投资报告：2018年新西兰投资环境报告（英文版）
Executive Summary
New Zealand has an open and transparent economy where businesses and investors can make commercial transactions with ease. Major political parties are committed to an open trading regime and sound rule of law practices. This is regularly reflected in high global rankings in the World Bank’s Ease of Doing Business report and Transparency International’s Perceptions of Corruption index. In the aftermath of the global financial crisis, the government and the Reserve Bank made substantive legislative and regulatory changes to the financial system. This included the establishment of the Financial Markets Authority, enacting comprehensive Anti-Money Laundering and Countering Financing of Terrorism legislation, and implementing macro-prudential policy to help identify and address systemic risk in the finance sector.
Since the new Labour party-led government coalition took power in October 2017, there has been a modest shift in economic priorities as the new government seeks to fulfill campaign promises and address a more left-leaning support base while acknowledging New Zealand’s dependence on trade. The Government has indicated a slight change in focus in trade agreement negotiations and has taken steps to amend employment legislation passed by the previous Government.
In December 2017, the government tightened regulations on rural land and introduced legislation to make the purchase of residential property by foreigners subject to overseas investment screening. The latter was an issue the government campaigned on, believing foreign purchasers of residential property as one of the main causes of a prolonged period of an escalation in house prices and a rise in homelessness.
After signing the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) agreement in March 2018, the government hopes to pass legislation and amend its other relevant existing free trade agreements to comply with Most Favored Nation provisions before the CPTPP’s entry into force.
There has been strong activity in New Zealand’s early-stage capital markets in recent years. Growth in angel investment activity sourced domestically and internationally has been seen largely in technology and food and beverage companies. The government has operated programs to channel foreign investment into specific sectors in specific regions, including forestry in Northland and energy in Taranaki. Other sectors to be targeted include those in which New Zealand has a competitive advantage, or those that are considered high quality, niche, or value-added, such as premium food and beverages, specialized manufacturing, agricultural expertise and technology, ICT/digital, and shared services.
Half of New Zealand’s foreign direct investment comes from Australia, with the United States ranking second, constituting about eight percent. Similarly, over half of New Zealand’s outward direct investment goes to Australia, with the United States ranked second at about 15 percent.
The 2018 Investment Climate Statement for New Zealand uses the exchange rate of NZD 1 = USD 0.72.
Table 1
| Measure | Year | Index/Rank | Website Address |
| TI Corruption Perceptions Index | 2018 | 1 of 175 | |
| World Bank’s Doing Business Report “Ease of Doing Business” | 2018 | 1 of 190 | |
| Global Innovation Index | 2017 | 21 of 128 | |
| U.S. FDI in partner country ($M USD, stock positions) | 2016 | $8,430 | |
| World Bank GNI per capita | 2016 | $38,740 |
1. Openness To, and Restrictions Upon, Foreign Investment
Policies Towards Foreign Direct Investment
Foreign investment in New Zealand is generally encouraged without discrimination. New Zealand has an open and transparent economy, where businesses and investors can generally make commercial transactions with ease. Successive governments accept that foreign investment is an important source of financing for New Zealand and a means to gain access to foreign technology, expertise, and global markets. Some restrictions do apply in a few areas of critical interest including certain types of land, significant business assets, and fishing quotas. These restrictions are facilitated by a screening process conducted by the Overseas Investment Office (OIO), described in the next section.
New Zealand has a rapidly expanding network of bilateral investment treaties and free trade agreements that include investment components. New Zealand also has a well-developed legal framework and regulatory system, and the judicial system is generally effective in enforcing property and contractual rights. Investment disputes are rare, and there have been no major disputes in recent years involving U.S. companies.
The newly elected Labour Party government has indicated a tighter approach to screening some forms of foreign investment. The government has indicated an interest in differing aspects of trade agreement negotiation from the previous government, such as the consideration of investment screening thresholds for certain types of assets and an aversion to investor-state dispute settlement provisions. This is described in the next section.
Crown entity New Zealand Trade and Enterprise (NZTE) is New Zealand’s primary investment promotion agency. In addition to its New Zealand central and regional presence, it has 40 international locations, with half of its staff - about 580 - based overseas. In the United States the NZTE has offices in San Francisco, Los Angeles, New York, and Washington, D.C.
The International Investment Attraction Strategy launched in 2015 is specifically aimed at attracting high-quality overseas investment, increasing the number of multinational companies to undertake research and development in New Zealand, and attracting individual investors and entrepreneurs to reside in New Zealand. The Investment Attraction Taskforce is headed by NZTE and operates across several government agencies that include the Ministry of Business, Innovation and Employment (MBIE); the Ministry of Foreign Affairs and Trade (MFAT); Treasury; Immigration New Zealand; and Callaghan Innovation. Priority sectors identified by the taskforce include infrastructure, resources, food and beverage, high-value manufacturing, ICT, and primary industries.
The taskforce also introduced the Regional Investment Attraction Strategy to align and coordinate an approach to attracting investment. NZTE facilitates this work with regional economic development agencies to help channel investment to build capability and to promote opportunities in the regions. Other initiatives implemented by the taskforce include new visa categories created for investors and for entrepreneurs, and enabling foreign investors – under certain circumstances – to bid alongside New Zealand businesses for contestable government funding for research and innovation grants.
The New Zealand-United States Council, established in 2001, is a non-partisan organization funded by business and the government. It fosters a strong and mutually beneficial relationship between New Zealand and the United States through both government-to-government contacts, and business-to-business links. The American Chamber of Commerce in Auckland provides a platform for New Zealand and U.S. businesses to network among themselves and with government agencies.
Limits on Foreign Control and Right to Private Ownership and Establishment
The New Zealand government does not discriminate against U.S. or other foreign investors in their rights to establish and own business enterprises. It has placed separate limitations on foreign ownership of airline Air New Zealand and communications provider Spark New Zealand (Spark), the latter formerly known as Telecom Corporation of New Zealand until 2014.
Air New Zealand’s constitution requires that no person who is not a New Zealand national hold 10 percent or more of the voting rights without the consent of the Minister of Transport. There must be between five and eight board directors, and at least three directors must be ordinarily resident in New Zealand. In 2013 the government sold down its stake in Air New Zealand from 73 percent to 53 percent to raise money to pay down debt.
The constitution of telecommunications provider Spark requires at least half of its Board be New Zealand citizens, and at least one director must live in New Zealand. It requires no person shall have a relevant interest in 10 percent or more of the voting shares without the consent of the Minister of Finance and the Spark Board, and no person who is not a New Zealand national can purchase a relevant interest in more than 49.9 percent of the total voting shares without approval from the Minister of Finance. This telecommunications service obligation (TSO) – formerly known as the “Kiwishare obligation” – has been in operation since Spark’s privatization in 1990, and was motivated in part because of the vital emergency (111) service it provides. There are TSOs for charge-free local calling (provided by Spark and supported by Chorus), and for the services for deaf, hearing impaired, and speech impaired people (provided by Sprint International).
The establishment of telecommunications infrastructure provider Chorus resulted from a demerger of Spark in 2011. Chorus owns most of the telephone infrastructure in New Zealand, and provides wholesale services to telecommunications retailers, including Spark. The demerger freed Spark from the TSO, but obligated Chorus as a natural monopoly and infrastructure provider. To date the New Zealand government has granted approval to two private companies - in April 2012 and December 2017 - to exceed the 10 percent threshold, and increase their interest in Chorus up to 15 percent.
New Zealand screens overseas investment mainly for economic reasons to ensure quality investments are made that benefit New Zealand. Failure to obtain consent before purchase can lead to significant financial penalties. The Overseas Investment Office (OIO) is responsible for screening foreign investment that falls within certain criteria specified in the Overseas Investment Act 2005. The OIO requires consent be obtained by overseas persons wishing to acquire or invest in significant business assets, sensitive land, farm land, or fishing quota, as defined below.
A “significant business asset” includes: acquiring 25 percent or more ownership or controlling interest in a New Zealand company with assets exceeding NZD100 million (USD 72 million); establishing a business in New Zealand that will be operational more than 90 days per year and expected costs of establishing the business exceeds NZD100 million; or acquiring business assets in New Zealand that exceed NZD100 million. For all three categories the threshold is higher for Australian non-government investors to NZD516 million (USD 372 million) for 2018, an amount reviewed each year in accordance with the 2013 Protocol on Investment to the New Zealand-Australia Closer Economic Relations Trade Agreement. Separately, upon entry into force, non-government investors from CPTPP countries will face a screening threshold of NZD200 million (USD 144 million).
OIO consent is required for overseas investors to purchase “sensitive land” either directly or acquiring a controlling interest of 25 percent or more in a person who owns the land. Sensitive land includes land that: is rural and exceeds five hectares (12.35 acres); is part of or adjoins the foreshore or seabed; exceeds 0.4 hectares and falls under of the Conservation Act 1987 or is land proposed for a reserve or public park; is subject to a Heritage Order, or is a historic or wahi tapu area (sacred Maori land); or is considered “special land” that is defined as including the foreshore, seabed, riverbed, or lakebed and must first be offered to the Crown. If the Crown accepts the offer, the Crown can only acquire the part of the “sensitive land” that is “special land,” and can acquire it only if the overseas person completes the process for acquisition of the sensitive land.
The Waitangi Tribunal was established by the Treaty of Waitangi Act 1975 to hear Maori claims relating to the loss of land and resources as a result of historical breaches by the Crown of the Treaty of Waitangi signed in 1840. Maori land claims may not be lodged relating to privately owned land and affect only land owned by the Crown. Some private land titles are noted with a memorial recording that the land, when Crown land, would be subject to a claim and therefore repurchased by the Crown for market value at some future time. No land in New Zealand has to date been the subject of a repurchase decision.
Where a proposed acquisition involves “farm land” (land used principally for the purpose of agriculture, horticulture or pastoral purposes), the OIO can only grant approval if the land is first advertised and offered on the open market in New Zealand to citizens and residents. The Crown can waive this requirement in special circumstances at the discretion of the relevant Minister.
Commercial fishing in New Zealand is controlled by the Fisheries Act, which sets out a quota management system that prohibits commercial fishing of certain species without the ownership of a fishing quota which specifies the quantity of fish that may be taken. OIO legislation together with the Fisheries Act, requires consent from the relevant Ministers in order for an overseas person to obtain an interest in a fishing quota, or an interest of 25 percent or more in a business that owns or controls a fishing quota.
For investments that require OIO screening, the investor must demonstrate in their application they meet the criteria for the “Investor Test” and the “Benefit to New Zealand test.” The former requires the investor to display the necessary business experience and acumen to manage the investment, demonstrate financial commitment to the investment, be of “good character”, and not be a person who would be ineligible for a permit under New Zealand immigration law.
The “Benefit to New Zealand test” requires the OIO assess the investment against 21 factors, which are set out in the OIO Act and Regulations. The OIO applies a counterfactual analysis to those benefit factors that are capable of having a counterfactual applied, the onus is upon the investor to consider the likely counterfactual if the overseas investment does not proceed. Economic factors are given weighting, particularly if the investment will create new job opportunities, retain existing jobs, and lead to greater efficiency or productivity domestically.
In December 2017, the government introduced regulatory changes that place greater emphasis on the assessment of significant economic benefits to New Zealand. For forestry investments, the OIO is required to place importance on investments that result in increased domestic processing of wood and advance government strategies. For rural land, importance is placed on the generation of economic benefits which were previously seldom applied for lifestyle rural property purchases that previously relied on non-economic benefits to gain OIO approval.
The OIO monitors foreign investments after approval. All consents are granted with reporting conditions, which are generally standard in nature. Investors must report regularly on their compliance with the terms of the consent. Offenses include: defeating, evading, or circumventing the OIO Act; failure to comply with notices, requirements, or conditions; and making false or misleading statements or omissions. If an offense has been committed under the Act, the High Court has the power to impose penalties, including monetary fines, ordering compliance, and ordering the disposal of the investor’s New Zealand holdings.
In addition to placing emphasis on economic benefits in specific investments, in December 2017 the government issued new rules that reduced the area threshold for foreign purchases of rural land so that approval is required for rural land of an area over five hectares, rather than the previous metric of farm land “more than ten times the average farm size” (about 7,146 ha for sheep and beef farms, and 1,987 ha for dairy farms). They also issued a new rule that overseas investors intending to reside in New Zealand, move within 12 months and become ordinarily resident within 24 months, and ordered that the OIO place less importance on applicants’ sponsorship and donations in the application process.
In December 2017, the government introduced the Overseas Investment Amendment Bill to amend the 2005 Act in order to bring residential land within the category of “sensitive land.” The Bill in its current form will require foreigners to apply for OIO approval to purchase existing residential property and to sell-on any new home they build within 12 months of completion. Foreign investors can still purchase rural land less than five hectares but the Government said it will plan other measures to discourage “land bankers.” Due to New Zealand bilateral FTAs already in force, the ban will not apply to Australian or Singaporean investors. The government has announced it intends to pass the legislation before entry-into-force of the CPTPP agreement.
