New Zealand

Details

  • Industry: Agribusiness
  • Type: Business and industry issue
  • Date: 19/08/2010

Contact us

Ian Proudfoot

 

Ian Proudfoot

 

Global Lead Partner - Agribusiness & Food

+64 9 367 5882

 
Ross Buckley

 

Ross Buckley

Executive Chairman

+64 9 367 5344

 

Agribusiness - Evolving agenda: Foreign investors – friends or foes? 

Inbound investment into the New Zealand agricultural sector has received significant attention in recent weeks on the back of some high profile transactions.  Our overseas investment regime has been developed in a piecemeal fashion partly through political responses to proposed transactions over the years. 

 

We consider it is an appropriate time to review the overseas investment rules to ensure that the decision criteria are set to allow consideration of an investment in an objective manner, based on an assessment of whether a transaction contributes value to the New Zealand economy.

There is no evidence to suggest that we are experiencing a particularly high level of foreign investment in the agricultural sector at the current time (and we consider this unlikely given our internationally high land prices)

 

However, it is apparent that there is currently a lack of equity in the sector to enable maximum advantage to be taken of the opportunities available for growth. 

 

Our inbound investment regime, in comparison with other countries, is liberal and consistent with our free market trading policies, without any consideration of reciprocity of investment rights. 

 

We believe this brings a number of benefits to New Zealand in addition to investment, including access to innovation and technology and the ability to attract young people into the industry. 

 

It is important that inbound investment generates “win-win” arrangements for the investee and New Zealand thus issues such as customary land rights and maintaining value add activities in New Zealand need to be considered as part of an appraisal of a proposed investment. 

 

There may be a case for introducing a cap on the amount of land an inbound investor can hold to avoid significant concentrations of ownership, which in some circumstances could have a detrimental impact on long run wealth creation, although current ownership rights must be preserved.