Transcript New Zealand Overview Nick Arathimos Chief Manager, East Asia

New Zealand Overview
Nick Arathimos
Investment New Zealand
Investment New Zealand
What is Investment New Zealand?

New Zealand’s investment promotion agency

A division of Trade NZ

Facilitates foreign direct investment (FDI)
“We give you the inside running”
New Zealand - Key Facts

Population - 3.8 million

Land area - 271,000 sq. km

(about the same size as UK or Japan)

Currency 1 NZ$ = 43 cents USD

1 NZ$ = HK$3.40
New Zealand Economy


Deregulated
Prices are market driven rather than determined by the
government

Free movement of money in & out of NZ

Deregulated employment market

More than farming
Business in NZ

Transparency in business processes

Efficient, open & honest bureaucracy

Just do it attitude

Simple low tax structure

Economic growth combined with low inflation

Democratic
Percentage Contribution to GDP by
Economic Activity

Manufacturing
18.2%

Tourism
15.9%

Finance
14.7%

Transport
8.4%

Mining
8%

Software
7.2%

Agriculture and Fishing
5.8%
GDP Growth
8
7
6.5
6
5
5
4
3.1
3
0
3
3.5
2
2
1
3.2
4
1
0.3
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
What’s NZ like for Business ?

8 Universities, 20 + Polytechnics
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8 Crown Research Institutes
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Professional and skilled workers

Competitive costs – c30% lower than Australia

Robust, modern infrastructure
EXPORT = LIFE

Exports USD 10 billion = 30 % g.d.p

Free Market with Australia = 23 million

Singapore on board

Hong Kong under negotiation

USA, Chile, ASEAN?
Where Do The $’s Come From?


Visible Exports

Dairy, Meat, Wood and Wool - 65%

Added Value Manufacturing - 25%
Invisible Exports

Tourism, Software and Consultancy
Big Four Global Markets

Australia

USA

UK

Japan
Taxation in NZ

Main taxes are Income Tax and Goods and Services Tax
(GST)

Personal Tax Rates:

15% on income NZ$0- $9,500

21% on NZ $9500- $38,000

33% on income NZ$ 38,000- $60,000
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39% above NZ$60,000
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GST applies at a uniform rate of 12.5%

Company Tax 33%
IT Industry in NZ

NZ IT Valued at $9.5 billion

Approximately 50,000 employed in IT

4,500 IT students in NZ Universities

1,500 graduates annually

40% increase in graduates since 1998

Trend encouraged by Government
Software Services and Exports
350
300
250
NZ$ Millions
200
181
150
100
120
41
74
89
105
50 77
79
61 61
39
0
1994
1996
1998
Computer &
Education Services
Software
New Zealand - Ideal Test Market

Cost-effective testing

Scaleable demographics

Sophisticated market of early adopters

A season ahead of the Northern Hemisphere
Fertile Biotechnology Environment

Relatively disease free animal health status


New Zealand - the premier location for producing human
pharmaceuticals through farm animals
High quality and cost competitive Government and
university research facilities

A science community with strong international linkages

Research focuses on both agbiotech and human health
Fertile Biotechnology Environment



Biological sciences are a strength of New Zealand
tertiary education sector
New Zealand produces more graduates in biology than
any other science discipline
New Zealand has a deep resource of people with
intellectual capital in the biological sciences
Back Office Processing (SSC)


New Zealand represents a cost effective location
compared to other Western countries for both labour
and infrastructure costs
New Zealand has international and national
telecommunications infrastructure to undertake cross
border back office processing operations

New Zealand employees are customer service centric

New Zealand provides a 24x7 work force
Back Office Processing (SSC)
Total annual operating costs for a 100 person, transaction processing back office
facility, percentage cost saving in Auckland compared to Australian and US locations
50
30
20
10
Location
en
ve
r
D
n
ou
st
o
H
tte
C
ha
rlo
m
pa
Ta
dn
ey
Sy
el
bo
u
rn
e
de
M
Ad
el
ai
Br
is
b
nd
an
e
0
Au
ck
la
Percentage
40
Investment Overview


New Zealand welcomes investment from international
companies
Seeks to build on and complement the relationship
with it’s trading partners
Ease of Starting a New Business
United States
New Zealand
Canada
Finland
Britain
Netherlands
Ireland
Australia
Sweden
Denmark
France
Germany
Japan
Italy
0.0
1.0
2.0
3.0
Source: The Economist October 1999
4.0
5.0
6.0
7.0
Venture Capital

High business birth rate - 22.7 %

96 % of companies employ less than 20 people

Deal flow = 400 for first 5 months 2001

Less than 5 % invested
Venture Capital

Returns = 25 - 40% p.a.

No capital gains tax

NZD 500 m – 1 b invested + same available

= 0.8 % of private capital investment (US 2.4%)
Opportunities


Funding and management collaborations
Client / investee company synergies, e.g:
 Wireless communications and the Internet
 3D imaging and computer animation
 Genetics and biopharmaceuticals
 High tech niche manufacturing