In March 2018, the government announced forestry cutting rights be brought into the OIO screening regime, similar to the screening of investments that exists for leasehold and freehold forestry land. Because the addition of a new asset class to the screening regime requires legislation, proposed legislation will enable foreign investors to purchase up to 1,000 ha of forestry rights per year or any forestry right of less than three years duration, without OIO approval. The government aims to introduce and pass this legislation before entry into force of the CPTPP agreement to preserve its future right to legislate in relation to forests.
Outside of the OIO framework, the previous government passed the Taxation (Bright-line Test for Residential Land) Bill. Under this Act, properties bought after October 1, 2015 will accrue tax on any gain earned if the house is bought and sold within two years, unless it is the owner’s main home. The bill requires foreign purchasers to have both a New Zealand bank account and a New Zealand Inland Revenue (IRD) tax number, and will not be entitled to the “main home” exception. The purchaser will also need to submit other taxpayer identification number held in countries where they pay tax on income. To assist the IRD in ensuring investors meet their tax obligations, legislation was passed in 2016 that empowered Land Information New Zealand (LINZ) to collect additional information when residential property is bought and sold, and to pass this information to the IRD.
In March 2018, the new government passed legislation to extend the “bright-line test” from two to five years as a measure to further deter property speculation in the New Zealand housing market.
Other Investment Policy Reviews
New Zealand has not conducted an Investment Policy Review through the OECD, WTO, or UNCTAD in the past three years.
Business Facilitation
The New Zealand government has shown a strong commitment to continue efforts to streamline business facilitation. According to the World Bank’s Ease of Doing Business 2018 report New Zealand is ranked first in “Starting a Business,” “Registering Property,” and is ranked second for “protecting minority investors.”
There are no restrictions on the movement of funds into or out of New Zealand, or on the repatriation of profits. No additional performance measures are imposed on foreign-owned enterprises, other than those that require OIO approval. Overseas investors must adhere to the normal legislative business framework for New Zealand-based companies, which includes the Companies Act 1993, the Securities Act 1978, the Financial Markets Conduct Act 2013, the Commerce Act 1986, the Financial Reporting Act 2013, and the Anti-Money Laundering and Countering Financing of Terrorism Act 2009.
The Contract and Commercial Law Act came into effect in September 2017 and was designed to modernize and consolidate existing legislation underpinning contracts and commercial transactions. In March 2017 much of the omnibus Judicature Modernization Bill took effect which created five new Acts and 18 amendment Acts covering a range of areas including property, arbitration, copyright, and insolvency. Legislation currently going through Parliament to further streamline, modernize, and improve accessibility of New Zealand’s judicial system, include the Tribunals Powers and Procedures Legislation Bill, the Courts Matters Bill, and the Statutes Amendment Bill.
In order to combat the increasing use of New Zealand shell companies for illegal activities, the Companies Amendment Act 2014 and the Limited Partnerships Amendment Act 2014 introduced new requirements for companies registering in New Zealand. Companies must have at least one director that either lives in New Zealand, or lives in Australia and is a director of a company incorporated in Australia. New companies incorporated must provide the date and place of birth of all directors, and provide details of any ultimate holding company. The Acts introduced offences for serious misconduct by directors that results in serious losses to the company or its creditors, and aligns the company reconstruction provisions in the Companies Act with the Takeovers Act 1993 and the Takeovers Code Approval Order 2000.
The Companies Office holds an overseas business-related register, and provides that information to persons in New Zealand who intend to deal with the company or to creditors in New Zealand. The information provided includes where and when the company was incorporated, if there is any restriction on its ability to trade contained in its constitutional documents, names of the directors, its principal place of business in New Zealand, and where and on whom documents can be served in New Zealand. For further information on how overseas companies can register in New Zealand: https://www.companiesoffice.govt.nz/companies/learn-about/starting-a-company/register-an-overseas-company-other
In 2016, Parliament passed the New Zealand Business Number (NZBN) Act, which allocates eligible entities a unique identifier to enable them to conduct business more efficiently, interact more easily with the government, and to protect the entity’s security and confidentiality of information. All companies registered in New Zealand have had NZBNs since 2013, and are also available to other types of businesses such as sole traders and partnerships.
Tax registration is recommended when the investor incorporates the company with the Companies Office, but is required if the company is registering as an employer and if it intends to register for New Zealand’s consumption tax, the Goods and Services Tax (GST), which is currently 15 percent. Companies importing into New Zealand or exporting to other countries which have a turnover exceeding NZD 60,000 (USD 43,200) over a 12 month period must register for GST. This was extended to non-resident suppliers of cross-border remote services and digital downloads under the Taxation (Residential Land Withholding Tax, GST on Online Services, and Student Loans) Act 2016. Separate conditions apply to cross-border suppliers of telecommunication services.
New Zealanders must pay GST on goods that are not considered “low-value imported goods” on a de Minimis basis as determined by Customs New Zealand, in addition to customs duty if applicable. The Customs and Excise Act passed in March 2018 replaces the Customs and Excise Act 1996. The new law aims to modernize many of the sections of the 1996 Act which became outdated in the digital era where supply chains can be more complex. Importers will be able to seek binding valuation rulings to get certainty as to how much duty they will owe on goods they bring into New Zealand, and businesses will be permitted store their records in the cloud or off-shore, in line with modern business practice.
There are a number of New Zealand government agencies that offer a range of support to new and established small businesses. Support includes mentoring, grants, and capability building. Most of the programs which are operated by MBIE, NZTE, Callaghan Innovation, and the Regional Business Partner Network provide support through skills and knowledge, or supporting innovative business ventures. Grants are available, but many are co-funded, requiring some investment by the business owner, and extra conditions apply to non-resident applicants. The NZTE provides more tailored information and assistance for overseas investors wanting to invest in New Zealand. For more see: https://www.business.govt.nz/how-to-grow/getting-government-grants/what-can-i-get-help-with/
In 2017 the Ministry for Women and MBIE launched a pilot to attract more women into the technology sector. “Return to IT” assists women with a digital technology backgrounds to return to work in the sector after taking a career break of between two and five years. Successful applicants are offered an opportunity to be placed with a participating organization, or assistance with seeking employment in the IT sector. Women currently occupy less than a quarter of technically skilled professions in the New Zealand digital technology sector.
The Ministry for Women has also partnered with business representative organizations, trade associations, and private enterprise to develop a practical and accessible resource to educate, inform and support small to medium enterprises (SME) business owners on providing for a diverse and flexible workforce. About 97 percent of businesses in New Zealand are small and often do not have available a human resource specialist. The Ministry works to address the underrepresentation of women in the construction, trades, engineering, and digital technology sectors, and has completed some initial work in the Canterbury region. The Ministry also offers tools, resources, and practical advice on their website to encourage more women to pursue leadership roles.
The NZTE has a dedicated Maori business team that specializes in engaging with a wide range of Maori businesses. NZTE plays an active role in the Crown-Maori Economic Development growth partnership, and work closely with MBIE, the Ministry of Maori Development, the Ministry for Primary Industries (MPI), the Treasury, and Callaghan Innovation to support best practice to grow Maori companies. This growth contributes to the regional economic development goals in priority regions and sectors across New Zealand. NZTE also supports Maori customers’ participation in both out-bound and in-bound Ministerial visits and trade delegations to priority markets overseas. NZTE has also developed an investment-readiness program that brings together local Maori companies and regional investment experts, to learn about the capital-raising process, approaches to assessing investment opportunities, and how investment can achieve their growth aspirations.
The Ministry of Maori Development runs the Maori Business Growth Support program to help Maori establish and grow their business. They provide information, advice on business growth and planning, and help broker relationships. The program focuses primarily on Maori SME’s that have a clear commercial focus, and requires that the owner self-identifies as Maori and that the business is an independent entity based in New Zealand.
Outward Investment
The New Zealand government does not place restrictions on domestic investors to invest abroad.
NZTE is the government’s international business development agency. It promotes outward investment and provides resources and services for New Zealand businesses to prepare for export and advice on how to grow internationally. MFAT and Customs New Zealand each operates business outreach programs that advise businesses on how to maximize the benefit from FTAs to improve the competitiveness of their goods offshore, and provides information on how to meet requirements such as rules of origin.
2. Bilateral Investment Agreements and Taxation Treaties
New Zealand currently has signed bilateral investment treaties (BITs) with four partners: Argentina (August 1999), Chile (July 1999), China (November 1988), and Hong Kong (July 1995), but only the BITs with China and Hong Kong have entered into force. Besides these treaties, the country has concluded a number of economic agreements that also contain provisions on investment.
New Zealand has a Trade and Investment Framework Agreement with the United States that entered into force on October 2, 1992.
New Zealand and Australia trade through a Closer Economic Relationship (CER), which is a free trade agreement eliminating all tariffs between the two countries. However, the rules of origin under the CER do not permit products to enter Australia duty free from New Zealand unless the products are of at least 50 percent New Zealand origin. Additionally, the last manufacturing process must be carried out in New Zealand. The enactment of the Free Trade Agreement (FTA) between Australia and the United States on January 1, 2005, removed any tariff disadvantage to U.S. firms that choose to re-export products from New Zealand to Australia.
New Zealand concluded a Closer Economic Partnership (CEP) agreement with Singapore that entered into force on January 1, 2001.
New Zealand concluded a CEP agreement with Thailand that entered into force on July 1, 2005. The FTA contains a specific chapter on investment.
New Zealand has a Trade and Investment Framework Agreement with Mexico that entered into force on October 21, 1996.
New Zealand concluded an FTA with China that entered into force on October 1, 2008. The FTA contains a specific chapter on investment. In November 2016, an agreement was reached to launch negotiations on an FTA “upgrade.” There have been two rounds of negotiations to date.
New Zealand and Malaysia signed an FTA that entered into force on August 1, 2010. The FTA contains a specific chapter on investment.
New Zealand concluded a CEP with Hong Kong, which entered into force on January 1, 2011.
New Zealand has an agreement on Economic Cooperation with the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, which entered into force on December 1, 2013. The agreement established rules between the two countries based on international best practice to facilitate investment flows and provide for the balanced protection of investment.
An FTA between New Zealand, Australia, and the Association of South East Asian Nations (ASEAN) entered into force January 1, 2010. The FTA contains a specific chapter on investment.
New Zealand has an FTA with the Republic of Korea that entered into force December 20, 2015. The FTA contains a specific chapter on investment.
New Zealand signed the Trans-Pacific Strategic Economic Partnership Agreement (the P4 Agreement) with Brunei, Chile, and Singapore that entered into force on May 28, 2006.
New Zealand concluded work on an FTA with the Gulf Cooperation Council (GCC) on October 31, 2009, but the agreement has not yet been signed.
New Zealand signed the Pacific Agreement on Closer Economic Relations Agreement (PACER Plus) with Australia, Cook Islands, Federated States of Micronesia, Fiji, Kiribati, Nauru, Niue, Palau, Papua New Guinea, Republic of Marshall Islands, Samoa, Solomon Islands, Tonga, Tuvalu, and Vanuatu on June 14, 2017.
New Zealand signed the Anti-Counterfeiting Trade Agreement October 1, 2011. The United States, Australia, Canada, the European Union, Japan, Korea, Morocco, Mexico, Singapore and Switzerland have also signed. The ACTA requires ratification by six signatories and the New Zealand government’s consideration whether to ratify ACTA remains on hold. New Zealand is also a party in negotiations for the Trade in Services Agreement (TiSA).
New Zealand is also negotiating an FTA with India, and agreed to enter into negotiations with the European Union in October 2015. Negotiations for a Russia-Belarus-Kazakhstan FTA were suspended in May 2014.
In June 2017, New Zealand launched negotiations with the countries of the Pacific Alliance, including Chile, Colombia, Mexico, and Peru. There have been two rounds of negotiations to date.
New Zealand joined the Regional Comprehensive Economic Partnership (RCEP), launched at the East Asia Summit in November 2012. The RCEP covers 16 countries: the ten members of ASEAN (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam) and the six countries with which ASEAN has existing FTAs – Australia, China, India, Japan, Korea, and New Zealand. There have been 20 rounds of negotiations to date.
New Zealand has 40 bilateral income tax treaties and 11 information sharing agreements currently in force. The Convention between the United States of America and New Zealand for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income signed in 1982 was replaced by a new treaty signed in December 2008, which came into force on November 12, 2010. New Zealand has an intergovernmental agreement with the United States for their Foreign Account Tax Compliance Act (FATCA), which entered into force on July 3, 2014.
In 2017, there were two rulings from the New Zealand Court of Appeal and the New Zealand High Court after cases were brought regarding the correct interpretation of New Zealand’s double tax agreements (DTAs). A Court of Appeal decision (on the NZ-China DTA) ruled DTAs should be treated in the same manner as private contracts, rather than considering the international context and purposes of such treaties in accordance with previous local and international rulings. In another case that went to the Supreme Court and back, the High Court ruled against the IRD Commissioner for issuing information product notices to a tax agent that were found to be not “necessary” as specified in the (NZ-Korea) DTA.
