Archive for the ‘Foreign investment’ Category

Chinese Businesses Suggest Ways To Grow Economy

February 10, 2009

I attended a very special event at Parliament tonight.  Around 150 Chinese business leaders were invited by Pansy Wong to speak direct to the Prime Minister and relevant Ministers – Groser (Trade), Coleman (Immigration) and Wong on how we can get the economy growing again.  Tim Gibson from NZTE, a couple of other officials and I were privileged to be included on the invitation list.  What struck me was the similarity of view from this group of business people from one ethnic source to the wider views of the business community.  Immigration (particularly business migration), tourism and education were seen a key drivers of the recovery.  There was also a strong call for an improved export performance and a need to harness the skills of the wider New Zealand diaspora.  The PM spoke well.  Some of you regard me as too optimistic.  You should have heard the PM tonight.   Many in the audience supported this assessment.  Opportunity was a common theme of the comments from the floor.  I agree fully with suggestions from Ministers Coleman and Groser that this event become an annual one.

New Zealand And Israel

January 3, 2009

I tend to agree with Fran O’Sullivan’s article today in the NZ Herald on the Government’s restraint in comment on what Israel is up to in Gaza.  I am all for a more balanced approach in relations between New Zealand and Israel (which went too far the other way under Labour), but I do feel that we do need to be a bit more forthright in our comment on the current situation.  I put the current restraint in comment more down to the Government being new and the machinery of Government still being away on holiday, but once things start getting back up and running next week I hope some stronger statements are made.

I also hope that Isreal ceases hostilities immediately.  Aside from a humanitarian, and international law concern, I am keen to see some work done on building a better relationship between New Zealand and Israel.  In particular I want New Zealand to learn from Isreal’s venture capital culture and its business incubation programmes.  I also want more trade and investment with Israel.  Unfortunately the current offensive against Gaza will make this more difficult.

Protectionism The Real Enemy

December 25, 2008

I started to read the special Christmas double edition of The Economist last night (I managed to find a copy at Cromwell Paper Plus).  The first Leader is a story entitled Fare well, free trade.  It talks about how we are seeing a frightening combination of forces – a contraction of both capital investment and world trade.  The shifting of both trade and capital flows into reverse has not happened for a generation.

The article also deals with a factor that worries me enormously, the ability of world leaders to say one thing on the international stage, and to act very differently at home

In many countries politicians’ fealty to open markets is already more rhetorical than real. In November the leaders of the G20 group of big rich and emerging economies promised to eschew any new trade barriers for a year and to work hard for agreement on the Doha round of trade talks by the end of December. Within days, two of the G20 countries, Russia and India, raised tariffs on cars and steel respectively. And the year is ending with no Doha breakthrough in sight.

As economies weaken, popular scepticism of open markets will surely grow. Among rich countries, that danger is greatest in America, where grumbles were heard long before recession set in. The new Congress, with bigger Democratic majorities, has a decidedly less trade-friendly hue. Barack Obama’s campaign rhetoric left an impression of a man in two minds about trade, which he has since done nothing to dispel.

And to add into the mix trade distorting policies are beginning to abound

Politicians from Washington to Beijing are being pressed to help troubled industries, regardless of the consequences for trade. A bail-out of Detroit’s carmakers, whatever its final extent, will be a discriminatory subsidy. As China’s exporters go bust by the thousand, industries from textiles to steel have been promised handouts and rebates. Subsidies will beget more subsidies: Nicolas Sarkozy, France’s president, says that Europe will turn into an “industrial wasteland” if it too does not prop up its manufacturers. They will also invite retaliation. With China’s bilateral trade surplus at a record high even as America’s economy slumps, Congress will not take kindly to Beijing’s bolstering of its exporters.

The Economist suggests a policy prescription which I can only endorse

Add all this together and it is hard for a free-trader not to worry. So what is to be done? The first requirement is political leadership, especially from America and China. At a minimum, both must avoid beggar-thy-neighbour policies. Second, a conclusion of the Doha round would help. A deal would reduce the risk of broader backsliding by cutting many countries’ bound tariffs—and it would establish Mr Obama’s multilateral credentials. Third—Doha deal or not—is greater transparency. A good recent idea is that the WTO publicise any new barriers, whether or not they are allowed by its rules.

But The Economist misses one new factor which is probably more worrying than anything else it talks about.  That is the prospect of new instruments being introduced to keep US and European industry internationally competitive after cap and trade or carbon taxes are introduced as a response to climate change.  My fear here is that these policies will spark a trade war which will threaten to future of the WTO rules based system.  Avoiding such an outcome will be one of my key themes for the year ahead.

Kiwibank Advertisements

December 17, 2008

There is some controversy today in the Dominion Post Business pages with former BNZ Chairman Kerry McDonald quoted as follows

State-owned Kiwibank’s advertisements putting down Australian-owned banks are “reprehensible and outrageous”,

What interested me was that at a lunch we hosted here at the Chamber NZ Post CEO John Allen fielded a question from an attendee making similar points to Kerry McDonald, though in less forceful terms. 

Now I have to be careful here, NZ Post and Kiwibank are important members of the Chamber of Commerce and I have huge respect both for John Allen and Sam Knowles.  But I do think that Kerry McDonald is making an interesting point.  In New Zealand with a current account deficit as high as it is we are totally dependent on the willingness of the rest the world to give us funds to bridge this deficit.  In the circumstances is the Kiwibank messaging the messaging we are wanting to be sending the international financial community?  The answer is clearly no.  That said, I think most in the international financial community will see the ads for what they really are – a slick piece of advertising.

What worries me more is the impact the ads have on the wider New Zealand public and on the debate over whether foreign investment is a good or a bad thing.  From our perspective, it is a very good thing and we need more of it.  Maybe NZ Post and Kiwibank should reflect on this (indeed I am sure they do).  I don’t think that they should be in any great hurry to pull the current  ads, but I do hope that the next iteration of Kiwibank advertising is based more on quality of service or quality of offering rather than nationalistic sentiment.