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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 8 Crown Research Institutes 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 39% above NZ$60,000 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 ve r en D st on H ou tte ha rlo C Ta m pa 0 Au ck la nd Br is ba ne Ad el ai de M el bo ur ne Sy dn ey 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