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Foreign investment rules tightened amid Covid-19 fallout

New Zealand has tightened up the rules around Kiwi assets being sold to overseas owners while the country deals with the economic fallout of Covid-19. 

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Associate Finance Minister David Parker said the new rules would stop "important" New Zealand assets being sold without scrutiny from the Government. 

It introduces a national interest test, a temporary emergency notification power and a a national security and public order call-in power.

"This could result in risks to New Zealand's national security, or an offshore transfer of knowledge and jobs. While we welcome investment, and remain open for business, we also need to protect our long-term national interests," Mr Parker said. 

A new emergency notification regime will mean the Government needed to be notified of certain investments with a controlling stake in an existing business or business assets.

The Government would then "consider whether they are contrary to New Zealand's national interest".

If it decides it goes against national interests, the Government can impose conditions or block the transaction.

"The tight timeframes have not prevented us from producing a Bill which will achieve its purpose of ensuring the risks posed by foreign investment can be managed effectively, while reducing the regulatory burden of the current screening process, so we can continue to attract sustainable investment in our country," Mr Parker said. 

National's Andrew Bayly said yesterday during its second reading it was "absolutely crucial at this particular point in time, where we're facing an economic crisis, that we do not starve New Zealand businesses of much needed capital". 

However, National opposed it, with Mr Bayly said they believed "it's been done in haste".

"This bill needs to be reflected upon much more carefully than it has been."

"We just need to get this balance right between allowing New Zealand businesses who may not be financially constrained but actually want to get a foreign investor to be able to go and get that investment.

"This bill now imposes a significant barrier... to enabling those people to go and do that sort of stuff."

National's Mark Mitchell said the national interest test would give enormous power to one Minister.

"It's a complete travesty that this bill is even being debated and actually passed through this House under urgency and a shortened, truncated process, when one of the most fundamental issues that should be debated is the national interest test."

Labour's Angie Warren-Clark told the House during the third reading today "we're in unprecedented times".

"We have a very much changed foreign investment risk environment. It's a privilege to own or control our sensitive New Zealand assets. Let's protect our family silver."

It then passed with the support of the Government partners. 

Mr Parker released details of the Bill mid-May.

Once the temporary measures end, a national interest test will remain for business transactions at a minimum threshold of $100 million, or higher if set by the terms of an international trade agreement, as well as investments in sensitive land and fishing quota.

The move comes as Australia has reduced its foreign investment threshold for screening to $0 and Canada and the European Union have also recently strengthened their regimes.

On May 4, Foreign Affairs Minister Winston Peters described it as the "right move" and said he and others were pushing "real hard, as fast as possible" to go in the same direction.