Overseas investment updates – a focus on forestry

The Government has taken a significant step toward reshaping New Zealand’s investment landscape with the introduction of the Overseas Investment (National Interest Test and Other Matters) Amendment Bill. The Bill is now at second reading stage and is expected to have significant implications for the forestry sector.

The Bill gives effect to the Government’s proposed changes announced earlier this year (refer to our article regarding this here) and forms part of the Government’s economic strategy, “Going for Growth”, to attract and promote overseas investment in New Zealand.

Purpose

The purpose of the Bill is to reduce compliance costs, make decision-making faster, while ensuring the Government has the tools necessary to safeguard New Zealand’s national interest. While the scope of investments that are screened is not proposed to change, the Bill proposes to streamline the assessment process for certain less sensitive assets.

Key changes include:

• Overarching purpose: The Bill proposes to update the purpose statement of the Overseas Investment Act 2005 (Act) to explicitly acknowledge the importance of overseas investment in driving economic opportunity, while affirming that the foreign ownership and control of sensitive New Zealand assets remains a privilege.
• Faster decision-making: The Overseas Investment Office (OIO) will be required to grant consent to low-risk applications within 15 working days, unless there are reasonable grounds to escalate to a full national interest assessment.
• Delegation to the OIO: The majority of decision-making powers will be delegated to the OIO, with only a limited set of powers—such as the ability to decline to grant consent on national interest grounds—reserved for the Minister.
• Consolidation of tests: The investor, benefit to New Zealand and national interest tests will be replaced by a consolidated national interest test for all investments other than those involving farm land, fishing quota and residential land (which will continue to be screened under the existing consent pathways).

The 15 working days assessment timeframe and the delegation of most decision making to the OIO largely reflect current practice since the Ministerial directive letter issued in June 2024. The OIO already applies a risk-based approach, targets shorter processing times for low risk applications and makes the majority of decisions in practice.

Impact on the forestry sector

Removal of special forestry pathway

Most significantly for the forestry industry is that the Bill proposes to repeal the ‘special forestry test’ and the corresponding standing consent pathway. Forestry investments will instead be assessed under the new consolidated national interest test, rather than the streamlined approach that has been relied upon in the last couple of years.  This means that the Minister of Finance will have the broad power to decline consent to a forestry transaction if the Minister considers that it is contrary to New Zealand’s national interest.

Conversion of farm land to forestry

Conversions of farm land to forestry will remain subject to the more stringent and existing “farm land benefit” test. The Bill also makes no changes to relax the current rules requiring farmland to be advertised on the open market before an overseas purchaser can enter into a contract to buy the land, which was contemplated as a possibility when the changes were first announced in February.

Response to the Bill

Commentary in the forestry sector highlights that key players are concerned that losing the streamlined forestry pathway may dampen investment momentum and that this reversion to a “one-size-fits-all” approach introduces more red tape and uncertainty for a sector already under regulatory pressure.

Regardless of what the flow on effects of the changes will be, it is undeniable that removing the special forestry pathway marks a structural shift in New Zealand’s forestry investment environment. While the changes could place additional regulatory requirements on forestry investors, there is also a risk of politicisation where ministerial discretion could lead to inconsistent or ideologically driven outcomes.

Next steps

The Bill is currently at the second reading stage. It is expected to be passed into law by the end of 2025, with the new regime then implemented in early 2026. We will continue to provide updates.

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