NZ Streamlines Foreign Investment Process to Boost Economic Growth

“Processing times are currently too long, and this poses a barrier for investors,” Seymour stated.

The Associate Minister of Finance, David Seymour, has announced a new directive aimed at accelerating the consent processing timeframes under the Overseas Investment Act, as part of a broader effort to make New Zealand more attractive to foreign investors. This initiative addresses New Zealand's current ranking as the most restrictive OECD country for foreign direct investment, according to the OECD Foreign Direct Investment Regulatory Restrictiveness Index.

“Processing times are currently too long, and this poses a barrier for investors,” Seymour stated. “Budget 2024 started to get wasteful spending under control, but to ensure a strong growing economy, New Zealand needs to be more welcoming to investment.”

Seymour pointed out that decisions on consent applications under the general benefit test currently take an average of 89 days. This lengthy process creates uncertainty and diminishes the attractiveness of investing in New Zealand, adversely affecting businesses that depend on overseas investment for capital or liquidity.

The new directive sets an expectation for Land Information New Zealand (LINZ), the regulator for the Overseas Investment Act, to process 80 percent of consent applications in half the statutory timeframes. The remaining 20 percent of applications, which are more complex and higher-risk, will still have the full statutory timeframe for processing.

“To achieve this goal, the directive instructs LINZ to adopt a risk-based approach to verifying information and streamlining consent processes,” Seymour explained. “Recognizing that the majority of consent applications are low-risk, they should be processed more efficiently.”

This directive introduces a principle that welcomes investment, essential for New Zealand to maintain world-class public services and attract ideas, talent, and capital. By reducing barriers to investment, Seymour aims to foster greater prosperity for New Zealanders, which in turn supports funding for top-tier businesses and public services.

The changes also aim to eliminate redundancy in application assessments across different government agencies. For instance, LINZ will no longer assess issues already covered by other domestic regulations, such as competition impacts evaluated by the Commerce Commission.

“With the new letter, we’re removing bureaucracy to help make things faster,” Seymour said. “By processing low-risk transactions more quickly, LINZ can focus its resources on higher-risk applications.”

The new directive letter, effective immediately, replaces the previous government’s 12-page directive from November 2021 with a more concise five-page document. This update is part of a three-step process to better facilitate overseas investment. The first step reduces the number of decisions made by Ministers while retaining ministerial oversight for high-risk transactions. The second step involves the issuance of this new directive letter, and the final step will be to rewrite the Overseas Investment Act.

Additionally, the Overseas Investment Regulations 2005 will be updated to include a new reporting requirement on LINZ's compliance with the new timeframe objectives, ensuring accountability and transparency.

Overall, these reforms are designed to make New Zealand a preferred destination for foreign investment, supporting economic growth and enhancing the nation’s ability to fund essential public services.