Many of you will have received our recent OIO paper where we considered what changes may be brought about to the operation of the Overseas Investment Office by the new government and what that might mean for investors.
Since we wrote that paper the government has issued a Ministerial Directive Letter.
The letter itself highlighted what are important points to take note of. Below we identify some of what we believe are the significant points raised in the letter.
Sections in bold are our emphasis.
6. The Government welcomes high quality overseas investment that:
6.1 Generates high levels of benefits to New Zealand;
6.2 Creates new productive assets (e.g. ‘greenfield’ investments);
6.3 Is environmentally sustainable, minimising adverse impacts on the natural environment, and is likely to create positive and long lasting environmental benefits;
6.4 Provides economic, environmental, social and cultural benefits to regional communities;
6.5 Significantly increases value added activities in New Zealand; and
6.6 Provides for significant participation and oversight by New Zealanders.
8. The Government also recognises that while economic goals are important, so too are environmental, social and cultural goals. Overseas investment must deliver for all of New Zealand. It is a privilege, not a right, for overseas persons to own or control sensitive New Zealand assets and that privilege must be earned and maintained.
14. The Act acknowledges that the privilege associated with the ownership or control of rural land is greater than for non-rural land by requiring benefits resulting from the overseas investment to be substantial and identifiable (a higher threshold).
Other points were made regarding the importance of ‘increased export receipts’.
The letter and the particular points we highlight indicate that ‘business as usual’ is at an end and that those seeking to acquire farms to essentially carry on farming as before, may have to rethink their approach.
This is particularly the case where that farming system is creating negative environmental impacts.
In our opinion this advantages those seeking to acquire land with an Impact Investment strategy.