Experts call for overhaul of the OIO, saying the non-economic incentives NZ accepts makes us look like a developing country and the cumbersome application process puts off foreign investors

Experts call for overhaul of the OIO, saying the non-economic incentives NZ accepts makes us look like a developing country and the cumbersome application process puts off foreign investors

How many iPads does it take to get approval to buy sensitive land in New Zealand?

Yes, this sounds awfully similar to a ‘How many ‘whoevers’ does it take to change a lightbulb’ joke.

But no, it is not a joke.

It’s possibly the exact question overseas investors keen to buy sensitive land in New Zealand will be asking their lawyers, further to the Overseas Investment Office (OIO) approving a Singaporean investor’s application to buy an Arrowtown property on the basis they’ll donate $100,000 to Wakatipu High School to buy iPads and laptops.

The OIO on January 10 approved an application from Glenorchy Homestead Limited (GHL) to purchase the 19 hectare property for $2.7 million, with the intention of the buyer staying in it during their visits to New Zealand.

Two of the company’s three directors, David Chuang and Lim Len, are reportedly the son and wife of one of Singapore's richest men, John Chuang, of Petra Foods. Their Queenstown lawyer, Elliot Charles, is also a director. The company is owned by Glenorchy Investments Limited, which is registered in the British Virgin Islands. 

As well as providing “financial assistance or hardship allowances” to the students of the decile 10 school, the OIO says the buyer must “consult with the Department of Conservation (DOC) to determine what the Applicant can reasonably do to protect or enhance any existing areas of significant indigenous vegetation or significant habitats of indigenous fauna on the land, and implement (at the Applicant’s cost) any environmental protection reasonably recommended by DOC”.

If the buyer meets these two conditions, they’ll fulfil the Overseas Investment Act’s ‘substantial and identifiable benefit to New Zealand’ criteria.

How creative do investors need to get when identifying 'benefits' to NZ?

A Martelli McKegg Partner, Craig Nelson, explains the Act requires foreigners who want to buy sensitive land to demonstrate the sale will benefit New Zealand.

They need to commit to providing some of the 21 benefit factors the Act outlines. Some of these are economic - building a new irrigation system, creating jobs, or planting a forest for example - while others are non-economic - providing scholarships, undertaking environmental work, etc.

Identifying benefits can be straight forward when an applicant is proposing to run a business from the property. “However where you have a real challenge with OIO consents is where the property doesn’t allow that, like lifestyle blocks or homes,” he says.

“When you’re talking 19 hectares, you’re thinking: ‘What can I do with it? I can’t really run a business. I’m not going to build a hotel or sawmill. So how am I going to meet these benefit factors?’”

This is where those non-economic benefits become crucial to securing approval.

If applicants can’t commit to any of the more prescriptive categories of benefits outlined by the OIO, Nelson says they can commit to providing a “consequential benefit”, which gives them the flexibility do things like buy schoolkids iPads.

He suspects GHL would’ve struggled to identify benefits, so came up with something under this broad category.

While this is common practice, Nelson says the unusual part of this case is that GHL only outlined two benefits, while applicants usually provide between four and 10.

This said, he acknowledges the OIO can weigh applications up on a quality over quantity basis.

Does the OIO make New Zealand look like a banana republic?

The BNZ Chair in Business in Asia at Victoria University, Professor Siah Hwee Ang, maintains the system’s vagueness “is getting close to becoming a sort of soft corruption”.

“I don’t want to be extreme and say we are corrupt, but if you start accepting different criteria and different expectations like there aren’t any rules, then it’ll appear that we’re corrupt.”

Ang says “it’s very difficult to comprehend” a developed country such as New Zealand accepting the sorts of soft benefits the OIO does.

“The more they do this kind of thing, the more it appears that we’re unstable and have an unstable system. It becomes very much like what happens in developing countries… It makes us look cheap.”

