19 November 1999 Chairman Overseas Investment Commission P.O. Box 2498 WELLINGTON Dear Mr Webb OVERSEAS INVESTMENT POLICY, DELEGATION AND CRITERIA 1 This letter conveys the Government's general policy approach to overseas investment and to foreign ownership of fishing quota, interests in fishing quota, annual catch entitlement and provisional catch history (collectively referred to in this letter as ``investment''), and indicates the delegated authority for the Overseas Investment Commission (the Commission) and its staff to determine applications and related matters as from the date of this letter. GENERAL POLICY APPROACH 2 Section 9 (2) of the Overseas Investment Act 1973 (the Act) requires the Commission to ``comply with the general policy of the Government...transmitted in writing...by ...the Minister (Treasurer) and the Minister Of Lands''. We wish to convey the following general policy of the Government in relation to the exercise of the Commission's functions, powers, and duties including in relation to the administration of sections 56 and 57 of the Fisheries Act 1996: (a) The Government recognises the need for overseas capital and welcomes and encourages investment. Our policy reflects the need to develop strong international linkages and that the inflow of investment typically provides a net benefit to the New Zealand economy. (b) The Government is committed to an open and facilitative investment regime. Accordingly: (i) The investment criteria applications must meet should be interpreted in a manner that facilitates rather than impedes investment; (ii) Proposals that satisfy the investment criteria should be approved unless good reason exists to refuse them; and (iii) Any legislation administered by the Commission should be applied in a clear, consistent and efficient manner. (c) The Commission's operating procedures should be consistent with the Government's intention to facilitate positive investment. Accordingly, the Commission should: (i) Perform its functions in a timely, consistent and efficient manner; (ii) Seek to minimise the compliance and transactions costs to the private sector of the investment regime; (iii) Continue to make its decisions based largely upon material supplied to it by investors. It should regard the information as having been provided in good faith unless the Commission has good reason to believe otherwise; (iv) Continue to advise Ministers on proposals with the presumption that the investment will be compatible with the policy of the Government relating to any other matter; (v) Seek to recover its operating costs, through fees that must be approved by the Treasurer, from persons who use its services; (vi) Continue to monitor compliance with any conditions of approval, consent, permission, or exemption granted under the legislation with an approach that seeks a balance between the objectives of ensuring compliance with any conditions and providing the Commission with more accurate statistics on investment, and the desire to maintain a welcoming approach to investment; and (vii) Continue the practice of the Commission's staff performing the Commission's day-to-day functions, with the Commission's role being primarily one of governance and overview. 3 We are aware that the Commission compiles information on investment in New Zealand in the course of performing its functions. To the extent that existing resources permit, the Commission, in conjunction with other relevant agencies, should: (a) Disseminate information on investment in New Zealand; (b) Seek to raise public awareness about the usefulness of investment; and (c) Publicise and explain the nature of our regulatory regime to potential overseas investors. DELEGATION 4 The Treasurer delegates to the Commission and its staff the power to determine all applications under Part II of the Overseas Investment Regulations 1995 (the regulations). 5 The Treasurer and the Minister for Food, Fibre, Biosecurity and Border Control, as Minister of Lands (the Ministers) delegate to the Commission and its staff, in relation to Part III of the regulations: (a) their powers to determine applications which do not involve ``sensitive'' land as described in the First Schedule to the Act and regulations under the headings of Islands, and Foreshore, lakes and reserves and Land over 0.4 hectares on certain islands; (b) notwithstanding (a) above, their powers to determine land applications: (i) that do not involve a freehold estate or other estate or interest in land equivalent to a freehold estate; or (ii) that are part of a purchasing programme previously approved by Ministers under the Overseas Investment Regulations 1985 and 1995 or the Land Settlement Promotion and Land Acquisition Act 1952, where each acquisition is consistent with any conditions established for the programme; or (iii) involving land that is ``sensitive'' solely because it includes or adjoins a marginal strip that extends along or abuts any river or stream. 6 The Ministers also delegate to the Commission and its staff the following related matters: (a) their powers under regulation 12 to specify information and particulars to be supplied by applicants; (b) their powers under regulation 14 in respect of applications: (i) which have been delegated in terms of paragraphs 4 and 5 above; or (ii) which have been initially considered by the Minister and that require an administrative amendment; (c) their powers under regulations 16 in respect of applications that have been delegated in terms of paragraphs 4 and 5 above; (d) their powers under regulations 16 in respect of adding entities to or deleting entities from the Schedules to the Overseas Investment Exemption Notice 1995; (e) their powers under regulation 17 in respect of any matter delegated; (f) their powers under section 15 of the Act in respect of applications that have been delegated; and (g) in each case where a power has been delegated, the power of delegation under section 16 of the Act. 7 The Treasurer and the Minister for Food, Fibre, Biosecurity and Border Control, as Minister of Fisheries, also fully delegate to the Commission and its staff, so long as the Ministry of Fisheries concurs with the decision in each case, their powers to consider and determine applications under section 56 (2) and 57 (3) of the Fisheries Act 1996. Where the Ministry of Fisheries does not concur, the Ministers will determine the application. CRITERIA 8 In considering any applications under the Overseas Investment Act 1973 under delegation the Commission and its staff must take into account the matters provided for under section 14a of the Overseas Investment Act 1973. In considering any applications under section 57 (3) of the Fisheries Act 1996 under delegation the Commission and its staff must take into account the matters provided for under section 57 (4) of the Fisheries Act 1996. REVOCATION OF EXISTING DELEGATION 9 The existing delegation conferred on the Commission and its staff on 3 March 1999 is hereby revoked as from the date of this letter. BILL ENGLISH, Treasurer. JOHN LUXTON, Minister for Food, Fibre, Biosecurity and Border Control.