Media release - 17 June 2013
Ask your average Kiwi which country is currently dominating foreign investment into New Zealand, and their answer would probably be China.
But the reality shows quite a different picture, according to research undertaken by KPMG NZ.
KPMG has analysed trends in foreign direct investment through a review of the Overseas Investment Office (OIO) approvals over the period July 2010 to December 2012.
This research showed that Asia accounted for only 16% of gross foreign direct investment over the last two years. Australia remains our main single source of capital, at 46%. Combined, North America, Europe and Australia accounted for approximately 70% of investment.
“There has been a lot of press about Chinese investment into the country, particularly around large agri-business deals,” says Justin Ensor, KPMG Partner, Corporate Finance.
“However Asia and China are not as dominant as many people may think.”
The KPMG research also showed there were significant levels of investment from unexpected quarters – with Germany, for instance, investing heavily in agribusiness in recent times. Of the $300m that German entities have invested here in the past two and half years, agribusiness accounted for 86% (predominantly in dairy).
Another interesting finding was that Korea appears to have dropped off the radar as an investor in New Zealand. In the past two and half years, there were comparatively few Korean-based deal recorded by the OIO.
“In previous years we’d seen a lot of transactions with Korea, particularly around forestry and wood processing, but they were completely absent from the latest stats,” says Justin Ensor.
Overall, however, New Zealand remains an attractive environment for offshore investors. “At KPMG we’re regularly engaged with overseas buyers involved with acquisition and due diligence processes – and our experience tells us that inbound investors are maintaining their levels of interest in New Zealand.”
“New Zealand offers lower regulatory hurdles than in other territories, coupled with our stable political and legal environment. The recent uncertainty in Europe has no doubt made us an even more attractive proposition.”
Other highlights from the KPMG research showed that:
- The largest 11 transactions during the 2.5 year period accounted for approximately 40% of OIO-approved investment.
- Among Asian countries, Japan (53%) was a bigger investor in New Zealand than China and Hong Kong (33%). Significant acquisitions made by Japan in the last two years included beverage companies Independent Liquor and Charlie’s.
- While China’s level of foreign investment appears relatively low in recent times, this may be about to change. Recent examples include press announcements over proposed investments in the dairy sector by Yashilli and Yili.
- China, Germany and Sweden have been the most active acquirers of dairy land, accounting for over 70% of dairy land acquired by overseas investors in the last three years.
- The UK and the USA remain the dominant acquirers of land by overseas investors. China is 14th on the list by area acquired over the last three years.
PDF of the full report [PDF: 325KB]
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+64 21 335 740
About the KPMG Foreign Direct Investment Report
The KPMG Foreign Direct Investment Report analyses the trends in foreign direct investment, through a review of the Overseas Investment Office (OIO) approvals over a given period. This is the inaugural report, which has analysed approvals from the period July 2010 to December 2013. KPMG intends to publish this Report on a biennial basis. It complements the KPMG M&A Predictor, published every six months, which reports on Merger and Acquisition activity in New Zealand.
An important note on investment figures
While the OIO does not disclose the dollar value of net investment by application, they provide summary statistics which suggest that the net investment is usually considerably lower than the gross consideration paid. This is because many transactions are restructures which contribute little by way of net investment in NZ, or involved transactions between overseas entities. KPMG suggests that net investment is the better measure of incremental foreign direct investment in NZ.
About KPMG New Zealand
KPMG is one of New Zealand’s leading professional services firms; specialising in Advisory, Audit and Tax services. Our firm of over 800 professionals works with a wide range of New Zealand enterprises – from SMEs, privately owned businesses, to publicly-listed companies, government organisations, and not-for-profit bodies.
KPMG has offices in Auckland, Wellington, Hamilton, Tauranga, and Christchurch. Globally, KPMG operates in 156 countries; employing over 152,000 people in member firms around the world.
The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such