising employment and real incomes, with the maintenance of labour standards. And the state sector has not been excluded.

State owned enterprises across a broad range of sectors have been restructured including energy, transport, banking, forestry, broadcasting, construction and air traffic control to name just a few. The result has been a marked increase in productivity and profitability. New Zealand Telecom and New Zealand Post are significant examples.

We have also put in place an investment regime which is transparent and based on national treatment of foreign owned or controlled enterprises. Foreign investment now plays a key role in the New Zealand economy - not as a result of sentiment, but because corporates from around the world find New Zealand to be a good and secure place to do business.

All of this reform has not been without some pain. But there have been clear and positive results. Real GDP grew by six per cent in 1994 and 4.5 per cent in 1995. While the economy is growing slower at the moment it is expected to grow between three and five per cent on a sustainable basis.

Underlying inflation averaged 1.7 per cent from December 1991 to December 1995. Unemployment has fallen from a peak of 10.9 per cent in 1991 to a current rate of 6.1 per cent. We have now entered a period of sustained and sustainable growth with an economy fully capable of competing in the global market place.

And, all of this has occurred with sustainable, fiscal surpluses, the repayment of the Government's external currency debt and, most importantly, significant tax cuts for working New Zealanders and their families. So there are good reasons for looking closely at us as a trade and investment market. There are a number of other significant factors as well.

New Zealand is a cost effective platform for export into the combined Australia/New Zealand market of 21 million people. We have well established relationships in South East Asia, Japan and Korea with strong official ties underpinned by private sector investment, immigration and tourism flows.

And we are an excellent source of innovation and applied technology. Telecommunications products, food processing, high technology manufacturing and engineering are cases in point. All of these factors point to the value of strategic alliances and joint ventures being established between our business communities. This, I believe, is where the real growth in the trading relationship between us can occur.

And, just as South Africa might look to New Zealand as a springboard into Asia, so too should New Zealand look to South Africa as a springboard to other countries on the continent. A number of significant New Zealand companies are, of course, already represented here in South Africa. The New Zealand Dairy Board has had a company, New Zealand Milk Products (South Africa) in Johannesburg since 1992 importing, selling and distributing product. With a staff of 36 (almost all South African) it is a significant presence and I know the Board is looking to expand its business further.

It uses its Johannesburg company as a base for its activities into Namibia, Botswana and Malawi. A good example of the springboarding that I was talking about earlier. M.A.S. has also just, today, made an exciting new venture into the South African market. Its purchase of a South African company which will be called NZ Telecoms Pte Ltd, will greatly enhance the strong relationships which have already been established with South Africa and Botswana.

This new venture should lead to useful, reciprocal trading relationships being established, since installation and commissioning staff will be deployed from South Africa to a number of other countries on the continent. The fishing sector is also providing exciting new opportunities for cooperation. Sealord, whose equal shareholders are the Treaty of Waitangi Fisheries Commission and Brierley Investments Limited, has formed a number of joint ventures and alliances with overseas companies including a joint project in Namibia.

And here in South Africa the company has been participating with local partners in skills transfer and in exploratory fishing in deep water - an area not traditionally explored by South African fishermen. This opens up the possibility of identifying resources which South Africa may previously not have known it had.

Sealord is, I know, very keen to enter into joint ventures with strong local partners. As its presence in the region increases so too will its capacity to move vessels from one zone to another for mutual benefit. I understand, for example, that we may not be too far away from the day when, for example, South Africa might move some of its vessels to the New Zealand zone when we need extra resources and visa versa.

With similar fishing waters, productivity, markets etc, there is considerable logic to this approach.It is these sorts of arrangements in addition to straightforward investment and trade in each others economies, which I believe hold the key to further development in the trading relationship between us.

We want to trade and invest more with you. I hope that the reverse is true. I believe that with the imagination and flair which you as business representatives possess, the opportunities for both sides are considerable. The challenge is there. It is for you to seize.