Guy Tapley NZTE. Audit Tax Advisory 50

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1 Guy Tapley NZTE 50

2 REGIONAL INVESTMENT ATTRACTION New Zealand s Investment Attraction Strategy Guy Tapley Whangarei, November 2015

3 Some NZ context on FDI What are the patterns and trends in FDI in New Zealand? REGIONAL INVESTMENT ATTRACTION A partnership between NZTE and the regions to drive economic development

4 Sources of FDI in New Zealand Rank STOCK OF DIRECT INVESTMENT IN NEW ZEALAND TOTAL INVESTMENT 1 Australia NZ$53.9b 2 USA NZ$8.3b 3 United Kingdom NZ$7.4b 4 China incl. Hong Kong SAR NZ$5.2b 5 Singapore NZ$4.4b 6 Japan NZ$3.4b 7 Netherlands NZ$3.3b 8 Canada NZ$2.5b Audit Source: Tax Statistics Advisory New Zealand YE June

5 FDI Flows into New Zealand (USDM) Greenfield M&A Total Audit Source: Tax UNCTAD Advisory World Investment Report

6 Australian FDI Stock in New Zealand in NZ$B Tradable industries Non-tradable industries Total Australian FDI Audit Source: Tax Statistics AdvisoryNZ 4

7 NZ FDI attraction strategy What is the Government s plan for FDI? REGIONAL INVESTMENT ATTRACTION A partnership between NZTE and the regions to drive economic development

8 Highlights of the Strategy Context A more concerted and integrated New Zealand-wide effort to attract high quality investment. Execution underpinned by agencies adopting shared objectives, setting priorities jointly and seamlessly facilitating investment opportunities. A key priority of the Business Growth Agenda* complementing other actions aimed at strengthening New Zealand s investment environment. Goal:Attract higher levels of business investment to accelerate growth throughout the whole of New Zealand. Theme 1:Attract high value FDI in areas of competitiveness for New Zealand Theme 2:Attract overseas investment in R&D especially Multinational Corporations Theme 3:Expand pool of smart capital by attracting individual investors and entrepreneurs * Note: goal to lift export contribution to 40% of GDP by 2025.

9 Strategy continued Theme 1:Attract high value FDI Theme 2:Attract investment in R&D Theme 3:Attract investors & entrepreneurs Target:Facilitate investments with potential direct economic impact of $5 billionover next 3 yrs Target:Attract at least 10 international companies to undertake R&D in NZ over next 5 yrs Target:Double the investment by migrant and entrepreneur investors to $7 billion over next 3 yrs Sector priorities: Primary, F&B, Spec Manufacturing, Infrastructure, Petroleum & Minerals, ICT/Digital, Shared Services Market priorities: USA, Australia, Singapore, Japan,China, H.K., UK Sector priorities: Premium F&B, Agritech, ICT, Electronics, Health Technologies/Therapeutics, High Value Wood Products Market priorities: USA, Australia, China, Japan, UK/Europe, Sector priorities: cross sector attraction of international business and entrepreneurial experience & talent Market priorities: USA, UK/Europe, China, Japan, ASEAN

10 NZTE -strategy into action What is NZTE doing to facilitate the attraction of FDI? REGIONAL INVESTMENT ATTRACTION A partnership between NZTE and the regions to drive economic development

11 NZTEfocus and performance Focus on: Performance (June Year 2015): More proactive identification of specific opportunities to present to international investors Investment with higher potential Direct Economic Impact (pdei) = high quality FDI Improving outreach to priority sectors and regions to help catalyse capital investment Mobilisation of capital for company growth through the Better by Capital programme (BBC) $866 million of capital deployed of which $616 million in FDI $250 million though BBC Potential DEI of $ 1.4 billion Sources of FDI were 48% Greater China 25% East Asia 13% Australia 11% North America 2015/16 Targets: $1 billion of capital deployed, $1.5 billion of potential DEI and at least $200 million via BBC.

