US Companies Positive on NZ Investment Prospects

US Companies Positive on NZ Investment Prospects

An American Chamber of Commerce business climate survey of US companies operating in New Zealand has found that an overwhelming majority describe their local investments as successful, and despite ongoing niggles with the regulatory framework and compliance costs, most were positive about future growth opportunities.

Of the 91 respondents, representing a significant number of Fortune 500 companies, 87 per cent described their New Zealand operations as moderately or highly successful with 46 per cent intending to expand their current business or invest in a new start- up.

These companies also had a buoyant outlook with 84 per cent forecasting sales growth over the next three years and 84 per cent predicting an increase in exports for the current financial year.

“The results or the survey this year show a much more positive attitude towards the investment climate and a greater pragmatism to get on with business despite bureaucratic and regulatory frustrations,” AmCham President, Michael Stanley said. “It is also pleasing for New Zealand that our safe and stable environment and geographic location, close to major markets in Australia and Asia, is seen as a real asset and attraction.”

However, the survey showed that there has been no turning back the trend for investment decision making on New Zealand operations to remain offshore with 78 per cent of companies s deferring to their US head office and then having regional head offices acting as a further filter.

The survey also identified key areas that US companies believe should be looked at to make New Zealand more competitive, efficient and attractive to investors. Some 50 per cent of the respondents cited a need for administrative, legal and compliance procedures and costs to be improved. Other big issues they would like to see addressed related to the fluctuating New Zealand Dollar, the new Employment Act, the Resource Management Act., the size and state of the New Zealand economy and lack of basic infrastructure as well as a perceived skills shortage.

“The business issues identified mirror those identified in our 2003 survey and the catch cries of the New Zealand business community,” Mr Stanley said. “It is encouraging though that despite no immediate panacea on a number of fronts, only 16 per cent of companies surveyed actually indicated that they were considering downsizing or relocating, and a majority of those were in the manufacturing sector where costs and infrastructure were key drivers or consolidation with their Australian operation was a distinct option.”

Australia casts a strong influence over many aspects of the US companies’ New Zealand operations, particularly back office, regional management and sales and distribution functions, according to respondents, but few expressed any clear view on the effect of the Australia-US Free Trade Agreement on trading conditions and investment confidence.

“Only 6 per cent of the companies surveyed expected any impact on their New Zealand investment from the Australia-US trade deal while 62 per cent favoured a New Zealand Free Trade Agreement with the US,” Mr Stanley said. “We are every hopeful that a bilateral agreement may one day be concluded, but we have no delusions and will continue to work with our government and the private sector in playing our part in achieving freer trade through a multilateral approach while widening our influence with key Washington decision makers.”

The e-mail survey, conducted in August and September, with the support of Investment New Zealand and TNS New Zealand, is an annual business climate barometer of US companies. The American Chamber of Commerce in New Zealand uses the findings to direct its focus in progressing bilateral trade, commercial and business ties. The United States is New Zealand’s second biggest trading partner with bilateral trade running at $9 billion annually.

The results of the 2004 survey are being reported back to government and the business community to enable ongoing discussion and collaboration to address issues and make New Zealand a more attractive market for overseas investment.

The survey questionnaire and findings can be found on the AmCham website at www.amcham.co.nz

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