NSW International Engagement Strategy APRIL 2013 NSW International Engagement Strategy 1
Foreword NSW requires a clear co ordinated strategy for international engagement to support the growth of the NSW economy. At the request of the Premier and Deputy Premier a review of the current approach to international engagement has been undertaken to: Develop economic objectives and identify priority markets and industry sectors Focus our efforts on international activities with maximum economic trade and investment impact, and Identify organisational arrangements and capabilities to support the delivery of our international engagement strategy. The result of this review is the preparation of a NSW International Engagement Strategy that recommends actions to grow NSW as a globally competitive business hub. The Strategy builds on the strong working relationship between the private sector and the NSW Government. In preparing the NSW International Engagement Strategy, advice and expertise has been widely sought. I thank the NSW Export and Investment Advisory Board members for their input. I also thank the numerous bilateral chambers, corporates and agency representatives who contributed to the review. The Hon. Warwick Smith LLB FAICD AM Chair NSW Export and Investment Advisory Board
Executive Summary The NSW International Engagement Strategy provides a co-ordinated approach to growing international trade and investment activities in NSW. The Strategy responds to current economic pressures that make it necessary for governments and businesses to review the way they operate and adopt new business models for engaging with the global economy. The Strategy includes new actions for NSW Government that have been developed in consultation with practitioners, business partners, stakeholders, government agencies and international offices. Prioritising international markets and sectors 1 Prepare detailed strategies for priority markets 2 Create a NSW trade and investment presence in new priority markets 3 Co-ordinate visits to priority markets Growing international business investment 4 Seek expertise from industry experts 5 Market NSW to international companies 6 Attract investment in NSW infrastructure Strengthening exports 7 Partner with industry to promote trade missions into priority markets/sectors 8 Provide export facilitation and advisory services in metropolitan and regional NSW Building international relationships 9 Strengthen government to government relationships 10 Align with Australia wide engagement models Co-ordinating delivery 11 Introduce a new co-ordinating structure 12 Clarify roles and responsibilities 13 Co-ordinate effort to improve inbound and outbound delegations NSW International Engagement Strategy 1
Introduction The NSW International Engagement Strategy positions NSW to attract international investment, facilitate exports, create jobs and grow the NSW economy. The development of this Strategy comes at a time of unprecedented challenges and opportunities for economic trade and investment. NSW is confronted by historically high terms of trade with a high Australian dollar, increasing competition from lower cost locations, shortages of skilled labour, rising energy costs, and the global impact of a European economic and financial crisis. At the same time, there are also emerging opportunities, with new markets emerging particularly for industries and businesses that can adapt and innovate. Asian markets are particularly important for NSW as a service economy, especially in the growing export areas of education, professional services, ICT and tourism. Continuous reinvention and innovation is required to manage the challenges and take advantage of the opportunities. Collaboration between research, business and government, as well as ongoing education and training are critical to ensure the NSW workforce remains nimble and well-positioned for new business models. The current economic pressures make it necessary for both businesses and governments to review the way they operate. The changing economic environment and long-term fiscal pressures have resulted in a fundamental reassessment in the way the NSW Government operates to create the conditions for economic development and international engagement. The Strategy identifies specific international engagement actions to: prioritise our markets and sectors attract productive international investment and regional headquarters encourage growth in NSW business activity in overseas markets build close international trade and investment relationships, and co-ordinate our efforts and improve our structures for delivery. These five priority areas for action make up the subsequent chapters of this Strategy. 2 NSW International Engagement Strategy
Industry & Government TogetheR Industry Action Plans & NSW 2021 DEMONSTRATE LEADERSHIP MAKE IT EASIER TO DO BUSINESS COLLABORATE TO DRIVE INNOVATION AND COMPETITIVENESS INVEST IN CRITICAL INFRASTRUCTURE RAISE THE GLOBAL PROFILE OF SYDNEY AND NSW Advocate for NSW industries in national forums Find new solutions to economic pressures Anticipate opportunities and challenges in the Asian Century Improve NSW procurement processes Improve planning processes Ease the regulatory burden on business Better align education outcomes to industry needs Strengthen networks and collaboration between industry and the research sector Improve capabilities of NSW business Plan for new infrastructure Develop regional infrastructure for growth Invest in smart infrastructure Strengthen Sydney s global position Strengthen international engagement Globally Competitive, Innovative and Productive FIGURE 1 STRONG FOUNDATIONS FOR GROWTH OF THE NSW ECONOMY Growing the NSW economy International engagement is a critical component of the NSW economic development framework as illustrated in Figure 1 above. NSW 2021, the NSW Government s ten year plan, identifies as the number one priority the need to restore economic growth and establish NSW as the first place in Australia to do business. NSW 2021 sets a target to increase business investment by an average of 4% per year to provide the foundation for securing jobs and long term economic activity in NSW. The NSW Strategy for International Engagement will support the achievement of this target and complement existing NSW Government initiatives to support economic growth in NSW, including: long term planning and investment in critical infrastructure microeconomic and regulatory reform to remove red tape for business increasing our skilled workforce, innovation and research capacity building a strong and diversified regional NSW, and maintaining a sound fiscal base and efficient legal system. NSW 2021 sets priority actions to enhance our trade and export performance by targeting and attracting international investors into priority sectors, and growing the capability amongst NSW export businesses. The vision is for Sydney and NSW to be a leading economic and financial hub in the Asia Pacific Region. NSW International Engagement Strategy 3
