Minister to visit China and Japan

Hon Shane Jones, Minister of Forestry

Forestry Minister Shane Jones will visit China and Japan to further strengthen New Zealand’s relationship with two key primary sector export markets.  

The aim of his visit is to promote investment in New Zealand’s forest industry, support trade development opportunities – including for New Zealand exporters of manufactured wood products – and establish relationships with counterparts and industry stakeholders in both countries.

“This visit will build on the many decades of partnership and mutual respect that we continue to enjoy with these countries,” Shane Jones said.

“It will also allow us to further promote our forestry industry which is one of our largest export earners, with both China and Japan key markets for New Zealand.

“With the Government’s One Billion Trees planting programme, we know that high-quality overseas investment will play an important role in achieving this ambitious goal.

“In the year to March, nearly half of New Zealand’s total forestry exports went to the China market, while Japan is New Zealand’s fourth largest investor and a major investor in New Zealand’s forestry industry,” Shane Jones said.

The Minister will attend the 8th Global Wood Trade Conference in Chongqing, along with a delegation that includes New Zealand wood processing companies, the New Zealand Forest Owners Association, and Crown research Institute Scion.  

“It’s important that we continue to take steps like this to promote strategic cooperation in areas of significant mutual economic potential.

“This is a well-timed visit as it allows us to highlight the recent changes to the Overseas Investment Act, which will come into force in October. The changes will streamline the process of investing in New Zealand’s forestry sector and will also place more emphasis on value-added wood processing that will create jobs,” Shane Jones said.

Minister Jones departs New Zealand on September 14 and returns on September 22.

 

Shane.Jones@parliament.govt.nz

 

New Zealand forestry industry

New Zealand’s forestry export revenue was $6.2 billion for the year ending March 2018. This is an increase of 15.8 percent from 2017, and can be largely attributed to strong demand and prices from China. For the full year ending June 2018 New Zealand’s forestry export revenue is forecast to reach $6.4 billion.

China-New Zealand Relationship

Since diplomatic relations between New Zealand and China began in 1972, the bilateral relationship has grown to become one of New Zealand’s most valuable and important.

China is New Zealand’s largest primary sector export market, accounting for 27 percent of our total primary sector exports in the year ended June 2018, more than double our next largest partner, Australia.

Much of this growth has been supported by the New Zealand-China Free Trade Agreement (FTA), signed in April 2008. China and New Zealand are currently negotiating an upgrade to the FTA. 

New Zealand forestry products trade with China

China is an important market for our forestry industry. Last year (year ended March 2018) 47% of our total forestry exports went to the China market. China received 75% of our export logs. The next largest market for export logs was South Korea at 12%. China was also our largest market for wood pulp, and our second largest market for sawn timber.

Japan-New Zealand Relationship

Since diplomatic relations were established in 1952, the bilateral relationship, underpinned with high level political ties, has grown strongly through two-way trade, economic, tourism and people-to-people links.

New Zealand and Japan are both parties to the recently concluded Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). Areas of further opportunity in the relationship include renewable energy, science cooperation, sports diplomacy and increased Japanese investment in New Zealand.

Japan is the world’s third largest economy; New Zealand’s fourth largest trading partner; and New Zealand’s fourth largest investor. Japanese companies have invested heavily in wood processing in particular. In 2017, Japanese-owned manufacturers processed approximately 40% of the total wood processed domestically, or 5 million m3 of the total roundwood harvested.

Changes to the Overseas Investment Act to support investment

Changes to the Overseas Investment Act, which will come into force on 22 October 2018, will provide a more consistent approach and a streamlined pathway to overseas investment in forestry. Specifically the changes:

  • remove an existing exemption for profits à prendre to ensure that all interests in forestry assets are treated the same under the Act. As a result of this change, acquiring forestry rights (of 1000 hectares or more per year) or other regulated profits à prende (of five hectares or more) will require consent;
  • introduce a simplified consent pathway – the ‘special benefits test’ – for investors seeking to acquire forestry assets (whether freehold, leasehold, or forestry rights). Investors will be able to obtain consent to acquire such assets as long as they can satisfy a simple checklist, both reducing costs and increasing certainty for investors.
  • introduce standing consents, which will allow investors using the ‘special benefits test’ to obtain prior approval to enter into future forestry transactions, with the goal of speeding up the application process and reducing costs for investors.

The Overseas Investment Office, the administrator of New Zealand’s foreign investment screening regime, will provide updated information about these changes and how they will be applied next month.

 

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