In the second quarter of 2017, travel (including business and personal travel) made up 75.6 per cent of total services exports to ASEAN. This is not surprising given rising tourist numbers between ASEAN and NZ.
However we do see potential for this to grow further, as these numbers are low compared to tourism flows between Australia and ASEAN.
Australia is NZ’s biggest tourism destination both in terms of arrivals and departures (close to 40 per cent). Geographical proximity, close historical and cultural ties and the higher number of direct flights facilitates this relationship.
In 2017, a total of seven Australian destinations had direct flights to and from NZ, compared to only five in the 10 countries which make up ASEAN. Tourism flows could improve if the number of direct flights between ASEAN and NZ increase.
While NZ exports of travel for education to ASEAN are close to 9.6 per cent of its total education-related exports, it is much lower than other markets like China (23.4 per cent of the total).
The fact 38 per cent of NZ’s total travel exports are education-related shows the sector is a good prospect NZ can tap into.
Food for thought
Even though food forms the bulk of NZ’s total merchandise exports to ASEAN, there is room to enhance exports of certain food products, especially within untapped sectors.
The biggest gains though, can be made in the services category, given its vast growth prospects across both regions. Although small, engineering and other scientific services can be a good future growth avenue for NZ services exports to ASEAN.
Services exports from ASEAN to NZ are also expected to grow as new destinations emerge on the tourist map. The growth of new financial hubs in cities such as Manila can also help dilute the increased concentration of financial activities based out of existing hubs like Singapore and Kuala Lumpur.
While, goods trade have some potential to grow in certain sectors and investment can be enhanced, we expect services trade to hold the biggest potential for both regions. There are already existing trade arrangements in the form of AANZFTA.
China’s RCEP, if successfully concluded, will help to improve trade terms between ASEAN and NZ further. This will likely go beyond goods and services trade to cover investments as well.
These FTAs aim to promote foreign investment in the region through the strengthening of institutions and regulations. By 2020, 99 per cent of existing NZ trade in goods with Indonesia, Malaysia, the Philippines, and Vietnam, is expected to be duty free.
Such initiatives will likely pave the way for further economic cooperation between ASEAN and NZ.
Khoon Goh is the Head of Asia Research at ANZ