Ang says the OIO needs to have a clearer criteria. He maintains the soft non-economic benefits it currently accepts are as meaningless for investors as they are for New Zealanders. They make the system confusing and difficult to understand.

“The problem with approving things on a case-by-case basis is that once you approve one you probably open a can of worms for others to follow the same route.

“For all we know, in the next case iPads may not be enough and investors have to pledge to donate Mac Book Pros.”

Ang recognises the system also risks stigmatising foreign investors, when it’s actually the system that lacks transparency, rather than the individuals working within the system.

He has spoken out against the OIO regime in the past, criticising it for last year for permitting a Chinese investor to buy a lifestyle block in Northern Auckland, on the basis he’d give local low-decile schools scholarships.

Is the scheme really putting off investors?

A DLA Piper Partner, who’s also the chair of the NZ China Trade Association, Martin Thomson, says: “Donations of that nature are the product of a rigorous regime that’s very technical and drawn out.”

Yet he says we shouldn’t rush to saying the OIO benefits scheme amounts to corruption or bribery.

“We’ve got pretty shallow capital pools in New Zealand, so we’ve got to be careful we don’t have a mind-set that doesn’t appreciate the value that brings to our economy…

“I have concerns we’ve got a regime that’s making it pretty difficult for people to make investments in New Zealand at a time when economically there’s pretty strong acknowledgement that we need more investment to drive our economy.

“We are getting into territory where the process is becoming so difficult, that it’s potentially acting as a bit of a handbrake on that investment and encouraging overseas investors to contemplate whether they have the stomach for our process, or whether they might prefer to invest in other countries which welcome their money.”

Thomson says the rules around foreign investment vary between countries. The thing that sets New Zealand apart from Australia is that we treat investors like they’re privileged to have the opportunity to invest in New Zealand, whereas across the ditch, Australia considers itself to be the privileged one benefiting from the investment.

He says the UK is similar with virtually no restrictions on foreign investment.

“There are still plenty of assets you can invest in New Zealand that don’t require consent, provided the investment’s less than $100m. But in relation to sensitive land investments, it is reasonably onerous,” he acknowledges.

Is the regime being applied the way it was intended?

“I don’t think the regime was written to be applied as thoroughly and as rigorously as it is,” Thomson says.

He maintains the OIO is capturing a number of applicants that shouldn’t actually have to go through the process.

For example, it regulates a number of reserves which are actually “just not special at all”, as they’re often surrounded by commercial areas or front onto estuaries.

“They’re just not particularly attractive areas of land, yet we say you’ve got to go and get consent and establish benefits. In some instances it’s just ludicrous. It’s ridiculous.”

Thomson says the classes of reserves could be modified without changing the legislation. With the OIO constantly under review, he wouldn’t be surprised if the classes of reserves are reviewed.

“Then the OIO’s resources can be focussed on assets that really warrant the full application process.”

Furthermore, he admits the range of applicants operating under the same Act is problematic.

“It brings into question - have we got the mix right in terms of what’s actually caught by the regime. Many people would say Lochinver [farm] is an asset that does warrant careful analysis as to whether there will be benefits to New Zealand. But residential property caught by it - how concerned are we really about whether it should be restricted?”

Is there political will to amend the Act or the way it’s implemented?

Thomson says: “There’s a lot of anxiety around making it too easy for people to invest. The Government doesn’t have support to change the legislation. But there is still scope to re-visit, within the existing legislation, how some elements of the Act are applied, and some direction could be given to how certain sorts of applications are handled.”

He points out the OIO doesn’t have a material influence on property prices, as it doesn’t capture regular houses, unless they’re on sensitive land.

Rather than being side-tracked by the “investors hiking property prices” rhetoric, he says we should think about how investors could alleviate the under-supply of housing.

See this story for more on the OIO, and how costly and inefficient the director of Pengxin International has found the system.  

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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NZ is corrupt as most other places, we just seem to be a bit more discreet about it.

Really all the Foreign investors are saying is that it is hard to be discreet given some of the terms.


