Great Britain, the empire on which, once, the Sun never set, is currently in the eye of a storm! Ever since the country voted to leave the European Union, there has been utter chaos in all of EU. An ill effect of UK leaving the EU, there may no longer be tax free import/ export of goods between the UK & the EU. With over 50% of UK exports being sent to countries who are EU members, it has suddenly become very tough for businesses and industrial houses to think beyond 2019, when the UK will officially leave the EU.
There is utter panic spreading throughout the EU as industrial nations such as France, Germany and Italy are also worried about their exports to the UK/ Scotland. However, the UK Govt is not as concerned as the newspapers make it out to be. At the recently concluded meet of the 53 Commonwealth Head of Governments meeting (CHOGM), an idea to have a Commonwealth wide Free Trade Agreement was mooted.
It is an idea which would be a huge success. The Commonwealth of Nations is a group of 53 countries that were previously ruled by the United Kingdom. When referred to collectively, they cover an area of 29,958,050 km2, which is equal to 20% of all landmass, across 6 continents. The Commonwealth of Nations has a total population of over 2.4 Billion, which is close to 33% of all the World’s population.
The European Union has a GDP of $ 18.4 Trillion with just 28 member countries. The Commonwealth, has a combined GDP of over $14.6 trillion, even with there being no Free Trade Agreement in place. With the membership of some of the largest growing economies such as India, UK, Canada, Australia, South Africa and Nigeria, the Commonwealth of Nations truly promises to be the next big Union of countries, which can be bigger and more influential than the EU.
With a Free Trade Agreement in place, most of these nations will be able to trade freely with each other without the need for businesses to pay taxes for export/ import of goods and services. This is indirectly an incentive for a country to reduce its trade with other countries and increase its trade with one where it doesn’t pay taxes. This motivates global corporations to shift their regional/ corporate head offices from one jurisdiction to another.
The countries mentioned above are highly industrialized and have huge markets that need a steady supply of goods and services. However, barring London, there is no other city that stands out for its financial prowess. Although London can easily serve European and African countries, most countries on other continents find it difficult to match their work timings with London. This disadvantage presents an opportunity for Auckland.
Auckland is the major economic and financial hub of New Zealand. It has a GDP of NZ $ 93.5 Billion, which is 37.2% of the GDP of New Zealand. This is mainly due to the large number of business & financial services that it offers businesses across the globe. Operation costs for most businesses in New Zealand are 25% lower than other developed economies. Also, there are no payroll taxes, no stamp duties, no social security taxes, no long/ short term capital gains taxes and no estate taxes.
Auckland is the 3rd most liveable city in the World as per the Mercer Quality of Living survey. New Zealand is 12 hours ahead of GMT and a couple of hours ahead of all major Asian cities, thus making it easy for global MNCs to service their major clients from one location.
However, just having great infrastructure is not enough, unless you have the human capital to operate your businesses.
New Zealand also has some of the best universities in the World, with its top 8 universities ranking in the top 3% of the World regularly every year. The reason for the same is simple: they select only the best students after a rigorous selection process and then train them with a curriculum that is revised every year in consultation with Captains of the industry. Selected students are then trained with not just theoretical classes, but also with practical sessions which are conducted by senior industry professionals.
One University that has been a pioneer in introducing World class teaching techniques in New Zealand is the University of Otago. It has a glorious history of over 150 years and is known World over for the excellent faculty, facilities and courses that it offers students across the World.
One course that fits perfectly here is its 12 month Masters in Finance. It is offered jointly with India’s premier financial institution BSE Institute. The course trains students to be qualified as global Financial Analysts, Credit Risk Management Analysts, and M&A Analysts and Financial Managers who easily get a salary of over $50,000 in their first job after college.
It is graduates like these who are employed by MNCs across the World. With New Zealand being eyed by most MNCs across the World, the availability of graduates like these, makes it more tempting for corporations to shift offices immediately.
All these have made Auckland, New Zealand an investor’s and a manufacturer’s paradise. Hence, there are over 100 MNCs which have their regional offices in Auckland instead of other hubs in Australia/ Asia.
With the rise of emerging economies such as India, South Africa, Indonesia, etc, New Zealand stands to gain the most if it is able to use the vast resources it has at its disposal. The Commonwealth Free Trade Zone can work wonders for every country that is a signatory, but it is sure to transform Auckland to be the London of the Pacific!
Would like to end by quoting the poet Robert Frost – “The woods are lovely, dark and deep, but I have promises to keep and miles to go before I sleep.”