Pete Hodgson.

(An address to the NZ/Taiwan Business Council joint conference 2000)

Thank you for the opportunity to address your conference. Welcome, also, to those of you who are visitors to New Zealand.

Conferences like this are valuable for establishing and strengthening business relationships between New Zealand and our trading partners. They also help us learn about each other's markets. These connections, this understanding, are vital to trading nations like ours.

The Government is keen to help our international business relationships grow and thrive. I'm pleased to have this chance to talk with you about our approach. I hope we can get into a dialogue later on, so please think about any questions you have.

I know that high technology is of particular interest to your council, given its significance as a driver of growth in Taiwan.

Information technology and electronics do not drive the New Zealand economy to the extent they drive Taiwan's, but our software and Internet service industry is rapidly gathering strength.

We have some notable international successes, such as Tait electronics and the software company JADE. We have smaller, cutting-edge innovators like Virtual Spectator, which supplied the computer graphics for America's Cup television coverage. We have skyrocketing start-ups like the e-commerce company Exo-net, which made millionaires of its founders in 18 months.

The investment opportunities in IT are multiplying steadily.

As users of IT the New Zealand public are catching on at high speed. Already more than half the population has access to the Internet. The number of New Zealand sourced domain names and web sites is increasing exponentially. We are becoming a wired nation faster than most.

I see also that your conference this year has a particular focus on trade opportunities in biotechnology. This is indeed an area of huge opportunities for direct investment, joint ventures and trade between New Zealand and Taiwan.

I believe New Zealand has a strong future in biotech and therefore a great deal to offer to its international partners.

In this country we have significant expertise in a number of very promising areas, including floriculture, aquaculture, animal vaccines, transgenic research, biopesticides and post-harvest handling and storage technology.

There is also valuable work being done here on gene therapy for prevention, diagnosis and treatment, and on environmental protection, protein purification and diagnostics.

This expertise offers an excellent foundation for strategic alliances and collaborative research between New Zealand and Taiwan. The opportunities for pushing out the products of such collaboration into third markets are also significant.

The absence of a significant biological ingredients manufacturing industry in Taiwan offers strong market prospects for New Zealand suppliers. I suspect Taiwanese biotech enterprises will find that New Zealand products match the quality of American and European products while being much more attractively priced.

New Zealand is also in a position to meet some of the demand from Taiwan for specialised pharmaceuticals, such as immunosuppressant drugs, anti-cancer agents and drugs for disorders of the kidney, liver and pancreas.

There are further prospects for New Zealand suppliers of products such as diagnostic reagents, plasma, sera and anti-sera, bovine albumin, antigens, culture media, animal and human vaccines, enzymes, pharmaceutical grade salt, milk proteins and hormones.

That's a pretty strong list of opportunities for New Zealand companies that have raw materials, intermediates or R&D expertise in the relevant areas. I'd like to see those companies taking more of an interest in the Taiwanese market.

New Zealand could be a useful supplier of biotech knowledge to Taiwan as well. Taiwanese biotech companies seeking specialist expertise when establishing new plant or trouble-shooting may find New Zealand a high-quality and cost-effective source of consultants in that area.

This country's biotech research effort has traditionally been grounded in Government and university funded science, but the private sector effort is beginning to gather strength.

The imminent Stock Exchange listing of Genesis Research and Development is, I think, a sign of things to come. Those of you who were in Wellington on Tuesday might have noticed a front page newspaper story on the commercial development, by investors in my home town of Dunedin, of a newly-discovered anti-bacterial protein. It promises benefits in the battle to control rheumatic fever and rheumatic heart disease.

The Government has set out to increase private sector R&D by supporting it with a variety of grants schemes. Indeed this year's Budget included the largest ever increase, by far, in R&D support for the private sector. We are adamant that our future lies in technology and innovation.

However high technology is not yet a strong feature of New Zealand's productive and export base. Of our exports to Taiwan last year, 60% were foods and beverages, especially milk powder and meat. Butter, fish, kiwifruit and cheese made up most of the rest.

