foreign investment

The recent meeting between Finance Minister Michael Cullen and Australian Treasurer Wayne Swann raised the subject of mutual recognition for imputation and franking credits, again.

For some perverse reason this topic has been raised several times by New Zealand ministers and officials based on the quaint and frankly naive belief that the Australians are going to give New Zealand investors and companies an even break.

Give me a break There is more chance of an Aboriginal becoming Australian Prime Minister than there is of the Australian Government agreeing to mutual recognition. The fact is that mutual recognition would cost the Australian Tax Office billions in lost tax revenue – money it would rather spend on things like schools and health that would win votes.

How this works is beyond the scope of this column, but the brutal facts are that mutual recognition has far more going for it for New Zealand than it does for Australia, and in turn that means the idea getting the Australians to agree to it is a pipe dream.

A few weeks back I noted a recent paper by Casey Plunket from Bell Gully discussing potential reform to the imputation credit regime in New Zealand. Things have moved pretty fast since early June. In the past few weeks the Institute of Finance Professionals New Zealand has held forums in Auckland and Wellington to discuss a proposal to allow streaming of imputation credits generated by Australian companies to be given to New Zealand investors.

Separately, NZX has also come out with a proposal to adjust the imputation credit regime to make it more attractive for Australian companies to dual-list in New Zealand, via a tax credit. There is also a third proposal doing the rounds.

All this activity is happening because of a coming review of the imputation credit regime being conducted by the Treasury. From a purely domestic standpoint there is nothing wrong with the imputation credit regime; it is very efficient and ensures that New Zealand shareholders do not suffer the problem of double taxation on dividends paid by New Zealand firms. This would be fine if New Zealand were a "walled garden" and there were no foreign investment or New Zealand companies investing overseas. But New Zealand isn't a walled garden and cannot afford the luxury of being one.

AUSSIE INCENTIVES
As a country we are absolutely dependent on foreign investment to run our economy. The problem New Zealand faces is that there is a big incentive for Australian companies to make full takeovers of New Zealand companies and cut local shareholders out of the picture.

The strategy is for any Australian acquirer to load up on debt to the maximum amount allowed under the thin capitalisation rules and drive down the taxable profit of its New Zealand subsidiary to the lowest level possible. This maximises the profit earned in Australia (and the amount of franking credits to be paid to Australian investors) and minimises the imputation credits earned/tax paid in New Zealand.

If you look at the example of the ANZ Bank, which has many New Zealand shareholders, the dividend paid to an Australian tax resident is much higher than that received by a New Zealand tax resident because of the impost of double taxation.

The idea of change is to allow New Zealand investors access to the imputation credits generated from tax paid by ANZ in New Zealand. The NZX proposal is a variation on this idea and proposes a tax credit regime to offset some of the double tax hit for New Zealand shareholders of Australian firms.

Either proposal aims to achieve the same goal – a reduction in the grab for New Zealand companies by Australian-listed companies because the tax outcomes are so favourable to them. The hope is that imputation credit streaming or a tax credit will encourage Aussie firms to set up proper New Zealand listings and provide some much-needed depth to our capital markets. This is one idea among many being touted as solutions to the lack of growth in the New Zealand market.

Despite all the work on improving regulation, and efforts of NZX and the strong economy, the sharemarket is now smaller in relative terms than it was five years ago. As we move closer to an election the "hollowing out" of the sharemarket is being set as an election issue.

Whether it becomes one is hard to say, but with the advent of KiwiSaver and the PIE regime there is more focus on investment issues than previously. Fact is that what has been driving a lot of investment decisions both locally and in Australia has been New Zealand tax policy.

This is the big elephant in the room no one is really talking about. New Zealand's tax policy in respect of investment and wealth creation is still very flawed. We have seen some signs of improvement with changes to the rules for controlled foreign companies and the introduction of the PIE regime, but these are only first steps in what has to be a major overhaul of tax policy in this area.

SNATCHING DEFEAT
Improving the operation of the imputation credit regime as far as Australian companies goes is a step in the right direction, but it still feels like snatching defeat from the jaws of victory. Why? Because solving the issue of double taxation for one country still leaves many others where it is a problem.

What of New Zealand companies that earn income in Europe or North America? Much bigger markets than Australia but the impost of double tax on these dividends and income is not being addressed. The usual complaint of impact on tax revenue is given as a reason for not making changes to taxes on investments – but that is taking a short-term view when longer-term strategic decisions should be made.

