Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

NZ Economy Stifled by FDI Rules

(Wellington) -- New Zealand’s relative attractiveness as an investment destination has slumped in the last 10-15 years according to Capital Doldrums: How Globalisation is Bypassing New Zealand, a report released by The New Zealand Initiative.

Done well, foreign direct investment (FDI) creates jobs, usefully supplements domestic savings and further enhances the host country’s competitiveness by introducing leading-edge technologies, management expertise and access to overseas markets and expertise.

New Zealand succeeded in attracting a great deal of FDI from the late 1980s to the mid-1990s, but FDI stock has since stagnated as a percentage of GDP, while continuing to surge upwards in many countries, including Australia, the United Kingdom, Hong Kong and Singapore.

In 2000, the United Nations Conference on Trade and Development (UNCTAD) ranked New Zealand 73rd in the world for its ability to attract foreign direct investment; by 2011 that ranking had slumped to 146th.

This compares very unfavourably with Australia’s 24th ranking and the United Kingdom’s 29th ranking. Hong Kong and Singapore have consistently ranked in the top five during this period. Per capita Australia had attracted 45% more FDI than New Zealand by 2012.

“New Zealand is not excelling in its policy settings towards foreign investment”, said Dr Oliver Hartwich, Executive Director at The New Zealand Initiative.

“While purporting to welcome foreign direct investment, our Overseas Investment Act actually tells investors that they are privileged if we allow them to invest in sensitive land, broadly defined.”

The effects of New Zealand’s poor FDI regulatory settings include:

• The signals New Zealand has given to overseas investors in the Crafar Farms and Auckland airport cases have not enhanced our image as a capital destination.

• The Organisation for Economic Cooperation and Development (OECD) has assessed New Zealand’s regulatory regime for FDI to be one of the most restrictive in the world.

• The New Zealand Treasury considers that there is credible anecdotal evidence that our regime is having a chilling effect on FDI.

• Tellingly, outstanding Swedish retailer IKEA operates in Australia and Singapore, but not in New Zealand.

• New Zealand tax rates applying to investors and savers are not as competitive as they could be, partly because government spending is far higher than it needs to be.

“Clearly, given our small market size, if we are serious about getting New Zealanders’ income per capita back into the top half of the OECD, closing the income gap with Australia, or just holding our own in the world, we need to be serious about being internationally competitive for investors as well as for imports and exports,” said Dr Bryce Wilkinson, a senior research fellow at The New Zealand Initiative, who co-authored the report with Khyaati Acharya.

This report is the second of three that aims to promote public debate about New Zealand’s global links, including the contentious issues of foreign ownership and net external indebtedness. The next report will focus on policy recommendations.

ENDS

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

'Irregular Accounting': Voluntary Suspension Of Fuji Xerox Govt Contracting

This suspension gives the Ministry of Business, Innovation, and Employment time to understand the full implications of the report from FUJIFILM Holdings into irregular accounting practices at FXNZ. More>>

ALSO:

MPI: Cow Disease Detected In NZ For First Time

MPI is responding to the detection of the cattle disease Mycoplasma bovis in a dairy herd in South Canterbury... The disease is commonly found in cattle globally, including in Australia, but it’s the first detection of it in New Zealand. More>>

South Island Flooding: Focus Moves To Recovery

As water recedes throughout flood-impacted areas of the South Island, Minister of Civil Defence Nathan Guy has praised the efforts of those who were involved in the response to the flooding... More>>

ALSO:

Superu Report: Land Regulation Drives Auckland House Prices

Land use regulation is responsible for up to 56 per cent of the cost of an average house in Auckland according to a new research report quantifying the impact of land use regulations, Finance Minister Steven Joyce says. More>>

ALSO:

Fund For PPP Plans: Govt Embraces Targeted Rates To Spur Urban Infrastructure

The government's latest response to the Auckland housing shortage will see central government and private sector firms invest in 'special purpose vehicles' to fund essential roading, water and drains that Auckland Council can't fund without threatening its credit rating. More>>

ALSO: