Overseas Investment Act reform proceeds to next stage

The government has kicked off the next stage of its rewrite of the Overseas Investment Act, the central aim of which is to ensure that investments are “consistent with New Zealand’s national interest.”

The first stage included a ban on foreign buyers purchasing property in New Zealand, an amendment which passed its third reading in August and will come into effect on October 22. According to associate finance minister David Parker, the ban on foreigners buying existing homes has been “the most significant reform of the Act in more than a decade.”

He says the focus now will be on removing unnecessary red tape, and on reducing the complexity of investing into New Zealand.

“We know that steps can be taken to simplify the rules for those making productive investments into our economy while adequately protecting our most sensitive assets, including our pristine land – the envy of the world,” Parker stated.

“In the second phase of our reform, we still ensure New Zealand remains an attractive destination for beneficial, long-term foreign direct investment, while examining ways to ensure prospective foreign investments are consistent with New Zealand’s national interest.”

Parker noted that other countries have the ability to block investments from overseas which are not consistent with national interests, something New Zealand is currently unable to do. One of the review’s key aims will be to allow the government to ‘effectively manage overseas investment’ while supporting potentially beneficial investments by simplifying the process, and offering a clear pathway for consent.

The review will also ensure that the screening process for overseas investment provides strong protection against risks and imposes compliance and administrative costs.

“It is likely that a broad, but rarely used, discretion to decline approval for significant foreign investment, such as infrastructure assets with monopoly characteristics, will be introduced,” said Parker.

The government is currently consulting on reform options, and the legislation changes are expected to be completed by 2020.