Speaker 1: Kiaoda. I'm Chelsea Daniels and this is the Front Page,
Speaker 1: a daily podcast presented by the New Zealand Herald. In
Speaker 1: the past, overseas investment in New Zealand has been seen
Speaker 1: as a privilege rather than a riot. But could that
Speaker 1: all be about to change with Prime Minister Christopher Luxen's
Speaker 1: latest push for economic growth. He kicked off twenty twenty
Speaker 1: five by announcing the establishment of a foreign investment agency
Speaker 1: similar to those seen in Ireland and Singapore, and the
Speaker 1: government's holding a global investment summit next month, with sovereign
Speaker 1: wealth and major asset management fund managers expected to attend.
Speaker 1: So how does foreign investment work now? And can we
Speaker 1: emulate the success of another country like Ireland where foreign
Speaker 1: investment accounts for much of their GDP and private sector employment.
Speaker 1: Today on the Front Page, Bell Gully partner and overseas
Speaker 1: investment lawyer Glenn Shewan will take us through what foreign
Speaker 1: investment looks like in New Zealand now and what could change.
Speaker 1: First off, Glenn, how does foreign investment work in New
Speaker 1: Zealand at the moment?
Speaker 2: In terms of the overseas investment regime. It's been in
Speaker 2: place now for over twenty years. The current regime sort
Speaker 2: of in the modern form, came into being in two
Speaker 2: thousand and five, but we actually had some precursor legislation
Speaker 2: to that that governed investments into sensitive land and significant
Speaker 2: business assets, which are investments in New Zealand exceeding certain
Speaker 2: financial thresholds, and also governed investments into fishing quota. It's
Speaker 2: been tinkered with and modernized a few times across the years,
Speaker 2: but that's the basics of the system currently.
Speaker 1: How much foreign investment is there at the moment into
Speaker 1: New Zealand.
Speaker 2: There's quite a lot. The Overseas Investment Office has useful
Speaker 2: dashboards on its website which given indication of the volumes
Speaker 2: of investment that it consents every year. So just going
Speaker 2: by twenty twenty four, for example, they suggested that there's
Speaker 2: over four and a half billion of investments that were
Speaker 2: subject to their consent regime.
Speaker 1: So it has been able to invest in New Zealand
Speaker 1: been seen as a privilege up until now. I mean,
Speaker 1: how will it benefit us opening up the floodgates so
Speaker 1: to speak?
Speaker 2: Yeah, I mean the way the legislation is drafted suggests
Speaker 2: that it is a privilege to invest in New Zealand,
Speaker 2: and I know that the politicians the current government are
Speaker 2: considering switching that presumption to a presumption that overseas investment
Speaker 2: benefits us. There's a number of initiatives the governments having
Speaker 2: a look at in order to facilitate more investment. So
Speaker 2: even last year, Minister Seymour gave some ministerial directives to
Speaker 2: the OO to improve its decision making time frames and
Speaker 2: that has really come through in most of the decisions
Speaker 2: that the OO makes are now being made in about
Speaker 2: half the time that they used to and that is
Speaker 2: being seen as positive by investors. You obviously had Christopher
Speaker 2: Luxen's announcements around invest in z a couple of weeks ago,
Speaker 2: and then the proposed further reforms to the Obverse's Investment
Speaker 2: Act that are coming up. So it's all aimed at
Speaker 2: trying to encourage further investment. It's yet to be seen
Speaker 2: whether it will involve opening of the floodgates in how
Speaker 2: much additional investment will manifest, but the signals are certainly
Speaker 2: positive from the government.
Speaker 3: Modeled off the success of Ireland and Singapore. I can
Speaker 3: announce today that we have agreed to establish invest New
Speaker 3: Zealand as the government's one stop shop for attracting foreign
Speaker 3: direct investment. Now, the point of invest New Zealand is clear,
Speaker 3: will roll out the welcome mat, streamlining the investment process
Speaker 3: and providing tailored support to foreign investors, and the objective
Speaker 3: is to increase the capital investment across a range of
Speaker 3: critical sectors like banking and fintech, like transport and energy,
Speaker 3: manufacturing and innovation. So when the.
Speaker 1: Prime Minister mentions changes to the Overseas Investment Act, what
Speaker 1: could they be?
Speaker 2: So, as I mentioned at that moment, the purpose of
Speaker 2: the Overseas Investment Act includes a statement that it's a
Speaker 2: privilege for overseas persons to invest in New Zealand. The
Speaker 2: statements today suggest that that presumption will be reversed to
Speaker 2: recognize that it's in New Zealand's interests and benefits to
Speaker 2: Zealand to have overseas investment. So that's the primary change
Speaker 2: that we're expecting and the result of that will be
Speaker 2: easier pathways through the Overseas Investment Act process for investors.
