NZ And Malaysian SME's Can Work Together

Malaysia 9 July 2004

Birds Of A Feather?

How New Zealand And Malaysian SME's Can Work Together More

Summary of Address by Wellington Regional Chamber of Commerce CEO Philip Lewin to New Zealand Alumni Convention (NZAC) 2004 - Kuching, Malaysia

I wish to congratulate the organizers and sponsors of this conference, for their far-sightedness in bringing us all together. Conferences such as this are so very valuable - they put together people who like each other, and who wish to learn more about their friends. Whether we be Kiwis or Hornbills, we should come together as birds of a feather.

I've been asked to talk to you today about how New Zealand and Malaysian small to medium-sized enterprises or SMEs as the acronym has it, might work more closely together. In offering you a few thoughts I may risk sounding like a former government official - but will also strive to offer insights from the grass roots as it were.

The fact is that no matter how small they may be, companies in both our countries ultimately operate within an international context. That context is heavily conditioned by those international trade rules which both our countries have an active part in shaping.

As most of you will know from direct experience, New Zealand's economy is comprised overwhelmingly of SMEs. Although we can boast several world class corporates such as Fonterra, Telecom and so on, we are nevertheless a nation of small businesses.

There are several reasons for this. One of course is that in a quantitative sense everything in New Zealand is on the small side - apart from the scenery and the All Blacks, of course! Our four million people add up to not much more than the number of people in Kuala Lumpur on a typical working day, but of course occupy a much greater land mass.

It is little exaggeration to say that modern New Zealand was established by the British Crown in order to be an offshore farm for the "mother country". But interestingly, when the first settlers came to New Zealand, they encountered a highly entrepreneurial group of people who had got there first - the Maori. Much of the earliest commerce and even exporting out of New Zealand was done by the tangata whenua, which in Maori means "people of the land".

So, at least in human terms, New Zealand has always been small, distant and somewhat different. To quote one of the poets, "last, loneliest, loveliest".

New Zealand lives by exporting. So we have to be "first up and best dressed" when it comes to taking our products and services all around the world. And quite often, we are. The presence here today in Kuching of such a strong Kiwi delegation is ample testimony to our propensity to travel. Not for nothing is our Foreign Affairs and Trade Ministry known in Maori as ngati aorere, or "the high-fliers"...

All of us New Zealanders are deeply proud of our beautiful country down under. Amid the many scenic and human splendours New Zealand offers, there is none to compare with wonderful, windy Wellington on a good day!

At government level, New Zealand and Malaysia have been close friends for many years. Similarly, there is a great deal of information interchange which takes place between academics and some businesses. But what we need more of is greater depth of understanding of each other. Again, that is why gatherings such as this one are so valuable.

In many ways, New Zealand and Malaysia complement each other very neatly. You have so much bustle, dynamism and creativity, which we have our own set of natural splendours, wide open spaces with only those four million people in a land area the size of Great Britain. So we are made for each other.

Now a few words about where we come from in an economic sense. It was twenty years ago this month that New Zealand had its "quiet revolution" in terms of rapidly opening up the economy and liberalising capital markets and flows. Albeit at the cost of social dislocation which persist in some places to this day, Rogernomics as it was called was a necessary and radical transformation of our economy. The essence of it had to happen.

A main thrust of Rogernomics in the mid-late eighties was removal of import licensing, sharp phasing-down of tariffs, and significant reduction in the level of assistance given by Government to exporters and entrepreneurs, including SMEs.

In my own opinion, this necessary "hands-off" approach was carried to excess in the early nineties - policy rigour became ossified into an ideological fixation, public sector agencies were exhorted to "lock in the reforms", and small business entrepreneurs and would-be facilitators were effectively told to "get on their bikes" by the Government, when they came looking for a helping hand with business and industry development. In succession to Rogernomics, we got a stiff dose of Ruthenasia!

But notwithstanding this period of Government disengagement, publicly-assisted economic development did keep on happening as the nineties progressed. In a curious and inverted way, this reflected the operation of market forces. Despite the Government's hands-off stance, business development assistance and facilitation was forthcoming - from the larger City Councils such as Christchurch.

The lesson was that, despite the lack of involvement by Central Government at that time, there was and remains is a market for publicly-funded economic development activity. From the New Zealand Chambers' viewpoint, the critical question is not whether this should happen - it must - but rather by what means, and with how much careful concern for the taxpayer's hard-earned dollars?

In the New Zealand setting at least, it's been shown to be invalid for Government broadly defined to wash its hand of SMEs and wider business development, and to say "it's not our business - it's purely a matter for market forces to resolve".

This is not by any means to say that we want a return to the bad old days of a fortress economy, of the sort we had before 1984. The benefits of our economic liberalisation experience since 1984 have been felt in every quarter of our society, and have been the key feature in making New Zealand the so much more interesting, dynamic and vibrant nation that it is today. I repeat, none of us would want to go back to the past.

However, our recent historical experience has shown us that when it comes to SME and wider business growth, there is a real role for both local and Central government. This is in the area of facilitation and information provision, rather than subsidies and handouts. It is critically important that the line between these two very different things is not crossed.

Last year a public agency called "New Zealand Trade and Enterprise" was created. This is a fusion of Trade New Zealand and the more recent Industry New Zealand. Their mission is to facilitate internationally competitive business, increasing global connectedness and removing constraints to economic growth.

