Media Release — NEW REPORT
Verboten! Kiwi hostility to foreign investment
New Zealand operates one of the most restrictive foreign investment regimes in the developed world, missing out on much
needed investment, says a new Research Note from The New Zealand Initiative.
In Verboten! Kiwi hostility to foreign investment, Luke Malpass and Dr Bryce Wilkinson analyse the latest data from the OECD, finding that despite popular myth, New
Zealand actually operates the 6th most restrictive regime of the 55 developed economies measured by the OECD. But it is
the sector by sector breakdown that is most worrying.
“New Zealand has the most restrictive regime of all 55 OECD measured countries in manufacturing,” says Mr Malpass.
New Zealand has become comparatively restrictive over the past two decades.
Of the four criteria considered by the OECD, almost all of New Zealand’s restrictiveness is in the ‘screening and prior
approval category.’ This is entirely due to the Overseas Investment Act 2005.
“Bluntly put, New Zealand relies more than any other OECD country on ministries and ministers second guessing investment
intentions and possible outcomes, and on the most contrived criteria. A full 35 out of the 55 measured countries had
similar no restrictions at all,” says Malpass.
The Overseas investment Act was meant to retain a liberal foreign investment regime but instead states that ‘it is a privilege for overseas persons
to own or control sensitive New Zealand assets.’ It introduced a ‘sensitive land’ category of any land over 5 hectares
or 0.4 hectares near water.
“The definition of sensitive land is absurdly broad,” says Malpass. “Many bars and hotels on the Wellington or Auckland
Waterfronts are ‘sensitive land’; any manufacturing operation with a reasonably sized site or attached freehold land is
Commenting on the research findings, Dr Oliver Hartwich, executive director of The New Zealand Initiative, says:
“All New Zealanders bear the cost of high barriers to foreign investment. They raise the cost of capital for all firms
and all householders borrowing on mortgages. They reduce New Zealand’s economic growth potential. We need an FDI regime
that follows international best practice, even if it means scrapping most of the Overseas Investment Act.”