Mr. Tim Gibson
CEO New Zealand Trade and Enterprise

World Report: Through Investment New Zealand and New Zealand Trade and Enterprise you aim to connect international investors with investment opportunities in New Zealand. We are keen to communicate to potential investors among the readers of The Independent exactly what kind of services you provide.

Mr. Tim Gibson: Through investment New Zealand we can provide information on targeted sectors in New Zealand: in ICT, Biotechnology, our most recent report was on the food sector. So we provide generic information about key sectors of interest and then depending on the level of interest from a potential investor we try to identify a particular company or a group of companies that might be a logical fit and who would also potentially benefit from the relationship with a foreign investor.

We are very keen to focus our investment activity, so that it is not just about capital but also bringing modern technologies and access to markets.

World Report: Are there any particular sectors or incentives that you would like to highlight particularly for the UK-based investors?

Mr. Gibson: We don't offer incentives in terms of tax breaks but we do give some funding for research. In fact, Cadbury's have just announced a major expansion of their activities down in Dunedin and we worked very closely with them to help them persuade their head office that New Zealand should be their preferred destination.

UK investors tend to be exposed to all the key sectors of New Zealand's economy, a lot of it is historical. For instance, UK investors started most of our meat industry hundreds to two hundred years ago, the pattern has changed but there is along history between the two nations.

World Report: In terms of the business environment, what are your hopes for the upcoming review of the Business Tax Regime?

Mr. Gibson: I am probably as informed about it as you are. We are sitting tight and waiting to see what will come out of it. There have been some discussions about encouraging the internationalization and export activities of New Zealand companies but we'll just have to wait and see what they come up with.

World Report: And how do you see the potential incentives that could be put in place to stimulate Research and Development? Is that something that you're championing?

Mr. Gibson: Anything that is going to encourage New Zealand companies to continue to invest in product development and to invest in the market place, I have to say is a good thing.

World Report: Returning to the focus of our report, more in terms of biotechnology and ICT, are there any particular success stories that you would like to highlight?

Mr. Gibson: In biotechnology, I think that it is quite remarkable that a little more than five years ago we would have struggled to define whether or not we had a biotechnology industry and sector in New Zealand, and now it is nearly a billion dollar sector.

We have got a number of NZ companies that are doing really interesting things with biotechnology, building on our strong agricultural heritage. It is also very encouraging that one of the largest private capital firms has set up an Australasian dedicated biotechnology fund called Biopacific Ventures. Nestlé is involved with that and I think that this is a very positive endorsement.

In terms of ICT there are a couple of New Zealand companies that are doing pretty exciting things in the UK. Jade Corporation is one, their software is being used in the

English, Welsh, Scottish (EWS) railway system for transport logistics which is very interesting. You also watch New Zealand-based weather forecast on TV at night in the UK. Metra is the company behind the weather graphics software system Weatherscape XT used by the BBC - another exciting development.

We have more traditional companies, Old Fashioned Foods, which makes puddings of all things and is doing particularly well in the UK. We cut cross the whole gamut of sectors which are important to New Zealand.

World Report: I understand from you CV that you have a great deal of experience in the Dairy Industry. How are these new cutting edge technologies and companies affecting some of New Zealand's more traditional industries?

Mr. Gibson: Those more traditional sectors of our economy are also very much driven by innovation. I think that the New Zealand Dairy Sector is probably the most cost efficient in the world, using cutting-edge technologies, particularly around taking minor components out of milk and reagregating the milk protein. The Meat Sector in New Zealand has also transformed itself. A few years ago most meat going to the UK was frozen meat. Now, the bulk of the trade to the UK is chilled lamb, precut and delivering fresh produce to the supermarket shelves of UK consumers.

Although once upon a time, there was perhaps a tendency to look at New Zealand in very traditional terms in terms of carcasses of meat and blocks of butter, our agriculture sector is a world leader in terms of its ability to innovate. That is where our biotechnology sector really has an advantage because it's been able to build on that basic agricultural capability.

World Report: Looking ahead, ten, fifteen years into the future, how do you see agriculture and biotechnology complementing each other?

