Investor interest in forestry estates around the Whanganui district could ramp up with Government's decision to amend the Overseas Investment Act.

The move cuts through some red tape and brings forestry rights into the overseas investment regime, opening the way for what the Government calls high end foreign investment.

Forestry Minister Shane Jones said it would be an important part of achieving the Government's plan to plant 1 billion trees and boosting economic development opportunities in the regions.

It comes at a time when harvesting of hundreds of thousands of logs from privately-owned forestry estates across Whanganui district accelerates.


The new legislation gives investors' more flexibility in obtaining consents and removes unnecessary red tape.

Marcus Musson Photo / Stuart Munro
Marcus Musson Photo / Stuart Munro

Marcus Musson, a Whanganui-based director of Forest Owners' Management Services (FOMS) said the announcement was "bloody good news" for what he said was starting to look like a sunset industry.

"It means foreign investors can buy trees without necessarily having to buy the land. They were restricted to lots over 1000ha but now they can buy into wood lots smaller than 1000ha. And there are a lot of forestry blocks in that category," Musson said.

He said the other major obstacle was the cost of going through the approval process with the Overseas Investment Office (OIO).

"When you're talking about $40,000 to $70,000 to go through that OIO process then it's the sort of impediment that turns many people away."

He said the changes made sense from another perspective as well as forests being cut now needed to be replanted if the Government's objective was going to be met.
There was already a lot of replanting going on but he said NZ didn't have the investment capital needed to the reach that target.

He said other funding initiatives were also being pushed by the Ministry of Primary Industries to assist replanting and these, coupled with an easing of the investment regime "is a positive thing".

"It's definitely been well received within our industry. Now things are being replaced I believe it will ensure values in forestry will be kept up.


"The industry has definitely been buoyed by what the Government is doing. They're essentially taking what was looking like a sunset industry into the future. It's bloody good news and places like Whanganui stand to benefit," Musson said.

Meantime, the sale of four local authority-owned forests in Whanganui is still waiting for official approval to go ahead.

Last year an unnamed overseas buyer has put in an offer for four of the district's forests – McNabs, Te Ara To Waka, Siceleys and Tauwhare – but that bid hangs on getting approval from the OIO.

The purchase agreement had been signed off by council but was then delayed mid-year when the OIO asked for more information. Then in October the buyer asked for an extension until February this year.

The proposed sale stalled again soon after that when the OIO asked council to provide more information about the influences and behaviours if the log market in the region.
Leighton Toy, Whanganui District Council general manager property, said council was confident of resolution soon.

"We're waiting to hear from the OIO but are hopeful the news will not be too far away," Toy said.

The identity of the purchaser remains confidential until the sale is finalised.

Fact Box
Overseas firms have invested heavily in the forestry sector since it was opened up to private investment in the early 1990s. Analysts estimate 70 per cent of forest land is foreign-owned.
Exports of forest products totalled around $4.75 billion in 2015 with China the top destination according to the Forest Owners' Association.
Forestry accounts for around 3 per cent of NZ's gross domestic product and is the largest export earner behind dairy and beef.