New Zealand has long welcomed billionaires looking for a bolt-hole in challenging times and is now extending that welcome to global investors as it seeks to convince them that it is a safe haven for their money in an era of greater volatility.
Some of the world’s largest investment funds, infrastructure funds and construction and engineering companies are descending on Auckland this week as it tries to open up its economy to foreign investment.
Brookfield Asset Management, the newly rebranded Aberdeen, the Bank of China and Macquarie will attend the two-day New Zealand Infrastructure Investment Summit to weigh up opportunities in a country that, by its own admission and the OECD’s, has long failed to welcome foreign investors.
“The world is awash with cash and it is looking for safe harbours and safe returns,” Christopher Luxon, prime minister, told the Financial Times, adding that funds with NZ$6tn (US$3.4tn) of firepower would attend the summit.
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The summit comes at a critical time for Luxon, who was elected 14 months ago, his centre-right coalition inheriting an economy in recession and liberal policies adopted by the Jacinda Ardern administration. He has since repealed many of her signature policies, including bans on oil and gas exploration.
While Ardern may have put New Zealand on the map for her left-leaning agenda, it has yet to register on the radar of investors.
New Zealand has some of the most restrictive rules on foreign direct investment of all OECD members, according to a survey by the Paris-based organisation.
Foreign direct investment reached NZ$6.1bn in the year to March 2024, less than half the NZ$12.7bn recorded the previous year when British, Australian and Japanese companies made acquisitions, but more than double the NZ$2.9bn in 2005.
The country was “not on the frontier of best practice”, the OECD said last year, citing protracted screenings of foreign investments and controls on foreign ownership of assets including natural resources. It described inward FDI as “small” for an open economy.
“The world has forgotten about New Zealand,” said Paul Newfield, chief executive of asset manager Morrison & Co.
“The PM is trying to put New Zealand squarely on the map. To present a 20-year vision of where we need to be.”
Since taking office, Luxon’s government has reformed 20-year-old foreign investment rules, formed a government agency aimed at attracting investment into New Zealand companies and loosened rules for “golden visas”.
“We’re getting rid of the thickets of red and green tape,” said Luxon.
Where it once took months to approve overseas investments, amendments made last month mean it should take just 15 days. Luxon’s government also plans to overhaul planning laws, health and safety rules and strict environmental regulations that have frustrated farmers.
“We need to be ruthless to make sure we don’t get barnacles on the boat,” he said.
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Delegates in Auckland — which will include Australian and Canadian pension funds, Japanese and Korean engineering companies, US, Chinese and Spanish banks and sovereign wealth funds — will hear about opportunities to invest in everything from roads to healthcare and the mining and energy sectors.
Luxon also highlighted the country’s burgeoning space sector and science and technology research which he sees as a source for future IPOs and wealth creation. He has ruled out privatisations in this government term but has said this year he is open to considering asset sales as part of his next election campaign.
Chris Bishop, New Zealand’s infrastructure minister, said that there had been “a bit of a fear of the private sector” under Labour but both sides recognised the need for foreign investment to close what he called an “infrastructure deficit” in the country, which he said could be as high as NZ$200bn.
“It’s a ‘NZ Inc’ approach. It sends a signal of intent,” Bishop said. “Slower [economic] growth doesn’t have to be our destiny.”
The summit came at a time when support had ebbed for Luxon’s National-led government, said Danyl McLauchlan, an author and academic.
While New Zealand’s leaders have a long record of holding grand summits that don’t yield anything substantial — a jobs summit after the 2008 banking crisis produced a cycling lane across the country — this week’s infrastructure investment summit could prove pivotal for Luxon.
“Their [the Nationals] fortunes will be reversed if they get the economy back on track, sign deals and create jobs but if six months down the track nothing has happened then that could spell danger,” McLauchlan said.
This is a chance for Luxon, who visited Vietnam for a trade mission this month and will soon head to India to strengthen defence and economic ties with the country, to shift the debate about the country’s economy.
Global volatility could work in New Zealand’s favour, Luxon said. “New Zealand is a safe haven. It’s the beginning. It doesn’t solve all the problems but it’s a shift.”