Mr. Gibson: We have particular strengths and sustainable production of agricultural products and the technology involved in that production is very exportable. Sustainability is a major issue in the world now, as is the ability to feed the global population. All of those factors would suggest that there is good potential for New Zealand to export products and know-how as it develops these industries.

World Report: The Stern Climate Change Report generated bad publicity for New Zealand food imports into the UK by raising the issue of Food Miles. What message would you like to send to UK consumers concerned by this issue?

Mr. Gibson: I think that is an issue which is emotive and poorly understood. 99.75% of our exports to the UK go by ship and aren't flown. The term 'Food Miles' itself sounds as if its derived from 'Air Miles' so there is a bit of hyperbole surrounding the issue.

New Zealand generates about 0.2% of the world's carbon emissions. We are tiny. Our agricultural practices are very sustainable and the carbon footprint of a pint of milk or a pound of cheese in New Zealand is less than the carbon footprint of producing a similar product in the UK - we've also signed up to become a carbon neutral country. So we have got some work to do to make people better appreciate the facts of the situation, as opposed to the rhetoric and emotion but we don't underestimate that it is important that people do understand our industrial sustainability. As you heard the Prime Minister this week reemphasized that importance.

World Report: This year, in a move aimed at increasing exports from New Zealand, your government launched Export Year 2007. What are your hopes for this initiative?

Mr. Gibson: We are basically delivering the program and it is really about raising the awareness of the broader and business communities about the importance of, not only exporting, as that seems to carry an image of putting product in a container, but being part of the international business community.

In New Zealand, we only have currently about twelve thousand companies who export. This is a very small proportion of out total number of registered companies. Of those 12,000, 155 represent 75% of our export income so we are very dependent on a small number of companies. Add to that the fact that exports as a percentage on GDP have remained at about 30% for about twenty-five years. If we're going to pay our way in the world, this is not enough.

This really is a crucial issue so this year is very much a call to arms and through a whole series of events and activities we want to help New Zealand companies think about being part of the international market. And what we find through our teams around the world is that there are plenty of opportunities out there, unfortunately we don't have enough New Zealand companies who are capable of taking advantage of those opportunities. So a lot of our work is about helping to build that capability.

World Report: So the main barriers that you identified are capacity rather than lack of ambition?

Mr. Gibson: Capacity is the main issue, yes.

Mr. Gibson: It's also tough. We are a long way through the rest of the world. If you draw a circle around London within a radius of 1000 kilometres you have access to 500 million rich consumers. If you draw the same circle around Auckland you still haven't quite got to Australia. So it means that because of the small domestic market, New Zealand companies quite often have to go international quite early in their life cycle. This puts them under a lot of pressure.

The physical separation between us and the market place also means that New Zealand companies have to work that much harder and spend a lot of time sitting in airport lounges keeping close to the customers, which is why we want to continue to work on programs such as the Beachhead programme in the UK which, in partnership with UK Trade and Investment, helps New Zealand companies to develop a presence in the market place, develop local partnerships and local trading relationships which will benefit them in the longer term. I'd like to see it as a two-way street. I think New Zealand is ideally placed to help UK companies, particularly those that have aspirations in Asia.

World Report: We'd be keen to here your opinion on the challenges and opportunities opened up by the advent of new technologies. On one side, it makes it much easier for kiwi companies to access the global market place and get closer to their customers on the other, some have expressed concerns that it is very easy for ICT and high-tech companies to buy companies here and then relocate abroad. How do you see this issue?

Mr. Gibson: I think it is going to make the tyranny of distance that we talked about a little bit easier. There is a company based in Christchurch which is a good example of that. They focus on the UK TV advertising market and they are able to work while the UK is asleep so that when their customers in the UK arrive at work in the morning, there is a complete set of new material that has arrived overnight. So actually our location can be an advantage. There is a company not far from here, in the Wellington incubator, which runs a database of aspiring actors and actresses in the

UK. They register online and pay five pounds a month to be on this database and then this company provides that material to TV and film producers in the UK who were looking for actors and actresses. With new technologies, the distance becomes irrelevant.

