Government wants an additional $160 billion to $200 billion in foreign investment
By Fiona Rotherham
Oct. 14 (BusinessDesk) - The New Zealand government needs an additional $160 billion to $200 billion in foreign investment to meet its target of boosting exports to 40 percent of gross domestic product by 2025.
Lifting foreign direct investment in all parts of New Zealand by $5 billion over the next three years is one of the targets released by Economic Development Minister Steven Joyce in an update on the building investment chapter of the government’s Business Growth Agenda. The government is releasing each of the six chapters progressively, with the latest installment following exports and innovation.
Other targets include attracting at least 10 new international companies to undertake research and development activity in New Zealand over the next five years and doubling the amount of capital that investor and entrepreneur migrants bring into the country to $7 billion over three years.
Overseas Investment Office fees will be increased so it can build resource to speed up the time it takes to make decisions in the wake of criticism by investors the process was taking too long.
Shanghai Pengxin-subsidiary Dakang New Zealand Farm Group this week pulled out of a $42.7 million deal to buy a number of Northland farms after not having had any feedback from the OIO six months after lodging an application for approval. The Shanghai-based company had earlier had to extend an agreement to buy the Lochinver station near Taupo 11 times before ministers ultimately ignored OIO advice and rejected the sale.
Joyce said he was in China when the Lochinver decision was made and fielded questions by concerned investors about whether it signalled a change of government policy on foreign direct investment or a bias towards Chinese investors.
“I was able to reassure them there was no change in policy, it was applying the policy that already exists,” he said.
The Shanghai Maling bid for a controlling stake in meat co-operative Silver Fern Farms, which goes to a shareholder vote this Friday, has attracted opposition from some concerned at offshore control of the meat industry.
But Joyce said he thinks there’s less public opposition to foreign direct investment in New Zealand companies than in land purchases.
“I think the people against the Silver Fern Farms deal have not attracted the level of negativity that they thought they would for this transaction which needs to be assessed on its merits by shareholders,” Joyce said.
But he admitted more work needs to be done to convince New Zealanders on the benefits of high quality offshore investment and the connection between job creation and higher exports which supports the country’s economy and people’s lifestyles.
Business investment is currently growing at 2.3 percent a year and it would need to double to 4-to-5 percent to hit the government’s $160 billion to $200 billion target.
Joyce said competing for capital against other countries that can afford bigger inducements is not easy. The minister thought New Zealand’s attractiveness included access to R&D grants, some areas of specialty and opportunities to work with public science institutions on those, and the chance of joint ventures on medium-term science projects that already attract private sector investment domestically but haven’t yet looked for offshore investors to become involved.
Fundamentally there has been an information gap for offshore investors on what opportunities New Zealand, and regional New Zealand in particular, has to offer. Companies needed to proactively chasing investors rather than being reactive to approaches, he said.
“We have to quantify who to talk to and have people ready to answer questions and things like councils ready to step up on resource consents,” Joyce said. “Effectively we’re competing for international investment whether it’s American, or Malaysian or Chinese or wherever – they’re looking at all the world and we have to make sure we tell our stories.”
As part of the building investment plan, the government is working with regional stakeholders to identify and develop regional and Maori investment opportunities, with studies completed for Northland, Bay of Plenty, Manawatu Whanganui, and the East Cape. Regional action plans are being developed to identify what the government can do to help attract offshore investment into those opportunities.
Joyce couldn’t comment on how many multi-nationals had been attracted to date to set up R&D in New Zealand, other than those that had invested in existing Kiwi businesses. In those instances there has been a mixed bag with some extending the R&D done in New Zealand and others eventually pulling out.