Latest / Best of Business / Bowen Pan: Growth NZ co-chair outlines how New Zealand could potentially grow GDP

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Bowen Pan: Growth NZ co-chair outlines how New Zealand could potentially grow GDP · Best of Business

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  Speaker 1: You're listening to a podcast from Newstalk ZB. Follow this
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  Speaker 1: and our wide range of podcasts now on iHeartRadio.
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  Speaker 2: Now, as I was telling you earlier, it is worth
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  Speaker 2: watching the first half of last night's Future of New
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  Speaker 2: Zealand debate, if you haven't already, just to be challenged
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  Speaker 2: on what it is that we need to do to
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  Speaker 2: grow this economy. Now, one of the men on the
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  Speaker 2: panel has made this a little bit of a personal mission.
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  Speaker 2: Bowen Pan is the co-chair of Growth New Zealand. He's
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  Speaker 2: a board member here at NZME and the grandfather of
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  Speaker 2: Facebook Marketplace, and he's with us.
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  Speaker 1: Hi, Bowen.
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  Speaker 3: Hi.
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  Speaker 1: So what's your idea?
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  Speaker 3: Thanks for having me on the show.
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  Speaker 1: Oh, mate, you're welcome.
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  Speaker 2: What's your big idea? What do you reckon? What do
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  Speaker 2: we do to grow the economy?
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  Speaker 3: Well, New Zealand can't be exceptional at everything. I think
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  Speaker 3: I've been saying this last night. We should focus on
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  Speaker 3: a few areas where we can be world class and
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  Speaker 3: where we can really have an edge. And this is
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  Speaker 3: things like clean, cheap energy, like technology innovation. And so
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  Speaker 3: I think technology innovation really is one of those big opportunities.
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  Speaker 3: It's obviously not the whole answer, but it's a really
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  Speaker 3: good part of the answer. And the good thing is
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  Speaker 3: we've already proven that we can build global winners. And
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  Speaker 3: the question is whether we want to tweak our settings
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  Speaker 3: to really accelerate the growth of these industries for wealth
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  Speaker 3: creation in New Zealand. But of course, this isn't just
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  Speaker 3: tech for tech's sake. It's ultimately about better paying jobs,
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  Speaker 3: more opportunities for our kids and and bringing wealth into
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  Speaker 3: New Zealand by selling out to the world.
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  Speaker 2: The attraction of the tech sector is that, as you say,
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  Speaker 2: we have proven that we are quite good at it,
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  Speaker 2: and we're not starting from a nothing base, right? We've
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  Speaker 2: got Partly here. We've got the people. What are they
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  Speaker 2: called with the collars around the animals?
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  Speaker 3: We've got Rocket Power. Holter. That's right. We've got Holter.
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  Speaker 3: We've got Dawn Aerospace. We've got Aura. We've got Care Patron, Marlou,
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  Speaker 3: the list goes on, whether it's software, aerospace, in biotech, Um,
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  Speaker 3: there's a number of different, um, areas where we have
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  Speaker 3: proven that we actually can build global winners. Um, and, uh, and,
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  Speaker 3: and I think the, the really great thing about these, um,
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  Speaker 3: these companies is that actually the, the, when you aggregate
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  Speaker 3: them up, tech is now our third largest export sector
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  Speaker 3: after dairy and tourism. And by far one of the
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  Speaker 3: fastest growing. In fact, if you look at the preceding decade,
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  Speaker 3: it's grown on average 22% annually. Um, and, uh, and
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  Speaker 3: already 8% of our GDP. Uh, so it's already quite significant, uh,
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  Speaker 3: and it's growing very fast. Uh, and I think really,
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  Speaker 3: I think the idea here is what can we do
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  Speaker 3: to really accelerate what, uh, something that's already working, uh,
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  Speaker 3: to really, um, to really make that going.
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  Speaker 2: But Bowen, I would come back to you then. Well,
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  Speaker 2: I wouldn't, but others may, they may come back to
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  Speaker 2: you and say, well, listen, if it's already doing so well,
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  Speaker 2: then without any kind of government assistance, what's the argument
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  Speaker 2: for government assistance?
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  Speaker 3: Well, absolutely. It's, um, uh, it's about, um, you don't
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  Speaker 3: want to, uh, obviously to change something that's already working
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  Speaker 3: to make it worse. I think that's a baseline for sure. Um,
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  Speaker 3: but I think if you look around the world, um,
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  Speaker 3: a lot of, a lot of countries in liberal democracies
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  Speaker 3: are starting to really think about, uh, how can they
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  Speaker 3: position their own country in the world for competitive advantage? Uh, and,
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  Speaker 3: and so if we don't really think about this, in
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  Speaker 3: a way, uh, we are actually disadvantaged, uh, as, um,
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  Speaker 3: as how we play our hand in the world. And
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  Speaker 3: so why not play to our strengths and really think
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  Speaker 3: about instead of trying to shore up an area that
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  Speaker 3: is a weakness, we should really double down on areas
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  Speaker 3: where we can see this already kind of glimmers where
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  Speaker 3: it's really working well. And a really great thing is
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  Speaker 3: that obviously tech helps to scale really well. So it
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  Speaker 3: really removes a lot of the tyranny of distance. and
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  Speaker 3: leverages a lot of our strengths, like our really great
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  Speaker 3: trusted institutions and some of our really great talent base here.
