New Zealand stands to gain significant benefits by enhancing trade and business relations with key developing nations such as China and India, as well as promising emerging economies like Vietnam and Indonesia.
A recent visit by the Prime Minister of Vietnam, accompanied by a sizable delegation, underscores the growing bilateral co-operation between New Zealand and Vietnam.
Discussions during the visit spanned various sectors, including education, trade and finance, signalling a commitment to deepening economic ties. Prime Minister Christopher Luxon emphasised the significance of this visit in strengthening the friendship between the two nations and fostering mutually beneficial business opportunities.
Similarly, Deputy Prime Minister and Minister of Foreign Affairs Winston Peters met the Foreign Minister of China, Wang Yi, in March. Mr Peters’ recent engagements in South and Southeast Asia further highlight New Zealand’s proactive approach to establishing new economic partnerships, as well as strengthening the existing ones.
New Zealand needs to actively pursue new regional and multilateral trade and economic partnership agreements, while also enhancing bilateral relationships. These strategic measures are essential for expanding business opportunities and mitigating global risks.
Therefore, I wholeheartedly welcome these visits, as they mark the beginning of significant efforts that hold the potential for economic benefits for New Zealand.
Vietnam has been recognised as a country with the potential to emulate the economic trajectory of China, thanks to its adoption of similar economic reforms. Economic reforms in China began in December 1978, while in Vietnam the comprehensive restoration programme known as Doi Moi was introduced in 1986. Both nations embarked on economic reforms, gradually liberalising prices and international trade.
Vietnam’s ascension to the World Trade Organisation in 2007 marked a significant milestone in its integration into the global economy. With an impressive average annual growth rate of 6.5% between 1986-2022, Vietnam presents lucrative opportunities for trade expansion. In 2022, China’s growth rate stood at 3%, while Vietnam’s growth rate was 8%.
In 2022, less than 2% of New Zealand’s exports and imports were trade with Vietnam. These figures starkly contrast with New Zealand’s trade relationship with China, where almost 28% of New Zealand’s exports were directed, and slightly over 23% of New Zealand’s imports originated in 2022.
There is significant potential for growth in this bilateral trade relationship. Vietnam’s rapidly growing economy and its status as a key manufacturing hub in Southeast Asia, attracting electronics manufacturers and assemblers, provide strong incentives for exploring and expanding economic and trade ties.
Indonesia is equally compelling. As the fourth most populous nation globally, after China, India and the United States, Indonesia holds significant potential.
Indonesia’s GDP grew at an average rate of about 5% per year from 2014-19. Following the pandemic, its growth rate in 2022 stood at 5.3%. In 2022, Indonesia ranked as the 16th-largest economy.
According to a Financial Times report in November 2023, Indonesia is the world’s largest producer of nickel, a highly sought-after critical mineral essential for advancing technologies such as electric vehicle batteries. President Jokowi is entering the final months of his term, and Prabowo Subianto is set to become the future president. New Zealand’s proactive engagement with Indonesia, particularly in light of the upcoming leadership transitions, holds promise for mutually beneficial economic co-operation.
When it comes to relations with India, the 2000s were a series of missed opportunities. Australia has strengthened its economic ties with India, and there is scope for New Zealand and India to work on an economic co-operation agreement similar to the Australia-India Economic Co-operation and Trade Agreement.
New Zealand has not fully realised the potential of its trade and investment relationship with South and Southeast Asia.
Embracing strategies similar to Australia’s initiative to establish investment hubs in key Southeast Asian cities can further enhance New Zealand’s trade and investment prospects.
— Murat Ungor is a senior lecturer in the University of Otago’s department of economics.