12 Validating investment opportunities An Investment Value Proposition Desirability Feasibility Viability Scalability Market ready Half way there Concept /Raw Answers needed for these questions Is the opportunity focussed on export or economically enabling infrastructure? What is the international market opportunity? Is there a strong management/advisory team behind the project? Are there willing local partners/stakeholders? What is raw material availability/accessibility like? What required people/skills are available? What is the ability to grow to a large scale? What approvals/consents are required? What is the business/financial model for the opportunity? Is the model internationally competitive/viable? Why has a NZ company not taken up the opportunity? What feasibility work has been done to date? What is the estimated capital investment required?

13 Some regional opportunities under NZTE action Region Opportunity Action Bay of Plenty Wood processing plants (3) Pre-investment investigations Canterbury New hotel infrastructure Investor business case & engagement Canterbury Gelatine plant retention & modernisation Hawkes Bay Customer contact centre Pre-investment feasibility study Investor engagement & support Manawatu Customer contact centre Investor engagement & support Northland Integrated wood processing plant Pre-investment investigations Northland Finfish aquaculture production Market validation support Southland Southland Wellington Silica extraction & processing plant Investment business case update Oat-based health product production Strategic investor support Contact & business process outsourcing Investor engagement & support West Coast Activated carbon production Pre-investment investigations West Coast Waste to energy plant Pre-investment investigations

14 Foreign investors How do they make major FDI decisions? REGIONAL INVESTMENT ATTRACTION A partnership between NZTE and the regions to drive economic development

15 Greenfield FDI decision-making Phase Investing company action Implications for us 1. Assessment 2. Assignment Strategicbusiness needs/criteria, project scope and potential geographical locations of focus identified Internal location analysis team and or external consultants selected to conduct investigation 3. Research Deskstudy using internet and other data sources eliminates locations that do not meet business needs/criteria 4. Approval Long list of prequalified locations submitted to management with supporting analysis for consideration 5. Shortlist Management short-lists 3-5 locations for more intensive investigation 6. Scouting Investigators visit the short-listed locations and eliminate those that fail to measure up to critical requirements 7. Due diligence Investment feasibility study and incentive discussions to inform recommendations on top 2-3 locations 8. Site visits Investment decision-making managers and their advisors visit short-listed locations to maketheir own If we have deep connections with the company we may be able to get early warning, but this is rare If we have deep connections with the company we may be able to get early warning, but this is rare An effective web-based investment value proposition for New Zealand by sectorsis important New Zealand needs to get on the long list for potential investments that we are seeking to attract New Zealand needs to get on the short list for same NZTE and Regions need to work together to provide convincing support for the investigation NZTE mayco-fund potential investor s feasibility study using its Strategic Investment Fund (SIF) NZTE maydevelop, co-fund and coordinate visit under its VIP programme, with Regions assessment Sources: Brand Acceleration Economic Development Marketing (Olsson Associates, Garner Economics, Ginovus, McCallum Sweeney Consulting, 9. Cushman and Wakefield), Due diligence EDANZ andnegotiations NZTE. with investment Incentives will have been explored if two leading agencies, regulatory authorities and critical suppliers locations are level-pegged Negotiations 64 completed 10. Selection Investment decision-makers review all data, their direct The investor makes the decision we help to

16 Food for thought You need to have.clear value propositions that are very narrow and very targeted towards the potential investor Claus Lonberg, Managing Director of Copenhagen Capacity The majority view is that the most critical site selection factor on recent projects has been skilled and qualified work force availability. Transport infrastructure and location was the second most frequently cited critical location factor Site Selection Magazine s annual survey of 40 site selection consultants Readinessas competitive advantage, from identifying and preparing sites to targeting specific companies and industries in your marketing efforts Janet Ady, President/CEO, AdyVoltedge& Courtney Dunbar, Economic Development Leader, Olsson & Associates Real estate availability and financial incentivesare important at the negotiating stage but not relevant at the initial stage of an enquiry RoelSpee, Global Leader at IBM Plant Location International 65

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