Allowing streaming of imputation credits or having a tax credit seem like only half answers to a bigger problem. If that is all we want then that is all we are going to get. And is that really enough?

* Bruce McKay is an Auckland investment banker.

New Zealand is likely to lose more home-grown companies as head offices follow manufacturing facilities overseas, warns a Treasury report, but ministry officials say there may be little the government can, or should, do about it.  The research was part of a wide array of work at government level assessing the risks of a "hollowing out" of the economy as jobs, firms and ownership go overseas.

Consultants Andrew Sweet and Murray Nash reported to the Treasury in September that New Zealand firms with global ambitions soon encountered the almost irresistible pull of large masses of consumers and bigger manufacturing bases overseas. Once production left New Zealand, they said, sales and marketing soon followed, with head office and R&D usually left last.

"Once a company has begun relocating key components of its supply chain offshore, a self-reinforcing process often begins, with the relocated components acting as `magnets' of attraction for components remaining in New Zealand," the study, based on confidential interviews with 15 firms with substantial overseas sales, said.  Head office functions tended to be "stickiest", or most resistant to uprooting, often because key staff wanted to stay in New Zealand. However in the long run, even this was not always compelling.

The report also found that companies, once purchased by foreign owners, were more likely to have their local offices shut down and moved overseas. Other than to access New Zealand's natural resources, "firms see few compelling benefits from locating activity here".

Although the Sweet/Nash report highlights the risks of corporate exodus, Treasury's position, revealed in papers released to the Sunday Star-Times under the Official Information Act, appears to have shifted in the past 12 months. 

A December 2006 Treasury internal discussion paper on "hollowing out" says the loss of head office type functions and high-skill, high-wage jobs overseas poses risks to the economy because of spillover effects.  These include loss of income for New Zealand; loss of job opportunities and career progression; loss of international connections; and loss of expertise that could encourage the emergence of a cluster of industries.  Prime Minister Helen Clark was briefed by Treasury on the issue in March, a month before Fisher & Paykel announced 350 job losses due to shifting production to Thailand.

But by October this year officials were telling ministers there was no hard evidence any "hollowing out" was under way, and that there was little the government could do about persuading firms to stay in New Zealand.

It pointed to the fact that total manufacturing jobs have grown by 14% between 2000 and 2006, even as manufacturing declined in relative terms compared to other sectors of the economy.  Treasury said even the loss of entire firms overseas was not necessarily a problem, as long as skilled individuals and capital switched to new ventures in New Zealand. There was already evidence, for example, that ex-Navman staff and management had been re-employed.  "In practical terms this means there is probably only a limited role for policies directly aimed at holding firms in New Zealand, given the fiscal and economic risks of the government targeting support and assistance toward narrowly defined sectors or firms," it said.

Finance Minister Michael Cullen told a law firm's business breakfast meeting last month that firms would succeed by focusing on their strengths.  "If New Zealand can determine which elements in the value chain we can realistically seek to achieve some level of dominance, we can go one step further in improving our competitiveness and in securing greater gains from globalisation," said Cullen.  He pointed to the introduction of a new research and development tax credit from April 1 and said the new research showed policies such as KiwiSaver helped retain local ownership.

The European Union's highest court struck down a German law that shielded Volkswagen from takeover, paving the way for Porsche to take majority control of Europe's biggest carmaker.  The ruling is a major boost for the European Commission in its crackdown on so-called golden shares, or strategic stakes that give governments special influence over listed companies.

"The Court confirmed that public authorities should not have special rights in private companies. Special rights have become an ever more endangered species on their way to extinction," Commission spokesman Oliver Drewes told a briefing in Brussels.

The law's demise could also end decades of cosy ties between management and labour at VW in a system called co-determination that gives workers a major say in how the company is run.

The court ruled as expected that the Volkswagen Law broke EU rules on the free flow of capital because it capped voting rights at 20 per cent and let VW's home state of Lower Saxony veto strategic decisions with just 20 per cent of the votes.

Porsche welcomed the ruling that lets the maker of 911 sports cars exercise all of its VW voting rights via its nearly 31 per cent stake in Volkswagen ordinary shares.  Porsche has said it has secured enough options to let it "significantly" raise its holding in VW but has declined to say whether this meant it could already gain majority control.  "There is no decision on how we will proceed. We will take the decision to the supervisory board and this will be a decision for the supervisory board," Porsche spokesman Frank Gaube said in Luxembourg.

