Experts help us understand the impact of the general elections that brought three Kiwi-Indians to the Parliament, as well as the National Party back to power for the third term in a row
The NZ general elections 2014 not only brought John Key back to the Prime Minister’s office for the third time, but also placed three Kiwi-Indians as members of Parliament for the first time in the history of the country. Political pundits have predicted that Key’s continuation as the Prime Minister will ensure stability in the economic development of the country. But the bigger question is will the election of the Kiwi-Indian MPs impact the community in any particular way?
About 12,000 km away, another interesting project was launched this week. The ‘Make in India’ initiative that was telecast in real time in Auckland, has caught the interest of not just the Kiwi-Indians but of Kiwis in general. With the opening up of the Foreign Direct Investment, the Indian Prime Minister Narendra Modi has literally opened up the Pandora’s Box of viable ventures. As if this wasn’t enough, soon after, Modi flew straight to the US and made his way to the hearts of millions as he wove his magic with words at the Madison Square in New York City. About 20,000 people were fortunate to physically attend the venue, but many more woke up in the wee hours of the morning to tune in to Modi’s magic – even if it was being unleashed some 14,000 km away. There is something appealing about Modi’s rustic Hindi that endears the heart and transcends physical distance and fills up every vacuum – from Manhattan to Mars.
To understand how these diverse developments converge to affect our everyday life, here’s what the experts have to say.
Political stability opportunity to deepen NZ-India ties
- Shamubeel Eaqub
Principal Economist, NZIER
A continuation of the old guard in the 2014 general election means few surprises. It provides a stable platform to deepen ties between New Zealand and India. New Zealand Indians will be the key link in closing the cultural, business and economic gaps between these two nations.
The National party returned to power with a resounding victory in the 2014 general elections. The details of the final form of government are still to be finalised, but National will lead with a majority.
A resounding victory gives National the political mandate and necessary seats in the Parliament to implement policies. However, National also realises that policies cannot be railroaded through without due process and buy-in – or future governments would reverse them. John Key, the Prime Minister, has warned against complacency to his elected colleagues.
The return of National for a third term will see two themes: a continuation of existing policy changes on most fronts; and a more concerted push to realise legacy policies.
The implications for the local Indian community will be through a number of channels: the general governance environment, trade, immigration and investment.
Continuation of existing policies
The National party has been driving through a broad programme of change over the last two terms across many areas of business, welfare, health and education. The Business Growth Agenda for example has a number of initiatives, which appear small individually, but powerful collectively. The rolling maul of new initiatives will continue to unfold over the next three years.
The pace of policy change has been gradual. A tight fiscal environment has been a hand brake, caused by recession and the cost of the Canterbury earthquakes. It is also philosophical – with the stance of policy making centrist and deliberate in most instances. Fiscal responsibility and thus gradual policy-making will continue.
Legacy policies
National will also pursue some policies that will leave a lasting legacy. These are likely to focus on critical areas like health, education welfare and housing. There will also be a focus on less ‘hard’ measures, like a change in the national flag.
Policies on health, education and welfare are likely to be within broad parameters already discussed. They will not be a surprise. There have also been a few areas of policy focus, which have been slow in progress. Housing has been one such area.
Reforms of the Resource Management Act (RMA), which plays an important part in land supply and use is likely to be a priority. Reform of the local government sector is also an unfinished business.
Implications for the economy
There are few immediate implications for the New Zealand economy. A continuation of the old guard will mean no big policy shocks. It will be the usual economic factors that will drive the cycle: interest rates, exchange rates and global growth.
The big legacy policies are structural reforms that will affect the economy over a long period. Such reforms are likely to be measured in decades rather than within a three-year electoral term.
Implications for NZ-India relations
There is unlikely to be much change in policies relating to trade, immigration and investment. But there are opportunities for deepening New Zealand’s ties with India to create greater economic prosperity.
A returned centrist National government and a reformist Modi government in India may be an opportunity to deepen NZ-India ties. The economic rise of India is palpable. Millions have climbed out of poverty and the number of middle class families is soaring. This will create opportunities for both nations.