New Zealand is a party to the OECD’s Convention on Mutual Administrative Assistance in Tax Matters, and to the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit-Shifting (MLI). In June 2017 New Zealand participated in the signing ceremony for the MLI. The MLI is currently progressing through the treaty examination process through Parliament. As part of the treaty examination process, the IRD submitted a National Interest Analysis which outlines the measures the Government will need to take to comply with the obligations set out in the MLI, including the alignment of its double tax agreements.
In December 2017, the Taxation (Neutralizing Base Erosion and Profit Shifting) Bill was introduced into Parliament. The Bill as it currently stands is intended to address the ability of firms with presences in multiple countries from using (1) artificially high interest rates on loans from related parties to shift profits out of New Zealand (interest limitation rules); (2) artificial arrangements to avoid having a taxable presence in New Zealand; (3) transfer pricing payments to shift profits into their offshore group members that does not reflect the actual economic activities undertaken in New Zealand; and (4) hybrid and branch mismatches that exploit differences between countries’ tax rules to achieve an advantageous tax position.
The legislation would enhance the IRD’s ability to extract information from multinational firms held overseas to prevent firms from obstructing investigation through non-cooperation. Multinational firms would face fines for failing to comply with a request for information, and allow the IRD to make an assessment based on the information it has in its possession and prevent the taxpayer from admitting the requested information as evidence in a dispute or court proceeding. In a regulatory impact statement released in July 2017, the IRD said it was aware of 16 firms engaged in transfer pricing and permanent establishment avoidance that were under audit and collectively involved NZD100 million (USD 72 million) per year of disputed tax.
3. Legal Regime
Transparency of the Regulatory System
The New Zealand government policies and laws governing competition are transparent, non-discriminatory, and consistent with international norms. New Zealand ranks high on the World Bank’s Global Indicators of Regulatory Governance, scoring a 5.4 out of a possible 6, but is marked down on indicators relating to the method of conducting and reporting on public consultation.
Draft bills and regulations including those relating to FTAs and investment law, are generally made available for public comment, through a public consultation process.
The Regulatory Quality Team (RQT) within the New Zealand Treasury is responsible for the strategic coordination of the Government's regulatory management system. Treasury exercises stewardship over the regulatory management system to maintain and enhance the quality of government-initiated regulation. The Treasury’s responsibilities include the oversight of the performance of the regulatory management system as a whole and making recommendations on changes to government and Parliamentary systems and processes. These functions complement the Treasury’s role as the government’s primary economic and fiscal advisor.
In 2015 the government announced a program to lift regulatory quality following a review of the performance and condition of the regimes in New Zealand’s seven major regulatory departments – the Department of Internal Affairs (DIA), IRD, MBIE, Ministry for the Environment, Ministry of Justice, MPI, and the Ministry of Transport. The government implemented most of the 44 recommendations after an independent report found New Zealand’s regulation framework was not sufficiently keeping up with the changing global environment.
In 2017, the government released their Expectations Good Regulatory Practice which sought to strengthen and embed regulatory stewardship and implement the report’s recommendations. These expectations have been incorporated into the C********et's Impact Analysis Requirements, which are both a process and an analytical framework that encourages a sys********tic and evidence-informed approach to policy development, with key output being a revision to the Regulatory Impact Assessment (RIA) requirements. To help improve transparency in the regulatory process, RIAs are published on the Treasury’s website at the time the relevant bill is introduced to Parliament or the regulation is gazetted, or at the time of Ministerial release. A RIA provides a high-level summary of the problem being addressed, the options and their associated costs and benefits, the consultation undertaken, and the proposed arrangements for implementation and review.
While regulations are not in a centralized location in a form similar to the United States Federal Register, the New Zealand government requires the major regulatory departments to publish an annual regulatory stewardship strategy.
While some standards are set through legislation or regulation, the vast majority of standards are developed through Standards New Zealand, which is now a business unit within MBIE. The Standards and Accreditation Act 2015 set out the role and function of the Standards Approval Board which commenced from March 2016. Standards New Zealand operates as it did previously as a Crown entity, but by moving within MBIE it no longer offers membership subion services, and instead operates on a cost-recovery basis. The majority of standards in New Zealand are set in coordination with Australia.
The Resource Management Act 1991 (RMA) often draws criticism from both foreign and domestic investors as a barrier to investment in New Zealand. The RMA regulates access to natural and physical resources such as land and water. Critics contend that the resource management process mandated by the law is unpredictable, protracted and subject to undue influence from competitors and lobby groups. A government commissioned report released in 2015 estimated the RMA has added NZD 30 billion (USD 22 billion) to building costs.
There have been several cases in which companies have been found to use the RMA’s objections submission process to stifle competition. Investors have also raised concerns that the law is unequally applied between jurisdictions because of the lack of implementing guidelines. The Resource Management Amendment Act 2013 and the Resource Management (Simplifying and Streamlining) Amendment Act 2009 were passed to address these concerns.
The Resource Legislation Amendment Act 2017 (RLAA) is considered the most comprehensive set of reforms to the RMA since its inception in 1991. It contains almost 40 amendments and makes significant changes to five different Acts including the RMA, the Conservation Act 1986, Reserves Act 1977, Public Works Act 1981, and the Exclusive Economic Zone and Continental Shelf (Environmental Effects) Act 2013. Broadly, the RLAA attempts to balance environmental management with the need to increase capacity for housing development. It also aims to align resource consent processes in a consistent manner among New Zealand’s 78 local councils, by providing a stronger national direction, a more responsive planning process, and improved consistency with other legislation.
The Public Works Act (PWA) 1981 enables the Crown to acquire land for public works by agreement or compulsory acquisition and prescribes landowner compensation. New Zealand continues to face a significant demand for large-scale infrastructure works and the PWA is designed to ensure project delivery and not be a barrier to infrastructure development. Compulsory acquisition will be exercised only after an acquiring authority (through an accredited supplier) has made all reasonable endeavors to negotiate in good faith the sale and purchase of the owner’s land, without reaching an agreement. The land owner retains the right to have their objection heard by the Environment Court, but only in relation to the taking of the land, not to the amount of compensation payable. The RLAA amendment to the PWA aims to improve the efficiency and fairness of the PWA compensation, land acquisition, and Environment Court objection provisions.
Parliament passed the Land Transfer Act in July 2017. It aims to simplify and modernize the law to make it more accessible and to improve certainty of property rights. It empowers courts with limited discretion to restore a landowner's registered title in rare cases in the event of fraud or other illegality where it is warranted to avoid a manifestly unjust result.
In 2014 New Zealand joined the Open Government Partnership, and the government published its second National Action Plan in October 2016. Areas of commitment include advancements in access to open data, public engagement, openness with the government budget process, and access to legislation. In October 2017 the government released a report of a mid-term self-assessment of progress on the Action Plan. As part of the Independent Reporting Mechanism, an OGP-appointed independent reporter reports twice on each two-year OGP national plan, a progress report at the end of the first year and a further report at the end of the second year. New Zealand’s reporter made their mid-term review of New Zealand’s progress available on the OGP International website in January 2018. In March 2018 New Zealand became one of 19 countries to sign the Open Data Charter.
Statistics New Zealand is responsible for the management of the Government’s Open Government Information and Data Program (Open Data NZ). Recent initiatives include websites dedicated to helping business, granting online access for businesses to Stats NZ surveys, convening public consultation on ways to improve data supply, and the Data Futures Partnership.
International Regulatory Considerations
In recent years the New Zealand government has introduced laws to enhance regulatory coordination with Australia as part of their Single Economic Market agenda agreed to in 2009. In February 2017 the Patents (Trans-Tasman Patent Attorneys and Other Matters) Amendment Act took effect creating a single body to regulate patent attorneys in both countries. Other areas of regulatory coordination include insolvency law, financial reporting, competition policy, consumer policy and the 2013 Trans-Tasman Court Proceedings and Regulatory Enforcement Treaty, which allows the enforcement of civil judgements between both countries.
In 2016 the Financial Markets Authority issued two notices, the Disclosure Using Overseas GAAP Exemption and the Overseas Registered Banks and Licensed Insurers Exemption Notice, which ease compliance costs on overseas entities by allowing them under certain circumstances to use United States statutory accounting principles (overseas GAAP) rather than New Zealand GAAP, and the opportunity to use an overseas approved auditor rather than require a New Zealand qualified auditor.
New Zealand is a Party to the World Trade Organization’s (WTO) Agreement on Technical Barriers to Trade (TBT). Standards New Zealand is responsible for operating the TBT Enquiry Point on behalf of MFAT. From 2016, Standards New Zealand became a business unit within MBIE administered under the Standards and Accreditation Act 2015. Standards New Zealand establishes techniques and processes built from requirements under the Act and from the International Organization for Standardization.
The Standards New Zealand TBT enquiry point service provides a website for producers and exporters for recently proposed TBT Notifications and associated documents such as draft or actual regulations or standards. They also provide contact details for the Trade Negotiations Division of MFAT to respond to businesses concerned about proposed measures.
https://www.standards.govt.nz/international-engagement/technical-barriers-to-trade/
In August 2017 the government launched an online “Clearing House” to provide a centralized point of contact for businesses to access information and support on trade barriers. The website allows exporters to report issues, seek government advice and assistance with non-tariff barriers (NTB) and other export issues. The Clearing House tracks and traces the assignment and resolution issues across agencies on behalf of the exporter, and aims to provide the Government with an accurate and timely account of NTB and other issues encountered by exporters. The online portal involves the participation of Customs, MFAT, MPI, MBIE, and NZTE. The Clearing House can be found at: https://tradebarriers.govt.nz/
New Zealand ratified the WTO Trade Facilitation Agreement (TFA) in September 2015 and entered into force in February 2017. New Zealand was already largely in compliance with the TFA which is expected to benefit New Zealand agricultural exporters and importers of perishable items to enhanced procedures for border clearances.
Legal System and Judicial Independence
New Zealand’s legal system is derived from the English system and comes from a mix of common law and statute law. The judicial system is independent of the executive branch and is generally open, transparent, and effective in enforcing property and contractual rights. The highest appeals court is a domestic Supreme Court, which replaced the Privy Council in London and began hearing cases July 1, 2004. New Zealand courts can recognize and enforce a judgment of a foreign court if the foreign court is considered to have exercised proper jurisdiction over the defendant according to private international law rules. New Zealand has well defined and consistently applied commercial and bankruptcy laws. Arbitration is a widely used dispute resolution mechanism and is governed by the Arbitration Act 1996, Arbitration (Foreign Agreements and Awards) Act 1982, and the Arbitration (International Investment Disputes) Act 1979.
In 2016 the omnibus Judicature Modernization Bill was passed to improve and consolidate older pieces of legislation governing the New Zealand court system. The legislation enables the sharing of court information, the establishment of a new judicial panel to hear certain commercial cases, increases the monetary limit of the District Court’s civil jurisdiction, and improves accessibility to final written judgments by publishing them online.
During 2017 the government continued efforts to modernize and improve the efficiency of the courts system, by introducing several pieces of legislation including the Courts Matters Bill, the Tribunals Powers and Procedures Legislation Bill, the Trusts Bill (which clarifies and simplifies core trust principles and essential obligations for trustees to improve understanding about how trusts operate. Importantly, it also preserves the flexibility of the common law, allowing trust law to continue to evolve through the courts), and the Legislation Bill (to enhance accessibility to all types of New Zealand legislation).
The Tribunals Powers and Procedures Legislation Bill (the Tribunals Bill) and the Courts Matters Bill. The Tribunals Bill and the Courts Matters Bill amend tribunals and courts legislation respectively to: reduce the time it takes to hear and resolve matters and improve users’ experience of the courts and tribunals system; enable greater use of modern technology to further improve efficiency, effectiveness, and timeliness; simplify and standardize statutory powers and procedures to improve productivity and efficiency; and provide better consumer protection and redress, and greater access to justice.
Legislation to modernize and consolidate laws underpinning contracts and commercial transactions came into effect on September 1, 2017. The Contract and Commercial Law Act 2017 consolidates and repeals 12 Acts that date between 1908 and 2002.
Laws and Regulations on Foreign Direct Investment
Overseas investments in New Zealand assets are screened only if they are defined as sensitive within the Overseas Investment Act 2005, as mentioned in the previous section. The OIO, a dedicated unit located within LINZ, administers the Act. The Overseas Investment Regulations 2005 set out the criteria for assessing applications, provide the framework for applicable fees, and whether the investment will benefit New Zealand. Ministerial Directive Letters are issued to the OIO by the Government to instruct the OIO on their general policy approach, and matters relating to the OIO’s functions, powers, and duties as regulator. Letters have been issued in December 2010 and November 2017. Substantive changes, such as inclusion of another asset type within “sensitive land,” requires a legislative amendment to the OIA. The government ministers for finance and for land information are responsible for assessing OIO recommendations and can choose to override OIO recommendations on approved applications. Ministers’ decisions on OIO applications can be appealed by the applicant in the New Zealand High Court. For more see: http://www.linz.govt.nz/regulatory/overseas-investment
In situations where New Zealand companies are acquiring capital injections from overseas investors that require OIO approval, they must meet certain criteria regarding disclosure to shareholders and fulfil other responsibilities under the Companies Act 1993. Failure to do so can affect the overseas company’s application process with the OIO.
