Kiaoda. I'm Chelsea Daniels and this is the Front Page, a daily podcast presented by the New Zealand Herald. In the past, overseas investment in New Zealand has been seen as a privilege rather than a riot. But could that all be about to change with Prime Minister Christopher Luxen's
latest push for economic growth. He kicked off twenty twenty five by announcing the establishment of a foreign investment agency similar to those seen in Ireland and Singapore, and the government's holding a global investment summit next month, with sovereign wealth and major asset management fund managers expected to attend.
So how does foreign investment work now? And can we emulate the success of another country like Ireland where foreign investment accounts for much of their GDP and private sector employment. Today on the Front Page, Bell Gully partner and overseas investment lawyer Glenn Shewan will take us through what foreign investment looks like in New Zealand now and what could change. First off, Glenn, how does foreign investment work in New Zealand at the moment?
In terms of the overseas investment regime. It's been in place now for over twenty years. The current regime sort of in the modern form, came into being in two thousand and five, but we actually had some precursor legislation to that that governed investments into sensitive land and significant business assets, which are investments in New Zealand exceeding certain
financial thresholds, and also governed investments into fishing quota. It's been tinkered with and modernized a few times across the years, but that's the basics of the system currently.
How much foreign investment is there at the moment into New Zealand.
There's quite a lot. The Overseas Investment Office has useful dashboards on its website which given indication of the volumes of investment that it consents every year. So just going by twenty twenty four, for example, they suggested that there's over four and a half billion of investments that were subject to their consent regime.
So it has been able to invest in New Zealand been seen as a privilege up until now. I mean, how will it benefit us opening up the floodgates so to speak?
Yeah, I mean the way the legislation is drafted suggests that it is a privilege to invest in New Zealand, and I know that the politicians the current government are considering switching that presumption to a presumption that overseas investment benefits us. There's a number of initiatives the governments having
a look at in order to facilitate more investment. So even last year, Minister Seymour gave some ministerial directives to the OO to improve its decision making time frames and that has really come through in most of the decisions that the OO makes are now being made in about half the time that they used to and that is
being seen as positive by investors. You obviously had Christopher Luxen's announcements around invest in z a couple of weeks ago, and then the proposed further reforms to the Obverse's Investment Act that are coming up. So it's all aimed at trying to encourage further investment. It's yet to be seen whether it will involve opening of the floodgates in how much additional investment will manifest, but the signals are certainly positive from the government.
Modeled off the success of Ireland and Singapore. I can announce today that we have agreed to establish invest New Zealand as the government's one stop shop for attracting foreign
direct investment. Now, the point of invest New Zealand is clear, will roll out the welcome mat, streamlining the investment process and providing tailored support to foreign investors, and the objective is to increase the capital investment across a range of critical sectors like banking and fintech, like transport and energy, manufacturing and innovation. So when the.
Prime Minister mentions changes to the Overseas Investment Act, what could they be?
So, as I mentioned at that moment, the purpose of the Overseas Investment Act includes a statement that it's a privilege for overseas persons to invest in New Zealand. The statements today suggest that that presumption will be reversed to recognize that it's in New Zealand's interests and benefits to Zealand to have overseas investment. So that's the primary change that we're expecting and the result of that will be easier pathways through the Overseas Investment Act process for investors.
They have said they're not intending to change or at least change materially what types of investments are currently screened, and so that is sensitively and significant business are sets in fishing quota along with certain sensitive industries, but just make it easier for those investment to get through the IO process.
So what kind of things could we see there? Because I know that in Ireland, for example, there are major Chinese companies that have decided to set up their European base in Dublin. Could we see something similar like that happen here?
Yeah. I think there's a range of considerations that investors take into account when they're looking at investing in another country. The foreign direct investment regulation such as the Overseas Investment Actors one part of that. There's also tech status, immigration status in other regulatory settings, along with distance to or closeness to other markets. So as a range of factors,
I think this is only one part of it. It's said to be seen how much additional investment we'll see as a result of these changes.
Well, you mentioned how much we get at the moment, and I know that the establishment of invest in Z is modeled a similar scheme in Ireland and in Singapore as well. Just going over some Irish numbers was quite staggering. I read somewhere the United States in twenty twenty three alone invested four hundred and ninety one point two billion dollars in Ireland. That's like eight hundred and seventy five billion in New Zealand dollars. That's a far cry from what we're seeing at the moment.
It's a significant amount in Ireland has been encouraging this type of investment for a very long time now. It's Investment Agency traces its respect to about nineteen forty nine, and so it's been in the business of encouraging it foreign investment for quite some time, and it does that by throwing quite a lot of resource at that agency as well. I think it has more than twenty officers worldwide engaging with investors to encourage that type of investment.
What is Ireland doing at the moment that we're not doing.