FIGURE 2 Relative Importance of International Markets for NSW Size of bubble=size of FDI inflow to Australia (5 year average) AUSTRALIAN SERVICES EXPORTS ($ MILLION 5 YEAR AVERAGE) 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 GERMANY CANADA FRANCE SWEDEN UK SGP HONG KONG MALAYSIA SWITZERLAND USA NETHERLANDS BELGIUM CHINA KOREA JAPAN Source ABS, Global Trade Atlas, NSW Department of Trade & Investment 1,000 2,000 0 2,000 4,000 6,000 8,000 10,000 12,000 NSW MERCHANDISE EXPORTS ($ MILLION 5 YEAR AVERAGE) Engaging with the global economy Effectively engaging with the global economy is critical to growing the NSW economy, maintaining our competitiveness and improving our productivity. NSW exports and private investment account for a quarter of the Gross State Product (GSP) in NSW (in 2011-12, NSW exports generated over $65 billion in revenues or 14.4% of GSP and private investment generated over $52 billion or 11.5% of GSP, Source: NSW State Accounts, 2011-12). In addition, the Department of Foreign Affairs and Trade calculate that one in five jobs in Australia is dependent on international trade and investment activities, and that a 10% increase in our exports could deliver 70 000 new jobs to Australia. Building on our competitive advantages International companies choose NSW over other places to invest and set up their regional offices based on our: stable and diverse economy sound regulatory environment innovative, knowledge based industries research and development credentials highly skilled multicultural workforce world class infrastructure access to Asia Pacific markets, and high quality of life. The NSW International Engagement Strategy builds on these competitive advantages to grow international trade and investment. 4 NSW International Engagement Strategy
Developing the Strategy The NSW International Engagement Strategy has been prepared based on a review of current international engagement activities that aim to support economic growth in NSW. The Terms of Reference for the review are listed below: 1. Identify a clear focus and economic objectives for international engagement. 2. Identify priority markets, industries and business types in which to focus our resources and efforts. 3. Identify international engagement activities currently being undertaken by NSW and their benefits to the NSW economy. 4. Consider the priorities for NSW businesses in terms of what most assists them to further their trade opportunities internationally. 5. Identify and prioritise the new international engagement activities that could advance NSW s international engagement interests further. 6. Review organisational arrangements and capabilities to support the NSW International Engagement Strategy. 7. Identify opportunities for better co ordination across agencies to deliver greater results for NSW. 8. Review the interface and alignment with Australia wide engagement models. The development of the NSW International Engagement Strategy has been led by Mr Warwick Smith and Directors General from the NSW Department of Premier and Cabinet and the NSW Department of Trade and Investment, Regional Infrastructure and Services (DTIRIS). The actions in the Strategy have been developed in consultation with practitioners, stakeholders, business representatives, government and business partners. Importantly, consultations were also held with staff in the DTIRIS international offices, who are our front line for international engagement. Common themes identified in the feedback from these representatives were: the need for greater coordination of Ministerial visits, including closer engagement with overseas offices to leverage contacts the need for greater flexibility with regard to travel and operational accountability in international offices the need for better cooperation with industry to promote trade missions into priority markets and sectors, and the need for further development of marketing materials to promote NSW in priority markets and sectors. These issues, and many others raised by stakeholders are addressed in the NSW International Engagement Strategy. NSW International Engagement Strategy 5
Prioritising international markets and sectors The NSW Government will focus resources and effort in priority international markets and sectors. With limited resources and a world of opportunities, our approach is to identify markets and sectors predicted to be the most productive and aligned to our competitive advantages. This chapter identifies a new set of priority markets and sectors for NSW and identifies additional actions that will set us up for success in those markets. 6 NSW International Engagement Strategy
