Capital Inflow May Be Affected By Measures

Press, Volume CVIII, Issue 31657, 18 April 1968, Page 12

Capital Inflow May Be Affected By Measures

The restrictive measures in both the United Kingdom and the United States must have some adverse effect on expectations of private capital inflow during 1968, the A.N.Z. Bank says in its quarterly review on New Zealand.

However, offsetting factors include the possibility of increased funds from Australia and the greater attractiveness of New Zealand as an investment proposition now that the grounds for international investors to think the New Zealand dollar may be overvalued have been removed. Secondary Effects From New Zealand's point of view, the secondary effects of United States and United Kingdom restrictions may prove to be more important, says the review. These could include increases in the cost or difficulty of obtaining international finance and any adverse effect on commodity prices which might follow from reductions in international trade and business activity. The United Kingdom ($46.8m), Australia ($35.5m), and the United States ($19.5m) have provided 90 per cent of New Zealand’s

private capital inflow of $123.5m since 1964. During 1950 to 1967 United Kingdom firms ploughed back 60 per cent of their profits, Australian firms 57 per cent and United States firms 34 per cent. Manufacturing Manufacturing has attracted about half, or sll3m, of the $227m invested in New Zealand in the five years to March 1967. With the aim of preserving local control and ownership, the Government prefers would-be investors to provide loan rather than equity capital. In many cases this is not practicable and where establishment of a subsidiary company in New Zealand would involve continued access to modern technology and production methods, investors are encouraged to accept a measure of local share participation. (Forty per cent has been mentioned as a preferable minimum level.) The bank concludes that in a time of depleted foreign currency reserves, the question of the likely level of private capital movements as-

sumes even greater imporance.

Not only do inflows provide increased funds for investment Wiithin New Zealand but they also supplement receipts of overseas currency which closely govern the levels of domestic business activity.

Mr K. T. F. Harris has been appointed general manager of Lyte Aluminium Industries, Ltd, and Lyte Trimview (New Zealand), Ltd. He has been the company secretary and administration officer for the Lyte group for the last four years.