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Thursday, August 12, 2010

Lifestyle Used To Lure Investors But Net Full Of Holes


Lincoln Tan, the immigration affairs journalist at the NZ Herald, has again written an excellent series of feature articles for the paper. This time concentrating on a potential growth area for the New Zealand Immigration Service – the Business Investor.

In the first article he writes about a recent study to investigate the major draws for investor migrants.

Although the study’s results are  a reaffirmation of what was already known, i.e.  that the NZ lifestyle is more important than pragmatic business and tax issues to migrants, the report demonstrates how the marketing of  NZ can be manipulated to sidestep facts and rationality and appeal directly to emotion and ideals. It’s interesting to see how this na├»ve approach is failing because of bureaucratic shortcomings and a lack of joined-up thinking.

The study was commissioned by Immigration New Zealand and Investment New Zealand and was aimed at “finding messages to lure potential investor migrants.” Migrants were asked to chose the messages that appealed most strongly to them:

“Lifestyle No 1 reason for investor migrants – study”

“…The top two messages were “New Zealand is a great place to bring up a family” and “New Zealand is a small country with a strong sense of community”.
A message that strongly did not find favour at all was “Investing in New Zealand isn’t about just relocating – it’s about regenerating your business.” Any references made to “government” – such as one that said “The New Zealand Government understands it takes time to get your offshore tax affairs in order” – also didn’t go down well.
Some said it was difficult to establish business networks. “I’ve been here for one and a half years and am just finding my way in. It’s a much smaller market and difficult to get established,” one said.
“Children are a critical element in the migration decision,” the report said. “When young they are clearly an important motivating factor but by the time they hit the teen years they can become a barrier.”
A senior marketing lecturer at Massey University, Dr Henry Chung, said the study confirmed what many already knew. “The wealthy see the investor migrant category as a pathway to come to New Zealand, usually for the lifestyle or for their children, and not necessarily to do business or make money. “New Zealand is such a small economy, and usually, a would-be business migrant would be better off staying put in their country of origin.” you can find the whole article here – NZ Herald
With all this research going on into luring wealthy investors you’d think that scores, if not hundreds, of business people would be flooding into New Zealand,  keen to contribute to the NZ economy in exchange for a piece of the lifestyle?

Well yes, but they’re not getting in. According to another piece of investigative journalism and the judicious use of the Official information act by Mr Tan, the recently introduced Entrepreneur Plus immigration category has  netted only one successful applicant, yes one, out of the 12,000 people that registered their interest.

The new category, set-up to attract people who would create at least three full time jobs and invest a modest $500,000, only offered applicants conditional residency upon approval. Mr Tan writes that the Labour party immigration spokesman, Peter Hodgson, branded the scheme “a complete and utter failure.” Progress can be a backward process in New Zealand and whilst it fumbles other countries run with the ball and place it in the back of the net.

Scheme nets one rich investor

“…The Association for Migration and Investment, which supported the Entrepreneur Plus scheme, said the agency had not been totally upfront with information when the scheme was first announced.
“We thought it was a one-step policy for business migrants to get residency but it has now been explained that you still have to go through two steps – a long-term business visa and Entrepreneur Pluswhich makes it even more difficult than the old scheme,” said association chairwoman Coral Wong.
Ms Wong, who is also a licensed immigration adviser, said she had been advising potential investor migrants to look to other countries such as Australia, which had “more pragmatic policy requirements”. read the full article here
Another example of how bureaucracy and ‘small town thinking’ has stood in the way of progress in New Zealand was highlighted in the third article written by Mr Tan.

On 21 July he wrote of how wealthy Chinese investors were being prevented from becoming investor migrants because of strict rules governing the transfer of money into the country. Apparently, in New Zealand this can only be done through the banking system, whereas in China strict foreign exchange controls mean that finance companies are used.

You have to wonder which is the better financially regulated country and from that perhaps base a decision on which may be the better location in which to invest? Nevertheless Chinese people have been applying for investor visas in New Zealand, not doubt attracted by those lifestyle stories.

Out of the two applications from Chinese business people wanting to invest $10 million under the Investor 1 category, and 21 with $1.5 million to invest under Investor 2, you’ve guessed it, none have been approved.

Chinese investors claim they are blocked from NZ

“…New Zealand is like a village, and still cannot accept that wealth is accumulated differently by people living in big cities,” said a failed Chinese Investor 2 applicant in Mandarin.
His application was declined after he used a finance company to transfer $2.5 million to New Zealand…
…Immigration Minister Jonathan Coleman said the Ministry of Foreign Affairs was working with the Chinese Government at “the highest levels” to find a solution.” read the full article here
All style but no substance? Using the lifestyle to attract wealthy migrants can only get a country so far, sooner or later it has to come up with the goods.

You may also be interested in:
2025 Taskforce Report Welcomed – “…The private sector has been hamstrung by regulation. We’ve started cutting that back, but there’s a lot more to do. The public sector has significantly under-performed, and that is holding the country back. The Government needs to tackle these issues if we are to make progress…” Hon Rodney Hide, Minister for Regulatory Reform from a press release on Scoop, November 2009

Let’s Act Now to Avoid Being the Unlucky Country - “Why is the Government pursuing a policy of incremental and non-controversial economic changes when something more radical is needed? The nation’s economic future is flying out of Auckland, Wellington and Christchurch airports at a rate of almost 100 workers a day. They are often educated or trained in the professions or skills.“  Bernard Hickey writing for the NZ Herald, 8 August 2010

NZ Film Industry Needs Government Funding, Less Interference -The death of creativity…‘There’s often unclear decision-making. They don’t want to say no so they impose impossible conditions, then get caught out when the producer meets them. They have to be braver.’ ‘The Commission tends to use drafts as a way of avoiding decisions – if in doubt write another draft. It’s a momentum killer.’ ‘Their process has been about protecting jobs and the organisation and over time that has become their preoccupation…’

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