Priority international markets The identification of priority international markets for NSW is based on three criteria: current largest source of productive international investment (Figure 2) current significant markets for export of NSW goods and services (Figure 2), and international markets with strong economic growth (Figure 3). Based on this analysis, the most important and strongest international trade and investment partners for NSW are: Japan United States of America China United Kingdom India Malaysia United Arab Emirates South Korea Singapore Indonesia These are the top ten priority markets for NSW as a whole and will not be exactly the same for each industry sector. For example, the top export markets for NSW agricultural food products over the past five years would be Japan, USA, New Zealand, South Korea, Indonesia, Vietnam, China, Hong Kong, and Singapore. The additional markets that emerge will be addressed through sector specific strategies. Within these top ten priority markets are the priority markets within our region which will be the focus for NSW leading the charge into Asia. The following summary of each of the priority markets includes details of our current export and investment attraction focus, and the future growth opportunities for NSW. FIGURE 3 Economic Growth Past and Future Growth in GDP at national currency and constant prices 10% 9% CHINA 8% INDIA ANNUAL GROWTH IN GDP (20011 2016) 7% 6% 5% 4% UAE HONG KONG KOREA MALAYSIA UK 3% 2% USA AUSTRALIA NEW ZEALAND SWEDEN FRANCE CANADA SWITZERLAND SINGAPORE JAPAN 1% GERMANY BELGIUM NETHERLANDS 1% 0 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% ANNUAL GROWTH IN GDP (2006 2011)
Japan Japan is the world s third largest economy and it is an important trading partner for many countries, both as a source of imports and an export destination. Japan has a welleducated, industrious work force, while its large and affluent population makes it one of the world s largest consumer markets. With a population of 127 million, the Japanese market is characterised by consumers with high levels of disposable income, and companies with a strong global orientation and willingness to invest in sustainable, long-term products and services. Australia and Japan are developed, open market economies with strong, transparent regulatory systems that foster competition and provide robust protection for intellectual property and investment. Australia and Japan have similar regimes in such areas and a history of cooperation. This brings certainty and stability, makes an important contribution to the success of a highly complementary economic relationship, and provides an excellent basis for its future growth. Japan is Australia s second largest export market. Japan was Australia s second-largest trading partner in 2010-11. United States of America The United States of America is the world s largest economy. With a GDP of over $14.5 trillion (2011) representing around one quarter of global GDP, the USA is a major driver of the global economy. The USA is a world leader in international trade and investment, research and development expenditure, and stock market capitalisation. Australia and the USA have a shared record of working together closely to promote global trade liberalisation for over 50 years. The USA is Australia s most important economic partner country (when goods, services and investment are combined). Over 35% of USA merchandise trade with Australia occurs within NSW. In 2010-11 total bilateral merchandise trade between NSW and the USA was valued at $11.4 billion, an increase of 1.1% from 2009-10. In 2010-11 NSW exported $2.29 billion worth of goods to the USA and NSW imported $9.06 billion worth of goods from the USA. The USA market continues to offer significant opportunity to NSW, both as a destination for exports and also a source of foreign investment. Japan is NSW s largest market for merchandised exports of $9.7 billion (2010-11), and Australia s third largest source of foreign direct investment. Our objective is to build on our existing trade and investment successes, but also attract new investment into priority sectors including clean technology, life sciences, agribusiness, research and professional services. 8 NSW International Engagement Strategy
China China has the world s largest population and is one of the fastest growth markets for NSW. Over the past five years bilateral trade between Australia and China has grown by 148%. There is significant opportunity to increase investment opportunities as currently Australia only attracts a small proportion of China s foreign direct investment. In 2011 only 2.6% of Australia s total foreign direct investment in Australia was from China. China has an export oriented economy and requires resources from NSW to build infrastructure and supply energy for its manufacturing sector. New opportunities arise for NSW to export its expertise to China to support the restructure of its economy to higher value manufacturing, services and a focus on environmental sustainability. A NSW Strategy for China has been prepared to target areas for further engagement with China and to build on our existing trade and investment successes. The NSW Strategy for China targets new investment into the following sectors: Professional services ICT/digital Energy, resources and agribusiness, and Tourism and education services. United Kingdom The United Kingdom is the seventh largest economy in the world, with a GDP of $2.35 trillion. London is one of the world s leading financial centres. The UK has a well developed, diversified, market-based economy with extensive social welfare services that provides most residents with a high standard of living. The UK is a large importer of commercial services. Australia has a significant relationship with the UK underpinned by our shared heritage, common values, closely aligned strategic outlook and interests. Australia and the UK have an extensive economic and trade relationship. The UK is the second largest source of FDI into Australia after the United States and is still one of our more lucrative export markets. It is Australia s second largest services trading partner, our seventh largest merchandised exports market and the third largest source market for international visitors after New Zealand and China. To further our international trade with the UK we will build on our existing successes in tourism and professional services exports, and also focus on growing clean technology, digital/ict and research and development. Our strong trade relationship with the UK also offers significant opportunities for NSW to access the markets across the European Union (EU). The 27 members of the EU, as a bloc, constitute Australia s largest foreign investor and one of Australia s largest export partners. At the end of 2011, DFAT reports show EU foreign direct investments in Australia totalled $143 billion approximately 28.3% of total foreign direct investment in Australia. While servicing the broader EU market from the UK may not be ideal, it does provide an initial base for many NSW businesses starting to look at opportunities in continental Europe. NSW International Engagement Strategy 9
