New directive for the Overseas Investment Office announced
Associate Finance Minister David Parker and Minister for Land Information Eugenie Sage, have announced today the strengthening of New Zealand’s overseas investment regime, by issuing a new Directive Letter to the Overseas Investment Office.
The Directive Letter sets out the Government’s policy approach to overseas investment in rural land. The directive does not change the rules regarding acquisitions of significant business assets.
“The existing directive is too loose,” says Mr Parker. “It only applied to very large farms more than 10 times the average farm size.
“In practice this meant restrictions in sales generally applied to sheep and beef farms over 7,146 ha or a dairy farm more than 1,987ha.
“This new directive ensures authorised purchases will provide genuine benefits.
“Too often we see investors buy a New Zealand farm, and then use existing systems, technology and management practices which don’t substantially add anything new, or create additional value to our economy.
“We want to make it clear that it is a privilege to own or control New Zealand’s sensitive assets, and this privilege must be earned. We campaigned on these changes and they won’t come as a surprise to potential investors,” says Mr Parker
“Today’s announcement raises the bar for overseas investments in sensitive land by replacing the existing large farm directive, with a new and much broader, rural land directive which applies to all rural land larger than 5 hectares other than forestry,” says Ms Sage. “The large farm directive previously only applied to very large farms.”
“This directive acknowledges the importance of jobs, new technology and business skills, increased exports, processing of primary products and oversight and participation of New Zealanders,” says Ms Sage.
The new Directive Letter will come into force on 15 December 2017. All applications which are being assessed by the OIO at, and from, this date will be subject to the new directive letter.
Applications which have not been determined by 15 December, will be given a fair opportunity to make additional submissions under the new approach. The Overseas Investment Office continues to accept and process applications, and both Ministers and the OIO are making decisions on applications.
“This Directive Letter is the first step to strengthening the overseas investment regime,” says Mr Parker.
“We will be introducing legislation to ban foreign buyers of New Zealand’s existing houses before Christmas and other work to strengthen the Overseas Investment Act is underway.”
“The Government wants to see an increase in value added processing in the forestry sector and Minister Shane Jones will be making a separate announcement on this,” he says.