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Budget 2007: Supporting firms in offshore markets

Joint Statement
Trade, Economic Development

Supporting firms tapping into offshore markets

Budget 2007 reinforces the Labour-led government’s commitment to help firms crack offshore markets, Trade Minister Phil Goff and Economic Development Minister Trevor Mallard said today.

"Improving New Zealand’s export performance is crucial if we are to succeed in lifting living standards and further transforming New Zealand into a higher-wage and more innovative economy. As Export Year 2007 reminds us, we must ‘think global’ and help grow more firms that are export capable – and Budget 2007 reflects this work.

"The extra support builds on the success of the Beachheads programme, which uses private sector experience and practical business networks to give valuable in-market support to firms with high-growth potential which are looking to expand offshore. The Market Development Assistance Scheme (MDAS) has also been given a further boost to help more firms to explore and develop offshore markets," Trevor Mallard said.

The extra funding for MDAS of $87.8 million over four years reflects the decision not to proceed with a tax credit for export market development.

"We listened to many businesses and agreed expanding existing grants was a far more effective way of giving the exporters the right assistance they need to develop opportunities overseas," Trevor Mallard said.

Phil Goff said Budget 2007 also focused on developing key Asian markets.

"The new funding for NZTE will increase its focus and presence in China, Japan and India, reflecting the anticipated growth of demand for NZTE services in those markets, whose growth has the potential to provide very real benefits for New Zealand.

"Opportunities in these markets are growing rapidly, but New Zealand firms are not engaging with these markets at a rate that reflects this growth. By 2040 the world’s four largest economies will be China, the United States, India and Japan. We need to position New Zealand to take full advantage of the opportunities that growth offers us," Phil Goff said.

"A key theme of Export Year 2007 is partnership. The government can facilitate international trade with these initiatives, but it is up to the business community to seize the opportunities these initiatives offer."

Budget 2007 includes:

• An extra $87.8 million over the next four years to help more firms undertake new international market development activities. This brings the ongoing annual funds available from the Market Development Assistance Scheme to $53.6 million a year from 2009/10 compared to what was previously $27.6 million a year from 2009/10.
• An extra $6.3 million over four years to extend the Beachheads programme into China and India, place advisory boards in all Beachhead regional locations, and also expand Kea, a network of Kiwi expats.
• An extra $19.4 million over four years to increase NZTE in-market assistance for New Zealand firms in China, India and Japan; and
• $1.6 million toward New Zealand’s participation at the next World Expo in Shanghai in 2010.
• A new U.S. contract bonding product for exporters who are bidding for U.S. Federal or State contracts where they are required to provide a bond (or cash) equal to at least 100 per cent of the transaction size. This will be funded through a contingency liability of $50.0 million.

Note: the Market Development Assistance Scheme is also known as the Market Development component of the Enterprise Development Grant (EDG-MD).


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