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New rules aim to speed up investment

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Staff Reporter

09 June 2024, 6:11 PM

New rules aim to speed up investmentConsent processing to be faster for foreign investors - Associate Finance Minister David Seymour.

A new ministerial directive aims to streamline the consent processing times under the Overseas Investment Act, making it easier for foreign investors to bring capital into New Zealand.

Associate Finance Minister David Seymour announced the changes in a bid to bolster the country's economy by reducing bureaucratic delays.

“New Zealand is currently rated as having the most restrictive foreign direct investment policy out of the OECD countries in the OECD Foreign Direct Investment Regulatory Restrictiveness Index,” said Seymour.

“Processing times are currently too long, and this poses a barrier for investors. Budget 2024 started to get wasteful spending under control, but in order to have a strong growing economy New Zealand needs to be more welcoming to investment.”

The directive, issued to Land Information New Zealand (LINZ), sets an expectation that 80 percent of consent applications will be processed in half the statutory timeframes.

LINZ will still have the full statutory timeframe to handle the remaining 20 percent of applications, which are typically more complex or higher-risk.

“Decisions on consent applications under the general benefit test take 89 days on average,” Seymour explained.

“This creates uncertainty and impacts the attractiveness of investing in New Zealand. This affects New Zealand businesses that rely on overseas investment for capital or for liquidity. With the new directive letter, we’re making things faster and removing bureaucracy.”

To achieve these targets, LINZ will adopt a risk-based approach to verifying information and streamlining processes.

This approach acknowledges that the majority of consent applications are low-risk and should be processed more efficiently.

“We’re introducing a principle that we welcome investment. In order for New Zealand to retain world-class public services, New Zealand needs to be the preferred destination for ideas, investment, and talent. Reduced barriers to investment from people and businesses means greater prosperity for Kiwis. If we want world-leading businesses and public services, we need the money to pay for them. Today’s announcement is part of making this happen,” said Seymour.

The directive also aims to eliminate redundancy in the application assessment process.

Matters already covered by other domestic regulations, such as competition concerns assessed by the Commerce Commission, will no longer be re-evaluated by LINZ.

“These changes also bring balance to how applications are assessed by removing duplication across different parts of government. There’s no reason for LINZ to be assessing matters already covered by other domestic regulation, such as whether mergers will decrease competition, which is already assessed by the Commerce Commission,” Seymour noted.

The new directive letter replaces the previous government's 12-page directive issued in November 2021, simplifying it down to five pages. “We’re getting out of the way,” Seymour emphasised.

Effective immediately, all applications assessed by LINZ will be subject to the updated directive letter.

Additionally, the Overseas Investment Regulations 2005 will be updated to include a new reporting requirement on the extent to which LINZ meets the new timeframe objectives.

The directive letter is part of a three-part process to better enable overseas investment.

Fewer decisions will be made by ministers, although high-risk decisions, including all national interest and national security transactions, will still require ministerial approval.

The final step will involve rewriting the Overseas Investment Act to further streamline and enhance the investment process.

With these changes, the government aims to create a more welcoming environment for foreign investors, thereby fostering economic growth and enhancing the quality of public services in New Zealand.