NZTE are well resourced, but not excessively so. They have taken over the old trade commissioner network around the world - Mr Jeff Shepherd is their man in Kuala Lumpur - and have a growing presence back home in New Zealand.

Of course, NZTE's success or failure must ultimately be demonstrable and measurable, in both qualitative and quantitative terms. Otherwise the taxpayer funding will not continue to flow after the next change of Government - whenever that might be.

Personally, I believe that in New Zealand we've now got this balance more or less right. This is not just a policy position. My Chamber of Commerce acts as regional Lead Provider for two important NZTE nationwide programmes, Enterprise Training and BIZ Info referrals. Both are very much targeted at lifting the capability of SMEs.

So you can see that economic development facilitation and business assistance is now back in favour in New Zealand. I for one hope that this is not a passing phase. I do not want to see a return to the arid days of the early nineties. But that said, where there was once a desert in terms of the Government's preparedness to facilitate small business growth, nowadays we risk having almost a jungle of competing agencies, both taxpayer and ratepayer -funded, often funnelling public money around between themselves.

Someone other than the Government and local Councils has to keep tabs on all this. I guess that's one more reason for having Chambers of Commerce around, as constructive and trusted but vigilant third party organisations!

So there's a snapshot of the scene in New Zealand for smaller businesses. Now, how can Kiwis and Hornbills work more closely together in this area? And who are you going to call?

As I've indicated above, on the New Zealand Government side, channels already exist to amplify information about New Zealand business opportunities to Malaysian audiences. I've already talked about NZTE, and on the policy and diplomatic side I can tell you that our High Commission in your capital city, led by His Excellency Geoff Randall, is one of the best teams we have anywhere worldwide. As a Foreign Affairs Old Boy, I can personally attest to this!

But it doesn't stop there. Back in each of New Zealand's larger regions, we have both Chambers of Commerce and what are known as EDAs, or economic development agencies. We Chambers are completely privately owned and funded, but we work in natural partnership - at least in Wellington we do - with our Council-funded partners. They are called Positively Wellington Business, they have an eye-catching display right here at our Conference and I am sure they can be of real assistance to you in strengthening commercial links with our part of New Zealand.

So I hope you can see that both on the business organisation and government-council ends of the spectrum, "New Zealand Incorporated" is making a strong commitment to be in those places that really matter to us offshore. Malaysia is definitely one of these places.

But it's business alone that can do the business - not Government or Council agencies.

Last November the New Zealand Asia 2000 Foundation organized a "Seriously Asia Forum" in Wellington. The mission statement for this gathering, attended by senior politicians, business representatives, academics and media, was "Unleashing the Energy of New Zealand's Asian Links".

The question was asked by one of the participants: "how do we bring the two parties together?" By this he meant that New Zealand is a nation of SMEs, and that many of these companies are looking for investment vehicles to allow them to grow. In addition to potential investors abroad, New Zealand already has a number of skilled migrants on shore. These people have capital, are looking for SME level opportunities but need more assistance to find such investments. The two need to be brought together indeed. There are many investment opportunities in New Zealand, in the area of innovative technology in particular.

In many ways New Zealand and Malaysia complement each other in the global marketplace. Together our small and medium sized enterprises have much to gain though deeper mutual understanding of what we best produce, and what we have to offer in terms of resources, both physical and human.

What is the key to this better understanding and therefore even stronger cooperation among businesses? It's education, in its widest definition and in all its spheres. It is no accident that the educational ties we are celebrating at this conference are now forming the basis for commercial links between our two economies. Strengthened and empowered by these shared educational exchanges, our two SME business communities should take every opportunity for dialogue, leading in turn to mutual profit. "Let relationships develop, and commerce will follow".

Both our Governments are well aware of the dynamic nature of business partnerships between SMEs, and are doing a great deal to educate, facilitate and assist these contacts. Increasingly the publicly-funded structures and mechanisms are in place - and so the responsibility falls on our businesses themselves to realise the gains. By doing so they will benefit us all, in enhancing material and societal well-being in the years ahead.

Clearly there are some very well-focussed programmes in operation here in Malaysia, aimed at stimulating small business growth. Both your national and state governments and your business associations appear on the right track in marshalling public resource behind your small businesses.

In summary, the point I would want to stress is the complementarity of our two countries. Without wanting to over- generalise, Malaysia is increasingly a manufacturing powerhouse, while New Zealand is augmenting its traditional pastoral agriculture with knowledge -based services. So we do different things well. This is a necessary prerequisite for the sum of the whole being greater than that of the two parts.

The next point to emphasise is that, as I've acknowledged already, both our Governments are working to do what they can to get the contact points in place. This is not about doing business deals - only the businesses themselves can do that - but facilitating information flows and making sure enquiries about each other from each others' businesses are assisted speedily and knowledgeably.

My concluding message is that, so far as I can see as a newcomer to Malaysia, all of the necessary ingredients for even greater cooperation and heightened SME interaction are present. The right sort of Government programmes and business friendly organisations are there on the ground in both countries. What needs to be added to the mix in increasing quantities is he tangata - the people themselves - as our Organising Chairman Tan Sri Hamid Bugo himself has so fittingly acknowledged in his welcome to us all.

Ladies and gentlemen, on this my first visit to Malaysia, I'm genuinely touched by the warmth and affection for Wellington and New Zealand which many of you obviously hold. Just as is the case for us Kiwis here in Kuching, when you come back to our part of the world, please know that you will be among friends!

ENDS

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