The LINZ website reports on enforcement actions they have taken, including the number of compliance letters issued, the number of warnings and their circumstances, referrals to professional conduct body in relation to OIO breach, and disposal of investments.
Competition and Anti-Trust Laws
The New Zealand Commerce Commission is an independent Crown entity charged with enforcing legislation that promotes competition. The key competition law statute in New Zealand is the Commerce Act 1986, which covers both restrictive trade practices and the competition aspects of merger and acquisition transactions. In addition, the Commerce Commission enforces a number of pieces of legislation that, through regulation, aim to provide the benefits of competition in markets with certain natural monopolies, such as the dairy, electricity, gas, airports, and telecommunications industries.
The Commerce Act 1986 prohibits contracts, arrangements, or understandings that have the purpose, or effect, of substantially lessening competition in a market, unless authorized by the Commerce Commission. Before granting such authorization, the Commerce Commission must be satisfied that the public benefit would outweigh the reduction of competition. The Commerce Commission has legislative power to block a merger or takeover if it would result in the new company gaining a dominant position in the market.
The Dairy Industry Restructuring Act 2001 (DIR) authorized the amalgamation of New Zealand’s two largest dairy co-operatives to create Fonterra Co-operative Group Limited (Fonterra). The DIR is designed to manage Fonterra’s dominant position in the dairy market, until sufficient competition has emerged. Among other things, the DIR requires that Fonterra must accept all applications from farmers wanting to become supplying shareholders. The DIR’s automatic expiry provisions were triggered in 2015, when other dairy processors collected more than 20 percent of milk solids in the South Island.
A review by the Commerce Commission in 2016 found competition was not yet sufficient to warrant the removal of the DIR provisions, but it made recommendations to create a pathway to deregulation, and for another review to be conducted in five years’ time. In 2017 the new Government announced it would conduct a review of key issues facing the dairy industry and the DIR, including, environmental impacts, land use, Fonterra’s obligation to collect milk, and optimizing outcomes for New Zealand farmers and consumers. The Dairy Industry Restructuring Amendment Act was passed in February 2018 as an interim measure – pending the review - to ensure that the DIR provisions will not expire in the South Island on May 31, 2018.
The Commerce Commission is also charged with monitoring competition in the telecommunications sector. Under the 1997 WTO Basic Telecommunications Services Agreement, New Zealand has committed to the maintenance of an open, competitive environment in the telecommunications sector. Key reforms of the sector, through legislation enacted in 2001 and 2006, include the appointment of a commissioner responsible for resolving commercial disputes, the introduction of regulated services, the strengthening of the monitoring and enforcement, and the operational separation of Spark.
In 2016 the government announced a review of the Telecommunications Act 2001 to provide better support for competition, innovation and investment in the sector. As mentioned in the previous section, Chorus is considered a natural monopoly for providing New Zealand’s telecommunications infrastructure following its demerger from Spark in 2011.
Chorus won contracts from the government to build 70 percent of New Zealand’s new ultra-fast broadband fiber-optic cable network and has received subsidies. Chorus is listed on the NZX stock exchange and the Australian Stock Exchange (ASX), and has American Depositary Shares traded on the over the counter market in the United States.
The telecommunications service obligations (TSO) regulatory framework established under the Telecommunications Act 2001 enables certain telecommunications services to be available and affordable. A TSO is established through an agreement under the Telecommunications Act between the Crown and a TSO provider. Currently there are two TSOs. Spark (supported by Chorus) is the TSO Provider for the local residential telephone service, which includes charge-free local calling. Sprint International is the TSO Provider for the New Zealand relay service for deaf, hearing impaired and speech impaired people. Costs for subsidizing telecommunications services supplied under TSOs are funded through the Telecommunications Development Levy (TDL) collected from the telecommunications industry. The Commerce Commission determines the TSO charge paid to a TSO Provider and the proportion of the TDL borne by each liable telecommunications service provider.
As a monopoly providing wholesale services to retailers and not directly to consumers, the Commerce Commission regulates the amount Chorus can charge retailers to access its network based on what it would cost to replace the Chorus copper-line network, using the most efficient combination of modern technologies. In 2014 a case brought by Chorus against the Commerce Commission that eventually went to the Court of Appeal, after Chorus claimed the price determination issued by the Commerce Commission was too low. Chorus was ultimately allowed to charge a higher price, and the largest retail provider Spark raised their price to consumers and alleged that the lack of a stable and predictable pricing framework over a four-year period had affected their financial performance.
In February 2017 the government announced a review of the regulation of copper line services, and build a regulatory framework primarily on New Zealand’s fiber-optic cable network to establish a stable and predictable regulatory framework. The Telecommunications (New Regulatory Framework) Amendment Bill which passed its first reading in August 2017, will deregulate copper lines in areas where Ultra-Fast Broadband (UFB) fibre-optic cable is also available, and eliminate copper line regulation from 2020. The Commerce Commission would be required improve accessibility and its reporting retail service quality and to review the Telecommunications Dispute Resolution Service to maintain its efficacy. The Commerce Commission will also be able to make codes that address retail service quality, if the industry fails to develop industry-led codes that are adequate. It is seeking remove the Telecommunications Service Obligation TSO obligation. In areas, typically rural, where fiber is not available, the TSO obligation will be retained and Chorus will be required to continue supplying copper services at prices capped at 2019 levels.
The Commerce Commission has a regulatory role to promote competition within the electricity industry under the Commerce Act and the Fair Trading Act 1986. As natural monopolies, the electricity transmission and distribution businesses are subject to specific additional regulations, regarding pricing, sales techniques, and ensuring sufficient competition in the industry. The International Energy Agency (IEA) released its five-yearly review of the New Zealand energy market in February 2017 and made recommendations for the structure, governance and regulation of the electricity distribution service sector, and for network regulation and retail market reforms to ensure efficient transmission pricing.
The New Zealand motor fuel market became more concentrated after Shell New Zealand sold its transport fuels distribution business in 2010, and Chevron sold its retail brands Caltex and Challenge to New Zealand fuel distributor Z-Energy in 2016. The Commerce Commission approved Z-Energy’s application to acquire 100 percent of the shares in Chevron New Zealand on the condition it divest 19 of its retail sites and one truck stop in locations where it considered competition would be substantially reduced as a result of the merger. Z-Energy holds almost half of the market share for fuel distribution in New Zealand.
In August 2017 the Commerce (Cartels and Other Matters) Amendment Act was passed to enable easier enforcement action against international cartels. It created a new clearance regime allowing firms to test their proposed collaboration with the Commerce Commission and get greater legal certainty before they enter into the arrangements. It also expands the range of prohibited conduct to include price fixing, restricting output, and allocating markets, and expands competition oversight to the international liner shipping industry. It empowers the Commerce Commission to apply to the New Zealand High Court for a declaration to determine if the acquisition of a controlling interest in a New Zealand company by an overseas person will have an effect of “substantially lessening” competition in a market in New Zealand.
The government introduced the Commerce (Criminalization of Cartels) Amendment Bill in February 2018 to criminalize cartel behavior – a provision that was removed from the 2017 amendment during its passage through the Parliament process. If passed, the bill will introduce imprisonment as a penalty for engaging in cartel conduct. The government acknowledges it is not currently a significant issue but believes the existing civil regime is an insufficient deterrent and criminalizing cartel behavior provides a certain and stable operating environment for businesses to compete. It also aims to bring New Zealand in line with overseas jurisdictions that impose criminal sanctions for cartel conduct, enhancing the ability of the Commerce Commission to cooperate with its overseas counterparts in investigations of international cartels.
The Commerce Commission has two international cooperation arrangements (signed with Australia in 2013 and Canada in 2016) that allow the sharing of compulsorily acquired information, and provide investigative assistance. The arrangements help effective enforcement of both competition and consumer law.
Expropriation and Compensation
Expropriation is generally not an issue in New Zealand, and there are no outstanding cases. New Zealand ranks first in the World Bank’s 2017 Doing Business report for “registering property” and for “protecting minority investors.”
The Public Works Act 1981 provides the government with the statutory authority to acquire land for a public work. While the government's powers are wide, it can only acquire land, whether by negotiation or compulsorily, in accordance with the Act. Where voluntary agreement cannot be reached the Act provides for compulsory acquisition by the Crown through the Minister of Lands. This power is exercised only after reasonable endeavors have been made to negotiate in good faith the sale and purchase of the land. The owner has the right to object in the New Zealand Environment Court but only in relation to the land, and not to the amount of compensation payable. If the owner objects to the compensation offered, they can request it be determined by the Land Valuation Tribunal.
The RLAA has amended the Public Works Act 1981 (PWA) with higher compensation limits. The land owner retains the right to have their objection to a compulsory acquisition heard by the Environment Court, but only in relation to the taking of the land, not to the amount of compensation payable. The RLAA amendment aims to improve the efficiency and fairness of the PWA compensation, land acquisition, and Environment Court objection provisions.
The new government has indicated it will use compulsory acquisition under the PWA if there is evidence of land banking, and if it is delaying new government housing development. The government has established a KiwiBuild program that aims to build 100,000 affordable homes over ten years, with half being in Auckland.
Dispute Settlement
ICSID Convention and New York Convention
New Zealand is a party to both the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the Washington Convention), and to the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.
Proceedings taken under the Washington Convention are administered under the Arbitration (International Investment Disputes) Act 1979. Proceedings taken under the New York Convention are now administered under the Arbitration Act 1996.
Investor-State Dispute Settlement
Investment disputes are rare, and there have been no major disputes in recent years involving U.S. companies. The mechanism for handling disputes is the judicial system, which is generally open, transparent and effective in enforcing property and contractual rights.
Investment disputes brought against other foreigners by the New Zealand government have been largely due to non-compliance of the investors’ obligations under the OIO Act or their failure to gain OIO approval before making their investment.
Most of New Zealand’s recently enacted FTAs contain Investor-State Dispute Settlement (ISDS) provisions. The new government signaled it will seek to remove ISDS from future FTAs, having secured exemptions with several CPTPP signatories in the form of side letters.
International Commercial Arbitration and Foreign Courts
Arbitrations taking place in New Zealand (including international arbitrations) are governed by the Arbitration Act 1996. The Arbitration Act includes rules based on the United Nations Commission on International Trade Law (UNCITRAL) and its 2006 amendments. Parties to an international arbitration can opt out of some of the rules, but the Arbitration Act provides the default position.
The Arbitration Act also gives effect to the New Zealand government’s obligations under the Protocol on Arbitration Clauses (1923), the Convention on the Execution of Foreign Arbitral Awards (1927), and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958). Obligations under the Washington Convention are administered under the Arbitration (International Investment Disputes) Act 1979 as mentioned previously.
The New Zealand Dispute Resolution Centre (NZDRC) is the leading independent, nationwide provider of private commercial, family and relationship dispute resolution services in New Zealand. It also provides international dispute resolution services through its related entity, the New Zealand International Arbitration Centre (NZIAC). The NZDRC is willing to act as an appointing authority, as is the Arbitrators’ and Mediators’ Association of New Zealand (AMINZ).
Forms of dispute resolution available in New Zealand include formal negotiations, mediation, expert determination, court proceedings, arbitration, or a combination of these methods. Arbitration methods include ‘ad hoc,’ which allows the parties to select their arbitrator and agree to a set of rules, or institutional arbitration, which is run according to procedures set by the institution. Institutions recommended by the New Zealand government include the International Chamber of Commerce (ICC), the American Arbitration Association (AAA), and the London Court of International Arbitration (LCIA).
The Arbitration Amendment Act passed in 2016, amends the Arbitration Act 1996 to provide for the appointment of an “appointed body” to exercise powers which were previously powers of the High Court. It also provides for the High Court to exercise the powers in the event that the appointed body does not act, or there is a dispute about the process of the appointed body. These amendments came into force in March 2017. Since then the Minister of Justice has appointed the AMINZ the default authority for all arbitrations sited in New Zealand in place of the High Court.
In 2017 AMINZ issued its own Arbitration Rules based on the latest editions of rules published in other Model Law jurisdictions, to be used in both domestic and international arbitrations, and consistent with the 1996 Act.
In March 2017 the Arbitration Amendment Bill was introduced to bring New Zealand’s approach to the preserving the confidentiality of trust deed clauses in line with foreign arbitration legislation and case law. If passed the bill ensures arbitration clauses in trust deeds are given effect to extend the presumption of confidentiality in arbitration to the presumption of confidentiality in related court proceedings under the Act because often such cases arise from sensitive family disputes. The bill also defines the grounds for setting aside an arbitral award and confirms the consequence of failing to raise a timely objection to an arbitral tribunal’s jurisdiction.
