New Zealand politicians are drafting laws aimed at making the country the Luxembourg of Asia. The aspiration was outlined by New Zealand's Trade Minister Tim Groser, who was in Hong Kong on Monday to mark the signing of an economic agreement between the two jurisdictions.
At a press conference, AsianInvestor asked Groser if New Zealand is gearing up to be a financial hub. "You are absolutely right," he says, "and we are doing this in a very ordered way." There is a "serious opportunity" for New Zealand to specialise in areas such as fund management, he says.
Groser would not say when regulation is due to be passed, but said a team of experts is examining new laws and that they are being drafted more conservatively following the financial crisis. "Everybody has had a wake-up call in terms of just how careful you have to be."
Some feel it is a good time for New Zealand to position itself as a financial hub or offshore financial centre because regulation is expected to tighten in Europe and the US. If the rules become stricter in traditional European offshore centres, business could move further afield to countries such as New Zealand, agree legal sources.
Moreover, the country is geographically well placed to serve Asia and Australia, as it is much closer to those regions than historic offshore centres, including those in the Caribbean (Bermuda, Turks and Caicos, and Antigua) or Europe, such as the Channel Islands, Dublin or Luxembourg.
The government, regulators and stock exchange are working to make something happen, says Charles Finney, chief executive of the Wellington Regional Chamber of Commerce, who also attended the trade briefing. "It is a high priority for the government," he adds.
Hong Kong-based Rod MacKenzie, group managing director of north Asia at New Zealand Trade & Enterprise, says the services sector and time zone are among the country's strengths. Of course, Australia is also looking to set itself up as a financial hub for Asia and is drafting proposals to that end.
The New Zealand-Hong Kong China Closer Economic Partnership Agreement (CEP) is Hong Kong's first free trade agreement (FTA) aside from its CEP with mainland China. Hong Kong is New Zealand's ninth largest export market, with exports worth more than $820 million in the year ending June 30.