India India is currently the tenth largest economy in the world and is predicted to become the fifth largest by 2020. India has a fast growing population and a diversified economy. India is a source of opportunity for NSW due to its major infrastructure growth and demand for construction related products and services. India s new five year plan (2012 2017) identifies the need for $1 trillion worth of roads, railways, ports, airports, electricity, telecommunications, oil and gas pipelines and irrigation. The Australia India economic relationship has grown steadily in recent years and has the potential to increase considerably as India s economic expansion continues. Australia s strength in exporting primary products, particularly minerals and fuels, positions us well to supply growing Indian industrial and consumer demand. Bilateral trade between NSW and India was valued at $1.93 billion in 2010 11, an increase of 96% over five years. India is NSW s seventh largest merchandise export market. Merchandise exports to India are valued at $1.26 billion and have grown 116% in the five years to 2011 12. Our figures demonstrate the significance of our mining and resources relationship with top three categories in mining and resources. Sectors on which NSW will focus its efforts in the future are professional services, building and construction, resources and energy, and technology. Malaysia Malaysia is a significant trading nation with a high middle-income and an export-oriented economy. Malaysia is Australia s tenth largest trading partner. The total of NSW and Malaysia bilateral merchandise trade in 20010-11 was $3.9 billion. NSW exports to Malaysia in 2010-11 were valued at $616 million. Major exports were aluminium, medicinal and pharmaceuticals, coal, iron and steel. Malaysia is a growing source market for the NSW tourism industry, with 60,000 visitors from Malaysia in the year ending September 2012. Malaysian investment in Australia at the end of 2011 was $14 billion. Australian companies continue to pursue opportunities in Malaysia, with the stock of Australian foreign investment in Malaysia $5.6 billion in 2011. The Malaysian Government has relaxed liberalised investment regulation to create a business friendly environment, potentially opening up opportunities for NSW companies in areas such as services and regional distribution. The Malaysia-Australia Free Trade Agreement began on 1 January 2013, and opens avenues for NSW goods and services into the dynamic Malaysian market. Currently 97.6% of Australian goods exported to Malaysia are now eligible for tariff-free treatment, and this will rise to 99% in 2017. The NSW agribusiness sector is set to benefit across a range of product categories. 10 NSW International Engagement Strategy
United Arab Emirates The United Arab Emirates (UAE) is Australia s largest market in the Gulf, with excellent growth prospects. It is currently Australia s 16th largest trading partner. It has a sound economy, a fast growing and youthful population, low barriers to entry, a well managed banking system, excellent infrastructure, and a sophisticated business community familiar with Western practices. It is also an intensely competitive market. The bilateral relationship continues to have a strong commercial focus. The UAE offers export opportunities across a wide range of sectors due to the fact that 80% of all items consumed in the UAE are imported with 70% of those items re exported to surrounding markets. Most export opportunities are delivered via a trade show platform with most being held in Abu Dhabi and Dubai. In 2010-11 total bilateral merchandise trade between NSW and the UAE was $504 million, an increase of 92% over the previous year. In 2010-11 NSW exports to the UAE increased by 9% from the previous year and were valued at $237 million. Opportunities for attracting new investment and expanding exports are focused in the following sectors: Financial Services Agribusiness Building and Construction Services Food and Beverage, and Marine South Korea The Republic of Korea (South Korea) has the 15th largest economy in the world with sustained high economic growth. South Korea is Australia s fourth-largest trading partner with total bilateral trade worth $31.9 billion (2010-11), around 5% of all of Australia s international trade. The level of investment between Australia and South Korea has grown and diversified over the last decade. South Korea is also one of NSW s largest trading partners with $6.4 million worth of bilateral merchandise trade between 2010-11. NSW provides raw materials, manufactured products, food and services to South Korea and imports products such as cars, telecommunications equipment, computers and refined petroleum. NSW received 147,000 overnight visitors from the Republic of Korea, spending $490 million in 20011-12. Since 1991, NSW has had a Sister State Agreement with Seoul Metropolitan Government. The population of Seoul is around 10 million people, one fifth the population of South Korea. Like Sydney, Seoul has a strong financial base, highly efficient logistics, and a highly competitive ICT industry. Future trade and investment opportunities for NSW are in the financial services, digital economy and minerals and resources sectors. NSW International Engagement Strategy 11
