GROWING FAST: New Zealand’s economy could learn from Singapore
by WILSON OWEN
When Singapore became independent in the 1960s, it was an island of two million people with no local resources and little food production. When those factors were combined with very high unemployment levels, the future looked bleak.
One of the cornerstones to Singapore’s success has been its ability to attract investment to develop new industries.
In contrast, foreign investment in New Zealand seems to focus on foreign companies gobbling up existing New Zealand companies, which contributes little to the growth of the New Zealand economy.
Both Singapore and New Zealand have key similarities: They both have open door policies for investment, both have transparent infrastructure and both lead the world with virtually no corruption.
New Zealand should take a lead from the cornerstone of Singapore’s success and its Pioneer Status, which was awarded to investment in new industries. Initially, this offered tax holidays and benefits for five years, later increased to ten years, and resulted in Singapore becoming a leader in several industry sectors, stimulating envied GDP growth rates.
When the Pioneer Status was extended to companies supporting Pioneer Status companies, Singapore’s economy was even more vibrantly stimulated.
In New Zealand, Pioneer Status could be awarded to the high-tech sector, stimulating this high value sector of the economy. It could also be awarded to new types of agricultural ventures, stimulating investment to expand and grow this already successful sector, and maximise opportunities in the years ahead for premium food exports to fast-growing Asian economies. While many politicians publicly cringe at the thought of tax holidays, they reduce unemployment and improve the Government tax take via the large numbers of people who are employed.
New Zealand also needs to look seriously at how to stop foreign companies gobbling up established businesses, dumping the purchase price back in to the books as offshore debt, and effectively becoming a non-taxpaying citizen.
Since 1989 this practice has been severely eroding the government’s tax base, while contributing little to the New Zealand economy.