The Government's review of overseas investment rules has been welcomed by the New Zealand International Business Forum (NZIBF) which says not much investment has been coming in over recent years.
"Inward foreign investment can provide capital, expertise and offshore distribution to help New Zealand companies grow and create jobs," said NZIBF executive director Stephen Jacobi.
"Anecdotal evidence suggests that some foreign investors are deterred by our procedures even though most applications are in fact approved."
Jacobi said a review would help streamline procedures to ensure New Zealand was in line with international best practice.
But news of the investment review has not pleased all, with some saying it will only increase the chance of New Zealanders being exploited, rather than helped by overseas money.
Finance Minister Bill English announced the review yesterday, saying it was intended to make the process quicker and less complex.
"The current processes are cumbersome and complex. It takes a long time to make decisions because all the applications have to be measured against 27 different criteria by a pretty legalistic standard," said English.
The Government wanted to retain the opportunity to protect assets and land that it believed needed to be protected, but reduce the cost and complexity of decision making.
He said the Government was not being overwhelmed by applications for investment and this was likely to get worse during the international recession.
- NZPA understands that applications are down 7 per cent.
Law firm Chapman Tripp has also welcomed the review saying while it was important sensitive and culturally or historically valuable land was retained, unnecessary barriers should not be put up to foreign investments that could help the economy.
Green MP Kennedy Graham said simplifying rules was not necessarily a good thing and he was concerned the changes would make it easier for foreign investors to buy up pristine land for uses like golf courses or mining.
"The Government and Act Party seem intent on greater foreign ownership of New Zealand for the sake of uncritical economic growth," said Graham said.
Foreign investment often meant profits going offshore and New Zealand was at risk of being exploited rather than getting the productive investments it wanted, he said.
Spokesman for a group that opposes foreign investment, Murray Horton of Campaign Against Foreign Control of Aotearoa, said New Zealand already had one of the most liberal foreign investment laws in the world.
"If the door is already left permanently unlocked, with a sign saying "Come On In and Help Yourselves", this proposed law change will simply remove the door (and probably offer it for sale as well)."
Horton said the current global financial crisis might mean the Government's review would not make any difference.
"It seems to have escaped its notice that the global capitalist economy is undergoing a major crisis and that retrenchment and sheer survival are currently higher priorities for many of the very transnational corporations whose dominance of that economy has got us into the mess we're in. "
The global economic crisis was the reason that foreign investment in NZ nearly halved in 2008 (as compared to 07), not because of "red tape" in the approval (read "rubberstamping") process."
Any moves by the new government to further liberalise our overseas investment rules were likely to be locked in to future free trade agreements (FTAs) and so leave a "permanent open-door to foreign investors", according to the anti-corporate globalisation group Arena.
Spokeswoman Jane Kelsey said FTAs such as those recently signed with China, Thailand and Singapore contained "significant provisions around services and investment that promise that New Zealand won't ever tighten up its foreign investment rules".
"Governments don't just give foreign investors free rein for decades ahead, they also give the investors the right to sue the government directly in a secret international court if they regulate
in ways that reduce the invertors' profits."
When Government decides it isn't such as good idea they are told they can't restrict foreign investment because of an FTA, said Kelsey.
"That's what the previous government found when it tried to block the Canadian pension fund's buy up of Auckland Airport. Treasury said the Government couldn't pass legislation to keep the airport in New Zealand hands. It had to use the farcical situation of claiming the strategic asset was 'sensitive rural land' so it could use a loophole in the Singapore-New Zealand FTA."
"At a time when stressed foreign firms are maximising their profits and taking them back home (or collapsing), and when New Zealand maintains a significant current account deficit driven largely by repatriation of profits to overseas interests, why on earth would we want to further open up our investment regime and lock the door on ever going back," said Kelsey.