Bankruptcy Regulations
Bankruptcy is addressed in the Insolvency Act 2006, the Receiverships Act 1993, and the Companies Act 1993. The Insolvency (Cross-border) Act 2006 implements the Model Law on Cross-Border Insolvency adopted by the United Nations Commission on International Trade Law in 1997. It also provides the framework for facilitating insolvency proceedings when a person is subject to insolvency administration (whether personal or corporate) in one country, but has assets or debts in another country; or when more than one insolvency administration has commenced in more than one country in relation to a person.
New Zealand bankrupts are subject to conditions on borrowing and international travel, and violations are considered offences and punishable by law.
In the World Bank’s Doing Business 2018 Report New Zealand is ranked 32nd in “resolving insolvency”. Relative to other high-income OECD countries, New Zealand scores lower on the strength of its insolvency framework, specifically citing fewer opportunities for creditors to participate directly in the insolvency and reorganization processes.
The registration system operated by the Companies Office within MBIE, is designed to enable New Zealand creditors to sue an overseas company in New Zealand, rather than forcing them to sue in the country's home jurisdiction. This avoids attendant costs, delays, possible language problems and uncertainty due to a different legal system. An overseas company's assets in New Zealand can be liquidated for the benefit of creditors. All registered 'large' overseas companies are required to file financial statements under the Companies Act 1993. See: https://www.companiesoffice.govt.nz/companies/learn-about/overseas-companies/managing-an-overseas-company-in-new-zealand
4. Industrial Policies
Investment Incentives
New Zealand has no specific economic incentive regime because of its free trade policy. The New Zealand government, through its bodies such as Tourism New Zealand and NZTE, provides assistance in certain sectors such as tourism and the export of locally manufactured goods.
In the Media and Entertainment sector, the New Zealand Film Commission administers a grant for international film and television productions on behalf of the Ministry for Culture and Heritage and MBIE. In April 2014 the New Zealand government increased support for both international and New Zealand productions. The New Zealand Screen Production Grant increased the grant rebates from 15 percent for international productions to 20 percent, with an additional five percent available for productions that meet a significant economic benefit points test for New Zealand. Since 2014, the grant has supported over 50 international productions. The criteria for the grant and its administration was reviewed and updated in July 2017.
In the Energy and Mining sector, the New Zealand government introduced the annual Oil and Gas Block Offers program in 2012 as a means to raise New Zealand’s profile among international investors in the allocation of petroleum exploration permits. The government conducts the process in consultation with industry, iwi (Maori tribes), and the local governments affected. The new government has indicated they will be reviewing the program, but they will not dishonor their commitment to existing licenses or permits.
Callaghan Innovation is a stand-alone Crown Entity established in February 2013. It connects businesses with research organizations offering services, and the opportunity to apply for government funding and grants that support business innovation and capability building. Callaghan Innovation requires businesses applying for any of their research and development grants to have at least one director who is resident in New Zealand and to have been incorporated in New Zealand, have a center of management in New Zealand, or have a head office in New Zealand. For more information see: http://www.business.govt.nz/support-and-advice/grants-incentives
Foreign Trade Zones/Free Ports/Trade Facilitation
New Zealand does not have any foreign trade zones or duty-free ports
Performance and Data Localization Requirements
The government of New Zealand does not maintain any measures that are alleged to violate the Trade Related Investment Measures text in the WTO. There are no performance requirements or incentives associated with foreign investment. However, for those investments that require OIO approval and are subject to reporting requirements, investors must report regularly on their compliance in accordance with the terms of the consent agreement. Consent holders are generally (as a condition of consent) required to report annually to the OIO for up to five years from consent, but if benefits are expected to occur after that five-year period, monitoring will reflect the time span within which benefits will occur.
New Zealand does not generally have data localization requirements. However under certain circumstances approval is required from the Commissioner of Inland Revenue to store electronic business and tax records outside of New Zealand under Section 22(2BA) of the Tax Administration Act 1994 and the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017.
While data localization and cloud computing is not specifically legislated for, all businesses must comply with the Privacy Act 1993 to protect customers’ “personal information.” In October 2013, C********et agreed to a Cloud Computing Risk and Assurance Framework for government agencies. All State Service agencies are expected to follow the process in line with C********et direction.
In March 2018 the government introduced the Privacy Bill into Parliament to repeal and replace the Privacy Act 1993. The bill is designed to provide a modernized framework for protecting an individual’s right to privacy of personal information, while recognizing that other rights and interests may at times also need to be taken into account. It also aims to bring New Zealand privacy law into line with international best practice, including the 2013 OECD Privacy Guidelines and the European Union’s forthcoming General Data Protection Regulation.
Specifically, the bill aims to strengthen cross-border data flow protections as social media platforms, e-commerce, and cloud storage have changed the way personal information is used, stored, retrieved, and disclosed. The Bill also clarifies the application of New Zealand law when a New Zealand agency engages an overseas service provider, and the liability of the agency if the overseas provider discloses information because foreign law requires them to do so. The Bill addresses issues such as protection of trade secrets from requests made to agencies for access to information, and extending the ability of the Privacy Commissioner to consult with overseas privacy enforcement authorities when a complaint falls wholly or partly within another jurisdiction.
5. Protection of Property Rights
Real Property
New Zealand recognizes and enforces secured interest in property, both movable and real. Most privately owned land in New Zealand is regulated by the Land Transfer Act 1952. These provisions set forth the issuance of land titles, the registration of interest in land against land titles, and guarantee of title by the State. The Registrar-General of Land develops standards and sets an assurance program for the land rights registration system. New Zealand’s legal system protects and facilitates acquisition and disposition of all property rights.
The Land Transfer Act passed in July 2017, once fully enacted will replace the Land Transfer Act 1952, and will maintain the Torrens system of land title in which land ownership is transferred through registration of title instead of deeds, a system which has been in operation in New Zealand since the nineteenth century. The new Act aims to improve the certainty of property rights, modernize, simplify and consolidate land transfer legislation. It empowers courts with limited discretion to restore a landowner's registered title in rare cases, in the event of fraud or other illegality, where it is warranted to avoid a manifestly unjust result. The Act includes new provisions to prevent mortgage fraud, to protect Maori freehold land, and to extend the Registrar-General’s powers to withhold personal information to protect personal safety.
Regulations regarding land leasing by foreign or non-resident investors is governed by the OIO Act. About eight percent of New Zealand land is owned by the Crown. The Land Act 1948 created pastoral leases which run for 33 years and can be continually renewed. Rent is reviewed every 11 years, basing the rent on how much stock the land can carry for pastoral farming. The Crown Pastoral Land Act 1998 and its amendments contain provisions governing pastoral leases that apply to foreign and domestic lease holders. Other sectors that U.S. investors favor in New Zealand include wine and forestry.
The types of land ownership in New Zealand are: Freehold title, Leasehold title, Unit title, Strata title, and cross-lease. The majority of land in New Zealand is freehold. LINZ holds property title records that show a property’s proprietors, legal deion and the rights and restrictions registered against the property title, such as a mortgage, easement or covenant. A title plan is the plan deposited by LINZ when the title was created. Property titles do not contain information about the value of the property.
No land tax is payable, but the local government authorities are empowered to levy taxes, termed as “rates,” on all properties within their territorial boundaries. Rates are assessed on either assessed annual rental value, land value or capital value. There is no stamp duty in New Zealand. GST is charged on the supply of goods and services made in New Zealand by a registered person provided it is not an exempt supply, such as the supply of financial services and residential rental accommodation. Registration is optional if supplies do not exceed NZD 60,000 (USD 43,200) in any 12-month period.
When commercial property is sold, GST may need to be added to the purchase price. A purchaser who pays the tax may be entitled to a refund. When land is transferred between GST-registered parties, the transaction must be zero-rated for GST, provided that the purchaser intends to use the land to make taxable supplies and the land is not intended to be used as a principal place of residence by the purchaser. If all these conditions are not satisfied, GST must be charged by a GST registered vendor, unless the sale is part of a sale of a business as a going concern, which may be zero-rated. A mortgagee sale is subject to GST if the mortgagor would be liable to pay GST on the sale.
While there is no comprehensive capital gains tax in New Zealand, profits made on the sale of any asset (including land) is assessable as income, where the asset is purchased as part of a dealing or investment business, or for the purpose of resale or where there was an undertaking or scheme entered into for the purpose of making a profit. Profits from the sale of land are taxable, where construction, development or subdivision is involved, and if a consent or zoning change has or will benefit the land, and if the land is sold within 10 years. For residential land it is five years.
Mortgages and liens are available in New Zealand. There is no permanent government policy as such that discriminates lending to foreigners. However the Reserve Bank of New Zealand (RBNZ) introduced a macro-prudential tool as a means to curb rising house prices. In October 2013 the RBNZ introduced a series of temporary loan-to-valuation ratio restrictions on banks’ lending to investors and owner-occupiers wanting to purchase residential housing. In November 2017 the RBNZ indicated they would be easing lending standards due to the new Government’s housing market policies. From January 1, 2018, banks are limited to lending residential investors who have less than a 35 percent (previously 40 percent) deposit, to be no more than 5 percent of their total new lending in that category; and no more than 15 percent (previously 10 percent) of banks’ lending to owner-occupier have a deposit of less than 20 percent).
In 2016 three of the largest banks in New Zealand announced they would stop issuing home loans to people with foreign income who were not New Zealand or Australian citizens or did not hold a current permanent residency visa, regardless of whether or not they reside in New Zealand. There were also limitations placed on lending to citizens and permanent residents who used foreign income to service loans and did not reside in New Zealand.
A registered memorandum of mortgage is the usual form used to create a lien on real estate to secure an indebtedness. There is no mortgage recording or mortgage tax in New Zealand. When a lien secured by real property is foreclosed, there is a statutory process that must be followed which overrides the mortgage form itself. There are statutory requirements to be met and legal costs relating to foreclosing a lien on real property. There are no restrictions on foreign lenders securing their advances over real estate in New Zealand. However, on any mortgagee sale lenders would need to comply with the requirements concerning foreign ownership of land if the buyer or the land falls within certain criteria.
There are some statutory controls imposed on the amount of interest which may be charged on a loan secured by real property (and private and government agencies that monitor and report on interest charges) that ensure that interest rates and costs are not excessive or illegal. There are no laws that that restrict the ability to make a borrower or guarantor personally liable for indebtedness secured by real property.
Intellectual Property Rights
New Zealand has a generally strong record on intellectual property rights (IPR) protection and is an active participant in international efforts to strengthen IPR enforcement globally. It is a party to nine World Intellectual Property Organization (WIPO) treaties and participates in the Trade Related Aspects of Intellectual Property Rights (TRIPS) Council. New Zealand is currently not party to the WIPO internet treaties (the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty). However New Zealand is expected to ratify both treaties, as well as the Budapest Treaty and the Berne Convention as part of the treaty ratification process to enter the CPTPP.
New Zealand implemented the Madrid Treaty in December 2012, allowing New Zealand companies to file international trademarks through the Intellectual Property Office of New Zealand (IPONZ). Since 2013, an online portal hosted on the IPONZ and IP Australia websites has allowed applicants to apply for patent protection simultaneously in Australia and New Zealand with a single examiner assessing both applications according to the respective countries’ laws.
An amendment to the Trade Marks Act 2002 passed in 2011 prescribes that all trademarks must be classified according to the Nice classification system (in accordance with New Zealand’s accession to the Nice Agreement in 2013). To bring New Zealand in line with its obligation under the Madrid Protocol, the amendment establishes the Patent Office as New Zealand’s office of origin and provides for regulations to be made in regards to international registrations.
Changes to copyright regulations bestow copyright protection in New Zealand for nationals of countries which have recently joined the WTO, the Berne Convention for the Protection of Literary and Artistic Works, and the Universal Copyright Treaty from January 2017. The change is reciprocal protecting New Zealand copyright owners in those countries.
New Zealand is a party to the multilateral Anti-Counterfeiting Trade Agreement (ACTA), which is aimed at establishing a comprehensive international framework that will assist parties to the agreement in their efforts to effectively combat the infringement of intellectual property rights, in particular the proliferation of counterfeiting and piracy.
There are about ten statutes that provide civil and criminal enforcement procedures for IPR owners in New Zealand. The Copyright Act 1994 and the Trade Marks Act 2002 impose civil liability for activities that constitute copyright and trademark infringement. Both Acts also contain criminal offences for the infringement of copyright works in the course of business and the counterfeiting of registered trademarks for trade purposes. The Fair Trading Act 1986 imposes criminal liability for the forging of a trademark, falsely using a trademark or sign in a way that is likely to mislead or deceive, and trading in products bearing misleading and deceptive trade deions.
The Copyright Act 1994 is administered by MBIE and grants copyright protection for the author's lifetime plus 50 years from the calendar year, in which the author died, for literary, dramatic, musical, and artistic works; and for 50 years from the calendar year in which they were made, for sound recordings and films. The Copyright Tribunal hears disputes about copyright licensing agreements under the Act and applications about illegal uploading and downloading of copyrighted work. The Copyright (Infringing File Sharing) Amendment Act 2011 put in place a three notice regime intended to deter illegal file sharing. Alleged infringers may receive up to three warnings within a nine month period that infringement has occurred. The legislation enables copyright owners to seek the suspension of the internet account for up to six months through the District Court.
