Comments

David Thompson Posted:
So very, very true. It beggars belief that we consider ourselves to be a developed nation when so much of our economy is based on selling milk powder or logs. BTW, I own a Plinius amplifier (my second) that drives a set of Theophany speakers.
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David Thompson Posted:
A robust but sobering report. It concerns me that confidence is rising, yet sales and exports are down and "manufacturers and exporters are still lagging behind other sectors". Surely we should wait until we're earning more money before we start spending more?
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siemens Posted:
Yes true! The only thing that will never die in this world is the nature and its science behind it. Great post.
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Kieran Ormandy Posted:
Thanks for the question Steven, Germany has seen increases in manufacturing employment since 2009, and Switzerland has had stable manufacturing employment between 2006 – 2011, even in the face of ongoing Euro-zone issues. Korea has seen increases in manufacturing employment since 2008 and Israel experienced large increases since 1998, while being stable over the last 4 years. Singapore has had increases in manufacturing employment over the last two years. These countries all value their manufacturing sectors and work to protect them, this is reflected in the above numbers and their performance through the GFC. Note data around the above examples was sourced from OECD labour market stats.
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John Walley Posted:
Point one: you should have no doubt what our Association says publically represent the views of our members. Point two: we don’t knee jerk responses, if you trace back our comments around NZPower you will see them link all the way back to our research in 2004 and 2005. All that material is fully linked from our comments above. Point three: you will note our comments on major users, sadly the same advantage does not accrue to smaller industrial users. The perverse incentives of the LRMC approach in all this are well known. Point four: the NZMEA is not like any other Association in New Zealand we admit only manufacturers and exporters into membership, and our public expressions are the views of that restricted membership.
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19/5/10

Action needed on business lending contraction


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The Reserve Bank has expressed concern over continued business lending contraction in its Financial Stability Report released today. The New Zealand Manufacturers and Exporters Association (NZMEA) say that steps such as changing capital adequacy rules on lending to businesses, recapitalising Kiwibank and addressing the tax balance must be taken to counter this.

A NZMEA survey conducted in June last year found that:
• 63% of respondents reported that their bank had increased the margins they paid on credit facilities;
• 57% of respondents reported that their bank had tightened covenants associated with their credit facilities;
• 55% of respondents reported that their bank had increased charges associated with their credit facilities; and
• 46% of respondents reported that their bank had used the opportunity of any change of credit facilities to increase cross guarantees.

NZMEA Chief Executive John Walley says, “The stories we are hearing from those involved in the tradeable sector suggest that these problems still remain. The banks remain particularly hesitant to lend to firms with currency exposure.”

“It is little wonder that property lending is favoured by the banks while it has a lower risk weighting under Reserve Bank Capital Adequacy Ratios and demand for property is fuelled by tax advantages. As long as property is advantaged why would banks and investors change this behaviour?”

“Talking about the problem doesn’t work and it never has,” says Mr Walley. “Behaviour will change when the rules change; we can but hope to see some movement on asset tax in the budget tomorrow, along with a serious policy package to promote growth in the traded economy.”
 



tags: financial stability report, capital adequacy ratios, business lending

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