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

 

ICT Innovation: Six NZ Finalists In World Summit Awards

The awards are a global showcase of 40 projects, across eight categories, with a special emphasis on those which show the benefits of information and communication technology for the development of communities. New Zealand has finalists in six of the eight categories. More>>

ALSO:

Final Frontier: Rocket Lab And NASA Sign Commercial Space Launch Agreement

Rocket Lab has signed a Commercial Space Launch Act Agreement with the National Aeronautics and Space Administration (NASA). The agreement enables Rocket Lab to use NASA resources - including personnel, facilities and equipment - for launch and reentry efforts. More>>

ALSO:

Scoop Business: Wheeler Downplays Scope For ‘Large’ Rates Fall

Reserve Bank governor Graeme Wheeler says some market commentators are predicting further declines in interest rates that would only make sense for an economy in recession, although some easing is likely to be needed to maintain New Zealand’s economic growth. More>>

ALSO:

Ruataniwha Dam: Consent Conditions Could Mean Reduced Intensity

Legal advice sought by the Hawke’s Bay Regional Council on the Ruataniwha Dam consent conditions has confirmed that farmers who sign up to take water from the dam could be required to reduce the intensity of their farming operation to meet the catchment’s strict nitrogen limit. More>>

Health And Safety: Bill Now Sees Rules Relaxed For Small Businesses

Health and safety law reform sparked by the Pike River coalmine disaster has been reported back from the industrial relations select committee with weakened requirements on small businesses to appoint health and safety representatives and committees. More>>

ALSO:

Bearing Fruit: Annual Fruit Exports Hit $2 Billion For First Time

The value of fruit exported rose 20 percent (up $330 million) for the June 2015 year when compared with the year ended June 2014. Both higher prices and a greater quantity of exports (up 9.0 percent) contributed to the overall rise. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news