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Overseas investment is an important element of modern economies. The Governments of Thailand and New Zealand both actively encourage the inward flow of capital. Inward investment not only provides capital for increased production and job creation but also assists in the exchange of technology, skills and sector knowledge.
In 2003, Foreign Direct Investment (FDI) in Thailand and New Zealand totalled about US$4.2 billion and US$26 billion respectively. For Thailand, France, the United Kingdom, Germany, Japan, and North America were the main sources of FDI. For New Zealand, Australia, the United Kingdom, and the United States were the main sources of FDI and were also the main destinations for New Zealand companies investing overseas. Both economies welcome and encourage overseas investment and offer attractive, stable and open business environments.
Thailand’s foreign investment is subject to the Foreign Business Act 1999, administered by the Ministry of Commerce. The Act restricts foreign majority participation in some business activities related to national security, the social and natural environment, and non-competitive businesses. However, since 1999 there has been a reduction in the number of FDI restrictions allowing foreign investors to hold more than fifty percent of the shares in a number of business sectors which were reserved only for Thai nationals, including accounting, legal, engineering, and architectural services, hotel, distribution services, brokerage and construction.
In 2004, the Thai Government has continued to improve its overall investment liberalisation policy and to use its strategic location to attract foreign investment with the aim of becoming a premier investment destination in the region. The Board of Investment (BOI) is the government agency responsible for formulating investment policies and providing incentives and privileges for investment. In 2004, the Thai government has provided greater incentives to stimulate investment in particular industries: namely agro-industry, fashion, automotive, electronic and ICT equipment, and high value-added services such as the film industry, regional operating headquarters, long–stay health care services, call centres, and convention and exhibition businesses. Details of general restrictions and promotion relating to foreign investment can be obtained from the BOI website [external link].
Under New Zealand’s overseas investment regime, administered by the Overseas Investment Commission (OIC), some significant investments are subject to an approval process. The approval process relates primarily to the sale of land and is also used for statistical purposes. See Annex II for further details.
The New Zealand Government is currently undertaking a review of the Overseas Investment Act. The objective of this review is to maintain a liberal overseas investment regime and reduce compliance costs to businesses while providing greater protection to iconic sites of special historical, cultural or environmental significance. This review is expected to be completed in mid-2004 with any changes implemented from 2005.
Investment New Zealand [external link] is the country's national investment promotion agency and a division of New Zealand Trade and Enterprise. The agency actively promotes New Zealand as an investment destination, working closely with New Zealand companies and foreign investors on significant opportunities. It looks to match high growth potential New Zealand businesses with current and potential international investors, supports the management of multi-nationals' New Zealand subsidiaries to attract further investment from their overseas parents, and promotes New Zealand as a relocation destination.
Investment New Zealand's activities focus around six core sectors: Biotechnology; Creative Industries; Information and Communications Technology; Specialised Manufacturing; Food and Beverage; and Wood Processing. The first three sectors listed form the basis of the New Zealand Government's Growth and Innovation Framework. In addition the New Zealand Government currently offers a tax incentive for large-scale film and television projects produced in New Zealand.
To date investment flows between Thailand and New Zealand have been modest. Both countries could benefit from an increase in bilateral investment, and the exchange and transfer of knowledge, technology, ideas and export opportunities that would flow from it. Intra-industry investment is particularly beneficial in the export sector as companies are able to share international market information and strategies leading to improved competitiveness in the global market place.
Publicity surrounding the signing, implementation and promotion of the CEP will highlight investment possibilities in both markets and improve awareness of the opportunities for joint ventures and strategic alliances. The substantive “national treatment” obligations contained in a bilateral CEP could further support two-way investment flows by providing greater predictability and certainty for overseas investors by providing legal guarantees of national treatment, subject to scheduled exceptions.
iPSTAR New Zealand Limited (iPSTAR NZ) is a wholly owned subsidiary of Shin Satellite Public Company Limited, Thailand. iPSTAR has been established to own and operate a telecommunications business, marketing and selling the satellite-based iPSTAR broadband service in New Zealand.
The iPSTAR Broadband Satellite System will provide telecommunications and multimedia services to households, business and public organisations. Consumers will have a wide variety of pay television and video on demand services, low cost IP voice telephony, and high-speed internet connections. Organizations will access two-way high-speed corporate “Internet Works” and use Ultra Small Aperture Terminals ("USAT") or Virtual Private Networks (VPN) in addition to consumer services.
New Zealand is the 43rd largest investor in Thailand. The accumulated investment value in projects approved by the Board of Investment between 1985 and 2003 totalled US$25.5 million or equal to 0.03% of total FDI in the approved projects. Figure 8.1 shows that the peak period of New Zealand investment in Thailand was in 1999 when US$8.3 million was invested in manufacturing clothing and furniture, and in an aquarium business.
Figure 8.1: New Zealand Investment Projects Approved by BOI in 1985 – 2003
Source: Board of Investment
However, some New Zealand investment has not been channelled through the BOI. New Zealand investors have been involved in a wide range of activities in Thailand. Examples of New Zealand related investment in Thailand include:
