WELLINGTON, Nov 29 (Reuters) - New Zealand’s Labour-led government directed the country’s overseas investment regulator on Wednesday to subject foreign purchases of farmland and forests to new scrutiny, in line with an election promise to clamp down on inbound investment.
Minister of Finance Grant Robertson directed the Overseas Investment Office (OIO), which must approve certain investments by foreigners, to examine all foreign purchases of rural land above five hectares while considering factors such as job creation and participation by locals.
Previously only large purchases of farmland, usually measuring thousands of hectares, have needed OIO approval.
“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,” Robertson wrote in the formal directive, published on the OIO’s website. The leftwing government, which took the helm in October, also said the regulator must do more to focus on improving the domestic wood processing industry when it considers foreign investment in the country’s forests.
Reforming the forestry sector was a major issue for Labour’s coalition partner, the nationalist New Zealand First Party, which promised during the September election campaign to favour local mills over the higher-paying export market.
The tighter requirements, which will start on December 15, come on the heels of the government’s vow to introduce legislation before December 25 that will ban foreign purchases of existing residential property in a bid to cool demand in what Labour describes as a ‘housing crisis’.
The Labour government’s more protectionist stance is in contrast to the position of the previous centre-right National government, which during a decade in power emphasised New Zealand’s small trading economy as open for business. (Reporting by Charlotte Greenfield; Editing by Peter Graff)