Singapore Singapore is the hub for the South-East Asian region with a dynamic economy and one of the highest economic growth rates of all advanced countries. Singapore s investment in Australia is substantial and growing. The Singapore-Australia Free Trade Agreement (2003) has contributed to a strong bilateral economic partnership. In 2010-11 Singapore was Australia s largest trade and investment partner in ASEAN and our fifth largest trading partner overall. NSW trade with Singapore is significant, with bilateral trade valued at $3.81 billion in 2010 11, an increase of nearly 29% in the last five years, although the trade relationship is heavily in Singapore s favour. The Singapore Government is working towards transforming Singapore from an investment driven economy to an innovation driven economy. Innovation development projects may obtain grants of 30 50% of approved direct development costs. Two areas specifically identified for further development are environmental and water technologies, and interactive and digital media. Indonesia Indonesia and Australia have a healthy trade and economic relationship with total (merchandise and services) two-way trade worth $13.8 billion in 2010-11 and two-way investment worth around $5.7 billion in 2010. Indonesia is Australia s fourth largest trading partner in ASEAN and our 12th largest trading partner overall. In 2011-12, Indonesia was the eighth largest recipient of merchandised exports from NSW. There is considerable opportunity to further develop our economic relationship based on the proximity and complementarities of our economies. Specifically, export opportunities exist in the areas of: Resources and energy, particularly clean and renewable energy and associated infrastructure Agribusiness commodities and associated technologies and services Financial, professional and business services Information and communications technology Education and training, and Health services 12 NSW International Engagement Strategy
Priority industry sectors The identification of priority industry sectors in each of the above markets is based on: Demands and needs of the priority market Sector strength in terms of existing exports and foreign direct investment Potential for growth based on market opportunities, and NSW competitive advantages. Like other advanced economies around the world, NSW is shifting to a more service oriented economy as illustrated in Figure 4. The most important sectors for international trade and investment for NSW are: Professional Services Construction/Infrastructure Advanced Manufacturing Education and Research Information & Communication Technology (ICT) Clean Technology Mining Agribusiness Tourism FIGURE 4 Predicted Composition of NSW and Australian Economies in 2019 20 Financial and Insurance Services Construction Professional, Scientific and Technical Services Manufacturing Health Care and Social Assistance Transport, Postal and Warehousing Wholesale Trade Public Administration and Safety Retail Trade Information Media and Telecommunications Education and Training Mining Rental, Hiring and Real Estate Services Administrative and Support Services Electricity, Gas, Water and Waste Services Accommodation and Food Services Agriculture, Forestry, Fishing Other Services Arts and Recreation Services 0% 3% 6% 9% 12% 15% 18% NSW Australia NSW International Engagement Strategy 13
Professional services Professional services (including finance, insurance and legal services) is the largest industry in NSW, contributing 18% of the NSW economy and employing one in 10 of the State s workers. NSW makes up more than half of Australia s total professional services exports. The NSW Government aims to build on our global reputation as a vibrant, well regulated centre for services excellence to achieve a significant increase in finance, insurance and professional services exports. To maintain long term competitiveness, the professional services sector will need to continually reinvent itself with new skills, talent and technology. Construction/Infrastructure NSW has the highest concentration of Australia s construction and infrastructure companies and across the board manufacturing capabilities. We also offer the largest number of professional services firms, a deep pool of skilled workers, Australia s bulk of architecture and building related university students, and a new streamlined planning system is being developed. In 2011 12, the NSW construction sector was estimated to contribute $22.4 billion, or 5.3% of gross value added for NSW. It also employed an average of 300,000 people, 8.3% of the State s total workforce. The NSW Government has committed heavily to upgrading the State s infrastructure. In the current financial year, total state infrastructure investment is budgeted at $15 billion. NSW is well positioned to respond to demand for infrastructure and construction in priority markets to support strong population growth. NSW is also well positioned to provide services to support environmentally friendly building techniques and export of low energy intensive building materials and methods. 14 NSW International Engagement Strategy
Advanced Manufacturing Advanced manufacturing companies choose NSW because it offers a highly skilled workforce and excellent infrastructure. About half of NSW s total manufacturing exports are advanced manufactured goods In 2011 12, NSW manufacturing accounted for 30.6% of the value of Australia s exports of advanced manufactured goods. In all, about half of NSW s total manufacturing exports are classified as advanced. Over the seven years to 2011, NSW exports of advanced manufactured goods increased 3.2% whereas the rest of Australia s fell 1.3%. Manufacturing is NSW s fifth largest employer, accounting for 280,000 employees. NSW will focus efforts on the significant opportunities for highly specialised and technologically advanced manufacturers and will seek to access new international markets. Education and Research NSW will build on its competitive advantage as a knowledge intensive economy, characterised by a highly educated and skilled workforce, and a vibrant and high impact research sector: an economy that is globally recognised for its knowledge creation and innovation capabilities, and its ability to support emerging challenges facing NSW Government and industry. NSW is a significant exporter of educational services and research and development expertise. Currently education related services are the second largest export earner for NSW after coal, providing over $5.5 billion into the NSW economy (2010-11). There were around 145,000 international students enrolled in NSW (June 2012). In 2010-11 $6.3 billion was spent on research in NSW by the business sector. The NSW Government is pursuing initiatives to ensure that research outcomes are co-developed with our leading-edge companies, as well as the major international firms that call NSW home to improve the competitiveness of their products and services. NSW International Engagement Strategy 15
