There is no evidence of a high level of foreign investment in the agricultural sector, KPMG said in a report.The report sees no value in tightening rules for inbound investment and argues there is a lack of equity in the agriculture sector.It says that a
There is no evidence of a high level of foreign investment in the agricultural sector, KPMG said in a report.
The report sees no value in tightening rules for inbound investment and argues there is a lack of equity in the agriculture sector.
It says that a media focus on the ownership of productive agricultural assets has been intense, stoked by the very public tender process for the sale of the Crafar Farms, rumoured bids for agricultural properties from sovereign investors in the Middle East and sales of processing assets to international companies.
"As a small, developed economy, New Zealand has always required inbound investment to support the standards of living we are now accustomed to, and this holds true even in the current environment," Ian Proudfoot, KPMG's head of agribusiness, said.
"Events of the last year have demonstrated we are not always able or prepared to finance these opportunities from our own resources."
KPMG said that the high price of land was a deterrent to young people investing in farms and this needed to be addressed.
"There is an argument that an inbound investor who is prepared to co-invest in an equity partnership with a young New Zealand farmer should be able to short cut the overseas investment approval process as their investment is to be welcomed rather than regulated, given it does assist in creating an entry point for New Zealanders into land ownership," said Mr Proudfoot.
The report notes that many listed "crown jewel" companies have significant levels of foreign ownership.
The Overseas Investment Act 2005 (OIA) requires overseas investors to obtain consent from the Overseas Investment Office before acquiring a 25 percent or more interest in sensitive land. Rural land packages greater than five hectares are considered to be sensitive.
The investor is required to demonstrate a transaction will benefit New Zealand, with criteria including the creation or preservation of existing jobs, additional investment for development purposes or increased processing of primary products.
The previous Labour-led government introduced an additional test around the time of an application by an international bidder to acquire a significant stake in Auckland International Airport. This enables ministers to take into account whether the investment will assist New Zealand to maintain control of strategically important infrastructure on sensitive land.
"We welcome the review proposed by the current National Government as New Zealand's economic development has benefited historically from inbound investment," KPMG said.
"It is important that we have clear and stable policies that provide certainty to potential investors as to the criteria that have to be met to invest in sensitive and strategic assets in this country."
Finance Minister Bill English has been reported as saying that public concern about the sale of farmland to overseas interests may mean that the review of foreign investment rules may not deliver as much gain as hoped for.
