Industrialisation Exchange Policy

Press, Volume CIV, Issue 30776, 14 June 1965, Page 12

Industrialisation Exchange Policy

(New Zealand Press Association)

NAPIER, June 13.

Any policy of industrialisation which disregarded costs or which disregarded the longterm effect on the overseas exchange position would be more harmful than beneficial, Dr. G. A. Lau told the Napier division of the National Party. Dr. Lau is chairman of the New Zealand institute of Economic Research.

“For the present, industrial development, whether by overseas investors or with New Zealand capital, should be concentrated on the production of goods that will either produce a substantial saving in exchange (provided they could be produced here at a reasonably economic price) or in respect of which there are good reasons to expect they can be exported,” said Dr. Lau. To establish an industry in New Zealand with mainly overseas equity capital for the sole purpose of obtaining the exchange required to import plant and machinery was an expensive way to procure exchange.

“If the private savings in New Zealand are not sufficient for development, steps should be taken through a revision of our tax system to provide the incentives and the possibility for increased private savings,” he said.

Establishment of partnerships between overseas companies and New Zealand was pleasing.

Dr. Lau said if the country needed exchange for its development. it was primarily the function of the Government to provide it. An alternative, he said, was that public companies could market debentures in London at comparatively attractive rates, although the tax law was to some extent hindering this. Dr. Lau said direct overseas investment was not desirable for the sole purpose of obtaining capital.