Trade between NZ-India remains under-developed. For example, Australia exports twice as much to India as New Zealand (after accounting for the size of economies). Tourism with India is surging, but there is opportunity for much greater growth. Migration for study, work and family are strong, but more needs to happen to connect up NZ-Indians with local businesses to open opportunities for trade and investment.
We know that formal economic ties are only one part of doing business together. Cultural nuances and understanding each other’s way of doing business is just as critical.
Foreign investment rules are unlikely to change much. Knowledge intensive capital flows are essential to deepen economic ties between countries. Investment flows with India are still modest compared to potential economic ties between the two countries.
A platform for deeper ties
An unchanged government means policy direction will remain the same. The stability is an opportunity to deepen NZ-India ties. The long term gains for the two nations are obvious – this could be the time to hurry things along.
Indian and New Zealand business interests align post-election
- Sanjay Kumar and Vidya Garimella, EY
The 2014 general election has seen John Key’s National Party secure the first absolute majority of seats in Parliament in nearly 20 years.
As National enters its third consecutive term in Government, New Zealanders can expect current economic policies to continue. Amongst these policies is National’s target to double the value of New Zealand’s exports and increase the ratio of exports to GDP from 30% to 40% by 2025.
While China remains our largest trading partner, plans to increase trade should see the Government progressing trade negotiations with other emerging economies.
As a rapidly growing economy, India presents a wealth of opportunities for New Zealand businesses. India is New Zealand’s 15th largest bilateral trading partner and is predicted to be the third-largest economy in the world by 2025. In New Zealand, Indian is the second largest Asian ethnicity following Chinese and Hindi is the fourth most spoken language behind English, Maori and Samoan.
At the New Zealand India Friendship Association’s (NZIFA) event for the launch of the Indian Government’s ‘Make in India’ campaign, Peter Baker, a senior business executive and an advisor at New Zealand Trade and Enterprise, aptly discussed an important aspect New Zealand’s economic success. He said New Zealand first achieved economic success when the British settlers arrived and used their networks in the United Kingdom to build their businesses in New Zealand. Likewise, now is the perfect time for Kiwi-Indians to harness their connections with the motherland to achieve mutually beneficial economic outcomes in both India and New Zealand.
The recent New Zealand general election sees three Indian candidates, Kanwaljit Singh Bakshi and Parmjeet Parmar of National and Mahesh Bindra of New Zealand First, successfully enter the Parliament. With this notable result, an increased representation of Kiwi-Indian interests in the Parliament is anticipated.
At the NZIFA event, Kanwaljit Singh Bakshi reaffirmed that National will continue pushing for a Free Trade Agreement with India. It is also worth noting that the NZ Inc India Strategy, launched by Prime Minister John Key on October 11, should continue being implemented under the reelected Government. This strategy should see a growth in merchandise exports, services trade with India and an improvement to the bilateral investment framework.
On the other side of the world, Indian Prime Minister Narendra Modi launched his ambitious ‘Make in India’ campaign on September 25th. The event was broadcast live across India and to diplomatic missions abroad, including the NZIFA event in Auckland. Top industrialists and executives expressed their support for the campaign in New Delhi, including Reliance Industries chairman Mukesh Ambani, Tata Sons chairman Cyrus Mistry, Wipro chairman Azim Premji, Aditya Birla Group’s Kumar Mangalam Birla, ICICI Bank’s Chanda Kochhar, and Lockheed Martin’s Phil Shaw.
‘Make in India’ aims to turn the country into a global manufacturing hub and promises investors a conducive environment for doing business by simplifying regulatory processes, reducing the burden of compliance and developing infrastructure. Manufacturing contributes only 15% to India’s gross domestic product; Prime Minister Narendra Modi wants to raise it to 25%.
India’s High Commissioner to New Zealand, Ravi Thapar, emphasised that New Zealand had more to offer than just its agricultural exports. “This is a smart, technology-savvy country,” he said, mentioning the success of individuals such as Peter Jackson and companies such as Gallagher Group, Pacific Hovercraft, and Xero. Stating that the New Zealand economy was constrained by its size, Ravi Thapar encouraged investors to look to India, which presents incredible potential for business.
