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Call for exporter tax incentives supported

Canterbury Manufacturers’ Association.
Media Release.
17 July 2006

The Canterbury Manufacturers’ Association supports the New Zealand Institute in calling for the Government to provide tax incentives for companies that export to overseas markets and agrees that New Zealand’s geographical location is not an insurmountable barrier to successfully competing offshore.

“There are a host of pressures confronting New Zealand exporters”, says Chief Executive John Walley. “The recent high dollar and the inflow of cheap imports have a direct impact on the profitability and capability of New Zealand exporters to build international markets”.

The CMA says that while several New Zealand companies have either closed or relocated to a low cost country such as China, manufactured exports remain the key to New Zealand’s economic transformation and future growth. Therefore, increased trade and commercial interaction with the rest of the world, as stated in the New Zealand Institute report, is essential. “The only other short term option is an ever growing trade deficit until international lenders no longer support the ‘borrow and spend’ approach. New Zealand has to look beyond sun, sea, and sand and develop its export base”, says Mr. Walley.

“Exporters need targeted taxation incentives that encourage local exporters to increase their research and development, invest in productive equipment, develop people and above all take on the risk involved in the development of offshore markets”, says Mr. Walley. “On the barriers side, reducing compliance loads, and clearing out regulation that reduces flexibility would also help grow exports”.

Mr. Walley says that with the New Zealand dollar at current levels, a number of production projects lost to low cost countries are being returned to New Zealand firms, indicating the real impact exchange rates have on the external sector. Policy targeted at reducing exchange rate volatility will also encourage growth in exports; Government should not give in on pressing the RBNZ in this regard.

Mr. Walley says that while large organisations are in a position to help New Zealand’s export recovery, the smaller and medium sized enterprises also have an important role in this process as they can best find and fill the niche opportunities that exist out there in the world.

“These smaller, companies founded on elaborate transformation are developing niche markets, both domestically and offshore. It is these firms who will drive exports and it is these firms who will disproportionately respond to tax incentives targeted at investment, productivity, people, and export market development.

“New Zealand does not have the geographical benefits of similar sized countries such as Norway, Singapore and Taiwan, but that does not have to be a barrier to export growth as recognised in the New Zealand Institute report”.

ENDS

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