Of course there is corruption

We avoid the stigma by ignoring it, doing nothing, looking the other way, pretending it doesn't exist, then issue warnings for 5 years which gets it off the to-do list

Finally after being given the two-fingered salute for 5 years, we issue a paltry fine

Look at how this was done in the following case - down the bottom of the article

"NZ is corrupt as most other places .."

I think you should present some evidence of this claim. It seems quite ridiculous.


How about the topic at the start of the article. Foreign owners had to "Donate" $100,000 worth of tech to a local school for the sale to go through. That is bribery at its simplest.

Or what about lobbying - companies effectively "donating" to the government to get change. Which is the exact opposite to the very meaning of democracy - i.e. the people vote for change.

In fact lets talk about any "Political donation" they exist for one reason only.

or what about trying to get a job? the amount of nepotism in this country is astonishing.
- I personally think it is the reason why most Kiwi companies never really make it out of NZ. Management is usually mates/family rather than competent business minded people.

or I could go into other forms of corruption, most people would be pretty complicit in tax avoidance - eg cash jobs.

Like I said, we are just a bit more discreet about it.

In fact maybe discreet is not the right word, perhaps I should say we disguise corruption through multiple layers of non-transparent bureaucracy usually due to some form of Privacy law. Hmmm foreign trust anyone?

Pfffft. New Zealand is consistently one of the cleanest business environments in the world.

You say lobbying & nepotism when you job hunt?!?

I counter with young teenagers press ganged into the armed forces, dictatorships, forced child labour, governments where structural bribery forms a significant part of income, drug and human trafficking and a total lack of due process of law.

Try doing business in Indonesia for goodness sake. Even Australia has more corruption than NZ.

Because of the nature of people, corruption exists at some level everywhere. But to say all corruption is equivalent is an insult to those who live under it's worst effects.

try checking in with people who deal with this stuff for a living:

"I counter with young teenagers press ganged into the armed forces, dictatorships, forced child labour, governments where structural bribery forms a significant part of income, drug and human trafficking and a total lack of due process of law."

That appears to be actual crime - rather than corruption. But hey we can compare quite easily...
Kids are pressed into Gangs here (whole communities in fact), we have horrific levels of child abuse, and per capita have one of the worst drug problems going.

Crime may be reported here - but is it really dealt with?

"Because of the nature of people, corruption exists at some level everywhere."

Exactly my point. We are no better (or worse) humans that the rest of the world. I take Human Psychology over a transparency report any day.

@ Ralph; 'New Zealand is consistently one of the cleanest business environments in the world'.

Pffft, Pffftt!!! In case you haven't noticed, New Zealand has been falling in the Corruption Perception Index and we're likely to drop even further in ranking once the money laundering by foreign investors starts to become more glaringly obvious, as land and property affordability slips further out of reach for most Kiwis in the more desirable locations.

Here's a recent posting from Transparency International : Corruption Free? - NZ drops again

Oh no, 4th out of 168. It's a disaster of biblical proportions. The sky is falling. Woman and children first!

What seems to be lacking here perspective.

I'm sure we'll be on the same index as main land China before long - number 83.

Having read the report.

It should be pointed out that it is "preceived" corruption. Not actual corruption.

The Panama papers could change that "perception" drastically.

How about the shenanigans of C(r)asher Collins , Morenice Williamson, Murray and the Sheep, John it wasn't me bro and so on. Its all number 8 wire stuff typical of NZers and most people will have forgotten most of this as does jk although Shane Jones' hotel DVD escapade still resonates strongly.
Don't fool yourself NZ - we are just as dirty, perhaps even more so as our MSM is very weak and investigative journalism is dead and buried. Take a look at S African newspapers for courage under fire. They are still cartooning Zuma with a shower head dripping on him after he somehow escaped a rape charge against his niece. (He though a shower would prevent him catching aids)

Absolutely right ralphie boy, ridiculous stuff. "Is/as" as should have read "is more/ than"

I conclude you must have led very sheltered lives.

