NZ court blocks sale of farms to Chinese
Source: Agencies |
February 16, 2012, Thursday
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Print Edition
Print Edition
A COURT in New Zealand has halted the first ever sale of dairy farms to Chinese investors.
High Court Judge Forrest Miller ruled that the New Zealand government overstated the economic benefits Chinese investors would bring when it approved the sale of the 16 farms last month. Miller said the government needs to review the sale again using stricter evaluation criteria.
Supporters of the sale say it would encourage international trade, while others say farmland needs to stay in the hands of New Zealanders if the country is to remain prosperous.
The potential buyer is Shanghai Pengxin, run by property developer Jiang Zhaobai.
The company says it wants to spend more than NZ$200 million (US$164 million) buying and improving the farms.
A consortium of New Zealand farmers and businessmen led by merchant banker Sir Michael Fay filed the court action seeking to block the sale.
The group earlier offered to pay NZ$171 million to buy the land itself.
False comparison
"We're very pleased with the decision from Justice Miller," said consortium spokesman Alan McDonald. "Our view is that Shanghai Pengxin never brought any real economic benefits to New Zealand."
The judge essentially ruled that the New Zealand government used a false comparison when evaluating the benefits the Chinese investment would bring to the farms, which are currently in bankruptcy and poor repair.
The judge said the benefits from the Chinese needed to be measured not against the farms' current state, but against the benefits a New Zealand buyer would bring.
Cedric Allan, a spokesman for Shanghai Pengxin, said he believes the Chinese investment would benefit New Zealand under either measure.
He said he expects the sale to still go ahead after a second government review.
"Personally, for me, the ruling is a big surprise, I hadn't read the Overseas Investment Act in that way," he said. "We're still pressing ahead as fast as we can, and we're still confident we are going to get the final sign-off."
New Zealand relies on China to buy much of its farming exports, including its dairy products. In 2008, the two countries signed a free-trade agreement, the first such agreement between China and a developed nation.
High Court Judge Forrest Miller ruled that the New Zealand government overstated the economic benefits Chinese investors would bring when it approved the sale of the 16 farms last month. Miller said the government needs to review the sale again using stricter evaluation criteria.
Supporters of the sale say it would encourage international trade, while others say farmland needs to stay in the hands of New Zealanders if the country is to remain prosperous.
The potential buyer is Shanghai Pengxin, run by property developer Jiang Zhaobai.
The company says it wants to spend more than NZ$200 million (US$164 million) buying and improving the farms.
A consortium of New Zealand farmers and businessmen led by merchant banker Sir Michael Fay filed the court action seeking to block the sale.
The group earlier offered to pay NZ$171 million to buy the land itself.
False comparison
"We're very pleased with the decision from Justice Miller," said consortium spokesman Alan McDonald. "Our view is that Shanghai Pengxin never brought any real economic benefits to New Zealand."
The judge essentially ruled that the New Zealand government used a false comparison when evaluating the benefits the Chinese investment would bring to the farms, which are currently in bankruptcy and poor repair.
The judge said the benefits from the Chinese needed to be measured not against the farms' current state, but against the benefits a New Zealand buyer would bring.
Cedric Allan, a spokesman for Shanghai Pengxin, said he believes the Chinese investment would benefit New Zealand under either measure.
He said he expects the sale to still go ahead after a second government review.
"Personally, for me, the ruling is a big surprise, I hadn't read the Overseas Investment Act in that way," he said. "We're still pressing ahead as fast as we can, and we're still confident we are going to get the final sign-off."
New Zealand relies on China to buy much of its farming exports, including its dairy products. In 2008, the two countries signed a free-trade agreement, the first such agreement between China and a developed nation.
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