On the same day new rules on overseas investment were in the spotlight, Shanghai-based Bright Dairy got the green light to buy more than half of Synlait Milk.
The Overseas Investment Office (OIO) approved Bright Dairy's investment of $82 million for 51 per cent of Canterbury firm Synlait Milk, which would facilitate the completion of a second milk powder plant to begin operations in August 2011, Synlait said.
Debate about overseas ownership of farmland has been heightened by a bid involving Hong Kong stock exchange listed Natural Dairy (NZ) Holdings to buy 16 farms from receivers of the Crafar empire.
Finance Minister Bill English yesterday said ministers had in recent months reviewed the current framework for considering overseas investment applications, particularly in light of issues with respect to farmland ownership.
"Overall, the measures I'm announcing today strike an appropriate balance," English said.
"They increase ministerial flexibility to consider a wide range of issues when assessing overseas investments in sensitive land, while at the same time they provide extra clarity and certainty for potential investors and the Overseas Investment Office."
Federated Farmers president Don Nicolson said it was potentially an elegant solution to a difficult issue.
"The simple fact is this, our economy and our way of life would implode tomorrow if it wasn't for overseas investment," Nicolson said. "I must say we have not seen the detail that will underpin this new framework, nor the text of the ministerial directive letter," he said. "That's vital and what we're hoping for is a fine balance between opportunity and harm."
Fonterra chairman Sir Henry van der Heyden said the moves were a good step forward that recognised the mind-set of many New Zealanders.
David Boswell, partner corporate and commercial in Auckland law firm Bell Gully, said overseas investors would consider the changes another hurdle in an already uncertain regime.
"But I do think it will address the public confidence issue and it certainly will enhance the ministers' flexibility," Boswell said.
However, ministers already had extensive flexibility with the current regime, he said.
One concern was that the changes applied across all sensitive land applications, Boswell said. "To me it seems to have been introduced because of the concern about farmland and I would have thought if the Government is wanting to address the farmland issue they should deal with it specifically by giving clear guidance and directions or specific rules about that."By Owen Hembry Email Owen