Speaker 2: They have said they're not intending to change or at
Speaker 2: least change materially what types of investments are currently screened,
Speaker 2: and so that is sensitively and significant business are sets
Speaker 2: in fishing quota along with certain sensitive industries, but just
Speaker 2: make it easier for those investment to get through the
Speaker 2: IO process.
Speaker 1: So what kind of things could we see there? Because
Speaker 1: I know that in Ireland, for example, there are major
Speaker 1: Chinese companies that have decided to set up their European
Speaker 1: base in Dublin. Could we see something similar like that
Speaker 1: happen here?
Speaker 2: Yeah. I think there's a range of considerations that investors
Speaker 2: take into account when they're looking at investing in another country.
Speaker 2: The foreign direct investment regulation such as the Overseas Investment
Speaker 2: Actors one part of that. There's also tech status, immigration
Speaker 2: status in other regulatory settings, along with distance to or
Speaker 2: closeness to other markets. So as a range of factors,
Speaker 2: I think this is only one part of it. It's
Speaker 2: said to be seen how much additional investment we'll see
Speaker 2: as a result of these changes.
Speaker 1: Well, you mentioned how much we get at the moment,
Speaker 1: and I know that the establishment of invest in Z
Speaker 1: is modeled a similar scheme in Ireland and in Singapore
Speaker 1: as well. Just going over some Irish numbers was quite staggering.
Speaker 1: I read somewhere the United States in twenty twenty three
Speaker 1: alone invested four hundred and ninety one point two billion
Speaker 1: dollars in Ireland. That's like eight hundred and seventy five
Speaker 1: billion in New Zealand dollars. That's a far cry from
Speaker 1: what we're seeing at the moment.
Speaker 2: It's a significant amount in Ireland has been encouraging this
Speaker 2: type of investment for a very long time now. It's
Speaker 2: Investment Agency traces its respect to about nineteen forty nine,
Speaker 2: and so it's been in the business of encouraging it
Speaker 2: foreign investment for quite some time, and it does that
Speaker 2: by throwing quite a lot of resource at that agency
Speaker 2: as well. I think it has more than twenty officers
Speaker 2: worldwide engaging with investors to encourage that type of investment.
Speaker 1: What is Ireland doing at the moment that we're not doing.
Speaker 2: I think part of it is that traditionally we have
Speaker 2: been seen as having quite a restrictive overseas investment regime.
Speaker 2: He thinks of five to ten years ago, we had
Speaker 2: a reputation for being a difficult place to invest. While
Speaker 2: generally speaking overseas investors could get through the Overseas Investment Act,
Speaker 2: the timeframes were quite long and quite uncertain, and we
Speaker 2: were out of step with other jurisdictions around the world.
Speaker 2: So I think one thing Island has done is to
Speaker 2: ensure that those barriers are kept to a minimum. I
Speaker 2: think we have seen a change in perception of the
Speaker 2: New Zealand regime in the last year or two and
Speaker 2: then has started to trickle through to be understood by
Speaker 2: overseas investors. So we're starting to improve that aspect of
Speaker 2: the investment environment. As I say, that's just one piece
Speaker 2: of the puzzle. The tax regime, immigration regime, other regulations
Speaker 2: that are all relevant as well.
Speaker 1: Should New Zealand be wary of who we actually allow
Speaker 1: to invest here? I mean, I'm looking at Ireland again
Speaker 1: as a shining example. Right the Irish economy has been
Speaker 1: seeing more and more Chinese investment, but there are worries
Speaker 1: there that that comes at I guess a reputational cost.
Speaker 1: So they're kind of stuck in this awkward middle ground
Speaker 1: where on one hand, Dublin is the European headquarters for
Speaker 1: something like Shean, but on the other hand, Shean's had
Speaker 1: to admit it found child labor and its supply chain recently.
Speaker 1: So how do we balance investment opportunities while still having
Speaker 1: I guess it's social conscience, I suppose.
Speaker 4: Yeah.
Speaker 2: So there have been some changes to our legislation recently
Speaker 2: which have included a national security and public order aspect
Speaker 2: to our regime, and that really is aimed to bring
Speaker 2: us into line with other countries which screen investments for
Speaker 2: impacts on our national security in public order. So that's
Speaker 2: looking at investments in particular in our critical infrastructure in
Speaker 2: any entities here who are critical supplies to the New
Speaker 2: Zealand defense or intelligence agencies, or who deal with military
Speaker 2: and dual use technology. So I think that is part
Speaker 2: of the regime that's quite uncontroversial in targets those investors
Speaker 2: that we might have concerns about from a national security perspective. Otherwise,
Speaker 2: the Act is very much neutral in terms of who
Speaker 2: invests here and it's not really a question for the
Speaker 2: overseas Investment regulation.
