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NEW MINISTERIAL DIRECTIVE LETTER ISSUED TO THE OVERSEAS INVESTMENT OFFICE
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Minister for Land Information New Zealand Eugenie Sage and Associate Finance Minister David Parker (‘Ministers’) announced yesterday that a new Ministerial directive letter (‘Directive Letter’) had been issued to the Overseas Investment Office (‘OIO’).

The Ministers may issue directive letters to provide guidance to the OIO on the Government’s general policy approach to overseas investment in New Zealand sensitive assets. The Directive Letter applies to all new and existing applications at 15 December 2017. The OIO is currently reviewing its existing applications to determine those which are affected by the Directive Letter.

Rural land

In obtaining consent to acquire sensitive land, overseas investors must demonstrate that the investment will benefit New Zealand. The Directive Letter makes clear that certain benefit factors should be given higher importance than others for investments in rural land (except forest land). These include:

  • The jobs factor (demonstrating that the investment will result in new job opportunities or the retention of existing jobs in New Zealand);
  • The new technology of business skills factor (demonstrating that the investment will result in new technology or business skills);
  • The increased exports receipts factor (demonstrating that the investment will result in increased export receipts for New Zealand exporters);
  • The increased processing of primary products factor (demonstrating that the investment will result in increased processing in New Zealand of New Zealand’s primary products); and
  • The oversight and participation by New Zealander's factor (demonstrating that New Zealanders will oversee or participate in the investment).

The previous directive letter issued by Honourable Bill English dated 8 December 2010 is revoked. It provided that investors acquiring large areas of farm land (i.e. a farm which has a size ten times the average farm size for the relevant farm type) were required to demonstrate that New Zealand’s economic interests will be adequately protected. The new Directive Letter applies more broadly to all rural land (except forests), rather than specifically to large farms.

Sponsorship of community projects and donations

The Directive Letter makes clear, as the OIO has indicated previously, that sponsorship of community projects and donations is to be given low relative importance in assessing benefit to New Zealand.

Forest land 

The Directive Letter states that the Government recognises that investment in the forestry sector has the potential to add value to the New Zealand economy and environment. It provides that factors of high relative importance for applications relating to acquisitions of forest land are:

  • The increased processing of primary products factor (demonstrating that the investment will result in increased processing in New Zealand of New Zealand’s primary products); and
  • The advance significant Government policy or strategy factor (demonstrating that the investment will advance a significant policy or strategy).

If you have any questions in regards to the Directive Letter or overseas investment applications generally, please contact Matthew Ockleston, Gerald Fitzgerald or Emma Tonkin.

We acknowledge the assistance of Brittany Montague, Solicitor, in writing this Newsflash.

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