Forestry cutting rights to be added to overseas investment regime ahead of CPTPP signing
By Rebecca Howard
March 7 (BusinessDesk) - The government is adding forestry rights to the Overseas Investment Act screening regime ahead
of this week's signing of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership in Chile, preserving
its right to legislate on the issue using the same carve-out as residential property.
Ministers are finalising the details and it will then be referred to a select committee with a short period for public
consideration, Associate Finance Minister David Parker said in a statement. Adding a new asset class to the regime can
only be done through legislation, and Parliament's finance and expenditure committee is currently assessing an amendment
to include residential property.
Parker heads to Chile this week to sign the CPTPP - a trade and investment pact involving 11 countries across the
Pacific - and "making this change now will preserve policy options for future governments in relation to forests,” he
said.
“Not making this change would mean future governments could not screen overseas purchases of our forests because there
is little difference in effect between a long-term lease and a long-term forestry registration right. Both confer
effective control of the forest and land.”
Parker said overseas investors will only be able to purchase up to 1,000 hectares of forestry rights per annum, or any
forestry right of less than three years duration, without approval. Forestry rights do not involve the sale of the land
but the right to grow and harvest the crop.
Together with a decision to ban the sale of existing residential homes to foreign buyers, the government has also sought
to increase its scrutiny on foreign buyers of rural and forestry land.
In November it issued a new Directive Letter to the Overseas Investment Office that emphasised the forestry sector has
the potential to add "significant value" to the overall economy and environment. In particular, it aims to encourage an
increase in the value-added processing of raw products and the advancement of its forestry-related strategies.
Parker said changes approved by Cabinet mean a new streamlined approval path will be opened for overseas investors
buying forestry rights that will make it easier to gain approval.
A standing consent system will also be developed, so quality forestry investors can make purchases of forestry land and
rights without needing to seek prior approval of each individual transaction. This new streamlined approval path will
also be available for investments in leasehold and freehold forestry land, which are already screened.
"It is important to note that Māori hold a large percentage of forestry interests in New Zealand. It is not anticipated
that this change will prejudice interests that iwi have secured through the settlement process or fundamentally change
the rights and interests of Māori in relation to their lands," Parker said.
(BusinessDesk)