I think part of it is that traditionally we have been seen as having quite a restrictive overseas investment regime. He thinks of five to ten years ago, we had a reputation for being a difficult place to invest. While generally speaking overseas investors could get through the Overseas Investment Act, the timeframes were quite long and quite uncertain, and we were out of step with other jurisdictions around the world. So I think one thing Island has done is to
ensure that those barriers are kept to a minimum. I think we have seen a change in perception of the New Zealand regime in the last year or two and then has started to trickle through to be understood by overseas investors. So we're starting to improve that aspect of the investment environment. As I say, that's just one piece of the puzzle. The tax regime, immigration regime, other regulations that are all relevant as well.
Should New Zealand be wary of who we actually allow to invest here? I mean, I'm looking at Ireland again as a shining example. Right the Irish economy has been seeing more and more Chinese investment, but there are worries there that that comes at I guess a reputational cost.
So they're kind of stuck in this awkward middle ground where on one hand, Dublin is the European headquarters for something like Shean, but on the other hand, Shean's had to admit it found child labor and its supply chain recently. So how do we balance investment opportunities while still having I guess it's social conscience, I suppose.
Yeah.
So there have been some changes to our legislation recently which have included a national security and public order aspect to our regime, and that really is aimed to bring us into line with other countries which screen investments for impacts on our national security in public order. So that's looking at investments in particular in our critical infrastructure in any entities here who are critical supplies to the New Zealand defense or intelligence agencies, or who deal with military
and dual use technology. So I think that is part of the regime that's quite uncontroversial in targets those investors that we might have concerns about from a national security perspective. Otherwise, the Act is very much neutral in terms of who invests here and it's not really a question for the overseas Investment regulation.
We're also looking into the foreign buyer ban, that is, at the moment, non resident foreigners being unable to purchase existing homes in New Zealand bar Australians and Singaporeans. Does the ban and the changes to the Overseas Investment Act do they go hand in hand here? Do you think there'll be a reversal of that ban.
Yeah, it's not clear what changes will be made to that ban. I think there's different views possibly within the coalition parties. We have some optimism that there may be some improvements in the status for skilled migrant investors, but none of that's been laid out yet.
Yeah, so it's just a wait and see. How I know. I read somewhere on one roof actually they were talking to those higher end real estate agents and they there are some whisperings at the moment. I suppose given that, I'm sure those higher ups of overseas companies coming here will want a nice, flashy waterfront home to live in.
Yeah. Possibly. We haven't seen anything official out of the government on there.
And this has always been as your first if somebody has come to this country like they do to other countries, bringing you fifty million dollars to invest in a huge industry and to ensure that we've got with this non employment now potential exports with exports in this area now, then we will look at it. Certainly, that's always been our view because that means you've got us to use investor committed to this un economy and not just above hole in case they want to come in one day.
So Luxon's Global Investment Summit is scheduled for mid next month. How much pressure is writing on this.
Yeah, it's not clear how much of a difference the proposed reforms will make. As I say that it's been a a series of announcements and changes that have improved our reputation as a place for foreign investment. I think they will be clear in the minds of those attending that summer, but there may be some desire by the government to give some more details of the proposed further reforms ahead of that summer.
If you had the magic pen and you were going to change the Act to make New Zealand exponentially more attractive to overseas investors, what are some of the things that you would change tomorrow?
There are quite a few technical aspects of the legislation that sources of frustration for overseas investors, particularly around the need to advertise farmland in some of the information that needs to be provided, but I haven't sort of thought through in any detail how it go about that.
So in summary, in terms of the changes to the Act and how it compares to that of other countries, I suppose if we were to dot point at, how would we summarize what is actually going to happen.
Yeah. I think historically we have had that reputation as being somewhat more restrictive for overseas investment than other countries. Other countries since then have developed their own relatory regimes for foreign direct investment, which has brought us into slightly closer alignment, although possibly with our regime being somewhat more
fulsome than the overseas comparators. But there's been a series of announcements and changes in recent times that have improved that reputation, and I think that the changes that we are going to see to the Act will just further enhance that.
And if you were to take your peck, or if you were to guess what kind of companies or investment funds do you think I'd already lining up?
I think we already see a broad mix of investors. We have seen a lot of private equity taking interest in listed companies. We also see large trade players investing in their counterparts in New Zealand, so it's a broad broadbooks investors.
Thanks for joining us, Glenn.
You're welcome. Good ship.
That's it for this episode of the Front Page. You can read more about today's stories and extensive news coverage at enzdherld dot co dot mz. The Front Page is produced by Ethan Sills and Richard Martin, who is also our sound engineer.
I'm Chelsea Daniels. Subscribe to the Front Page on iHeartRadio or wherever you get your podcasts, and tune in tomorrow for another look behind the headlines.