Next phase in rewrite of Overseas Investment rules

The Government is launching the second chapter in its rewrite of the Overseas Investment Act to ensure investments are consistent with New Zealand’s national interest.

This will also focus on reducing complexity and cutting unnecessary red tape, Associate Finance Minister David Parker said.

The first phase included the ban on foreign buyers acquiring existing homes, which takes effect on October 22, as well as measures to encourage foreign investment in forestry.

“By preventing foreigners from buying existing homes the Government has completed the most significant reform of the Act in more than a decade,” David Parker said.

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

“In the second phase of our reform we will 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.

“Many of our closest allies have the ability to block significant investments that are inconsistent with their national interests. New Zealand currently cannot,” David Parker said.

“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.”

Legislation to implement the changes is expected to be completed by 2020.

The Government will consult widely on options for reform. Public consultation will take place in the first half of 2019.

The work will be led by the Treasury. Its terms of reference can be found at: https://treasury.govt.nz/publications/information-release/phase-two-reform-overseas-investment-act-2005