URGENT PRESS RELEASE – 29 July 2009

New Immigration Investor Policies Unplugged

The New Zealand Association for Migration and Investment (NZAMI) welcomes the announcement yesterday of the revised migrant investment policy and of the new Entrepreneur Plus policy. The NZAMI had written directly to the Prime Minister and all cabinet members in early February to promote the urgent and timely review of immigration policies that could deliver a range of immediate economic benefits, and this call was also taken up at the subsequent Job Summit.

It is pleasing to now see some progress in this area but much more can still be done, and the NZAMI remains hopeful that the National Government will increasingly recognise the ability of well directed economically motivated immigration policies to achieve positive outcomes for New Zealand and New Zealanders. The joint announcement of the new policies by the Ministers of Immigration and Economic Development certainly signals a greater economic focus for at least part of New Zealand’s immigration policies and this approach is welcomed by the NZAMI.

It has been acknowledged by all parties that the current, and the immediately previous, migrant investor policies have not delivered the outcomes possible from this policy option.

So what do the new policies actually deliver?

The higher level Investor Plus (Investor 1) category requires applicants to have the ability to invest $10 million. This level of funds must then be transferred to New Zealand and invested in a suitable investment for three years. This category has no other pre-requisite criteria that need to be met apart from the fact that the funds must be legally acquired and that the applicants must be in good health and of good character (applies to all immigration applications). Investor Plus applicants must spend 20% of their time in New Zealand in years two and three.

Most interest however is on the lower level Investor 2 category with the initial focus on the minimum thresholds needed to be met in order to submit an expression of interest (EOI) - the first stage of such an application. This category requires applicants to claim points under criteria relating to the level of investment possible, English language, period of business experience and their age. Although, a minimum of 20 points is required to submit an EOI, it would appear that applicants who only just achieve or exceed this level may not actually be successful in further progressing their application.

As can be seen from the following two examples there is likely to be a significant variance in the points possible under this Investor 2 category.

Example One: Criteria Points $2 million investment 20 Good English 10 10 years Business Experience 30 Aged – 50 years 10 Total 70 Points

Example Two: Younger applicants who have good English, longer business experience, and more funds to be invested will be significantly advantaged over those who are older and with limited English, business experience and funds. In addition the requirement for the investment funds to be transferred through the trading bank system into New Zealand will continue to present real practical and legal challenges for applicants from countries which operate restrictive foreign exchange and money transfer controls.

Applicants who have acquired their wealth through their home property and/or inheritance may be able to achieve the required investment levels. However, the additional requirement for a minimum of at least three years of business ownership or management experience in a commercial business with five employees and annual turnover of $1 million may mean many of these people will not be eligible. In this sense, and even though the increase in the age limit to 65 years is positive, the policy still has a business focus and should not be perceived as a retirement policy. We await the announcement of a retirement visa policy sometime in 2010.

Other positive aspects of this new policy are that the funds can be invested in New Zealand in a wider range of investment options which include New Zealand Government and local authority bonds, and bonds issued by New Zealand public listed companies. While it remains unacceptable for the investment funds to be invested in residential real estate and bank deposits,

Criteria Points $1.5 million Investment 10 Limited English 1 4 years Business Experience 12 60-65 years 0 Total 23

Points the opportunity to invest in a range of low risk investments will prove attractive to many investor applicants. It must always be appreciated that applicants who apply under the investor categories have, as their primary intention, the objective of obtaining residence and of living in New Zealand. Consequently these applicants will tend, understandably, to adopt a conservative investment approach. The new policy acceptably accommodates this approach while keeping funds out of the residential property market. Applicants from countries who have a much more informed understanding of New Zealand and of western investment practices, such as the UK and USA, may be encouraged to invest in more active business opportunities. Work is underway to ensure a collaborative approach to informing these applicants about New Zealand investment opportunities.

Another positive and pragmatic aspect is the ability of the applicant to borrow against assets in order to realise their investments funds to be transferred. The funds under Investor 2 policy must remain in New Zealand for four years and the applicants must spend 40% of their time in New Zealand in years two, three and four. During the term of the investment, the interest or dividends achieved on the investment are available for the applicant to use as they wish. These applicants must also, in addition to the amount nominated for their investment, prove they have further assets of NZ$ 1 million available to cover their settlement and living expenses in New Zealand.

There is no limit on the number of Investor 1 applicants. A quota of 300 applications has been set for the Investor 2 category and the NZAMI believes that the policy should attract interest to around this level. However, as with any new policy, Immigration New Zealand can be expected to initially adopt a cautious approach in setting the EOI selection mark. In this regard applicants are encouraged to seek professional advice from New Zealand licensed immigration advisers (see www.iaa.govt.nz) and immigration lawyers to ensure they are advised in their best interests on how best to structure their initial EOI points claim. For example any “overclaim” for investment funds points may lock an applicant into a higher level of investment above what was necessary to ensure a successful application.

The announcement of the Entrepreneur Plus policy was also timely and has been very welcomed by the NZAMI. Any business applicant who invests $500, 000 in a new or existing business enterprise in New Zealand, and then additionally creates and retains three full time employment positions, is deserving of the ability to be issued residence directly. This is a very worthwhile policy initiative by the Government and will deliver significant tangible benefits for New Zealand.

Previously, the only option available for business applicants was the Long Term Business Visa. The LTBV is not a residence visa and many applicants under this policy sought to minimise their business investment. The new Entrepreneur Plus category will appropriately incentivise business applicants to now invest at higher levels, and actively create new employment, due to the fact that they will now be approved for residence at the outset. The NZAMI believes the Entrepreneur Plus policy, as announced, is a very good policy which will deliver on the outcomes envisaged. It is hoped that the final detail of the policy, to be announced in November when the policy is to take effect, will only further support our current views.

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