Asian Investment in NZ: the facts behind the figures
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Asian Investment in New Zealand: the facts behind the figures
Research commissioned by the Asia New Zealand Foundation has found that investment from Asia accounts for a relatively small share of all foreign investment in New Zealand. It also found Australia, the United Kingdom and the United States are New Zealand’s largest sources of foreign investment, representing 58%. Asian investment is less than 10% of the total.
Simon Draper, executive director of the Asia New Zealand Foundation, says there are persistent misconceptions about the level of Asian investment in New Zealand. “We want to correct that and support a more informed and mature discussion about investment from Asia. We also need to talk about what constitutes ‘good’ investment and the type of investment that should be encouraged.”
That is why the Foundation commissioned research into case studies of Asian investment. “We wanted to provide new reference points, beyond the Auckland housing market and sensitive land sales.”
“This research shows that FDI is more than just dollars and that complementary skills and strengths bring about strong growth opportunities,” says Draper. “Investment can have very positive outcomes for New Zealand businesses, people development and economic development.
“But not all deals are good ones, so we should be asking the right questions.”
The research, Asian Investment in New Zealand, also found a gap in the available statistical data with no official figures on the sectoral composition of non-Overseas Investment Office (OIO) approved investments by source countries or regions.
Draper says this gap presents challenges in analysing the figures on Asian investment. “We know Asian investment in New Zealand is less than from North America, Europe and Australia but data isn’t collected around source country investors outside of OIO,” said Draper. “This makes it very difficult to understand the full picture and have an informed discussion.”
“This issue is too important to New Zealand’s future to be left to soundbites and uninformed debate. We hope this report is a useful addition to a mature, thoughtful discussion of an important part of the New Zealand economy.”
The research, Asian Investment in New Zealand, was conducted by the New Zealand Asia Institute at Auckland University.
KEY CONCLUSIONS FROM THE RESEARCH
• Investment from Asia accounts for a relatively small share of all foreign investment in New Zealand.
• According to Statistics NZ data, Australia, the United Kingdom and the United States are New Zealand’s largest sources of foreign investment, representing 58%.
• Asian investment comprises 17% of the stock of foreign direct investment (FDI) and less than 10% of the stock of all foreign-owned assets in New Zealand.
• There is a gap in the available statistical data with no official figures on the sectoral composition of non-OIO-approved investments by particular source countries or regions.
• Our researchers looked at OIO data, which does attribute investment to source countries – but only covering sensitive investment (e.g. large scale or involving land sales). Over half of all OIO-approved investments originate from Australia (29%) and the US and Canada (26%), while the largest sources of inward investment from Asian countries are China (9%), followed by Japan (7%) and Singapore (4%).
• This is a restricted subset of data, however. The OIO doesn’t capture information on most foreign investments in small and medium manufacturing and service-related industries.
• Investment from Asia is growing, and the share of OIO-approved investments from Asian countries has doubled from 12% in the 2006-2010 period to 25% in the 2011-2015 period.
• Auckland and Waikato are the most popular destinations for OIO-approved FDI from Asian investors (together accounting for 21% of such investments), suggesting that Asian investors prefer to invest in regions that already do well economically.
• 75% of the OIO-approved investments from Asia (2006-2015) occurred in three broad business sectors, namely ‘livestock including meat and dairy production’ (26%), ‘property-related ventures’ (25%), and ‘forestry and horticulture including mining’ (24%). This apparent concentration of investments from Asia in the primary sector could simply reflect the nature of the OIO screening regime.
• In the successful businesses in our case studies, Asian investors demonstrate a commitment to business growth and provide knowledge and capital to improve the competitiveness of the businesses.
• Access to funding is sometimes complemented by increased market access for New Zealand businesses to Asian markets.
• Successful businesses are also able to use knowledge gained from the investors and from international markets to refine their products or service offerings and processes.
• Beyond growth in profits for a company that Asian investment can bring, other benefits include contributions to the New Zealand economy, such as providing employment in regional centres, providing training and up-skilling, and contributing to local communities. Successful investment requires a fit between the investors (their commitment, knowledge and networks), the businesses (their capabilities and resources) and their surroundings (the community and business ecosystem).