Earnings from New Zealand’s third-biggest export sector, information technology, could be boosted significantly by distributed ledger technology.
According to a report released by New Zealand’s innovation agency, Callaghan Innovation, there is ample room for growth in the sector if the country embraces blockchain technology. Currently, the IT sector in New Zealand generates NZ$16 billion annually and employs nearly 100,000 people.
“Technology is now New Zealand’s third-biggest export sector, bringing in more than $16 billion a year in overall revenue, with plenty more headroom for further growth. Technological innovation is the path to lifting our earnings and productivity,”
a Callaghan Innovation executive, Erica Lloyd, said.
Besides IT exports the report titled ‘Distributed Ledgers and Blockchains – Opportunities for New Zealand’ also cites other ways in which the Pacific country stands to benefit. This includes the injection of high-paying tech jobs into the economy.
Increased Income Tax Revenue
The report, however, notes that blockchain startups tend to have their workforce distributed across the world and thus New Zealand should strive to ensure that it is the country of choice as a residence for tech talent. This way the Pacific country will also benefit from the increased income tax base:
“Regardless of the jurisdiction of the company providing the work, if the employee or contractor is a tax resident in New Zealand then an increase in local jobs will lead to an increase in tax revenue through PAYE (Pay as You Earn)”
Additionally, the report states that distributed ledger technology will serve as a catalyst for other sectors and consequently spur economic growth. These sectors include finance, creative industries, education, supply chains, healthcare, transport and energy.
The report authored by Joshua Vial also noted that blockchain technology has the potential to transform public services in New Zealand by improving transparency, preventing fraud and establishing trust.
Existing Hurdles
But in order for New Zealand to reap fully from blockchain technology, the report recommends taking various measures aimed at creating a conducive environment for the blockchain sector. This includes unblocking the access of blockchain firms to banking services.
The report, for instance, notes that such firms currently face numerous hurdles in accessing basic services from financial institutions due to the strict anti-money laundering regime. In this regard, the report calls for the country’s financial regulator and central bank to work together:
“The Reserve Bank [of New Zealand]and the Financial Markets Authority could give consideration to producing guidelines to support a level of auditing appropriate to the risk exposure of individual blockchain companies, avoid blanket de-risking, and ensuring compliance costs are not onerous.”
Images from Shutterstock.
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