The next meeting of the sports car maker's supervisory board is set for November 12, he said, adding he could not say whether the VW issue would be on the agenda.  One source familiar with the matter said it was unlikely Porsche would increase its stake before the end of this year. 

Analysts suspect it may await the outcome of Lower Saxony state elections on January 27 before making its next move.  This put an immediate dampener on shares of Volkswagen, which fell 3.3 per cent to 174.52 euros by 1224 GMT after briefly rising as much as 2.5 per cent following the court's decision.  Shares in Porsche were up 4.8 per cent.

VW said it would examine the ruling's impact on its statutes, while the powerful IG Metall engineering workers union called on the Berlin government to ensure labour representatives on VW's board could still block plant closures or transfers.  "The verdict puts the interests of capital markets above those of employees and Lower Saxony," IG Metall local chief Hartmut Meine said.

The 1960 VW law stipulated that Germany and Lower Saxony were each entitled to appoint two members to VW's supervisory board as long as they owned shares.  The German federal government is no longer a VW stockholder, but Lower Saxony is its second-biggest investor and said it intends to keep its VW stake of 20.1 per cent.

Porsche said it would be in favour of Lower Saxony's two board representatives remaining in their positions.  Both Berlin and Lower Saxony said they accepted the court's decision. The German justice ministry said it would immediately start the process of amending the legislation.  The EU executive is using the court to stop member states using strategic stakes in companies to thwart takeovers.

In June it gave Portugal a final warning to scrap special rights the country holds in two energy companies – Energias de Portugal and GALP Energia.  It also started legal action against Poland over a law giving the state special rights in 15 companies.  And it warned Romania over its share in the country's biggest oil and gas firm, Petrom, a unit of Austria's OMV.

The Government is to scrap grants and loans to lure foreign investment, after they proved too expensive, encouraged takeovers of existing businesses and failed to attract enough "greenfields" investment.  It will instead aim to encourage more investments by local firms overseas in a push to increase their global impact.

Economic Development Minister Trevor Mallard yesterday agreed the new approach – to be announced in a speech to diplomats in Wellington today – was a major policy shift.  A review of Investment New Zealand had found it was involved with 19 investments worth $502 million, of which $155 million would not have occurred without its intervention.

That had cost $60 million.  "It's a pretty low ratio of benefit to cost. Most people would feel that was pretty expensive."

The benefit from the extra $155 million would exceed the cost of getting it. Of the 19 investments, 15 were in existing businesses, 49 per cent were in wood processing and 37% were Malaysian-based.  "We don't want to encourage NZ companies, unless there are very good reasons, to be hocked off overseas. Frankly ... selling forests to Malaysians to export logs in a way that logs have already been exported doesn't really add much," Mallard said.

Levels of inward direct investment were "about right" and close to the OECD average, though the quality needed to be improved.  However, outward investment was only one-third of the average.

There would be no change to the regulatory regime under the Overseas Investment Act.

He conceded there was a political risk in advocating extra investment offshore, rather than at home.  But it would help lower the huge current account deficit, which he saw as the biggest long-term economic problem facing New Zealand.

Manufacturers are unlikely to see any short-term respite from the high Kiwi dollar - which hit a fresh post-1985 float high of US78.35 cents early yesterday. Some economists and currency experts are picking the currency to stay around current levels till at least the end of the calendar year.

Westpac is among those that have raised forecasts for the New Zealand dollar, which closed at 78.12, now picking it to reach US79c by year's end. "That's a fairly decent revision from our last track, which was around US74c," Westpac currency strategist Michael Gordon said.

High dairy prices were helping farmers and could bolster the economy "in the order of 1 per cent to 1.5 per cent of gdp" growth. The Kiwi has also gained ground against the Australian dollar - after weak retail spending data across the Tasman yesterday pointed to Reserve Bank of Australia rates being kept on hold.

The Kiwi finished at A91.2c yesterday. With this country's Reserve Bank having increased the official cash rate to 8 per cent early in June, New Zealand has the highest interest rates in the industrialised world. The Kiwi continues to attract the "carry trade", particularly from Japanese switching out of yen into the Kiwi to get higher returns.

