New Zealand Investing

25 July 2009

Ref: NZ Herald

 

The New Zealand government has relaxed its foreign investment rules in a bid to show the world that “New Zealand is open for business”.  The recent changes effectively make it easier for overseas investors to buy New Zealand assets.

 

The changes are the first of a two-part review of New Zealand’s foreign investment policy.  The second part will focus on changes to the Overseas Investment Act itself.

 

Part of the rule changes is a delegation of greater power to the Overseas Investment Office in reviewing foreign investment applications.  It is expected that the Office will make the final decision on up to 40 percent more applications, as they will be able to decide all applications barring rural sensitive land or land adjoining waterways.

 

In addition, several types of transactions of a minor, technical or temporary nature have been exempted from the Act.  Finance Minister Bill English has said that approximately 98% of all applications were approved anyway and the changes would speed up approvals and cut red tape.

 

These changes take effect immediately.  And it is hoped by simplifying the foreign investment approval process; it will encourage greater foreign investment to further stimulate New Zealand’s economy.

 

As part of this move, the Government is dropping requirements preventing the sale of “strategically important assets” into foreign hands.  There is concern that this could see Auckland International Airport, which is considered strategically important, back on the sales block.

 

However, the Government will introduce a new right to veto on the grounds of “national Interest”- but Mr English expected this to be used so rarely that he could not think of a case in which it would be invoked as most of New Zealand’s vital assets have adequate protection through foreign ownership restrictions.

 

Mr English said the Government would continue to protect things New Zealanders had legitimate concerns about, such as land and large businesses. Overseas investors would be subject to higher conditions, especially around stewardship and public access rights.

 

The Government also intended to simplify the process of investing in sensitive land and will raise the $100 million (NZD) threshold above which foreign investments require approval.

 

The following summarises these changes to New Zealand’s foreign investment policy:

 

·        Removal of veto on sales of “strategically important assets”

·        Allow ministers to use “national interest” as a last resort measure to veto foreign ownership stakes in rare cases.

·        Lift the $100 million threshold above which Overseas Investment Commission screening of investments is needed.  New limit is not yet set but review aims to set it at a level where only genuinely sensitive assets are captured.

·        Narrow the range of land considered “sensitive” and trim down the 27 criteria for buying such land.

·        Provides greater certainty for investors, by removing the ability to substantially change overseas investment rules during applications.

New Zealand Investing