“At the core of these principles is reversing the presumption that investing in New Zealand is a privilege and that investors must justify their transaction to the government,” New Zealand’s Associate Minister of Finance David Seymour said as he announced the government’s plan to change foreign investment laws in the country.
Seymour explained that New Zealand had earned a bad reputation among international investors, who often must navigate restrictive laws if they want to do business in the country. The reforms will target the Overseas Investment Act of 2005. That law stipulates that individuals or businesses must prove that their investment will benefit New Zealand, be it in the form of creating jobs, bringing new technology or stimulating the economy.
The finance minister explained that the restrictive policy has led to international investors counting New Zealand out when considering where to take their money.
The reform will mean that “the new starting point is that investments can proceed unless there is an identified risk to New Zealand’s interests,” Seymour said.
The New Zealand law firm MinterEllisonRuddWatts says potential changes include a sector-specific approach, an emphasis on monitoring and enforcement and a decrease in application costs.
Australian asset manager New Forests has invested widely in New Zealand. David Shelton, their global head of investments, says that important industries like forestry and agriculture “rely on inflows of investment capital, as the domestic sources of capital are often not able to invest at the levels necessary to see these industries thrive.”
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By GlobalDataShelton welcomed the government’s reforms and said it could “help position New Zealand and its industries for future growth.”
Chris Parke, a corporate partner at a commercial law firm, explained that there has been a lack of consensus across the political spectrum when it came to foreign investment. It has meant that, as administrations have changed, their “tinkering” with the OIA is one of the aspects that has made it so difficult to navigate for foreign investors.
If a company does manage to establish that their investment will benefit the country, the OIA “will then continue to monitor consent holders to make sure they meet the consent conditions once it’s granted.”
The changes will maintain the government’s ability to screen investments and impose conditions or blockages when necessary. The government hopes to complete the reforms before the end of 2025.
