RAW DATA: Overseas Investment Review Q&A

When are these new measures likely to be used?
The economic interests factor and the mitigating factor will apply only to foreign investments in sensitive land (such as farmland greater than five hectares or land adjoining the foreshore or conservation land). The government will issue a new ministerial directive letter to the Overseas Investment Office to provide guidance to the office and investors. Broadly, the government considers the new factors to be of relatively high importance to assessing investments in farmland. The Government does not expect that relatively small parcels of land, such as land bought for lifestyle purposes, will fall within this direction.

What practical difference are the changes likely to have?
The new factors will allow ministers to consider a wider range of issues when assessing an investment in sensitive land. Each investment application will continue to be considered on a case-by-case basis.

Why have you kept the strategic asset test?
The strategic asset test has not been used in the two years since it was introduced. However, on balance, ministers concluded that removing the test would reduce their flexibility to deal with investment applications for sensitive land. Taken together, the new measures announced today provide a balanced and appropriate framework for addressing genuine public concern about certain types of overseas investment.

How can you provide both extra flexibility for ministers and extra certainty for investors?
The government has had to balance a number of factors and we believe we have struck an appropriate balance. While the changes give ministers more flexibility, they also give investors a clear sense of what the government views as important and where extra scrutiny will be applied.

When will the new rules take effect?
We expect the new regulations to take effect in December 2010.

What do the changes mean for overseas investment applications already submitted?
Applications already submitted will be assessed under the current regulations. The new regulations will be applied to those investment applications that made after the new regulations come into force.

Are the changes consistent with New Zealand’s international investment obligations?
Yes. New Zealand makes commitments in a number of its trade agreements, which mean that we cannot introduce new categories of investment under our overseas investment legislation. But we retain flexibility to adjust the criteria for screening categories of investment - this includes the new factors.