Allan Freeth on foreign investment

A good op-ed by Telstra-Clear CEO Allan Freeth:

During my involvement with the activities and meetings of Save the Children and the World Economic Forum, I have been struck by the inner turmoil of stakeholders from the old superpowers, Britain and America.

In their heads they realise that the Indian and Chinese economies are coming into predominance. But in their hearts, they cannot give up the idea that they will continue to reign supreme.

Much the same is being seen in New Zealand with the current foreign investment debate.

In the Herald, Fran O’Sullivan reported on prospect of Fonterra partnering with a Chinese company to develop dairy farms in China. The company, Shanghai Pengxian, is the same one awaiting a government decision allowing it to buy the 16 Crafar dairy farms, around 8,000 hectares of land.

I have said for some time that the proposed partnership with Shanghai Pengxian and Landcorp, could result in massive economic opportunities for New Zealand.

I recognise that land has a special status in the eyes of many New Zealanders, but this is in the face of the sale of thousands of hectares to foreigners, particularly US citizens, over the past few years. I hesitate to suggest that the issue may be a cultural one as opposed to economic, but it is hard to see the extreme result being anything other than some type of xenophobic knee-jerk reaction.

Take just this week. When Bill English is over in Australia talking about how more and more Australian companies want to invest in New Zealand, and no politician says a word. But then you have a Chinese leader visit and promote investment from China, and the Greens rush out a press release. It is absolutely playing to xenophobia. Not all opposition is xenophobic, but much of it is – and politicians play to it.

Some of the anxiety about foreign investment is driven by laudable, but in my view misguided, concerns about the environment. But other concerns may be based on a fear that foreign investment, particularly in land, in some way erodes our sovereignty.

Even before the High Court ruling which sent back the Overseas Investment Commission’s decision on the Crafar farms sale, politicians, interest groups and individuals had expressed opposition to the sale of the farms to Chinese interests. Yet, as you read this, there is another New Zealand trade mission in China, from Auckland, seeking business and investment.

I am not sure we can continue a strategy of trying to have our cake and eating it, too!

More importantly, such protests fuel a growing public anxiety that foreign investment is a bad thing. In my view, foreign investment is not simply good for our economy, it is critical to our long term, sustainable economic future.

Exactly. China especially is a massive opportunity for us.

National went into the 2011 General Election promising more investment in infrastructure, and developing a more export-focused economy, delivering more for young Kiwis.

It would be difficult to find fault with those objectives, and even more difficult to see how they might be met without the continued investment from overseas necessary to support the planned and sustainable development of our resources, including minerals, energy, forestry, agriculture and technical innovation.

Do those opposed to this investment want to tell the rest of the world that New Zealand isn’t open for business? Do they understand global trade and investment is reciprocal, or do they think it is just a one-way street? Do they know that of the $60 billion in FDI in New Zealand, around $40 billion, or two-thirds of the total, comes from Australia, $10 billion from the US and $5 billion from the UK?

Do they know that China’s investment in New Zealand is around $1.8 billion mostly in the forestry sector, followed by manufacturing and commercial construction? Do they really want to send one of the world’s biggest economies a message that their money is not welcome in New Zealand?

The economic nationalism put forward by Greens, NZ First and more recently Labour is reckless.

Those opposed to foreign investment in our enterprises should consider the investment made by British firms in the nineteenth and twentieth centuries in New Zealand’s meat processing industry.

British owners and shareholders profited by that investment, but if the investment hadn’t been made by them at that time, where would the money have come from to build the plant and infrastructure? And where would our economy be today, if that investment had not been made all those years ago?

But at least our carbon footprint would be smaller!

The economic contribution from foreign investment is as relevant today as it was then. New Zealanders need to learn more about the importance of foreign investment to our economy and take an active role in the debate on both sides.

Then, if they remain opposed to the idea, let the opposition be based on information and not ignorance, or the fact that they do not know how to deal with a global shift in economic and social power.

I won’t hold my breath waiting.

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