Information and Communication Technology (ICT) NSW currently dominates Australia s telecommunication, computer and information services exports. NSW exports of telecommunication, computer and information services are valued at over $829 million (2010-11), representing 51% of the national total. NSW is a leading ICT centre in the Asia Pacific region. NSW has a highly skilled workforce and cutting edge research capacity. We have a wide range of industries including finance, creative digital industries, transport and logistics, advanced manufacturing and health that are reliant on the digital economy. In 2011, approximately 84,400 people were employed in the ICT sector in NSW representing about 40% of the ICT industry in Australia. In 2011, NSW was home to approximately 25,700 ICT businesses representing 39% of the Australian total. Sydney is the leading centre for new media and creative digital content development, the base for world class, globally connected digital companies as well as traditional media companies. In addition, Sydney is home to National Information and Communications Technology Australia (NICTA), the CSIRO ICT Centre, as well as five national centres of excellence, and two co-operative research centres in ICT related research fields. Clean technologies NSW is the smart choice for companies looking to position themselves in the low carbon economy of tomorrow. The NSW State Plan s target is that 20% of electricity consumed in NSW will be from renewable sources by 2020. Renewable energy is energy derived from sources that cannot be depleted including solar photo-voltaic, solar thermal, wind, wave, hydro, geothermal and some forms of biomass. Greater use of renewable energy along with improved energy efficiency will help support sustainable development in the NSW energy sector. NSW is home to a wide range of clean tech businesses that are not only leading the country, but also the world, in helping reduce energy consumption. An estimated $8 billion is spent on environmental goods and services each year, and the market is continuing to grow. NSW has set targets for 20% of the State s energy consumption to come from renewable sources by 2020, and for all greenhouse gas emissions to be reduced by 60% by 2050 against 2000 levels. Ubiquitous high speed broadband will bring new opportunities for a connected state; where regional businesses can connect with complimentary counterparts and access international markets with ease; where services will be available anytime, anywhere; and where smart infrastructure will revolutionise the way we function. 16 NSW International Engagement Strategy
Mining The resources sector makes a major contribution to the NSW economy in terms of business activity, investment, regional development, job creation and exports. The NSW mining industry is based on favourable geology, resulting in the discovery and development of many world class mineral deposits. The value of the NSW minerals export was $20 billion in 2010 11. Coal production is the largest commodity with exports of over $16 billion in 2010 11. The mining industry currently has over $13 billion of new development projects in the pipeline in NSW which would generate over 9,000 new direct jobs and 28,000 indirect jobs in NSW. Agribusiness Agribusiness companies choose NSW because it offers diverse growing conditions, well serviced infrastructure, a strategic location for servicing the eastern seaboard and access to export markets. The industry includes agriculture, horticulture, timber/paper products, aquaculture, food processing and manufacturing of products such as fertilisers. It also consists of domestic and exporting primary producers, manufacturers and packagers of food and beverage products, from raw materials to finished products for the foodservice and retail segments. Tourism The visitor economy includes both the direct contribution of tourism activities, along with indirect effects (via the supply chain), the impact of capital investment and collective Government expenditure in relation to the visitor economy. We recognise that visitors offer many far-flowing benefits to the broader economy, including through employment, investment, infrastructure development, export growth and multiculturalism. Total NSW tourism consumption is $28.7 billion, and contributes $11.1 billion to the State s Gross State Product this ranks above agriculture, forestry and fishing and just below mining. The industry supports 289,600 jobs in NSW (160,300 direct and 129,300 indirect jobs), and direct tourism employment in NSW ranks above employment for agriculture, forestry and fishing and mining. Visitor expenditure in NSW contributes over $20.2 billion to the NSW economy, supporting more than 159,000 direct jobs and over 96,000 businesses in NSW. The NSW 2021 target is to double overnight visitor expenditure in NSW by 2020. The sector generates nearly $38 billion in annual sales and services income (in 2010-11 $16 billion from agricultural, forestry and fisheries and $21.1 billion by food processing), supporting the NSW economy in terms of jobs, investment, exports, value-added, and R&D. NSW International Engagement Strategy 17
FIGURE 5 Summary of Priority International Markets and Sectors for NSW PRIORITY MARKET FOREIGN DIRECT INVESTMENT EXPORT OF SERVICES EXPORT OF MERCHANDISE Japan Infrastructure Professional Services Clean Technology Mining Research Professional Services Tourism Advanced Manufacturing Clean Technologies Agribusiness Mining USA ICT Clean Technology Professional Services Professional Services Education & Research Creative Industries (Film) Tourism Advanced Manufacturing ICT Clean Technology China Advanced manufacturing Infrastructure Professional Services ICT Mining Professional Services Education & Research Creative Industries Advanced Manufacturing Clean Technologies Agribusiness Mining UK Professional Services Clean Technology ICT Mining ICT Professional Services Research Tourism ICT Agribusiness Clean Technology India Infrastructure Professional Services ICT Mining Professional Services Creative Industries (Film) Infrastructure Clean Technology ICT Mining Malaysia Professional Services ICT Professional Services Creative Industries (Film) Advanced Manufacturing ICT Agribusiness UAE Infrastructure Professional Services Professional Services Infrastructure Advanced Manufacturing South Korea Advanced Manufacturing Infrastructure Professional Services Mining Professional Services Education Advanced Manufacturing ICT Mining Agribusiness Singapore Professional Services Clean Technology Infrastructure ICT Professional Services Creative Industries (Film) Research Advanced Manufacturing Professional Services ICT Agribusiness Indonesia Professional Services Education & Research Mining Agribusiness Clean Technology ICT (related to mining and agriculture sectors) 18 NSW International Engagement Strategy