BNZ chief economist Tony Alexander said there was little sign of a pullback in economic growth that would allow the Reserve Bank to start an easing cycle. The currency was headed toward US80c. Only a negative economic event such as a downturn in immigration or pressure on house prices would cause the dollar to fall. He said that while some sectors of the economy were hurting, the "cries of pain" from manufacturers had not been as shrill as in the past when the Kiwi had been at lower levels. Manufacturers were investing in plant, building and information technology to boost productivity, Mr Alexander said. "They're able to handle the higher currency better."

But Canterbury Manufacturers Association chief executive John Walley said foreign-owned companies such as GL Bowron, and textile manufacturer Gale Pacific, were at the forefront of decisions to restructure and move overseas. "What that's saying is that the (firms) with no sentiment are upping stakes ... these offshore-owned companies are a bit like the canary down the coalmine."

In February, Charles Levin, an independent currency trader and adviser to exporters, predicted the Kiwi would be trading as high as US80c at a time when manufacturers were saying anywhere above US70c was too high. The Reserve Bank could best work to help exporters by making the Kiwi less attractive to currency traders, he said.

New Zealand's biggest property company says high demand from offshore investors is making it difficult to acquire new assets.

Kiwi Income Property Trust [ NZX : KIP ] reported revenue of $59.2 million for the year to March 2007.

Profits rose by four per cent over the previous year after the removal of a $15 million gain from the previous year is taken out.   A $220 million revaluation on its portfolio earlier this year lifted its total value to $1.9 billion.

Chief executive Angus MacNaughton, says New Zealand property is particularly popular among foreign investors at the moment.  Mr MacNaughton says completion of the Sylvia Park shopping centre in Auckland has been the company's main focus over the past year.

The Centre has now been valued as an investment property worth $422.7 million, giving it a current year revaluation gain of $47.6 million- ahead of the projected revaluation gain of $6.0 million.

Half of New Zealanders want a common transtasman currency, says a poll issued last night in Australia.

The UMR poll reveals 49 per cent of New Zealanders favour a shared dollar, against 41 per cent of Australians.

That is a dramatic change since 2000 when only 29 per cent of New Zealanders supported such a change.

But Prime Minister Helen Clark warned today that a common transtasman currency would mean New Zealand adopting the Australian dollar.

"The convergence of trying to bring the two together could be quite rough on the smaller party," she said.

Miss Clark said an Anzac dollar had never been on offer and it had always been clear there would be one currency - the Australian dollar.

The issue has been debated for years, but shot back into the limelight after National Party leader John Key suggested last week it was an idea that should be explored.

Finance Minister Michael Cullen attacked Mr Key then, and repeated his opposition last night, saying New Zealand would lose control of monetary policy if the Kiwi dollar was abandoned in favour of a joint currency.

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He was backed by National Bank chief economist Cameron Bagrie, who said: "We would have to be insane to do it."

The poll result was revealed at the Australia New Zealand Leadership Forum in Sydney.

The annual two-day forum, attended by 80 leaders in their fields, tries to develop economic and other links between the two countries.

Dr Cullen said the poll should have asked whether New Zealanders supported the adoption of the Australian dollar, as the Howard Government had already made it clear it would not abandon its currency in favour of an Anzac dollar.

But Mr Key - who is also at the forum - pledged to raise the issue again at today's economic debate.

Supporters of a joint currency say lower transaction costs in transtasman trade and the removal of currency uncertainty between New Zealand and its most important trading partner should contribute to increased trade and enhanced economic integration.

But opponents say full currency union would mean the end of an independent monetary policy, loss of economic sovereignty, and a reduced ability to insulate ourselves from any shocks that might befall the Australian economy.

Inflation

Inflation in Australia was 3.3 per cent to last December. In New Zealand, it was 2.5 per cent to March 31.

But New Zealand's interest rates are higher. The official cash rate is 7.5 per cent, against 6.25 per cent in Australia.

Mr Bagrie said New Zealand would be "giving up a lot for getting nothing in return".  "Our currency will be dictated by Australian conditions, by what the Reserve Bank of Australia does, by hard commodity prices such as gold, tin and coal which Australia exports but we don't."

