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FORBES RATES NEW ZEALAND AS
'THE BEST COUNTRY IN THE WORLD TO DO BUSINESS'

by Simon Lord,
last updated 16/11/2012

Forbes has ranked New Zealand as the best country in the world to do business. The influential bi-weekly US magazine says New Zealand has ‘a transparent and stable business climate that encourages entrepreneurship.

Although New Zealand is the smallest economy in the Forbes top 10 with an estimated GDP of US$162 billion, it ranks first in four of the 11 metrics the magazine examined, including personal freedom and investor protection, as well as a lack of red tape and corruption. By comparison, Forbes rates the US at 12th out of 141 countries, behind Australia (11th) and the UK (10th). It notes that the US now has the highest statutory corporate tax rate in the world and quotes the World Bank as saying that the typical small or medium-size business requires 175 hours a year to comply with US tax laws.

The Forbes report graded countries according to 11 different factors: property rights, innovation, taxes, technology, corruption, freedom (personal, trade and monetary), red tape, investor protection and stock market performance. It comments, ‘New Zealand cut its corporate tax rate from 30% to 28% last year and eliminated certain deductions, making the cut fiscally neutral. Investors have prospered, with the country’s benchmark stock index, the NZX 50, up 24% over the past 12 months.’

‘New Zealand’s economy is closely tied to Australia’s, and both held up better than most during the global financial crisis. The downside to the resilience of its economy is that the New Zealand dollar has appreciated, making the country’s agricultural exports more expensive. The higher prices have helped to push up unemployment to 7.3%—the highest level since 1999.’

In light of the findings of the latest Franchising New Zealand survey, it’s worth reading Forbes’ review of the country’s economy. This notes that, ‘The economy fell into recession before the start of the global financial crisis and contracted for five consecutive quarters in 2008-09. In line with global peers, the central bank cut interest rates aggressively and the government developed fiscal stimulus measures. The economy posted a 2% decline in 2009, but pulled out of recession late in the year, and achieved 1.7% growth in 2010 and 2% in 2011. Nevertheless, key trade sectors remain vulnerable to weak external demand. The government plans to raise productivity growth and develop infrastructure, while reining in government spending.’

The 2012 Franchising New Zealand survey estimated the turnover of the NZ franchise sector at NZ$20 billion (approx $US16 billion). This would suggest franchising represents roughly 10% of GDP, consistent with the finding of the 2001 survey.

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