1 Prepare detailed strategies for priority markets In 2012, the NSW Government prepared a NSW Strategy for China to focus trade and investment activity and strengthen our engagement with China. The strategy for China identifies the greatest opportunities for NSW businesses and for attracting investment. It is proposed that similar strategies be prepared for all priority markets to be developed progressively with all eight remaining strategies complete by the end of 2013. These strategies will be live documents that are reviewed periodically and updated in response to market changes. These periodic reviews will assess the effectiveness of the strategy and continually improve the approach to support the delivery of NSW 2021 targets. ACTION 1 Prepare clear market specific strategies for each of the priority markets over the next year: strategies for India, Japan, UAE and UK complete by mid 2013 strategies for USA, Singapore, South Korea, Malaysia and Indonesia complete by the end of 2013, and undertake post implementation reviews of the success of each strategy. NSW International Engagement Strategy 19
London San Francisco Los Angeles NSW Department of Trade & Investment Offices Destination NSW (DNSW) Offices Co-located office FIGURE 6 Locations of NSW Trade & Investment and Destination NSW Offices 2 Create a NSW trade and investment presence in new priority markets DTIRIS currently has five overseas offices in China (Shanghai and Guangzhou), India (Mumbai), United Arab Emirates (Abu Dhabi) and the USA (San Francisco) illustrated in Figure 6. The International Offices are small, highly-focused operations targeting investment leads and supporting exporters with highgrowth potential in two to three priority industry sectors. They are typically two to three person offices headed up by senior local managers with extensive regional market knowledge, strong networks and business contacts in priority industries. Depending on the market, these offices may be located with other Australian or NSW Government offices, serviced office facilities or technology parks. This ensures a more flexible, cost-effective and importantly, marketappropriate operational set-up. NSW has adopted a business model of overseas operations that differs from other jurisdictions in Australia. In comparison, the NSW approach is able to operate at a considerably lower cost (approximately $600,000 per annum for a two or three person office depending on local market conditions) and has proved to be highly effective. The success of the overseas trade and investment offices are measured by tracking the return on investment. Return on investment is calculated by comparing the international investment and export dollars generated for every $1 spent on the running of the office. Each office has been delivering a minimum of 20:1 return on investment in the start-up year and 40:1 in subsequent years. 20 NSW International Engagement Strategy
Abu Dhabi Mumbai Guangzhou Shanghai Hong Kong Tokyo Singapore Sydney Auckland It is proposed to maintain the existing network of overseas offices and over time, establish new trade and investment offices in additional priority markets Japan, UK, Korea, Singapore, Malaysia and Indonesia. In some cases there may be an opportunity to co-locate with Destination NSW who already have offices in Japan, UK and Singapore. A business case will be prepared to determine the most cost effective way to establish a presence in these priority markets. In addition, the commissioning of senior sector-specialist personnel on a short-term basis should be considered as an option to supplement the targeted activities of individual offices in high priority sectors. To maximise the value of the international offices in delivering investment and export outcomes for NSW, we recognise the heads of the offices as the most senior representatives of the NSW Government in-market. ACTION 2 The NSW Government will establish the business case for new trade and investment offices in the carefully targeted additional priority markets Japan, UK, Korea, Singapore, Indonesia and Malaysia. DTIRIS will work towards a sustained NSW trade and investment presence in all these priority markets over the next 2 3 years by: establishing a new DTIRIS presence in Japan and UK in 2013 recommending the most viable business models for all other markets by end of 2013, and identifying any additional funding requirements for NSW trade and investment offices in priority markets. NSW International Engagement Strategy 21
3 Co ordinate visits to priority markets The Premier, Deputy Premier, Treasurer and Ministers have all undertaken a number of successful visits to priority markets over the last two years. To increase the commercial outcomes of the visits a co-ordinated approach is proposed that involves: Premier s missions focused on high-level meetings with Government and business leaders in the highest priority markets Preparation of an annual calendar of Ministerial trips to cover all of NSW s top 10 priority markets each year and timed to follow up on opportunities created by the Premier s meetings Ministers travelling on portfolio related trips will visit additional markets critical to the industry sector, and Sharing information across portfolios on the visit program, purpose for each appointment and responsibilities for follow up action. Ministers without a direct trade and investment objective would also represent a broader economic agenda while visiting a