UBS New Zealand economist Robin Clements agreed that having a joint currency would make New Zealand too dependent on what was happening in Australia.  "If exporters here now are complaining about the dollar, and homeowners are complaining about interest rates rising because Auckland house prices are going up, how will people feel when it gets painful because Sydney house prices are going up?"

There were benefits for companies moving into Australia, but the two economies would have to be far more closely integrated before it could make sense.  "The conditions aren't there for it, and I don't think it's a sound argument."

Mr Clements and Mr Bagrie were surprised the level of public support was so high, and said the way the question in the poll was worded could have influenced the replies.

"If it asked, 'Are you prepared to have monetary policy run by the Reserve Bank of Australia?' you might get a different answer" said Mr Clements.  In the UMR poll, 70 per cent of those surveyed are positive about Australia.

But they are concerned about the hollowing-out of the NZ economy, and 62 per cent feel the permanent movement of New Zealanders to Australia is bad for New Zealand.

At a pre-forum press conference Australian Foreign Minister Alexander Downer said the increasing amount of investment by companies across the Tasman showed the trans-tasman relationship was working.

Australian companies have invested about $A40 billion ($44 billion) in New Zealand, and New Zealand companies have put about $A22 billion into Australia.  But the UMR poll suggests New Zealanders are not comfortable with the Aussie buy-up - 52 per cent of those polled believed the increasing Australian ownership of New Zealand companies was bad.

- Additional reporting Claire Trevett, NZPA

UPDATED REPORT: Two Christchurch factories are blaming the continuing high value of the New Zealand dollar for their decsions to close, costing the city 140 jobs.

Sheep skin exporter GL Bowron is cutting 70 jobs and moving most of its production offshore, while plastic goods manufacturer Click Clack is to close its Christchurch plant at the end of June, with the loss of a further 70 jobs.

The Japanese-owned Bowron, which has operated a sheep skin tannery since 1881, has been through a series of restructurings in recent years and has been one of the highest profile victims of the Kiwi dollar, which has been trading above US70 cents.

GL Bowron's Woolston plant will continue to operate, concentrating on technical and product development and production of smaller volumes of high grade products.

The company said it was consulting with unions about its plans and would continue to utilise New Zealand sheep skins.

Click Clack chief executive John Heng said today the company planned to move production to its Levin factory, but some industrial lines made in Levin would be made offshore.

He said he could not rule out moving further manufacturing offshore if the New Zealand dollar and interest rates remained at high levels.

Of the 70 jobs hit by the Christchurch closure, up to 20 workers would be offered the opportunity to transfer to Levin.

The company, which produces a range of polycarbonate goods, including the popular Strahl beverageware, exports 85 per cent of its production to more than 60 countries worldwide from its Palmerston North base.

Mr Heng said Click Clack had struggled "long and hard" to combat the effects of the continuing high value of the New Zealand dollar over the past three or more years.

"A year ago in January, when we moved supplier contracts worth more than $3 million offshore, we warned that we couldn't go on forever with a New Zealand dollar that's so ridiculously over-valued.

"We've made many changes to the way we do business and cut our costs to the bone, with the result that we are a lean, finely honed operation."

Almost 80 jobs had been cut through attrition across the New Zealand group "over a period of time", Mr Heng said.

"Despite our best efforts, the Christchurch operation is becoming less profitable by the day due to the continual rise of the New Zealand currency."

Mr Heng said the company would work to help employees find new jobs.

The current account deficit is "still too high" at $14.4 billion, according to the Government, while profits for foreign owners of Kiwi companies, such as banks, keep growing, and were up $385 million in just three months.

The Green Party called on the Government to slow down lending by foreign-owned banks into an over-cooked housing market.

The lending was making the current deficit worse and making housing unaffordable for many, the Greens said.

A report this week showed it was almost impossible for an average wage earner to buy an average home, a mortgage taking about 75 per cent of the average wage in Wellington.

The shortfall between what New Zealand earns and spends overseas was $3.9 billion in the December quarter, Statistics New Zealand reported yesterday. This was slightly better than most forecasts.

The New Zealand dollar rose to US71.08 cents from US70.94c just before the announcement and ended the day just above US71c.

The deficit figures showed profits earned by foreign investors in New Zealand rose $385 million in the December quarter, mainly because Australian-owned banks were making higher profits.

Borrowing overseas has increased by about $24 billion in the past year, much of it household debt.

Foreign investors were also getting better returns from dividends and rising interest payments.

