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Asian investing info gaps: Asia-NZ group

NZ Newswire logoNZ Newswire 31/05/2017 Pattrick Smellie

Government efforts to attract foreign investors would benefit from greater strategic focus, the Asia-New Zealand Foundation says in a new report that finds big gaps in official statistics measuring where investment comes from.

It suggests also that the current Overseas Investment Office tests risk failing to assist such a strategic approach, instead imposing conditions on things that are easy to measure but don't relate to economic impact.

"Unlike the provisions of the Overseas Investment Act relating to good character and business experience, assessing the benefits arising from a proposed investment requires an estimate of future effects," the foundation report says.

"This is a very difficult task and some OIO decisions appear to rest on 'benefit' factors that can be more readily imposed and monitored, such as a requirement to support a particular local heritage or local ecological asset in the area surrounding the investment site."

Imposing that kind of requirement on a case-by-case basis ended up producing something like a tax or entry fee on inward investment, the report said.

"It does not provide us with a strategic basis for attracting the kinds of investment that best serve the country."

While the Act includes considering factors such as job creation and retention, new technology, exports, productivity gains and further investments, the problem lay in determining whether any particular proposed investment delivered those.

Research by the University of Auckland's New Zealand-Asia Institute found that, based on the limited public data available, Asia accounts for less than 10 per cent all foreign investment in New Zealand.

By comparison, Australia, Britain and the United States accounted for 58 per cent of recorded foreign investments.

That left a gap with "no official figures on the sectoral composition of non-OIO approved investments by source countries or regions", and potentially overstating the extent of Asian direct investment in primary industries.

The report calls for "robust" discussion of foreign direct investment because of its long importance to New Zealand's economic development.

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