priority market. The annual calendar would be co ordinated by DPC and DTIRIS with input from other agencies and updated every six months. The proposed schedule of trips would be aligned to significant events and business opportunities in the priority markets and would be prepared for consideration by the Premier in consultation with his Cabinet colleagues. A visit outcome report will also be prepared and recorded so that a history of NSW Government engagement with key markets and key contacts can be maintained. ACTION 3 Create an annual calendar of trade and investment focused Ministerial visits to priority markets, including: aligning high level meetings with NSW economic priorities establishing a simple online platform to facilitate sharing of visit programs and to track government to government meetings and outcomes, and tracking and driving delivery of a follow up action report to ensure outcomes of meetings are achieved. 22 NSW International Engagement Strategy
Growing international business investment Australia is among the top ten destinations in the world for international investment. Over the past five years international investment in Australia has grown by 65% and each year there is over $50 billion in private business investment in NSW. NSW will grow international business investment by facilitating interested international companies to invest and locate their operations in NSW by providing: information to assist business planning and benchmarking NSW against other locations intermediary support with telecommunications, recruitment, training, property and other business service providers help with site selection and advice on issues affecting project delivery assistance with understanding and navigating government planning, regulatory and approval processes assistance with sourcing innovative new suppliers and/or other supply chain issues introductions to business and industry associations and networks, and other support on a case by case basis. NSW will also increase the promotion of Sydney and NSW and attract investment in infrastructure projects. NSW International Engagement Strategy 23
4 Seek expertise from industry experts NSW currently has an Export and Investment Advisory Board that provides high-level advice to the Deputy Premier and Minister for Trade & Investment on measures to grow the NSW economy through the attraction of productive foreign investment and regional headquarters and encourage growth in NSW business activity in overseas markets. It is proposed that this Board become an Advisory Panel that provides advice on improving the export and investment performance of NSW businesses and attends business meetings with the Premier and Deputy Premier as requested. The expertise of the Panel members would be accessed throughout the year through targeted events rather than quarterly meetings. The Panel members would continue to support the identification of emerging opportunities for the NSW Government s Trade & Investment offices in China, India and the United Arab Emirates. ACTION 4 Replace the current Export and Investment Advisory Board with an Expert Advisory Panel of same membership that: provides high level advice to the Premier and Deputy Premier as needed supports identification and engagement in emerging opportunities in priority markets, and attends targeted business meetings/events at the request of the Premier and Deputy Premier. 24 NSW International Engagement Strategy
5 Market NSW to international companies NSW stands out as an extremely attractive destination for investors. Already more international companies have their regional headquarters in Sydney than any other place in Australia and half of Australia s top 500 companies are also based in NSW. We will continue to attract and assist international companies to invest and locate operations in NSW by: Increasing the visibility of our $61.8 billion State infrastructure plans till 2015 16 Overhauling the NSW planning system and simplifying procurement procedures Reducing the regulatory costs of doing business in NSW Actively welcoming foreign investment into Public Private Partnerships Promoting the strengths of our Regional Areas Promoting the Significant Investor Visa Targeting international investors in priority sectors, especially where we have overseas NSW trade and investment, or tourism offices Providing facilitation services to investors seeking to set up or expand in Sydney and regional NSW Highlighting NSW capabilities, opportunities and significant policy changes through effective international marketing. There exists good quality marketing brochures and a website promoting Sydney as a global city for investment and location of regional offices. It is proposed to expand on the existing marketing materials by regularly updating and improving these materials and by upgrading the sydneyaustralia.com website. The website upgrade will aim to consolidate in one online presence: all opportunities for foreign investment and trade in NSW information in multiple languages key contacts and how to information, and the latest information/event element to engage the international community. DPC will work with DTIRIS on specific marketing material to promote NSW as a place to do business. The NSW Government will also work with the City of Sydney Council, NSW Business Chamber and the Committee for Sydney to identify opportunities to market NSW and Sydney to international companies. Action 5 Increase promotion of Sydney and NSW as a competitive and attractive location for international companies to invest and locate their operations by: creating an engaging and informative online presence for investors through sydneyaustralia.com creating market specific brochures and other communication strategies for each of our Priority Markets marketing NSW as the place to do business in Australia maintaining a professional range of marketing collateral profiling our economic, industry sector and regional advantages for investors developing consistent messaging for use by all NSW Government officials in priority markets, and liasing with partners such as the City of Sydney Council, NSW Business Chamber and the Committee for Sydney. NSW International Engagement Strategy 25