Foreign Investment can play a pivotal role in strengthening the economy and can also create a number of jobs. Considering these factors, the Government of New Zealand is giving special importance to attracting Foreign Investment. New Zealand encourages Foreign Investment without any distinction. New Zealand's regulations monitoring foreign investment are liberal by international standards. There are no restrictions whatsoever on the movement of funds into or out of New Zealand, or on repatriation of profits. There is no imposition of any additional performance measures on foreign-owned enterprises.
Foreign Investment in New Zealand includes both income from Foreign Direct Investment and income from other sources, such as borrowing. Different countries do this in different ways, for example some will buy gold or oil but this is the way New Zealand does it. Foreign Investment in New Zealand has increased steadily and the major chunk of it comes from Australian sources, outperforming both the US and UK. At the end of 1991, the total FDI in New Zealand was $11 billion which rose to as much as $49.3 billion in 2001. The Foreign portfolio investment in New Zealand has been more volatile and has seen a series of net outflows and inflows from the year 1997 to 2000. According to the government's statistics, portfolio investment(investment by held by institution or private individual)by in New Zealand hit a record $3.89 Billion in the year 2001.
Current Scenario of Foreign Investment in New Zealand
As recently measured in the year 2008, the stock of FDI in NZ stood steadily at $93.3 billion. The US and Australia are the major contributors to total FDI in NZ, with the former having investments worth $10.7 billion, the latter holding a mammoth amount of $50.8 billion.
Legal Framework for Foreign Investment in New Zealand:
The legal framework for FDI in New Zealand is stated in the Overseas Investment Regulations of 1995. It has been dealt out by the Overseas Investment Commission (OIC). In terms of the regulation, an overseas person must grant permission to acquire 25% or more of any New Zealand business or a property worth more than $30 million. However, the government of New Zealand is a bit watchful in allocating sensitive land, assets and resources.
Future prospects for Foreign Investment in New Zealand:
Efforts are on to make Foreign Investment in New Zealand more attractive and simpler by making improvements in the Overseas Investment Act. As recently as March 2009, the government proclaimed a review of the Overseas Investment Act 2005 which monitors foreign investment in NZ. This review aims to provide immediate measures which ensure more applications to be decided by Overseas Investment Offices than ministers, which in turn will give no room for bureaucracy. It also aims to change the Overseas Investment Regulations and the scope of the overseas investment-screening regime. All these four key changes, when implemented, can bring about a massive change in the current regime which governs Foreign Investment in NZ. They are also looking to simplify the sale of land in favor of a proposed overseas investor. Furthermore, the government of New Zealand is also working heavily towards quickening up the decision making process which goes in the Special Land Offer Back Procedure.
With a minimum taxation policy and a robust foreign policy, coupled with endeavors of the government to attract foreign investment, New Zealand is surely the future of foreign investment.