In the west, corruption is called lobbying.

and receiving a cushy posting at the end of ones political career is called reward for service

Revolving Door syndrome ?

Buy an ipad for the schoolkids. Sounds nice. But in this context it's just creepy.


It's well past 'verging'.

iPads. The glass beads of 2016.

In the form of - What do I have to do to get this deal through?

Give me a price


It appears the staff training for the ipads was a 30k budget
Think about that for a minute

And that's where the issue is.The footnotes. Let the headline take the heat or praise, and hope all and sundry can't be bothered to read or analyze the fine print.


iPads for a decile 10 school in exchange for some of our best land which they could own forever! Yeah totally corrupt.

Prof Ang is right. It looks and sounds very corrupt. And in addition who knows what sort of stuff is happening under the table with OIO.
Either the land is sensitive or its not. Black or white. Yes/no answer.
In my view theres too much ipad/ tablet stuff going on in schools anyway.

New Zealand is like that cute girl with the ugly personality.

Who suffers from chronic diarrhoea which happens to flow into the waterways.

Whose carer prostitutes her out to the wide boys. Jk is already planning the movie - its to be called "Uber Driver"

Make it a MacBook Air and we can talk. that you?

JK , its just a sign or progress !!!

Next National Party billboard: "Bribery just means that they like us!"

Solely because a branch office such as the OIO, which is only one of many Govt Dept's, makes an unpopular decision, it is unfair to blame the PM or his party directly.

The buck never stops there.

Oh well. I'm sure the grifter-in-chief would be the first to say that life's unfair.

Before news that driver license may be bought in auckland... after about WoF. Now this. What is next? Police will stop us on the road and ask for a bribe?

that has been around for a while, i have seen some that can not make he end of the driveway yet held all the licences,

Once land is sold to foreigners, this is permanently handing over part of our sovereignty to foreigners who do not share our values and who will not live in NZ as a NZer.

The practice doesn't sound corrupt at all.
There must be a benefit to NZ according to the law, and there was no benefit in the purchasers otherwise buying the property. I understand there may have been some benefit to the vendors in getting a higher price than they otherwise would, but I assume that benefit is specifically not enough to meet the benefit to New Zealand criteria.
Corruption is defined as "dishonest or fraudulent conduct by those in power, typically involving bribery."
There was nothing dishonest or fraudulent in the transaction, unless the officials had children at the decile 10 school in Whakatipu- very unlikely you would assume.
The tone of the article seems to suggest that we should sell all land in New Zealand to foreigners for their holiday homes. I could not more strongly disagree, and actually think $100k of ipads was an extremely cheap get out for the purchasers.

I agree the OIO needs an overhaul !!!
An economic benefit to NZ should be viewed as a product that is currently not able to be produced here being produced here.....this product should add to export revenue.....there is no economic benefit to NZ if a NZ'er can do the same, produce the same as the overseas applicant......

Overseas applicants should be able to generate significant taxes for NZ and this is where the whole system fails miserably......our taxation system is fundamentally flawed in favour of overseas investors.......if one exports a product there are significant GST implications as well and these are generally not mentioned...... Then there are the income tax issues that allow choices depending on where the overseas investor is based for income taxation purposes......

The OIO takes a typical bureaucrats view of twisting the English language to use another they ever actually consider the NZ taxation system benefits or lack of benefits from allowing the overseas investment to take place?? The fact is that between 90 to 95% of taxes are generated by SME's this is what pays for all the bureaucratic spending nationwide yet the OIO continues to allow this tax base to shrink and then considers a few computers in schools as a good payment.....this type of OIO activity is not a continuing economic benefit to NZ and anyone with half a brain would realise that economic activity is about the annual contributions able to be made to NZ not some one-off payment to get one in the door.

Well said notaneconemist.

Very few invest to back and support. Rather purchase to have and control.
At least get the name right.
Its a much better urban dictionary meaning to boot.

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