New Think Tank Report Clears Up FDI Myths

MEDIA RELEASE
New Think Tank Report Clears Up FDI Myths

Public policy think tank, The New Zealand Initiative, launches its first report on New Zealand’s international debt position and foreign direct investment regimes.

The report, New Zealand's Global Links: Foreign Ownership and the Status of New Zealand's Net International Investment, provides a one-stop-shop for statistics on New Zealand’s investment patterns. In particular, it shows that:

• Despite popular myth, New Zealanders actually earn more than they spend. National resident unit savings has been positive for the last 38 of the last 41 years.
• High debt is not the fault of the private sector. While levels of private debt may be high, these stem from the legacy of historical government policies between 1974 and mid-1980s.
• The future debt burden will depend on future internal competitiveness and the gap between New Zealand’s growth rate and the yield in the debt.
• Despite concerns to the contrary, Asians are not taking over New Zealand. In fact, in 2012 Australians owned 55% of foreign investment in New Zealand, while ASEAN nations owned only 3.1%.
• If New Zealanders are to become tenants in their own country, it is more likely the landlord will be the government, not foreign investors. Of the 28.7 million hectares in New Zealand, the report estimates that 1 million are owned by foreigners, and the Department of Conservation alone manages 8.5 million.
• Offshore investment is a two-way street. New Zealand is not a ‘takeover’ target by foreign investors. In fact, the OECD regards New Zealand’s regime for screening inwards investment as one of the most restrictive in the world; and
• New Zealand has been heavily dependent on international capital since colonial days, and this is normal for a young, growing country.

Commenting on the report, the Initiative’s executive director Dr Oliver Hartwich says, “Our research shows that New Zealand has little to fear but much more to gain from its economic engagement with the rest of the world. It has done so in the past, and it should do so in the future.”

The report is the first of three that aims to facilitate more informed public debate on the contentious issues of external indebtedness and foreign investment in New Zealand.

ENDS

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