PM pushing Overseas Investment Office for more practical approach.
John Key wants a more practical approach from the Overseas Investment Office when long-term foreign investors buy more assets.
The issue came up at a Chinese Chamber of Commerce lunch last weekend.
“The Overseas Investment Office treats us as if they don’t know us,” was how investor Terry Lee put the matter to Key.
Key’s response what that he had asked his Ministers to ensure that the OIO worked more closely with investors.
Lee is the overseas president of Shanghai Pengxin which bought the ill-starred Crafar farms in the central North Island and subsequently invested in Synlait Farms and hotel assets. Its application to buy the Lochinver Station was turned down by Cabinet Ministers. But Pengxin also pulled out of other investments because of the time taken to get to the approval stage.
What Lee is concerned about is the amount of time and money existing investors have to spend on framing up applications to buy new assets when the information is probably easily obtained from the OIO’s own database.
It was a stance that seemed to find favour with Key who acknowledged that Shanghai Pengxin was a good example of a long-term investor in New Zealand.
“If you decide tomorrow you want to make another investment in New Zealand, currently the OIO will go back to square one and ask all of the basic questions even though we know you have invested in the past, we know what your track record is and we know you’ve done a good job of doing all the things you said you would do.”
Other foreign investors and their legal and accounting representatives also find the OIO’s machinations perplexing. It has been a constant refrain among the business community that foreign investors in Australia find it much easier to get a steer from the Foreign Investment Review Board on how applications should be tailored than is achievable on this side of the Tasman.
Key has been repeatedly lobbied by investors of all stripes and has raised the issue with the relevant Cabinet Ministers.
The OIO is attempting to address this as part of a culture change to a more customer-friendly approach.
It recently held a seminar in Auckland to try and come up with more sensible approaches so that applications can be dealt with more swiftly.
The Overseas Investment Office tends to take a ground zero approach to applications by foreign investors.
Approval has to be sought from the OIO if the foreign investor plans to buy sensitive land – or an interest in sensitive land through buying shares in a company that owns sensitive land; business assets worth more than $100 million, or fishing quota or an interest in fishing quota.
But Key’s request for a more practical approach also comes at a time when the OIO is under pressure over how a couple of Argentinian business people who had reputational issues back home passed the good character test.
A review of the office’s process for assessing good character is being conducted by Wellington barrister Peter McKenzie QC.
The OIO has increased its fees so that it can employ more staff and process applications faster.
But moving swiftly still requires the foreign investor to front up with information when requested.
Case in point the joint venture proposal that would see Chinese investor Shanghai Maling gain effective control of the country’s largest meat processing firm, Silver Fern Farms, is still in front of the OIO. A decision is required by June 30 but a deadline extension may be sought.
While Key is rolling out a welcome mat to foreign investment – including from China – there is push back.
“What concerns people about China … is that they can see the sheer weight of capital and the potential in investment and so they’re worried less so about what’s happening and more fearful about what might happen,” Key said.
“We’ve got to keep making the case that if New Zealand wants to grow at the level it wants, it is not going to do it with the current level of capital.”