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  Speaker 2: I was trying to remember, and I'd mentioned it earlier,
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  Speaker 2: but you've given a really great example of how the
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  Speaker 2: Israeli government sort of changed the settings just slightly to
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  Speaker 2: help one of the businesses that Apple purchased. What did
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  Speaker 2: they do?
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  Speaker 3: Yeah, so as an example, this is a few decades ago,
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  Speaker 3: the Apple acquired Apple, a company in New Zealand as
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  Speaker 3: well as in Israel at roughly the same time at
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  Speaker 3: about 100-ish people headcount. The difference is that the Israeli
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  Speaker 3: government then went over to Apple and said, hey, what
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  Speaker 3: can we do to actually turn this 100-ish R &
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  Speaker 3: D center into a 1,000-person R & D center? And
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  Speaker 3: so they worked together very closely with Apple, whether it
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  Speaker 3: was various different incentives, etc. And now we have over
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  Speaker 3: 2,500 people working in Apple Israel. And if you look
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  Speaker 3: at how many people for Apple in New Zealand, it's
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  Speaker 3: still roughly the same number, low hundreds. So if we
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  Speaker 3: kind of shift to what are the areas that we
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  Speaker 3: can really get right, I roughly break it down into talent, capital, regulation,
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  Speaker 3: and then wealth distribution. On the talent side, I think
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  Speaker 3: at the base level, it's really about ensuring our pipeline
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  Speaker 3: of really strong engineers and STEM, as well as the
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  Speaker 3: go-to-market like sales and marketing, all those folks that's really
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  Speaker 3: required for building a really successful global tech company is
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  Speaker 3: actually there. And the trend there, even though our talent
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  Speaker 3: base is still quite strong, when I talk to tech
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  Speaker 3: firms here, they do tell me that the engineering graduate
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  Speaker 3: quality has declined over the past decade. And if you
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  Speaker 3: look at the OECD results of school performance in math
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  Speaker 3: and science, perhaps that's not surprising. But that is important
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  Speaker 3: to actually think about, okay, if we really want to
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  Speaker 3: support this industry, it's actually about really making sure that
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  Speaker 3: baseline is there. The example that we just talked about
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  Speaker 3: was Apple. I think about that as actually attracting international
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  Speaker 3: tech companies to create a concentration of experienced operators. So
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  Speaker 3: it's not just about high-paying jobs in New Zealand. That's great.
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  Speaker 3: But also if you have clusters of these thousands of
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  Speaker 3: people based in a country like New Zealand, that helps
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  Speaker 3: to create this agglomeration effect of talent. And the last
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  Speaker 3: piece on talent is diaspora. We have the second highest
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  Speaker 3: number of diaspora in the developed world. And we do
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  Speaker 3: not that much with it. And certainly compared to some
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  Speaker 3: of the other well-known countries that leverage the DS priority strongly,
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  Speaker 3: whether it's Ireland or Israel or some of the other countries,
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  Speaker 3: there's a lot more we can do to really drive that.
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  Speaker 3: The second piece is capital. And the capital part is
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  Speaker 3: really about capital allocation across the tech sector in New
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  Speaker 3: Zealand right now is still quite uneven. um, across different
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  Speaker 3: areas and it's more thin in some of the later stages. So, uh, in, in, uh,
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  Speaker 3: in the, um, uh, funding world, this is called kind
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  Speaker 3: of series B, uh, onwards. And so, um, the good
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  Speaker 3: thing is that we now have enormous pools of savings
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  Speaker 3: through KiwiSaver and also through New Zealand Super and ACC.
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  Speaker 3: KiwiSaver alone, we have nearly $ 140 billion under management. ACC
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  Speaker 3: is about $ 94 billion, New Zealand Super over $ 50 billion,
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  Speaker 3: and less than 2% of that is committed to private assets.
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  Speaker 3: So private assets is more than just venture capital of
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  Speaker 3: banking tech companies. This broadly includes private equity, right? So,
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  Speaker 3: we should really think about different ways and structuring the
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  Speaker 3: system to really incentivise this capital flow.
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  Speaker 2: The point that you make is that it's all kind
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  Speaker 2: of there.
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  Speaker 1: It's there or thereabouts.
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  Speaker 2: All it takes is a few tweaks and we might
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  Speaker 2: be able to actually turn this into something awesome. Bowen,
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  Speaker 2: it is good to talk to you and I'm sure
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  Speaker 2: we're going to talk a lot more because we've got
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  Speaker 2: to get this idea going. So Bowen Pan, thanks very much.
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  Speaker 2: Growth NZ co-chair and obviously a board member of NZME,
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  Speaker 2: which is the parent company of Newstalk ZBT.
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