11 September 2006

Competition for foreign direct investment is hotting up and New Zealand needs to attract more of it.

With an isolated economy and a small domestic market, New Zealand businesses often struggle to grow to a significant size unless they export. Foreign direct investment (FDI) is an important link for developing New Zealand’s connections with the rest of the world.

While the amount of foreign direct investment into New Zealand has been steady in recent years – at around NZ$4 billion a year between 2002 and 2005, according to Statistics New Zealand – a bigger share of the available pot is starting to go to developing countries. These now account for 42 percent of global FDI inflows compared to 27 percent during 2001–2003.

New Zealand needs to put out the welcome mat for the global entrepreneurs who have chosen to live and invest here, says ICT Investment Manager for Investment New Zealand, Steve Penno.

Mr Penno says that New Zealand is more globally connected and has a higher profile internationally than ever before, and there’s a growing awareness of our technological capability.

“An increasing number of New Zealand’s technology companies are achieving global success, and foreign investors are realising that. A lot of investors come here initially for lifestyle reasons and to buy land, but once they can see what we can do, they invariably end up investing further.”

One international entrepreneur who has chosen to make New Zealand a base is John Ellenby, the man who gave the world laptop computer technology. An Englishman, Ellenby is a Silicon Valley star who launched the world’s first mobile computing system in 1982 through his company Grid Systems.

The 65-year-old computer scientist tied his yacht up in New Zealand in 1991 after pottering about the Pacific Ocean doing the work of his San Francisco technology company GeoVector. GeoVector has developed a mobile phone local search technology that means you can use your mobile phone to point at an object and find information on it. For example, point at a restaurant and view the menu on your mobile.

“We were in the process of finalising the initial designs that are now the core of GeoVector and we thought this would be a good place to start working with a wireless carrier in a test market that was quite small. We also liked New Zealand a lot,” says Mr Ellenby.

He says that much to his delight, he discovered lots of things were happening in New Zealand in telecommunications that he hadn’t seen anywhere else. He now spends at least one week of every month in New Zealand and his company has invested around US$5 million in its New Zealand research and development project, which employs about nine full-time-equivalent staff.

“New Zealand plays a very pivotal role for us. It enables us to try out new things with a very interesting and very capable group of people. The skill levels in New Zealand with respect to wireless applications and cellphones are probably higher than anywhere else I have come across.”

Tom Furness is another foreign investor who likes New Zealand. The co-founder of the Human Interface Technology Lab New Zealand (HIT Lab NZ) at Canterbury University, Dr Furness, 63, is known in science circles as “the grandfather of virtual reality”.

From the former military scientist’s HIT Lab US, based at the University of Washington, have sprung projects helping people to see, walk or cope with severe pain; surgeons to operate or locate disease; students to demystify biochemistry; and architects and interior designers to understand space.

The lab had also spawned more than 23 companies — two of which were trading on the Nasdaq with a market capitalisation of US$2 billion — when the Canterbury Development Corporation came knocking on Furness’s door in 2001 during a Christchurch civic visit to sister-city Seattle.

The result was HIT Lab NZ, a 2003 joint venture between the universities of Washington and Canterbury and the Canterbury Development Corporation, headed by Kiwi Mark Billinghurst.

Furness says in New Zealand he finds the energy and vitality he experienced in the US 10 years ago. “We have lost our way a bit. I’m in a position [where] I can help make a difference [in New Zealand].”

This article has been reproduced with kind permission of New Zealand’s Unlimited Magazine (www.unlimited.co.nz)