***New Zealand has not recognised that direct investment capital is scarce for which global competition is fierce

WELLINGTON : Foreign in vestment, tourism-wise, has became an emotive issue here

This has been fuelled by the purchase by Japanese interests of the well-known Wairakei golf course at a popular government-owned tourist resort, and recent sales of hotel and office properties to overseas investors.

Yet tourism could do well for New Zealand's remote location, tf an investor was looking for particular tourism-related Investments or distance from international trouble spots, says a report just pub bshed here.

New Zealand s concern at being left behind Aslan and European countries in the quest for Japanese Investment is highlighted in the report. It was made by the Japan New Zealand Business Council task force.

The task force surveyed 70 Japanese organisations currently doing business here, tn an effort to pinpoint obstacles Io further investment Japan Is New Zealand's largest trading partner. But direct Japanese investment in New Zealand has dropped in each of the last two years

This has happened at a time when Japanese global invest

ment is increasing at a growth rate of 40 per cent per annum.

This fact should be of ma jor concern to all New Zealanders," a report by a Japan-New Zealand Business Council investment task ixtr says

Direct Japanese investment in New Zealand in 1989 totalled US$101 million com pared with US$4,256 millton in Australia. US$32,540 mil Iton in the United States and US$1,362 million in Canada. Britain attracted US$5,239 million and US$133 million Japanese investment went to Ireland.

While Japan is New Zealand's largest trading part-

ner, investment in relation to trade does not match that of any other country.

The New Zealand market, with a population of only 3.3 million people, was seen as too small to warrant overseas investment to secure and service the local market. Even access to larger markets through New Zealand's closer Economic Re lations Agreement with Australia was not seen a strong enough incentive.

In a 1987 review of Japan's direct overseas investment, 55 per cent of respondents said their primary reason for investment was expansion of overseas markets.

The New Zealand invest ment task force in its report said it was important to change the perception that investment in New Zealand was constrained by the size of the domestic market.

"We need to promote the concept of investment in high value-added resource sectors for processing and re-export," it said

Forestry, agriculture, food processing, aquaculture and fishing, certain manufacturing, energy conversion, tourism, education, health, software, engineering and financial consultancy were ail areas where New Zealand was actually or potentially competitive.

The task force admitted New Zealand was not well located In relation to third mar kets. Distance from Japan and other major markets posed a problem if a Japanese company sought access to an outside market through investment in New Zealand.

The task force said New Zealand needed to build on the positive perception regarding tourism and the associated infrastructure. There was considerable goodwill tn Japan

towards New Zealand and New Zealanders, with Japanese tourists here now totalling over 100,000 a year.

New Zealand had the highest proportionate level of students studying Japanese of any country outside Japan, the task, force noted.

Much of Japan's investment in New Zealand has been tn the tourist industry although It falls well behind the high Japanese investment In Australian tourism.

Tourism Is seen as an industry which ts highly vulnerable to overseas takeover. Critics of purchases by overseas owners cite the examples of the "Japanese Invasion" of Honolulu and Australia's Gold Coast, a report on New Zealand tourism points out.

But the recent report on tourism saw no cause for concern and found that most of the Japanese tourist's dollars stayed in New Zealand.

The typical Japanese visitor here spends NZ#3,OOO

(USS 1,980) on a six day/ five night tour. This Includes NZ* 1.000 (USS66O) for inter nal transportation. NZ* 1.000 on accommodation and meals and NZS5OO (USS33O) on shopping and excursions

Even if a Japanese visitor spends all nights on tour In a hotel owned by offshore inter ests, a minimum of NZS87O (US$575) would remain In New Zealand. If accommodations! was in the more numerous domestic-owned hotels the figure rose of NZ$970 (US$640).

Most of the Japanese visl I tors' purchases are in shops owned and operated by New Zealanders.

Answering criticism that New Zealand and Australia were being sold off to Asians, the tourism report—sponsored by Air New Zealand—says Asians have been "virtually the only players in the hotel devcl opment game" over recent years.

The Asian region currently receives 11 per cent of total world tourism arrivals and is growing at an annual rate twice as fast as the rest of the world

"Without foreign Investment into leisure properties. Australia and New Zealand would probably not have captured their lair share of the rapid tourism arrival growth In the Asia Pacific region during the !98Os," the report says.

Tourism not only provided Jobs but It reduced balance of payments deficits for both New Zealand and Australia.

Foreign Investment could also bring in foreign expertise and technology, making local operators more efficient by encouraging competition.

The Japan-New Zealand Business Council task forces report on Investment says that, to be regarded seriously In Japan, countries like New Zealand must adopt a coordinated approach by prtvatf and public sector organisations when marketing Investment opportunities.

New Zealand had not always had a welcoming attitude towards overseas investment, it noted. adding:

"Communicating New Zealand's pretent liberal attitude requires both effort and commitment.'

Urging the government to make a minister specially responsible for investment and set up an investment board, the report said the importance of top level government commitment towards attracting Japanese investment could not be over emphasised

Nothing that the New Zealand prime minister's visit to Japan last year was the first by a prime minister In nine years, the report said This perceived lack of commitment considerably undermines the effort to attract investment."

And it declared: 'Above all etoe, New Zealand has not recognised that direct invest ment capital is a scarce and valuable commodity for which global competition to fierce."

— Dept hnru* Asia