Key John: Overseas Investment Bill — Second Reading Instruction to Committee In Committee Third Reading 
Key John: Overseas Investment Bill — Second Reading Instruction to Committee In Committee Third Reading 
[Volume:626;Page:21569] 
JOHN KEY (National—Helensville) 
: 
 I rise to take part in the debate on Part 2 of the Overseas Investment Bill. I want to reflect on the issue around the size of companies and the reasons for which the current threshold for a company to be required to give notice of an intention to acquire a New Zealand company which is around about $25 million will be extended up to $100 million. 
Rod Donald 
: Shocking! 
JOHN KEY 
: No it is a wonderful thing. I want to talk about why it would not make sense for acquisitions involving amounts of less than that to be referred to the Overseas Investment Commission. As members will probably be aware there has not been a situation where the commission has turned down an application from those companies. 
I want to put a slightly different spin from that of the Green Party on what takes place when foreigners make an acquisition here in New Zealand. In particular it relates to the criteria and factors that will be considered. They are the issues around job creation business skills development of export receipts market competition and additional investment and development. I say that because last Friday I met with a group of investors who have invested about $50 million so far in New Zealand but who have ambitions to invest a further $150 to $200 million over the next 2 to 3 years. It was interesting to talk to them about the role they have been playing in the companies they have been acquiring in New Zealand. It has been a role of quite active management which is slightly different from the normal venture capital situation in which a lot of the investors will come along and supply some finance but essentially leave the status quo in place—the companies concerned are left to get on with it. 
In fact the investors I met have done something a lot of commentators have argued is a real benefit of overseas investment. They have come to New Zealand and invested not only their capital but also—maybe this is more important—their time and their contacts in their international networks. In many respects that is quite similar to the situation that operates domestically in New Zealand with “angel investors” who are involved I guess more in the infancy of the development of a company. They may not put in very much capital at all but it is very often the case that they agree to lend their experience skills know-how and knowledge to small companies that are looking to develop. 
What was interesting about the investors I met with last Friday was that they told me that in the case of a number of New Zealand companies that they have bought into with a significant investment they have managed to double and treble the size of the exports of those companies in a very short space of time—within months of acquisition. Members may ask themselves why it is that a foreigner is able to come to New Zealand and supply something that is more than just capital which we accept is reasonably freely available here in New Zealand. The answer is that the companies that are being acquired often operate here in New Zealand in a niche area. They are built on the backs of entrepreneurial New Zealanders who have developed some good ideas technical know-how and skills. But those people lack the ability to have access to the marketplace and to other suppliers along the food chain who may buy their products. So what is hugely valuable about those investments is not so much the ability of the company to get access to capital but its ability to get access to those vertical chains. 
Navman New Zealand is quite an interesting example. At one level I was concerned about Navman being sold offshore because I think it is producing fantastic technology and I do not want to see that company picked up relocated to Los Angeles and lost to New Zealand. The real challenge for New Zealand is to prove that it is an incubator and also a developer of great companies. It has been quite interesting to see that Navman has at this stage at least managed to take the foreign capital that has come out of the Brunswick Corporation and develop the company on by building greater market access and penetration of its goods—by building a world-class company with world-class products on the back of that technical know-how. 
Gerry Brownlee 
: That’s right. 
JOHN KEY 
: That is right. For those who stand up to speak on this bill and say that foreign investment is bad— 
Gerry Brownlee 
: Who are they? 
JOHN KEY 
: The Green members for one and the New Zealand First members as well. They do not want a bar of anyone from overseas. They actually forget the other things those people may bring outside of capital which are much more important than capital. I refer to things like knowledge and know-how and access to markets.