Some 91 percent of Taiwan's exports to New Zealand, by contrast, were manufactured goods - particularly industrial and electrical machinery, metal products and textiles.

That contrast is kind of typical of our export profile. The technology imbalance is all too familiar. Only about a quarter of New Zealand's total exports are manufactured goods, and elaborately-transformed goods are a fraction of that.

This must change. We must produce more high-value exports if we are to address this country's current account deficit.

Increasing the technological and skills base of our economy will also help build the New Zealand we want, which is one of high-quality, high-skill employment. Only that will maintain the high standard of living we expect in this country, to go along with the unique natural environment we're famous for.

That's why this Government has set itself the objective of transforming the economy.

Our primary production expertise is substantial, and indispensable. But it's no longer enough. As a Government we're committed to strengthening the knowledge and technology base of the economy.

In the same breath, l say that much of that new strength will come from the primary industries.

There is no paradox here. I am saying simply that commodities are not enough, but high-tech developments arising from commodity production will be a significant part of our economic future.

International partnerships are a key to that economic transformation. New Zealand is a small country that needs direct investment from abroad to supplement its own capital base. There are opportunities here for both long-term investment and venture capital.

Taiwan is a significant exporter of capital, but it was the source of only 0.3% of inward investment to New Zealand from 1994 to 1998. Clearly there is room for that to increase, given the opportunities I've been talking about.

Inward direct investment is welcome not just for the capital contribution but also for the corporate and market relationships that generally come with it. More and more, successful innovation in business is characterised by the strength of the networks connecting companies, both within and across international borders.

The Government is increasing its efforts to facilitate inward investment through Trade New Zealand. In particular we are strengthening the Special Investor Programme, which has brought several potential investors here from Taiwan recently.

New Zealand welcomes the injection of business skill and entrepreneurship that business migrants bring to this country.

Immigration from Taiwan has been declining steadily in recent years, although there are signs this is beginning to turn around, following some easing of entry conditions last year. In the six months to March, migrant applications from Taiwan have increased by 50% over the same period last year.

This Government is keen to introduce some stability to immigration policy after a decade of policy swings.

Frequent and significant revisions have created some confusion for those contemplating a move to New Zealand. So we are not proposing any more rapid change. Potential migrants have a right to know that the rules are not going to be constantly changing, while New Zealanders need to know that there will be a genuine consultative approach to major policy changes.

We do, however, want to want to improve services to migrants.

We know that many business migrants get their initial investment and immigration advice from immigration consultants. So the Government is presently seeking public comment on options for setting enforceable standards for those consultants.

Business migrants also stand to gain from the establishment of pilot settlement services for recent migrants. This project will trial different approaches to meeting migrants' needs on arrival in New Zealand.

The Government is particularly conscious of gaps in services for business and professional migrants. We want to ensure that when business migrants come to New Zealand they are put in touch with local business networks. Similarly, professionals should be put in touch with local professional bodies.

Many Taiwanese visit New Zealand for pleasure as well as business, of course, and tourism is a significant business between our countries. There were more than 40,000 visitors from Taiwan last year, perhaps 80% of them here purely for a holiday.

Here, again, there is potential for growth. Visitor numbers have slipped in recent years, reflecting tough competition in the global tourism market. But present currency conditions may work in New Zealand's favour, and traffic will inevitably increase as the number of Taiwanese resident in New Zealand grows.

Education is also forging stronger links between Taiwan and New Zealand.

Taiwan is already our fourth largest education export market, involving almost 1800 students last year. Growth has been almost continuous for eight years now, and this year's figures look to be about 15 percent stronger than last.

I expect the personal and professional relationships built through education will become more and more significant to the business connections between New Zealand and Taiwan in the years ahead.

I want to end where I began, with an acknowledgment of the strength and value of the trade relationship between New Zealand and Taiwan.

Taiwan is our seventh largest export market overall, with growth of 23 percent in exports last year. That is a relationship worth nurturing, on both sides.

Thank you.

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