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Foreign Direct Investment Report 2016-2018

Foreign Direct Investment Report 2016-2018

Five countries continue to dominate more than half of New Zealand’s foreign direct investment.

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Australia, the United States, Canada, China and Singapore were the most significant investors in New Zealand over the period 2013 to June 2018, accounting for 55% of investment, according to KPMG’s latest Foreign Direct Investment into New Zealand report.

The fourth of its kind, the report provides a summary of applications for investment over the last five years, highlights origin of investment and identifies emerging and recurring trends.

“Foreign direct investment can jump around a lot from year to year, however the longer term picture suggests that it is our trading partners on the Pacific Rim who will account for the majority of investment in New Zealand moving forward.” says Justin Ensor, KPMG Deal Advisory Partner.

There has been a general decline in the number of approved applications over the period 2014 to 2018, this is largely attributable to a decline in approved applications in the Agri-Business sector. Deals in the Financial Services and Energy, Power and Utilities sectors contributed to approximately a third of foreign direct investment for the period 2013 to 2018. By comparison, Agri-Business accounted for 11% for the same period.

“The trends suggest that foreign investment into agri-business has been declining, with some parts of this sector facing ‘head winds’ on the funding front.” says Ensor.

The Agri-Business sector has relied on a degree of foreign investment over the past 10 years especially at the larger scale end of the sector, however with the trend downwards of approved applications this does create issues for the sector.

“Certainly, the drop in the number of approvals by the OIO suggests that the New Zealand market isn’t as attractive to foreign investors as it once was. This is causing parts of the sector to struggle with investment and liquidity as bank funding has also become more challenging” says Brent Love, KPMG Farm Enterprise Partner.

Key findings from the report:

  • 55% of foreign direct investment came from five countries;
  • North America and Australia are our most significant source of foreign investment in New Zealand, followed closely by China and Singapore.
  • There has been a general decline in agri-business application volumes, with declines in dairy and milk processing perhaps reflecting lower prices and pay out experienced during 2015 to 2016.
  • Forestry investment has increased in prominence in the last several years, surpassing investments in dairy over the period 2016 to June 2018.
  • Over the last five years, China and the United States have been the most significant sources of investment into our agri-business sector, accounting for nearly a third of all investment.

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