In terms of your question of companies starting up and being sold off, well that's inevitable. We don't like it but it capital will always go where the owner of the capital wants to take it. What we need to do is ensure that the broader business environment in New Zealand remains benign to companies. We are still ranked at number two in the OECD, in terms of ease of doing business in New Zealand. That needs to be retained. Obviously, we need a tax environment which is fair to companies as well. If you can get all of those things right hopefully we can persuade quite a few companies to stay here or at the very least to look differently at their business models. I think, in the past, often people have said, "We have to move the whole lot overseas," when, in fact, parts of the business can stay and parts can be moved overseas.

World Report: Given the incredible quality of life that New Zealand offers and its very benign business environment, do you think there is possibility that high-tech companies may choose to relocate to New Zealand? If distance really is no longer an issue, why not base yourself here?

Mr. Gibson: Exactly. Certainly, we are pitching New Zealand as a business destination in that way. It was interesting that in the aftermath of the September 11th attacks in 2001, the immigration numbers in New Zealand went through the roof. That would suggest that people do think of New Zealand as a safe haven in which top operate. So we are always on the lookout to encourage companies and individuals to
invest here. As I said before, we are ideally placed for companies looking at Asian markets. We're close and New Zealand has a very good reputation in Asia.

New Zealand is also a good test market, you get results quite quickly in terms of feedback on products and services. And with the Free Trade Agreement we have in place with Australia, you can also access their market.

World Report: In the World Bank survey, "Doing Business in 2007", New Zealand ranked number one for ease of doing business out of 175 countries. However, internationally, whilst people associate New Zealand with its pristine landscape, they are not aware of its innovative business culture. How much of a barrier is this perception gap in attracting further investment and promoting trade?

Mr. Gibson: We are working quite aggressively to try and change the mindset that sees New Zealand as it was twenty or even thirty years ago. There is a slightly romantic view that New Zealand is all clean and green and that there are a lot of sheep and nice mountains. This is all true but we are trying to make people aware that New Zealand is also innovative, creative and technologically advanced, particularly in hi-tech sectors. We are running a programme called "New Zealand, New Thinking" which is designed to enhance that reputation.

A lot of people are still surprised that Peter Jackson is a Kiwi and that the Lord of the Rings - which was made a couple of kilometers from where we're sitting - all of that was done in New Zealand. And that is New Zealand technology that's used in the film.

The software package, created for the movie, which was designed to develop all the battle scenes including the orcs gave them individual minds so that they all react in different ways. This software which gives these orcs intelligence has now being sold to the New York Transit Authority to model crowd behavior in subways.

Concerning the ease of doing business, go onto the www.companies.govt.nz website. You can register a company and be up trading within about two hours. It's amazing.

World Report: We are trying to identify what is that makes New Zealand unique. Could you perhaps tell us a little more about "Brand New Zealand", and how your approach differs from any other country around the world?
Mr. Gibson: Ernst Rutherford, a New Zealander who split the atom, made an observation: "We haven't got money, so we have to think." I think that captures New Zealand's approach to the world. We are relatively remote, we don't have hugely abundant natural resources other than the lovely environment and the ability to grow grass, so we have to work a lot harder and be creative about what we have got to try and maximize value from that.

Mr. Gibson: New Zealand is quieter. I lived in the UK for a few years and when I came back to New Zealand I didn't realize just how tired I was. You come back here and I am not saying that here it is easier but you do notice that.

Another one of the important differences about New Zealand is that when the first people arrived here, they were twelve thousand miles from home. They had nowhere to go, they couldn't go down the road to get a solution to a problem, they had to figure it out themselves and I think that attitude is still a great asset to New Zealand.

World Report: As a final question, I would like to give you the opportunity to send a direct message to the readers of The Independent.

Mr. Gibson: I have a couple of messages. First of all if you have any interest in New Zealand, don't hesitate to go to one of our offices in the UK. Come and have a look at New Zealand you might be surprised at what you find.