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NZ 'under scrutiny' in Asia over Crafar deal

Published: 1:57PM Sunday April 08, 2012 Source: ONE News

New Zealand's reputation will be damaged in Asia if the sale of the Crafar dairy farms to Chinese interests does not go through, says a Kiwi managing investments in China.

A High Court appeal led by Sir Michael Fay has forced the Overseas Investment Office to reconsider Shanghai Pengxin's $210 million offer for the 16 farms which are in receivership.

David Mahon, managing director of Mahon China Investment Management, told TVNZ's Q+A programme New Zealand is "under scrutiny" because of the delay to the Crafar Farms sale, not just in China but across Asia.

Mahon, who has lived in China for a quarter of a century, said: "There is a view here, I think, in certainly government circles, that Chinese investment has been singled out from other investment, and there is a prejudice simply's Chinese investment. And so, in a sense, New Zealand is under some scrutiny."

If the deal does not go through "New Zealand will have a lot of repairing to do across Asia and certainly in China," Mahon said.

He said New Zealand is looked upon as being a very advanced and sympathetic country to China.

"Therefore this Crafar deal, the court case that was brought against it, is being looked upon with some surprise, and I think the Chinese are quite perplexed.

He said the Chinese are not looking to buy and own land around the world, but want to secure the resources that their own narrow agriculture base doesn't supply them.

"China actually wants resources - whether they're fibre, timber, wool - or whether it is protein. In the case of the Crafar farm deal, it's a search for protein.

"And given the fact that Chinese are urbanising in such great numbers, and the demand for food is increasing, there is an urgency for the Chinese to secure good lines of supply."

Mahon said New Zealand needs to look at the issue of land sales to overseas buyers given it has generated so much debate in the country.

He said a solution may be a leasehold arrangement where farmers sell their land to a national trust which would then lease it out.

'Paying rent'

However, Greens co-leader Russel Norman said Landcorp will effectively be paying rent to Shanghai Pengxin, making them tenants in New Zealand, if the sale goes through.

State-owned Landcorp will join with Pengxin to run the farms should the deal be approved.

Norman said: "We're in a very interesting situation where a government-owned entity is actually facilitating this process of the sale of land into overseas ownership."

He said the sale of land overseas is a strategic problem for New Zealand's economic future and it seems "a very strange thing" for a government SOE to be doing.

Landcorp chair and former agriculture minister Jim Sutton said Landcorp will not be paying rent.

"We'll be a share-farmer. A share-milker."

Sutton said New Zealand as a whole has a big stake in the Chinese deal going through.

"We risk pointlessly chilling the most important economic relationship we have."

Sutton also denied rumours that he used his casting vote to commit Landcorp to the deal.

"It's absolute nonsense. It's not the way we make decisions& there has been no division within the Landcorp board over this issue," he said.

However Norman said New Zealand does not need this foreign investment.

The Greens say they are opposed to foreigners of any nationality being able to buy land in New Zealand and the Government needs to revise the rules for all.

"The greens objected for example when Shania Twain was buying land many years ago and we raised concerns around James Cameron [buying land in New Zealand]. Our approach has been consistent all the way through," Norman said.