New Zealand sees growth in foreign direct investment over the last decade

KPMG has released new analysis of the flows of foreign direct investment coming into New Zealand. Between 2013 and 2021, foreign direct investment has grown overall. The small size of New Zealand means that the mix of countries investing changes somewhat each year, but we continue to attract investment from our primary trading partners.

This year the analysis is provided dynamically online and enables New Zealanders to explore transaction trends, where investment is coming from, and which industries and regions are most popular between January 2013 and June 2022.

Covid-19 and ongoing global disruption have influenced investment patterns. Net foreign investment into New Zealand decreased in 2020, likely due to New Zealand’s trading partners grappling with the Covid-19 lockdowns and border restrictions. 2021 shows an increase though, while still in progress, 2022 is likely to see another decline. 

•  The US and Australia are still the main sources of gross foreign direct investment, when measured over the last three years.
• Transaction activity was strong through the pandemic post the initial outbreak, as evidenced by high levels of M&A activity in 2021.
• Approved applications have increased in recent years, after low points in the 2017 and 2018 years.
• Energy, telecommunications and entertainment, real estate and IT infrastructure featured as key sectors for net investment in the last couple of years since the pandemic. 
• Whilst on a gross basis the financial services sector was significant, much of this represented a change in ownership between offshore owners. Financial services includes subsectors such as banking, insurance and transaction and processing payments.
• On the agribusiness front, milk processing, forestry, horticulture and wine have been the key areas for investment since 2019.  Overall, there has been a decline in net investment through the pandemic. 

Justin Ensor, Partner in KPMG New Zealand’s Deal Advisory practice, says, “New Zealand is entering a period which will require substantial and bold investments across a range of sectors, whether that be building more renewable energy sources to support the pursuit of net zero targets, investment into housing, or the development of technology sectors. The agribusiness sector which drives our export revenue also faces significant challenges of decarbonising which will require investment in productive capacity and new technologies. 

“The next ten years are perhaps the most important we face for making good investment decisions and finding the right partners with the technology, channels to market and capability to help us build sustainable futures for the next generations. We are beyond looking at pure financials.”