Supply Chains: New Zealand
Historically an agricultural economy, New Zealand has made significant efforts to transition into the digital economy and now represents one of the most technologically literate societies in the world. New Zealand’s economy has successfully brought together tech-enabled services with agricultural and fishing industries and a large tourism sector. The economy represents an open and attractive place for investment, with few limitations on investment. In 2020, New Zealand received US$4.2 billion of inbound foreign direct investment (FDI) versus US$309 million five years earlier, an increase of 1500 percent. However, due to the COVID-19 pandemic and economic fallout, real GDP in 2020 decreased by 2.1 percent.
New Zealand’s attractive business climate, solid infrastructure, and skilled workforce help draw in foreign investment, but its small economic size and geographic isolation make investment less attractive than in other countries. Due to its heavy reliance on its agricultural sector, New Zealand ranks 50 out of 146 in economic complexity. This ranking has increased in recent years as New Zealand pursues more sophisticated digital industries and strengthens business ties with its Pacific neighbors.
While New Zealand has long been an open economy that is highly reliant on trade and foreign investment, recent policies have focused on protecting strategic interests and embedding sustainability in New Zealand’s economy. In recent years, New Zealand has also advanced legislation like the Overseas Investment Act of 2018 and Overseas Investment Amendment Act of 2021, which remove the need for consent for lower-risk transactions while subjecting inbound investment in higher-risk transactions and assets of significance to New Zealand, such as real estate, land, and agricultural assets, to increased scrutiny and potential blockage by the government. New Zealand’s top sources of foreign direct investment in recent years have been Canada, Australia, and Hong Kong.
Recent Investment/Supply Chain Policies
- On May 24, 2021, New Zealand’s government passed the Overseas Investment Amendment Act (No.3), which aims to simplify and ease the National Interest Test, which was introduced in 2020 and applies to investments made by “non-NZ government investors.” This includes increasing the “national interest ownership” threshold for foreign government investors from 10 percent to 25 percent and introducing exemptions for certain “passive foreign government investors.” The act will also allow repeat investors to become “pre-verified,” making the approval process for consecutive applications simpler.
- On June 8, 2020, Trade and Export Growth Minister David Parker and Associate Trade and Export Growth Minister Nanaia Mahuta announced the launch of a Trade Recovery Strategy to push back against “pervasive and entrenched nationalism and protectionism,” drops in global demand, and businesses looking to “shorten supply chains.” Elements to the strategy include an allocation of NZ$216 million (US$152 million) over four years to the New Zealand Trade and Enterprise (NZTE), enabling it to "offer in-market services to twice as many exporters."