The deficit figures came ahead of growth figures due to be made public today, adding to expectations that the economy expanded about 1 per cent in the December quarter, or perhaps slightly more.

Finance Minister Michael Cullen said the deficit was still too high.

"The worry is that the international investment balance, including the cost of borrow overseas, is still rising because we as a nation are still willing to take on more debt, much of it in the household sector," Dr Cullen said.

Households had been borrowing to spend, while the Government had been saving. "New Zealanders need to think harder about saving."

Green Party co-leader Russel Norman said the $329 million increase in the current account deficit was mainly because of rising profits for foreign-owned companies, especially the big banks.

"These banks are making a fortune by borrowing money overseas and lending it into the over-cooked housing market, then sending the profits back to their Australia owners," Mr Norman said.

He called on Dr Cullen to "encourage" the Reserve Bank to increase the amount of capital banks have to hold, limit the sale of land to citizens and permanent residents in New Zealand, bring in a capital gains tax exempting the family home, and tighten up the tax breaks on investment property.

New Zealand investment opportunities have been ripening for 20 years, but Kiwis are too shy about equities and need to get excited about saving, an American investment expert says.

William Buechler first visited New Zealand the day before the 1987 sharemarket crash. New Zealand recovered more slowly than any other country. The resulting lack of exposure of investment opportunities had made the country flush with potential, he said on his return last week. "I felt then and I feel now that this is a great place to be investing."

Mr Buechler, owner of asset management company Barclay Partners, started putting money into New Zealand seriously about a year ago, after seeing potential in a post-September 11 global marketplace.

Since a visit in August last year Mr Buechler has built a hedge fund in Barclay Partners geared toward New Zealand investments, with a small percentage in Australian stocks. Back to investigate investment opportunities and meet Finance Minister Michael Cullen, Mr Buechler said he detected a more positive outlook. "You're really on the verge of some fabulous things happening here."

Conversely, he was "dismayed" at the lack of enthusiasm about government workplace savings scheme KiwiSaver. "I was shocked when I got here that there was not more excitement about KiwiSaver. There's been too much made of the fact it won't be compulsory and therefore it won't work. I disagree."

The key was educating people about the "power" of the savings movement and explaining the benefits of long-term investing.

Mr Buechler, who was involved in setting up 401k, the US equivalent of Kiwisaver, said it had become almost the measure of a company. "An employer wouldn't be able to attract employees if they didn't have (a workplace savings scheme). It's become almost pervasive."

The money accumulated through 401K had wider benefits, helping the United States economy ride out downturns and accentuating the upturns.

After the 1987 crash, Kiwis turned their backs on equity markets, and there was no national savings buffer to inject confidence into the markets like there was in the US.

"Your market basically went nowhere for 15 years. You didn't build an equity culture so you don't really have people thinking stocks and sharemarket."

The lack of focus on shares had caused businesses to pay better dividends to attract investors and led to many being undervalued compared with their international peers.

"That's what led to those opportunities that I see now," he said.

It was that culture change that he discussed with Dr Cullen last week, in a meeting prompted by Dr Cullen using quotes from an article Mr Buechler wrote for Forbes magazine. "We talked about how bright the future was for New Zealand."

Mr Buechler said awareness of the opportunities in New Zealand was not widespread, but the world was waking up to what New Zealand markets had to offer.

The strength of the stock exchange was critical in giving overseas investors confidence, and he liked what he saw.

"They are building the market. You are not going to get the outside capital without having a viable sharemarket."

The potential for NZX to grow was huge and its forays into the Australian market were "nothing short of brilliant".

Overseas investors were sometimes concerned about the size of New Zealand's total market capitalisation, about $50 billion, but it was a misplaced worry.

"It's a self-fulfilling prophecy. If there's more money floating around, the share prices go up, and bingo, the market cap goes up."

That said, if investors waited too long they would miss out. "The interest level in the US from institutions and the individuals we are talking to is growing exponentially."

New Zealanders needed to stop looking at property - "real estate is a little overdone" - and start looking at the innovation and potential in local companies to spread their investments, Mr Buechler said.

New Zealand was unique among younger investment markets in that it was less volatile than most. "I know what I own today I will own tomorrow," he said. "It's hard-earned money for me and for my clients. I cannot fathom putting it into some of the countries that do not have the political stability and legal system you have here."