Trade Minister Todd McClay address the “See Tomorrow First” Innovation Forum in Tokyo.
Trade Minister Todd McClay says “focus is key” if the Government is to deliver on its goal to double exports by value in 10 years.
“I’m a really firm believer, as is [Prime Minister] Chris Luxon, in setting a target and working towards it,” says McClay. “This is not the Government doing it in isolation. It becomes a partnership with business and industry, who export or bring in investment into New Zealand.”
McClay, who also holds the agriculture portfolio, is having conversations with Kiwi firms on what they need from a regulatory or infrastructure perspective to grow their exports.
The Government has introduced fast-track consenting and changed the foreign investment regime with the aim of making it more attractive to international investors. The goal is to make it easier to pursue new opportunities, ranging from value-add food processing, renewable energy, data centres, space, oil and gas, mining, film and more.
McClay indicates that officials are considering whether New Zealand should be placing fewer but bigger bets in the foreign investment space.
“We can get the system right so that we’re an open and attractive place for investors to come. Then ultimately, individual businesses and business people will decide where they put their effort.
“But as far as where the Government places its resource, we can’t do everything. So, we’ll take some time during the course of this year to decide more broadly from an economic development point of view where our resource is best placed.”
This year McClay has joined the Prime Minister in multiple meetings with foreign investors during offshore missions to Southeast Asia and Japan. He stresses New Zealand is a very open economy. But he underscores that foreign direct investment in the natural resources and green energy sectors are priorities.
“The third area is around tech. How do we grow the tech sector, which includes the example of gaming, so companies in New Zealand that are doing really, really well can become large worldwide?”
“If I was to pick a couple of areas straight away where I think that — if we get that regulatory setting right we could see growth very quickly and deliver hugely in as far as incomes are concerned and result in growth in the economy — it is in some of those new technology areas, which also include agriculture and other areas of service delivery.”
McClay is working to open doors to new markets in the Middle East and India as the Government seeks to further diversify New Zealand’s export footprint.
McClay has charged New Zealand Trade and Enterprise chief executive Peter Chrisp with pulling together an over-arching, all-of-government strategy to double exports.
Chrisp is the brains trust behind many business missions that successive prime ministers and trade ministers have led offshore in recent years.
In 2024, there have been missions to Southeast Asia and Japan. Luxon will lead a mission to South Korea in September; India is next — likely in early October.
These missions reinforce New Zealand’s presence in markets, seal agreements to increase trade and provide opportunities for upcoming Kiwi companies to enhance their profile with prospective partners.
Chrisp is upbeat: “We have got very good international positioning. Our free trade agreements and market access is good. Really the bulk of the issues on the New Zealand side is how we build more export capacity. Growing exports from here is really tough. And there’s a very high death rate.”
Outside the major agribusiness exporters like Fonterra and Zespri and companies such as Mainfreight, Fisher & Paykel Healthcare, or Xero — name recognition has to be built.
“For that trip to Singapore, Thailand, and the Philippines, we always expected Singapore to be talking about decarbonisation,” says Chrisp. He notes sustainability was also a focus in Thailand and the Philippines.
Exporters need to be aware that investors, governments, big multi-international players and big retail chains are driving decarbonisation and focus accordingly on their emissions profiles.
New Zealand has been focused on evolving as a value-added economy, he notes. “Most of the private sector has got that mission in place,” says Chrisp. He singles out Fonterra as a huge value-added player in China.
But there are environmental constraints and New Zealand is not going to double export revenue simply by doubling the volume of goods traded.
That’s why it is imperative to grow more business with high-value markets such as the United States, Australia, Singapore, Japan, South Korea and the United Kingdom.
Chrisp likens New Zealand’s export economy to the Eiffel Tower with major companies like Fonterra at the top and the vast number of exporters at the base. “The real dilemma is how we get those tiny start-ups into the science system and scale them up.”
NZTE, through Invest New Zealand, has launched a new global investment drive under the banner “Do Good, Do Well” that highlights the importance of sustainable, inclusive, and innovative business as the key to driving economic growth.
But says Chrisp, “at the end of the day, real deal flow comes from deal matching”.
Having investors with capital is key, but there must also be investable opportunities. Chrisp says New Zealand does need to choose targets because “at the moment we’re interested in absolutely everything”.
“We’re very high on renewable energy at the moment. We are going through an energy transition in our vehicle fleet. It will take a lot more renewable energy to do it.”
Perceived regulatory roadblocks are being addressed, such as the Resource Management Act and construction costs. But there are other issues: “If you want to get involved in space, what are your Civil Aviation Authority regulations that allow autonomous flight or your regulations about drones? If you’re going to food processing, what’s your regulation about local foods? Then finally, you need to have a matching machine.”
Invest NZ provides this function — a tinder for business. There are also lessons from the past: In 2016, Project Palace, a government-led initiative was launched to accelerate the supply of new hotels in key New Zealand destinations. Government research found an extra 26 hotels were needed. But just six investments were secured before Covid-19 resulted in borders being closed.
Government officials have already started preparing a fallback strategy in case Donald Trump is re-elected as US President in November and imposes a 10% tariff on all imports.
The US is New Zealand’s second largest destination for primary industry exports (12%) against China (33%).
Major Kiwi exporters are doing their own risk assessments. “It would be hard,” warned a source.
A swinging US trade policy may also ignite a trade war which could reduce global economic growth and create a second order effect.
Christopher Luxon speaks on restoring farmer confidence