The New Zealand Police are able to investigate and prosecute copyright pirates and trademark counterfeiters. IPONZ enforces criminal offences for counterfeiting registered trademarks and copyright piracy. Customs NZ administers copyright and trademark infringement at the border.
New Zealand has implemented border enforcement measures in accordance with TRIPS obligations. Trademark and copyright owners can request the assistance of Customs by lodging a border protection notice under the Trade Marks and/or Copyright Acts that identifies their New Zealand registered trademarks and a deion of the works or goods that are subject to copyright protection. When a notice has been lodged Customs can detain suspected infringing trademark goods and copyright works for 10 working days (extendable to 20 days on request). Notices remain valid for a period of up to five years, or until the period of copyright protection or trademark registration expires, whichever is shorter. This is to enable the trademark or copyright owners to initiate court action for trade mark or copyright infringement. Border enforcement measures do not apply to goods imported by a person for their private and domestic use.
Between July 1, 2016, and June 30, 2017, Customs New Zealand seized 44,520 counterfeit items at the border.
In September 2016 the Smoke-free Environments (Tobacco Standardized Packaging) Amendment Act was passed. In June 2017, the Smoke-free Environments Regulations 2017 were enacted. From June 2018, all tobacco packets must be the same standard dark brown/green background color as Australia, United Kingdom, Ireland and France. New pictures and health warnings will be enlarged to cover at least 75 percent of the front of tobacco packs, and all tobacco company marketing imagery will be removed. The 2017 regulations standardize the appearance of tobacco manufacturers’ brand names.
New Zealand meets the minimum requirements of the TRIPS Agreement, providing patent protection for 20 years from the date of filing. The Patents Act 2013 brought New Zealand patent law into substantial conformity with Australian law. Consistent with Australian patent law, an ‘absolute novelty’ standard is introduced as well as a requirement that all applications be examined for "obviousness" and utility. The Patents Act stops short of precluding from patentability all computer software and has a provision for patenting “embedded software.”
In 2016 an amendment to the Agricultural Compounds and Veterinary Medicines Act extended the period of protection for confidential information given in support of an application to register an innovative trade name product from five to eight years, and it expanded the scope of data protection coverage to include confidential information provided in support of applications to register non-innovative trade name products and uses. Data protection for innovative products, including new uses, has been extended to ten years, and for non-innovative products including reformulations and new uses, the Act introduces data protection of five years. New-use applications qualify for data protection if they: result in a product being used on an additional species of plant or animal or a new pest or disease; or allow different application rates, methods or withholding periods.
An amendment made to the Geographical Indications (Wine and Spirits) Registration Act 2006 that took effect in 2017 enables New Zealand wine and spirit makers to register the geographical origins of their products. The Act and its amendments is administered by IPONZ and aims to protect wine and spirit markers’ products, to allow the registration of New Zealand geographical indications overseas, and to enforce action for falsely claiming a product comes from a certain region.
New Zealand is not on the USTR’s Special 301 report list.
For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/details.jsp?country_code=NZ
6. Financial Sector
Capital Markets and Portfolio Investment
New Zealand policies generally facilitate the free flow of financial resources to support the flow of resources in the product and factor markets. Credit is generally allocated on market terms, and foreigners are able to obtain credit on the local market. The private sector has access to a limited variety of credit instruments. New Zealand has a strong infrastructure of statutory law, policy, contracts, codes of conduct, corporate governance, and dispute resolution that support financial activity. The banking system, mostly dominated by foreign banks, is rapidly moving New Zealand into a “cashless” society.
New Zealand adheres to IMF Article VIII and does not place restrictions on payments and transfers for international transactions.
New Zealand sovereign debt maintains high credit ratings with stable outlooks from the three credit rating agencies. Fitch Ratings revised its outlook from positive to stable in January 2016 based on lower commodity prices and a slower rate of external debt reduction than expected. Standard & Poor’s affirmed its AA rating in January 2018, and Moody’s affirmed its Aaa rating in February 2018.
New Zealand has a range of other financial institutions, including a securities exchange, investment firms and trusts, insurance firms and other non-bank lenders. Non-bank finance institutions experienced difficulties during the global financial crisis (GFC) due to risky lending practices, and the government of New Zealand subsequently introduced legal changes to bring them into the regulatory framework. This included the introduction of the Non-bank Deposit Takers Act 2013 and associated regulations which impose requirements on exposure limits, minimum capital ratios, and governance. It requires non-bank institutions be licensed and have suitable directors and senior officers. It also provides the RBNZ with powers to detect and intervene if a non-bank institution becomes distressed or fails.
The GFC also prompted New Zealand to introduce broad-based financial market law reform which included the establishment of the Financial Markets Authority (FMA) in 2014. The Financial Markets Conduct Act (FMC) 2013 provided a new licensing regime to bring New Zealand financial market regulations in line with international standards. It expanded the role of the FMA as the primary regulator of fair dealing conduct in financial markets, provided enforcement for parts of the Financial Advisers Act 2008 to strengthen protections and increase transparency for investor assets held by custodians, and allowed for equity crowd-funding and employee share schemes.
Legal, regulatory, and accounting systems are transparent. Financial accounting standards are issued by the New Zealand Accounting Standards Board (NZASB), a committee of the External Reporting Board (XRB) established under the Crown Entities Act 2004. The NZASB has delegated authority from the XRB to develop, adopt and issue accounting standards for general purpose financial reporting in New Zealand. The NZASB’s accounting standards are based largely on international accounting standards, and generally accepted accounting practices (GAAP).
Smaller companies (except issuers of securities and overseas companies) that meet proscribed criteria face less stringent reporting requirements. Entities listed on the stock exchange are required to produce annual financial reports for shareholders. Stocks in a number of New Zealand listed firms are also traded in Australia and in the United States. Small, publicly held companies not listed on the NZX may include in their constitution measures to restrict hostile takeovers by outside interests, domestic, or foreign. However, NZX rules generally prohibit such measures by its listed companies.
In 2016 the market capitalization of listed domestic companies in New Zealand was 43.2 percent of GDP, at USD 80 billion. The small size of the market reflects in part the risk averse nature of New Zealand investors, preferring residential property and bank term deposits over equities or credit instruments for investment. New Zealand’s stock of investment in residential property has exceeded NZD1 trillion (USD 720 billion) since in 2016.
Money and Banking System
The Reserve Bank (RBNZ) regulates banks in New Zealand in accordance with the Reserve Bank of New Zealand Act 1989. The RBNZ is statutorily independent and is responsible for conducting monetary policy and maintaining a sound and efficient financial system. The New Zealand banking system consists of 26 registered banks, and more than 90 percent of their combined assets are owned by foreign banks, mostly Australian. There is no requirement in New Zealand for financial institutions to be registered to provide banking services, but an institution must be registered to call itself a bank.
In November 2017 the government announced it would undertake a review of the RBNZ Act 1989. In March 2018 the government announced it will broaden the legislated objective of monetary policy beyond price stability, to also include supporting maximum sustainable employment. It will also require that monetary policy be decided by a consensus of a Monetary Policy Committee, which must also publish records of its meetings. While policy decisions at the RBNZ have been made by the Governing Committee for several years the Act itself is not designed around a committee decision-making model, and individual accountability rests with the Governor, who based on the clear and specific goals set through the Policy Targets Agreement can be removed from office for inadequate performance.
The Act requires the RBNZ to consider both qualitative and quantitative criteria when assessing applicants for bank registration. Applicants who are incorporated overseas are required to have the approval of their home supervisor to conduct banking business in New Zealand, and the applicant must meet the ongoing prudential requirements imposed on it by the overseas supervisor. Accordingly, the conditions of registration that apply to branch banks mainly focus on compliance with the overseas supervisor's regulatory requirements.
Following the introduction of the Dual Registration Policy for Small Foreign Banks in December 2016, the RBNZ issued its first dual registration in 2017. Foreign-owned banks are permitted to apply for “dual registration” – operating both a branch and a locally incorporated subsidiary in New Zealand - provided both entities comply with relevant prudential requirements. Locally incorporated subsidiaries are separate legal entities from the parent bank. They are required, among other things, to maintain minimum capital requirements in New Zealand and have their own board of directors, including independent directors. In contrast, bank branches are essentially an extension of the parent bank with the ability to leverage the global bank balance sheet for larger lending transactions. Capital and governance requirements for branch banks are established by the home regulatory authority. There are no local capital or governance requirements for registered bank branches in New Zealand.
New Zealand has no permanent deposit insurance scheme and the RBNZ has no requirement to guarantee the viability of a registered bank. In response to the GFC, the government announced a temporary retail deposit guarantee covering certain retail deposits up to NZD1 million (USD 72 million) for two years. The RBNZ operates the Open Bank Resolution (OBR) which allows a distressed bank to be kept open for business, while placing the cost of a bank failure primarily on the bank’s shareholders and creditors, rather than on taxpayers. While the scheme has been generally successful, in 2010 the government paid out NZD 1.6 billion (USD 1.2 billion) to cover investor losses when New Zealand’s largest locally owned finance company at the time, went into receivership. There have since been bailouts of several insurance companies and other smaller finance companies.
The Reserve Bank of New Zealand (Covered Bonds) Amendment Act passed in 2013 provides some coverage for holders of covered bonds issued by banks. The Act provides for covered bond programs to be registered and monitored by the Reserve Bank, and allows bond holders to have access to a specific pool of assets (limited to 10 percent of the bank’s total assets), in the event that the bank fails.
The four largest banks (ASB, ANZ, BNZ and Westpac) control 87 percent of the retail and commercial banking market measured in terms of total banking assets. With the addition of Kiwibank, that rises to 91 percent. Kiwibank launched in 2002 and is majority owned by NZ Post (53 percent), with the NZ Superannuation Fund (25 percent), and the Accident Compensation Corporation (22 percent).
The four banks have capital generally above the regulatory requirements. The initial findings from a RBNZ review of bank capital requirements released in March 2017 found New Zealand banks to be “in the pack” in terms of capital ratios relative to international peers.
Rating agency risk assessments of the large New Zealand banks is heavily influenced by expectations of support from the Australian parent banks. While the implicit support of the parent banks is valuable, it can also present risk if they are placed on negative outlook. Recommendations from the Australian Financial System Inquiry and accepted by the Australian Prudential Regulation Authority have improved the resilience of the Australian parents of New Zealand’s four banks. While this contributes to the ultimate soundness of the New Zealand subsidiaries, it does not directly strengthen their balance sheets.
New Zealand’s banking system relies on offshore wholesale funding markets as a result of low levels of domestic savings. Banks are able to raise funds in international markets relatively easily at reasonable cost, but are vulnerable to global market volatility, geopolitics, and domestic economic conditions. Domestically, banks face exposure due to the concentration of New Zealand exports in a small number of commodity-based sectors which can be subject to considerable price volatility. Residential mortgage and agricultural lending exposures have also presented risk.
While the Zealand banking system has one of the lowest ratios of non-performing loans to gross lending in the OECD, macro prudential measures introduced in October 2013 have introduced loan-to-value ratio restrictions, defined as those with loans greater than 80 percent of value. In the intervening years these tools have been tweaked by the RBNZ to reduce banks’ risk exposure during an escalation of house prices and debt, and several banks announced they would at least temporarily cease lending to foreigners for residential property purchases.
The penetration of New Zealand's major banks has improved since the introduction of the voluntary superannuation scheme, KiwiSaver in 2007. The increase in their market share is also a result of the appointment of three additional banks as default KiwiSaver providers in 2014. In 2017 there were over 2.7 million KiwiSaver members, and the amount invested in KiwiSaver schemes is estimated to be NZD 47 billion (USD 34 billion).
There are some restrictions on opening a bank account in New Zealand that include providing proof of income and needing to be a permanent New Zealand resident of 18 years old or above. Access to money in the account will not be granted until the individual presents one form of photo ID and a proof of address in-person at a branch of the bank in New Zealand. Some banks will require a copy of the applicant’s visa. If the applicant does not apply for an IRD number, the tax rate on income earned will default to the highest rate of 33 percent. New Zealand banks typically have a dedicated branch for migrants and businesses to set up banking arrangements.
The RBNZ does not regulate cryptocurrencies and its current legal status is under ordinary law relating to contracts and tax obligations. New Zealand banks have so far maintained cautious policies towards blockchain technologies wary of violating consumer protection, and anti-money laundering and terrorism financing legislation.
The FMA treats cryptocurrencies as “money's worth” for the purposes of New Zealand law. It considers the transfer of cryptocurrency or the conversion of fiat currency into or out of cryptocurrency (including the services provided by an exchange) as the provision of a financial service known as a “value transfer service.” The FMA may also treat any crypto-currency as a security for the purposes of the Financial Markets Conduct Act 2013. A person providing transaction services in relation to cryptocurrencies or tokens that are financial products may have obligations as a broker under the Financial Advisers Act 2008.