Speaker 1: We're also looking into the foreign buyer ban, that is,
Speaker 1: at the moment, non resident foreigners being unable to purchase
Speaker 1: existing homes in New Zealand bar Australians and Singaporeans. Does
Speaker 1: the ban and the changes to the Overseas Investment Act
Speaker 1: do they go hand in hand here? Do you think
Speaker 1: there'll be a reversal of that ban.
Speaker 2: Yeah, it's not clear what changes will be made to
Speaker 2: that ban. I think there's different views possibly within the
Speaker 2: coalition parties. We have some optimism that there may be
Speaker 2: some improvements in the status for skilled migrant investors, but
Speaker 2: none of that's been laid out yet.
Speaker 1: Yeah, so it's just a wait and see. How I know.
Speaker 1: I read somewhere on one roof actually they were talking
Speaker 1: to those higher end real estate agents and they there
Speaker 1: are some whisperings at the moment. I suppose given that,
Speaker 1: I'm sure those higher ups of overseas companies coming here
Speaker 1: will want a nice, flashy waterfront home to live in.
Speaker 2: Yeah. Possibly. We haven't seen anything official out of the
Speaker 2: government on there.
Speaker 4: And this has always been as your first if somebody
Speaker 4: has come to this country like they do to other countries,
Speaker 4: bringing you fifty million dollars to invest in a huge
Speaker 4: industry and to ensure that we've got with this non
Speaker 4: employment now potential exports with exports in this area now,
Speaker 4: then we will look at it. Certainly, that's always been
Speaker 4: our view because that means you've got us to use
Speaker 4: investor committed to this un economy and not just above
Speaker 4: hole in case they want to come in one day.
Speaker 1: So Luxon's Global Investment Summit is scheduled for mid next month.
Speaker 1: How much pressure is writing on this.
Speaker 2: Yeah, it's not clear how much of a difference the
Speaker 2: proposed reforms will make. As I say that it's been
Speaker 2: a a series of announcements and changes that have improved
Speaker 2: our reputation as a place for foreign investment. I think
Speaker 2: they will be clear in the minds of those attending
Speaker 2: that summer, but there may be some desire by the
Speaker 2: government to give some more details of the proposed further
Speaker 2: reforms ahead of that summer.
Speaker 1: If you had the magic pen and you were going
Speaker 1: to change the Act to make New Zealand exponentially more
Speaker 1: attractive to overseas investors, what are some of the things
Speaker 1: that you would change tomorrow?
Speaker 2: There are quite a few technical aspects of the legislation
Speaker 2: that sources of frustration for overseas investors, particularly around the
Speaker 2: need to advertise farmland in some of the information that
Speaker 2: needs to be provided, but I haven't sort of thought
Speaker 2: through in any detail how it go about that.
Speaker 1: So in summary, in terms of the changes to the
Speaker 1: Act and how it compares to that of other countries,
Speaker 1: I suppose if we were to dot point at, how
Speaker 1: would we summarize what is actually going to happen.
Speaker 2: Yeah. I think historically we have had that reputation as
Speaker 2: being somewhat more restrictive for overseas investment than other countries.
Speaker 2: Other countries since then have developed their own relatory regimes
Speaker 2: for foreign direct investment, which has brought us into slightly
Speaker 2: closer alignment, although possibly with our regime being somewhat more
Speaker 2: fulsome than the overseas comparators. But there's been a series
Speaker 2: of announcements and changes in recent times that have improved
Speaker 2: that reputation, and I think that the changes that we
Speaker 2: are going to see to the Act will just further
Speaker 2: enhance that.
Speaker 1: And if you were to take your peck, or if
Speaker 1: you were to guess what kind of companies or investment
Speaker 1: funds do you think I'd already lining up?
Speaker 2: I think we already see a broad mix of investors.
Speaker 2: We have seen a lot of private equity taking interest
Speaker 2: in listed companies. We also see large trade players investing
Speaker 2: in their counterparts in New Zealand, so it's a broad
Speaker 2: broadbooks investors.
Speaker 1: Thanks for joining us, Glenn.
Speaker 2: You're welcome. Good ship.
Speaker 5: That's it for this episode of the Front Page. You
Speaker 5: can read more about today's stories and extensive news coverage
Speaker 5: at enzdherld dot co dot mz. The Front Page is
Speaker 5: produced by Ethan Sills and Richard Martin, who is also
Speaker 5: our sound engineer.
Speaker 1: I'm Chelsea Daniels. Subscribe to the Front Page on iHeartRadio
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