With the scrutiny on foreign investment here in Australia, it would also be worth noting that New Zealand is undergoing a similar conversation about foreign investment in the 'Land of the Long White Cloud'.
In New Zealand, this has been largely triggered by big investments into two sectors; Housing (particularly in Auckland) and into the famous Dairy Industry. KPMG found Canada accounted for 22 percent of overseas investment in 2013-2014.
China - though by far the biggest foreign player in the dairy sector - was second on overall investment with 14 percent, followed by the US (13 percent) and Australia (11 percent). The US was the biggest buyer of land in that period.
The report, Foreign Direct Investment in New Zealand: Trends and Insights is the second of its kind by KPMG and is based on Overseas Investment Office (OIO) decisions over the last two years. To read that report click here.
The issue of housing investment into the New Zealand housing market has become a big issue in New Zealand politics. This has caused the Key Government to introduce a suite of restrictions on foreign home buyers as fears rise about the effect of this investment on home prices, especially in places such as Auckland.
In May 2016, Land Information New Zealand (LINZ) released data which showed that 474 out 11,955 houses sold between January and March in 2016 went to non-residents.
Of the sales to foreign buyers, 276 houses went to Chinese residents. The next biggest investors were Australians, with 45 properties.
Across all of New Zealand, 3 per cent of houses sold between January and March went to people who were not New Zealand citizens or holders of a residency, student or work visa.
Chinese tax residents snapped up 321 of those properties (29.5 per cent of non-resident purchases), followed by Australians on 312 properties (28.6 per cent).
However, fears around loss of sovereignty and suspicion around the motives of Chinese buyers are prompting a rise in protectionist politics; from One Nation and the Greens on the right and the left of Australian politics and New Zealand First on New Zealand's right and the Greens on New Zealand's left.
A large number of investments do not need approvals beyond the normal legislative business framework for New Zealand-based companies.
The Overseas Investment Act 2005 regulates the acquisitions by overseas entities of 25 percent or more ownership or control of interests of sensitive New Zealand land and significant business assets.
However, just as Australia has an independent Foreign Investment Review Board (FIRB), New Zealand has regulatory arrangements as to what needs higher 'testing' from government. These tests are unique to the growing economic circumstances New Zealand faces. New Zealand has seen as massive growth in its economy since John Key came to power after a long term of Helen Clark as New Zealand's Labour Prime Minister.
These three tests are:
- sensitive land (eg farm land, historical landmarks, regional parks)
- significant business assets (eg New Zealand securities or assets, or the establishment of a business, worth more than $100 million)
- fishing quota (an interest in fishing quota or securities in a person that owns an interest in fishing quota).
However, this is balanced by an efficient Department of Trade and Enterprise that can assist with investment into New Zealand successfully.
Some of the services NZTE can provide include:
- supplying general and customised reports on New Zealand investment opportunities, costs and regulatory processes for your investment
- facilitating your visit to New Zealand by identifying potential investment targets and arranging suitable meetings, including introductions to other contacts in New Zealand (eg regional economic development agencies) that could support your investment
- facilitating the selection of suitable sites for your investment project
- helping coordinate your investment, including providing information and facilitating access to other Government assistance programmes, and helping to remove potential obstacles
- providing information about potential New Zealand-based advisors or suppliers for your investment project
With our team having extensive dealings with New Zealand Government agencies, we are perfectly placed to assist investors in their regulatory engagement with New Zealand. If you would like to talk further, please click on the button below.