In March 2018 the IRD issued guidelines for paying tax on proceeds from the sale of cryptocurrencies. Tax will be applied when one cryptocurrency is swapped for another or if it is sold for fiat money. If a vendor receives cryptocurrency as payment for goods and services, it is considered business income and is taxable. Tax rules for foreign exchange transactions do not apply to cryptocurrencies.
Foreign Exchange and Remittances
Foreign Exchange Policies
New Zealand has revoked all foreign exchange controls. Accordingly, there are no such restrictions on the transfer of capital, profits, dividends, royalties or interest into or from New
Zealand. Full remittance of profits and capital is permitted through normal banking channels and there is no difficulty in obtaining foreign exchange. However, withholding taxes can apply to certain payments out of New Zealand including dividends, interest, and royalties, and may apply to capital gains for non-residents and on the payment of profits to certain non-resident contractors.
Remittance Policies
The Pacific Islands are the main destination of New Zealand remittances from residents and from temporary workers participating in the Recognized Seasonal Employer (RSE) scheme. The RSE allows the horticulture and viticulture industries to recruit workers from nine Pacific Island nations for seasonal work when there are not enough New Zealand workers.
Since 2013 anti-money laundering laws have been tightened. Banks, non-bank institutions, and people in occupations that typically handle large amounts of cash such as lawyers and real estate agents, are required to collect additional information about their customers and report any suspicious transactions to the New Zealand Police. If a bank is unable to comply with the Act in its dealings with a customer, it must not do business with that person. This would include not processing certain transactions, withdrawing the banking products and services it offers, and choosing not to have that person as a customer. As a result New Zealand banks have been reducing their exposure to risks and charging higher fees for remittance services, which in some instances has led to the forced closing of accounts held by money transfer operators (MTOs). Other workers affected by the reduction in the number of MTOs include recently resettled refugees, and migrant workers from the Philippines involved in rebuilding Christchurch, in the wake of a 2011 earthquake.
The New Zealand government is working with banks to improve the bankability of small MTOs, and to develop low cost products for seasonal migrant workers in the RSE. New Zealand is also using its membership in global fora to encourage a coordinated approach to addressing high remittance costs, and is working with Pacific Island governments to find ways to lower costs in the receiving country, such as the adoption and use of an electronic payments systems infrastructure.
The New Zealand Treasury released a report in March 2017 to explore feasible policy options to address the issues in the New Zealand remittance market that would maintain access and reduce costs of remitting money from New Zealand to the Pacific.
Sovereign Wealth Funds
The New Zealand Superannuation Fund was established in September 2003 under the New Zealand Superannuation and Retirement Income Act 2001. The fund was designed to partially provide for the future cost of New Zealand Superannuation, which is a universal benefit paid by the New Zealand government to eligible residents over the age of 65 years irrespective or income or asset levels.
The Act also created the Guardians of New Zealand Superannuation, a Crown entity charged with managing and administering the fund. It operates by investing initial government contributions (and the associated returns) in New Zealand and internationally, in order to grow the size of the fund over the long term. Between 2003 and 2009, the government contributed NZD 14.9 billion (USD 10.7 billion) to the fund, after which it temporarily halted contributions during the GFC. Originally budgeted to resume in 2020, the new Government resumed its contribution in December 2017 with a payment of USD 50 million and expects to pay another USD 300 million into the fund in the 12 months to June 2018.
The guardians have a stated commitment to responsible investment, including environmental, social and governance factors, which is closely aligned to the United Nations Principles for Responsible Investment. It is a member of the International Forum of Sovereign Wealth Funds, and is signed up to the Santiago Principles.
In February 2018, the fund was valued at NZD 38.4 billion (USD 27.6 billion) of which 45 percent was in North America, 20 percent in Europe, 14 percent in New Zealand and 6 percent in Australia.
Following an announcement in October 2016 the NZSF significantly reduced its exposure to both fossil fuel reserves and carbon emissions, divesting assets of value USD 690 million from 297 companies by August 2017. The NZSF claims its global passive equity portfolio - about 40 per cent of the total fund - is “low-carbon.” However remaining investments include at least 29 airlines and over 300 companies within the oil and gas sector and the metals and mining sector.
The fund explicitly excludes companies that are directly involved in the manufacture of cluster munitions, the manufacture or testing of nuclear explosive devices, the manufacture of anti-personnel mines, the manufacture of tobacco, and the processing of whale meat. In 2013 the fund divested a group of five U.S. companies due to their involvement with nuclear weapons.
7. State-Owned Enterprises
The Commercial Operations group in the New Zealand Treasury is responsible for monitoring the Crown’s interests as a shareholder in, or owner of organizations that are required to operate as successful businesses, or that have mixed commercial and social objectives. Each entity monitored by the Treasury has a primary legislation that defines its organizational framework, which include: State-Owned Enterprises (SOEs), Crown-Owned Entity Companies, Crown Research Institutions, Other Crown Entity Companies, and Mixed Ownership Model Companies.
SOEs are subject to the State-Owned Enterprises Act 1986, are registered as companies, and are bound by the provisions of the Companies Act 1993. The board of directors of each SOE reports to two ministers, the Minister of Finance and the relevant portfolio minister. A list of SOEs and information on the Crown’s financial interest in each SOE is made available in the financial statements of the government at the end of each fiscal year. For a list of the SOEs see: http://www.treasury.govt.nz/statesector/commercial/portfolio/bytype/soes
Most of New Zealand’s SOEs are concentrated in the energy and transportation sectors. Private enterprises are allowed to compete with public enterprises under the same terms and conditions with respect to markets, credit, and other business operations. For example, Contact Energy, a publicly listed company, is allowed to sell energy in direct competition with Meridian Energy Limited, which is an SOE. Under SOE Continuous Disclosure Rules, SOEs are required to continuously report on any matter that may materially affect their commercial value.
Privatization Program
The New Zealand government has not announced any upcoming privatization programs.
The New Zealand Public Private Partnership (PPP) Program is coordinated by the Treasury and represents a long term contract for the delivery of a service, where the provision of the service requires the construction of a new asset, or the enhancement of an existing asset, that is financed from private sources on a non-recourse basis, and where full legal ownership of the asset is retained by the Crown.
Successive New Zealand governments have embarked on several privatization programs since the 1980s, as a means to reduce government debt, move non-strategic businesses to the private sector to improve efficiency, and raise economic growth.
In 2014, the government completed a program of asset sales with the goal to pay down public debt. It involved the partial sale of three energy companies and Air New Zealand, with the government retaining its majority share in each. The bulk of the initial share float was made available to New Zealand share brokers and international institutions, and unsold shares were made available to foreign investors. Foreign investors are free to purchase shares on the secondary market. Generally the float prices are lower and sales are constrained by New Zealand’s relatively small financial market capacity limiting its ability to absorb new issues.
After Spark was privatized in 1990, the government retained a Kiwishare obligation of at least 10 percent due in large part to its emergency services. Since Chorus demerged from Spark, only the former has a restriction on foreign ownership as mentioned in the earlier section.
8. Responsible Business Conduct
The New Zealand government actively promotes corporate social responsibility (CSR), which is widely practiced throughout the country. There are a number of New Zealand NGOs that are dedicated to facilitating and strengthening CSR, including the New Zealand Business Council for Sustainable Development, the Sustainable Business Network, and the American Chamber of Commerce in New Zealand.
New Zealand is committed to both the OECD due diligence guidance for responsible supply chains of minerals from conflict-affected and high-risk areas, and the OECD Guidelines for Multinational Enterprises. Multi-national businesses are the main focus, such as a New Zealand company that operates overseas, or a foreign-owned company operating in New Zealand. The guidance can also be applied to businesses with only domestic operations that form part of an international supply chain.
To help businesses meet their responsibilities, MBIE has developed a short version of the guidelines to assess the social responsibility ‘health’ of enterprises, and for assessing the actions of governments adhering to the guidelines. MBIE is the national point of contact for raising issues in New Zealand. If further action is needed, they provide resolution assistance, such as mediation, but do not adjudicate or duplicate other tribunals that assess compliance with New Zealand law. MBIE is assisted by a liaison group that meets once a year, with representatives from the Ministry of Justice, Ministry for the Environment, MFAT, New Zealand Council of Trade Unions, Business New Zealand, the Engineering, Printing and Manufacturing Union, and the New Zealand Business Council for Sustainable Development.
9. Corruption
New Zealand is renowned for its efforts to ensure a transparent, competitive, and corruption-free government procurement system.
Stiff penalties against bribery of government officials as well as those accepting bribes are strictly enforced. New Zealand consistently achieves top ratings in Transparency International’s Corruption Perception Index. In 2017, Transparency International ranked New Zealand 1st out of 180 countries and territories, scoring 89 out of 100. U.S. firms have not identified corruption as an obstacle to investing in New Zealand.
New Zealand opted to join the WTO Government Procurement Agreement (GPA) in 2012, citing benefits for exporters, while noting that there would be little change for foreign companies bidding within New Zealand's totally deregulated government procurement system. New Zealand’s accession to the GPA, came into effect in August 2015. New Zealand supports multilateral efforts to increase transparency of government procurement regimes. New Zealand also engages with Pacific island countries in capacity building projects to bolster transparency and anti-corruption efforts.
New Zealand Government Procurement and Property (NZGPP) delivers MBIE’s procurement and property functional leadership objectives including the management of the Government Electronic Tenders Service (GETS) platform. The NZGPP sets out the Government Rules of Sourcing which must be followed by New Zealand government departments, the Police, the Defense Force, and most Crown entities. All other New Zealand government agencies are encouraged to follow the Rules. A range of additional mechanisms are used to bind agencies to applying the rules, including the Whole of Government Direction under section 107 of the Crown Entities Act 2004. Information on the rules is available at the MBIE site under: www.procurement.govt.nz
Internationally, New Zealand has signed and ratified the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. In October 2006, the OECD examined New Zealand for compliance with the convention. New Zealand has also signed and ratified the UN Convention Against Transnational Organized Crime. In 2003, New Zealand signed the UN Convention Against Corruption and ratified it in December 2015.
The legal framework for combating corruption in New Zealand consists of domestic and international legal and administrative methods. Domestically, New Zealand’s criminal offences related to bribery are contained in the Crimes Act 1961 and the Secret Commissions Act 1910. The New Zealand government has a strong code of conduct, the Standards of Integrity and Conduct, which applies to all State Services employees and is rigorously enforced. The Independent Police Conduct Authority considers complaints against New Zealand Police and the Office of the Judicial Conduct Commissioner was established in August 2005 to deal with complaints about the conduct of judges. New Zealand’s Office of the Controller and Auditor-General and the Office of the Ombudsman take an active role in uncovering and exposing corrupt practices. The Protected Disclosures Act 2000 was enacted to protect public and private sector employees who engage in “whistleblowing.”
The Ministry of Justice is responsible for drafting and administering the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) legislation and regulations. It also provides guidance online to companies and NGOs in how to combat corruption and bribery. The New Zealand Police Financial Intelligence Unit collates information required under AML/CFT legislation.
The first phase of the AML/CFT Act 2009 came into full effect in June 2013. The AML/CFT Amendment Act 2015 strengthened the foreign bribery offence to respond to recommendations made by the OECD Working Group on Bribery, and increased penalties for bribery and corruption in the private sector to bring them into line with public sector bribery offences.
The second phase of the AML/CFT will be enacted in 2018 after the Anti-Money Laundering and Countering Financing of Terrorism Amendment Act 2017 was passed in August 2017. It will extend the 2009 Act to cover lawyers, conveyancers, accountants, real estate agents, and sports and racing betting. Businesses that deal in certain high-value goods, such as motor vehicles, jewelry and art, will also have obligations when they accept or make large cash transactions. Businesses will be allotted time to comply with the Act and compliance costs are estimated to be USD 554 million and USD 762 million over ten years. The New Zealand Police Financial Intelligence Unit estimate that NZD1.35 billion (USD 1 billion) of domestic criminal proceeds is generated for laundering in New Zealand each year, driven in part by New Zealand’s reputation as a safe and non-corrupt country.
The second phase of the AML/CFT legislation was enacted earlier than planned following a review of New Zealand’s foreign trust regime in 2016. Following the “Panama Papers” incident in April 2016, an independent inquiry found New Zealand’s tax treatment of foreign trusts to be appropriate, but recommended changes to the regime’s disclosure requirements, which were subsequently legislated to dispel concerns New Zealand was operating as a “tax haven”. The Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 amended the Tax Administration Act 1994 for foreign trust registration and disclosure. The changes are intended to deter offshore parties from misusing New Zealand foreign trusts, and reaffirm New Zealand’s reputation as being free of corruption.
In August 2017 the government introduced the Trusts Bill to replace the Trustee Act 1956 and the Perpetuities Act 1964 to make trust law more accessible, clarify and simplify core trust principles and essential obligations for trustees, and preserve the flexibility of the common law to allow trust law to continue to evolve through the courts. If passed, the Trusts Bill will be the first significant change to New Zealand’s trusts legislation, and will cover all trusts including family trusts and those for corporate structures. It is estimated that there are between 300,000 and 500,000 trusts in New Zealand
Resources to Report Corruption
The Serious Fraud Office and the New Zealand Police investigate bribery and corruption matters. Agencies such as the Office of the Controller and Auditor-General and the Office of the Ombudsmen act as watchdogs for public sector corruption. These agencies independently report on and investigate state sector activities.
