The International Funds Services Development Group (IFSDG) was established by Cabinet in March 2010 to look at the benefits of establishing a funds domicile and investigate the broader financial services opportunities for New Zealand.
The IFSDG comprised top-level private sector experts from the financial services sector. Their report, Exporting Financial Services, outlines their research and recommendations.
The IFSDG believes that New Zealand can build on its existing capability as an exporter of financial services.
The major opportunity is as a funds domicile and funds administration centre, where collective investment funds can be incorporated and serviced. The IFSDG originally contracted the financial consultancy firm Oliver Wyman to analyse New Zealand’s opportunity to be the domicile for Asia-Pacific retail funds. However, further analysis shows opportunities in other markets and fund types (for example, alternative assets).
The domicile opportunity does not rule out attracting other parts of the financial services value chain, such as investment management or global custody, but considers it more likely that these will be located in other jurisdictions where fund managers are closer to their investors or the assets they manage.
Research conducted by Oliver Wyman indicates that the full realisation of the domicile opportunity would generate revenue in New Zealand of approximately NZ$0.5 billion to NZ$1.3 billion per year, tax revenue of between NZ$150 million and NZ$360 million per year, and 2,000 and 5,000 high-quality jobs by 2020/2030.
Specific changes need to be made to New Zealand’s tax and regulatory systems before the domicile opportunity can be realised. Many of these changes are currently being progressed through existing government work programmes. It will require only a relatively small step up from the existing work programmes to meet the conditions necessary for the domicile opportunity.
In addition to the domicile opportunity, the IFSDG’s analysis of Associated International Financial Services Activities suggests that there are some quick wins that can be achieved to build upon the existing success of the international parts of the New Zealand financial services industry.
Government response to the Final Report of the International Funds Services Development [858 kB PDF]
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