The ‘Make in India’ initiative will act as a first reference point for guiding foreign investors on all aspects of regulatory and policy issues and assist them in obtaining regulatory clearances. A dedicated cell has been created to answer queries from business entities through a newly created web portal (www.makeinindia.com). The back-end support team of the cell will be answering specific queries within 72 hours. Other widgets on the website homepage will inform you about Sectors, Live Projects, Policies and Frequently Asked Questions. A range of sectors including tourism and hospitality, ports, aviation, railways, renewable energy, and wellness are covered in detail.
“Make in India”, according to the website, “represents an attitudinal shift in how India relates to investors: not as a permit-issuing authority, but as a true business partner”. With both New Zealand and Indian Governments actively encouraging commerce, this is the right time for New Zealand investors to focus on India as a serious business destination.
The views expressed in this article are those of the authors and do not necessarily represent the views of EY.
Indian New Zealanders have a role to play in New Zealand- India Relations
Dr. Ashok Sharma,
Honorary Academic, Politics and International relations, the University of Auckland and
Deputy Chair, New Zealand Institute of International Affairs, Auckland Branch
The 2014 General election has given National Party a clear cut majority making John Key Prime Minister for the third term. Some interesting firsts have been created in this election. For the first time in the last 30 years any party has got clear majority and the Labour Party suffered its worst defeat in the last 100 years. But another first in this election is the growing number of MPs from different ethnicities and religious backgrounds in the NZ Parliament, newly elected representatives ranging across age, background and sexual orientation.
The new Parliament has three MPs of Indian origin - Kanwaljit Singh Bakshi and Parmjeet Parmar from National Party and Mahesh Bindra from NZ First. This reflects the increasing number of population of Indians in New Zealand as well as their political participation. Indian community has been active in politics through their participation in both the main political parties in recent years.
Indian community is the fastest growing ethnic community in New Zealand. Of late, Indian community is getting prominence in New Zealand’s socioeconomic and political life. There is a fast growing Indian community in New Zealand numbering around 100,000, constituting 2.5 % of New Zealand’s total population (2006 census), is settled all across the country. Their presence can be felt in many walks of life from public life to business, medicine, engineering, information and technology, education, sports, motel and small businesses, agriculture and arts.
Diaspora plays an important role in bridging the nations. Indian diaspora has been termed a ‘Model Minority’ in the North American context and they have played an influential role in the relationship between their newly adopted country and motherland. Indian Americans’ contribution in the socio-cultural and economic realms of the United States and their role in the US-India relationship are cited as an example in this case.
Although the Indian community is making their presence felt in different walks of life in New Zealand, their professional success has not reached the level from where they can focus on political activism either in New Zealand domestic politics or play an active role in New Zealand’s relationship with India. However, Indian diaspora in New Zealand is being engaged on this front by the government and institutions. The trend of 2014 election reflects that Indians in New Zealand is preparing itself to transform their professional success to political activism. In the coming years the Indian New Zealanders will play a more active role in New Zealand-India relations.
The role of Indian diaspora will become significant in New Zealand’s relationship with India. Today building a relationship with India is top priority of NZ-India Inc and the steps have been taken by the New Zealand government to conclude the Free Trade Agreement. The growing New Zealand-India trade relationship is most noticeable in the increasing tempo of two-way high level visits, the growing trade relationship and the negotiations towards a bilateral free trade agreement. For enhancing the trade relations it is important that both countries understand each other’s requirements, the market needs, trade patterns between the two countries and business opportunities for New Zealand and Indian companies in terms of products, services and investment.
Narendra Modi-led Bharatiya Janata Party (BJP) government in India has given top priority to economic development. Modi government is a business-friendly government, which is welcoming to foreign investors. He has promised corruption-free, efficient governance, a rationalised tax regime and speedy e-governance that will cut back on bureaucratic red tape. This will help the speedy development of ongoing free trade negotiation between New Zealand and India.
The BJP is also known for its diaspora-friendly policy and the recent announcement of PM Modi during his visit to the US that all People of Indian Origin (PIO) cardholder will have life-time visas is an indication that the Indian government will engage Indian diaspora across the globe to bridge the relationship between India and their newly-adopted country.
It augurs well for Indians in New Zealand as they can play a facilitating role in New Zealand-India relations when the two business-oriented leaders John Key and Narendra Modi are at the helm of affairs in New Zealand and India.