Changes in overseas investment rules welcome

Changes in overseas investment rules welcome, but need to go further

The CTU welcomes the decision by the Government not to weaken the already feeble overseas investment rules after a review that took over a year behind closed doors.

Instead it has added an “economic interests” factor and the possibility of requiring New Zealand oversight or involvement in an investment. The Finance Minister will also provide “more clarity about the Government's policy on overseas investment in sensitive assets” in a new ministerial directive letter to the Overseas Investment Office.

“We also welcome the fact that they have seen sense in leaving the strategic asset test in place,” said CTU Economist and Policy Director Bill Rosenberg.

The proof of the new rules will be in their wording and ultimately in the way the Ministers of Finance and Land Information exercise their powers in making decisions on overseas investment applications.

Bill Rosenberg said: “The rules still leave huge holes in the oversight of some of the most important overseas investment into New Zealand where land acquisition is not a factor, such as leveraged buyouts by private equity investors which leave New Zealand companies in a weakened and highly indebted state.”

“The Government admits that New Zealand has made ‘commitments in a number of its trade agreements, which mean that we cannot introduce new categories of investment under our overseas investment legislation’, as the Minister of Finance’s media statement said. This leaves New Zealand in a vulnerable position where it cannot exercise control over damaging overseas investment. It should be trying to unwind those commitments.”

ENDS

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