2023: Doing Business In New Zealand

Doing Business In New Zealand

1. What is the current business climate in your jurisdiction including major political, economic and/or legal activities on the horizon in your country that could have a big impact on businesses?

New Zealand’s political landscape has proven remarkably stable and consistent since the current mixed-member proportional voting system was adopted in 1993, with one of two main centrist parties leading each government formed since then.The Parliamentary Election in October of 2023, was contested by the five parties currently represented by Members of Parliament and another 12 parties which also registered for the election.

New Zealand has an open economy that works on free market principles. It has sizeable manufacturing and service sectors (including digital), complementing a highly efficient agricultural sector. Exports of goods and services account for around one-third of real expenditure GDP.

Foreign investment is generally welcomed, and all levels of government are keen to promote business, economic development, and employment growth. New Zealand regularly ranks high in the Index of Economic Freedom, compiled by the Heritage Foundation, which in 2023 ranked New Zealand in the top five countries in the world on the measured economic freedoms.

The strength and durability of the country’s economy can largely be attributed to the following factors:

• an increase in the flexibility of the economy, creating a more dynamic economy able to respond to market shifts and manage significant economic shocks;
• a sound and sustainable macroeconomic framework, which reduces economic volatility and allows businesses (and households) to plan for greater certainty;
• greater efficiency of the local and central government sector; and
• a strong primary sector that is quick to respond to global opportunities.

Notwithstanding global uncertainty and downstream issues, New Zealand’s business environment is sound. Aspects including a reasonably predictable policy environment, clear property rights, and high levels of trust and transparency provide a positive basis for sustained growth.

2. From what countries do you see the most inbound investment? What about outbound?

New Zealand receives the most direct foreign investment from our closest neighbor, Australia. However, this doesn’t mean we aren’t attractive to countries further away—the United States, Canada, China, Singapore, and the United Kingdom all continue to find New Zealand’s stable and growing markets appealing.

New Zealand’s top export and import partners include China, Australia, the United States, Japan, South Korea, Singapore, Germany, and the United Kingdom

New Zealand is committed to an open, rules-based international trading system and is an active participant in the World Trade Organization (WTO). Its market access commitments are among some of the most extensive and liberal in the WTO.

3. In what industries/sectors are you seeing the most opportunity for foreign investment?

The top three contributors to New Zealand’s GDP are:

1. Professional, scientific, and technical services
2. Manufacturing
3. Construction

Projects and development include net zero targets supported by New Zealand's growing investment in renewable energy, development in our technology sector, (which already contributes over 8% to GDP, and employs 5% of New Zealand’s workforce) and the need for an upgraded and maintained infrastructure pipeline worth NZD 65 billion.

Our domestic activity in these areas is supported by the investment statistics we are seeing; energy, telecommunications and entertainment, real estate, and IT all featured as key sectors for investment in the last couple of years.

Renewable energy

While placed second in the world for energy security with 84% of electricity usage currently from renewable sources, New Zealand is expanding its renewable energy to meet its Government-backed target of being 100% renewable energy by 2035. This expansion presents an immense opportunity for investment.

Technology

The country’s tech sector has seen 48% growth in early-stage investment in the last year and a 111% increase in capital investment in New Zealand tech business over the same period. Agritech is especially attractive, however Cleantech and Healthtech also present big opportunities.

Food and beverage

Coupled with an extensive exporting network, investment in the country’s food and beverage sector (including aquaculture, value-added dairy, and alternative proteins) remains buoyant.

4. What advantages and pitfalls should others know about doing business in your country?

The gateway to booming Asia-Pacific markets – With Asia shaping global trade and investment flows, New Zealand is strategically placed to setup business serving the Asia-Pacific and Western economies, while also gaining preferential access to international markets (for example, Australia, China, Singapore, Hong Kong, Indonesia, Malaysia, Thailand, and Vietnam) through the Free Trade Agreements New Zealand has signed with major Asia-Pacific economies.

A highly developed financial hub – New Zealand has one of the most developed financial

systems in the world. The country’s stock exchange is the first to open each trading day, and several major trading banks and numerous other banking institutions are based here, along with agents and sales offices representing many international banks. The Reserve Bank of New Zealand supervises the country’s banking system to ensure the country remains financially stable.

A competitive and transparent tax system – With its competitive and low compliance tax system, the US-based Tax Foundation’s latest International Tax Competitiveness Index ranks New Zealand’s overall tax system as third in the developed world for its competitiveness, second for property taxes and sixth for its individual (i.e. personal) taxes.

A fair labor environment and competitive costs – New Zealand’s labor laws support business owners and employees and offer highly competitive wage rates and low on-costs and overheads – all crucial advantages over comparable investment locations.

A time zone advantage – New Zealand is 12 hours ahead of the United Kingdom, and between two and six hours ahead of Australia and many major Asian cities. The country is perfectly located for multinational companies to service customers through the night, including the United States, the United Kingdom, and Europe.

5. What is one cultural fact or custom about your country that others should know when doing business there?

The foundation document of New Zealand is the Treaty of Waitangi, entered into between chiefs of the indigenous Māori people and the Queen of the United Kingdom of Great Britain and Ireland in 1840. While the constitution of the country has evolved significantly since then, the original partnership between Māori and the Crown continues to be reflected in the country’s society and business environment today. This means you may frequently encounter traditional welcomes or "mihi” at the start of meetings and the use of Māori words as part of everyday speech. Don’t be afraid to have a go – all genuine attempts are appreciated.

Haere ra (farewell).

Our Firm