BusinessDesk’s Pattrick Smellie had the best synopsis of New Zealand First’s announcement on foreign direct investment this weekend: “it was less important for what it said than for the fact that Peters said it.” 

The Overseas Investment Act has placed New Zealand among the developed world’s least hospitable climates for foreign investment.  

Other countries recognise investment as a benefit to be sought. Investors do not just bring capital to places where it is desperately needed, though that would be boon enough. They also bring expertise from other markets that help boost competitiveness.  

New Zealand’s regulatory regime instead treats foreign investors like criminals seeking parole. Are they worthy of being allowed to mingle with locals? Unsurprisingly, investors often conclude that a small market at the far end of the world beset by consenting challenges is not worth the hassle.  

It is far more to our cost than theirs. Kiwi commentators regularly bemoan a lack of access to capital, less-than-competitive markets, and high costs. An unfriendly investment regime contributes to all those ills. 

The incoming government’s coalition agreement promised to liberalise the foreign investment regime. Politics within the coalition government have made that tricky. 

At New Zealand First’s conference this past weekend, Peters suggested that he saw ways of enabling foreign investment consistent with his Party’s concerns.  

The precise details of his proposal were difficult to understand.  

Peters offered Singapore’s sovereign wealth fund Temasek as a laudable example to follow. But Temasek issues bonds rather than encouraging investors to take on an equity stake to ride along with the fund’s investments.  

Foreign investors are already allowed to invest in New Zealand government debt, whether national or local.  

And Singapore is generally open to foreign direct investment as well.  

Hence Smellie’s conclusion: the details of the policy announcement, which presumably have yet to be thoroughly developed, matter less than the announcement itself. The coalition may have found a way through its internal politics towards a more liberal and enabling solution.  

It will be worth watching. Foreign investment rules even came up in the Commerce Commission’s market study into retail grocery as a barrier to entry that blocks potential competition.  

New Zealand has a wealth of investment opportunities and insufficient resources to go it alone. Not treating foreign investors like criminals would be a welcome change.