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

 

Must Sell 20 Petrol Stations: Z Cleared To Buy Caltex Assets

Z Energy is allowed to buy the Caltex and Challenge! petrol station chains but must sell 19 of its retail sites and one truck-stop, the Commerce Commission has ruled in a split decision that acknowledges possible retail price coordination between fuel retailers occurs in some regions. More>>

ALSO:

Huntly: Genesis Extends Life Of Coal-Fuelled Power Station To 2022

Genesis Energy will keep its two coal and gas-fired units at Huntly Power Station operating until 2022, having previously said they'd be closed by 2018, after wringing a high price from other electricity generators who wanted to keep them as back-up. More>>

ALSO:

Dammed If You Do: Ruataniwha Irrigation Scheme Hits Farmer Uptake Targets

Enough Hawke's Bay farmers have signed up for water from the proposed Ruataniwha Water Storage Scheme for it to go ahead as long as a cornerstone institutional capital investor can be found to back it, its regional council promoter announced. More>>

ALSO:

Reserve Bank: OCR Stays At 2.25%

Reserve Bank governor Graeme Wheeler kept the official cash rate at 2.25 percent, in a decision traders had said could go either way, while predicting inflation will pick up as the slump in oil prices washes out of the data and capacity pressures start to build in the economy. More>>

ALSO:

Export Values Down: NZ Posts Biggest Annual Trade Deficit In 7 Years

New Zealand has recorded its biggest annual trade deficit since April 2009, reflecting weaker prices of agricultural commodities such as dairy products, beef and lamb, and increased imports of vehicles and machinery. More>>

ALSO:

Currency Events: NZ's New $5 Note Wins International Banknote Award

New Zealand’s new Brighter Money $5 note has been named Banknote of the Year in a prestigious international competition. The $5 note was awarded the IBNS Banknote of the Year title at the International Bank Note Society’s annual meeting. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news