Serious Fraud Office
P.O. Box 7124 - Wellesley Street
Auckland, 1141
New Zealand
www.sfo.govt.nz
Transparency International New Zealand is the recognized New Zealand representative of Transparency International, the global civil society organization against corruption.
Transparency International New Zealand
P.O. Box 5248 - Lambton Quay
Wellington, 6145
New Zealand
www.transparency.org.nz
10. Political and Security Environment
New Zealand is a stable liberal democracy with almost no record of political violence.
11. Labor Policies and Practices
The New Zealand labor market is experiencing a tightening in labor market conditions with the unemployment rate trending down as the country’s net migration rate hovers around record levels. Youth unemployment remains high at around 19.4 percent, compared with the overall rate of 4.5 percent for 2017. The rise in net migration is comprised of international students, professionals, and returning New Zealand citizens. The previous government relaxed visa rules for international students, however there is concern this could be contributing to the high youth unemployment rate. There have been reports of exploitation of migrant workers in the hospitality, agriculture, viticulture, and construction industries. New Zealand operates a Recognized Seasonal Employer Scheme that allows the horticulture and viticulture industry to recruit workers from the Pacific Islands for seasonal work to supplement their New Zealand workforce. A similar program was introduced for construction workers in Canterbury, and for tourism and hospitality workers in Queenstown.
Workers with skills on the immediate lists will find it easier to apply for temporary work visas and, in the case of long-term shortages, resident visas. However MBIE operates under strict criteria in order for occupations to be listed. Immediate skill shortages exist mainly in the construction, trades, engineering, health, and agriculture industries. For more see: https://www.immigration.govt.nz/about-us/policy-and-law/how-the-immigration-system-operates/skill-shortage-lists
The previous government boosted funding for apprentice programs, particularly in the construction trades where demand for workers is high in regions experiencing housing shortages, mainly in Christchurch and Auckland.
Labor laws are generally well enforced, and disputes are usually handled by the New Zealand Employment Relations Authority. Its decisions may be appealed in an Employment Court. MBIE is responsible for enforcement of laws governing work conditions. Unions have the right to organize and collectively bargain.
A number of employment statutes govern the workplace in New Zealand. The most important is the Employment Relations Act (ERA) 2000, which repealed the Employment Contracts Act 1991. Other key legislation includes the Health and Safety at Work Act 2015, Holidays Act 2003, Minimum Wage Act 1983, the Equal Pay Act 1972, the Parental Leave and Employment Protection Act 1987, and Wages Protection Act 1983.
MBIE provides guidance for employers on minimum standards of employment mandated by law, guidelines to help promote the employment relationship, and optional guidelines that are useful in some roles or industries. Agreements on severance and redundancy packages are usually negotiated in individual agreements. For more see: https://www.employment.govt.nz/
The ERA requires registered unions to file annual membership returns with the Companies Office. The Council of Trade Unions estimate total union membership at 397,000 for the December 2017 quarter, an increase of 5.1 percent on the previous year, representing about 18.7 percent of all employees in New Zealand. Women make up 58 percent of the membership compared to 49 percent across both sexes. A rise in membership between December 2017 and December 2016, occurred across three age groups: 15-24 years (up 8 percent), 25-34 years (up 18 percent), and 55-64 years (up 9 percent). By industry, the increases in membership were led by Manufacturing, Construction, Education, and Health Care. About 389,800 – 18.4 per cent of all employees in New Zealand – were on a collective agreement, over 1.4 million (67.8 percent) were on an individual agreement, 140,600 (6.6 percent) had no agreement [which is illegal under local law], and a further 7 percent did not know what kind of employment agreement they had.
The number of work stoppages is generally on a downward trend. According to the latest data available from MBIE, there were 13 stoppages in 2014, up from six in 2013. The 13 work stoppages that occurred in 2014 involved 1,564 employees, 1,148 lost person-days of work, and cost an estimated NZD 300,000 in lost wages and salaries. In comparison, in 2005 there were 60 stoppages involving 17,752 employees, costing NZD 4.8 million and resulting in 30,028 lost person-days of work.
From April 1, 2018 the minimum wage for adult employees who are 16 and over and are not new entrants or trainees is NZD 16.50 (USD 11.88) per hour. The new entrants and training minimum wage is NZD 13.20 (USD 9.50) per hour. The new government intends to progressively increase the minimum wage to NZD 20.00 (USD 14.40) per hour, with the final increase to take effect in April 2021. In recent years some local government agencies have raised minimum wages for their staff up from the government mandated rate to a “living wage” estimated to be NZD 20.55 (USD 14.80).
New Zealand underwent its most significant workplace health and safety reform leading to the Health and Safety at Work Act 2015 and the formation of the work health and safety regulator WorkSafe New Zealand. MBIE is the primary policy agency for workplace health and safety.
Before winning the election in 2017, the new government campaigned on its promise to amend several pieces of employment legislation passed by the predecessor National Government, and its intent to repeal the Employment Relations (Film Production Work) Amendment Bill 2010. In 2018 the government introduced the Employment Relations Amendment Bill, which aims to promote and strengthen collective bargaining and union rights in the workplace. The bill, if passed, would also make changes to provisions concerning: individual employee’s terms and conditions of employment, the continuity of employment if an employee’s work is affected by restructuring, rest breaks and meal breaks, strikes and lockouts, and personal grievances, disputes, and enforcement.
In June 2017 Parliament passed the Care and Support Workers (Pay Equity) Settlement Act which mandated an increase in wages for workers in aged and disability residential care, and home and community support workers. In January 2018 the new government announced the reconvening of the Joint Working Group to provide further recommendations that address key stakeholder concerns relating to the Act.
In December 2017, the government amended the Parental Leave and Employment Protection Act 1987 to increase the duration of parental leave payments in two stages. From July 1, 2018 parental leave would increase from 18 weeks to 22 weeks, and from July 1, 2020 a further increase to 26 weeks.
The New Zealand government has an adequate labor inspectorate system to identify and remediate labor violations and hold violators accountable. The MBIE Labor Inspectorate investigates and prosecutes unfair labor practices, such as instances of forced or child labor, and the harassment or dismissal of union members. In April 2017, the government introduced a stand-down period for employers who breach employment standards law to be banned from recruiting further migrant workers. Employers who have incurred an employment standards-related penalty will be banned from recruiting migrant labor for a term ranging from six months to two years, depending on the severity of the case. For more: https://www.employment.govt.nz/resolving-problems/steps-to-resolve/labour-inspectorate/
The Health and Safety at Work Act 2015 sets out the health and safety duties for work carried out by a New Zealand business. The Act contains provisions that affect how duties apply where the work involves foreign vessels. These provisions take account of the international law principle that foreign vessels are subject to the law that applies in the flag state they are registered under. Generally New Zealand law does not apply to the management of a foreign-flagged vessel, but does apply to a New Zealand business that does work on that vessel. Two exceptions when the law does apply, if the New Zealand business is operating a foreign-flagged vessel under a “demise charter” arrangement, or when the foreign flagged vessel is operating between New Zealand and a workplace in the New Zealand exclusive economic zone or on the continental shelf; and that workplace is carrying out an activity associated with mineral extraction (e.g. a drilling platform or fixed ship) that is regulated under the Exclusive Economic Zone (Environmental Effects) Act 2012 or the Crown Minerals Act 1991.
In May 2016 the Fisheries (Foreign Charter Vessels and Other Matters) Bill 2014 came into full effect requiring all foreign charter fishing vessels to reflag to New Zealand and operate under New Zealand’s full legal jurisdiction. The legislation was part of a range of measures that followed a Ministerial inquiry in 2012 into questionable safety, labor and fishing practices on some foreign-owned vessels. Other measures the government introduced include: compulsory individual New Zealand bank accounts for crew members; observers on all foreign-owned fishing vessels; and independent audits of charter parties to ensure crew visa requirements – including wages – are being adhered to.
In March 2017, the New Zealand government’s ratification of the ILO’s Maritime Labor Convention (MLC) came into effect. While New Zealand legislation is largely consistent with the MLC, ratifying the Convention gives the Government jurisdiction to inspect and verify working conditions of crews on foreign ships in New Zealand waters. More than 99 per cent of New Zealand’s export goods by volume are transported on foreign ships, and the MLC will apply to about 890 foreign commercial cargo and cruise ships that visit New Zealand each year, and approximately 30 New Zealand ships.
In December 2017, Parliament passed an amendment to the Maritime Transport Act 1994 to implement the intergovernmental International Oil Pollution Compensation’s Supplementary Fund Protocol, 2003. Accession to the Fund gives New Zealand access to compensation in the event of a major marine oil spill from an oil tanker. The amendment also exercises New Zealand’s right to exclude the costs of wreck removal, cargo removal and remediating damage due to hazardous substances from liability limits. The accession to the Fund was prompted in part by New Zealand’s worst maritime environmental disaster in October 2011 when a Greek flagged cargo ship ran aground creating a 331 ton oil spill resulting in NZD 500 million (USD 360 million) in clean-up costs. The amendment also addresses the risks associated with alcohol and drug use in the commercial maritime sector by requiring operators to have drug and alcohol management plans, including random testing for staff carrying out safety sensitive activities.
12. OPIC and Other Investment Insurance Programs
As an OECD member country and developed nation, New Zealand is not eligible for OPIC programs. Although the New Zealand government does not provide OPIC-like services to encourage New Zealand investment in developing countries, New Zealand is a member of the Multilateral Investment Guarantee Agency (MIGA). It also has an export insurance program administered under the New Zealand Export Credit Office (NZECO) within the New Zealand Treasury. Its purpose is to support the internationalization of New Zealand exporters through the provision of trade credit insurance and financial guarantees that cover a range of political and commercial risks associated with doing international business. NZECO’s financial guarantees and insurance policies are fully backed by the New Zealand Government through the Minister of Finance. The maximum aggregate liability under the scheme is NZD 740 million (USD 533 million).
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
|
| Host Country Statistical Source* | USG or International Statistical Source | USG or International Source of Data: | ||
| Economic Data | Year | Amount | Year | Amount |
|
| Host Country Gross Domestic Product (GDP) ($M USD) | 2017 | $204,095 | 2016 | $184,969 | |
| Foreign Direct Investment | Host Country Statistical Source* | USG or International Statistical Source | USG or International Source of Data: | ||
| U.S. FDI in partner country ($M USD, stock positions) | 2017 | $5,827 | 2016 | $8,430 | http://bea.gov/international/direct_ |
| Host country’s FDI in the United States ($M USD, stock positions) | 2017 | $2,817 | 2016 | $176 | http://bea.gov/international/direct_ |
| Total inbound stock of FDI as % host GDP | 2017 | 37% | 2016 | 39% | |
* Host country statistics differ from USG and international sources due to calculation methodologies, and timing of exchange rate conversions. Almost a third of inbound foreign direct investment in New Zealand is in the financial and insurance services sector. Statistics New Zealand data available at www.stats.govt.nz
Table 3: Sources and Destination of FDI
| Direct Investment from/in Counterpart Economy Data (2016) | |||||
| From Top Five Sources/To Top Five Destinations (US Dollars, Millions) | |||||
| Inward Direct Investment | Outward Direct Investment | ||||
| Total Inward | $70,401 | 100% | Total Outward | 16,740 | 100% |
| Australia | 37,060 | 53% | Australia | 8,186 | 49% |
| United States | 5,628 | 8% | United States | 2,527 | 15% |
| China, P.R.: Hong Kong | 3,983 | 6% | China, P.R.: Hong Kong | 1,426 | 9% |
| United Kingdom | 3,736 | 5% | Singapore | 1,037 | 6% |
| Japan | 3,639 | 5% | United Kingdom | 850 | 5% |
| "0" reflects amounts rounded to +/- USD 500,000. | |||||
Table 4: Sources of Portfolio Investment
| Portfolio Investment Assets (June 2017) | ||||||||
| Top Five Partners (Millions, US Dollars) | ||||||||
| Total | Equity Securities | Total Debt Securities | ||||||
| All Countries | $95,171 | 100% | All Countries | $61,518 | 100% | All Countries | $33,653 | 100% |
| Australia | 24,611 | 26% | United States | 21,458 | 35% | Australia | 6,237 | 19% |
| Japan | 4,174 | 4% | Australia | 2,719 | 30% | Japan | 1,582 | 5% |
| United Kingdom | 3,964 | 4% | United Kingdom | 2,591 | 4% | United Kingdom | 1,245 | 4% |
| France | 1,912 | 2% | Japan | 1,497 | 4% | Netherlands | 1,101 | 3% |
| Canada | 1,700 | 2% | Cayman Islands | 1,232 | 2% | Canada | 788 | 2% |
14. Contact for More Information
Economic Officer Andrew Covington
U.S. Embassy Wellington
PO Box 1190
Wellington 6140
New Zealand
+64-4-462-6000
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