(Government Bill 141–1, Todd McClay)
From: Ukes Baha | 18 April 2025
Submitted in response to the call for public submissions on the United Arab Emirates Comprehensive Economic Partnership Agreement Legislation Amendment Bill.
I submit this formal opposition to several key clauses of the United Arab Emirates Comprehensive Economic Partnership Agreement Legislation Amendment Bill (Government Bill 141–1). These clauses weaken New Zealand’s overseas investment screening framework, elevate foreign investor privileges without adequate justification, and fail to safeguard national interests, democratic oversight, or Treaty obligations.
While I do not oppose the entire bill—particularly its customs and tariff components which are procedural requirements of the UAE CEPA—I strongly object to Subpart 2 of Part 1, which amends the Overseas Investment Regulations 2005 to create special exemptions for “Type 5 investors.” These exemptions are unjustified, structurally dangerous, and offer significant benefit to overseas investors without reciprocity, transparency, or clear public gain.
New Regulations 96A and 96B (Clause 11)
The bill introduces a new class of “Type 5 investor” linked to the UAE, allowing these investors to acquire New Zealand business assets valued up to NZD $200 million without triggering standard Overseas Investment Act scrutiny (regulation 96A).
This elevated threshold is typically reserved for countries with close democratic, legal, and security alignment to New Zealand (e.g., Australia). The UAE, by contrast, is a highly centralised autocracy with opaque financial practices, limited press freedom, and no independent judiciary. The exemption is not supported by reciprocity or risk assessment.
By inserting this provision, the bill enables fast-tracked foreign acquisition of sensitive or strategic business interests with no requirement for a national interest test, transparency disclosures, or long-term public benefit analysis.
Regulation 96B(1)(a)(ii)(B) and (iii)(B), and Section 96A(2)
Nowhere in the eligibility framework for Type 5 investors is there a requirement to demonstrate:
The ownership and control test (as referenced in Regulation 86 and invoked in 96B) is easily satisfied via indirect structures and does not exclude politically exposed persons, sovereign funds, or state-linked corporate entities.
These omissions are not merely gaps—they represent a systemic weakening of the regulatory integrity of New Zealand’s overseas investment regime.
Regulation 96A, Schedule 1AA (Clause 12)
By inserting this new investor category into the Overseas Investment Regulations without substantive public discussion, the bill sets a precedent for deregulation through trade-linked privilege.
With each new FTA introducing its own thresholds and exemptions (e.g., Type 3 for China, Type 4 for the EU, now Type 5 for the UAE), New Zealand’s investment law becomes a patchwork of favours—tailored for geopolitical partners or trade expediency, not for principled stewardship.
This ad-hoc approach undermines the coherence of the OIA framework and threatens long-term sovereignty over economic assets and infrastructure.
Entire Subpart 2 of Part 1 (Clauses 5–12)
The UAE's financial environment is globally associated with beneficial ownership secrecy, tax shielding, and opaque corporate structures. Nothing in this bill prevents investors from accessing the NZ market via subsidiaries, shell entities, or politically linked investment vehicles.
There are no mandatory transparency conditions, disclosure of beneficiaries, or conflict-of-interest screens built into the new regulations. It assumes trust where independent oversight is essential.
This bill effectively opens the door for capital inflows without enforcing the standards New Zealand would expect from domestic investors—let alone from entities based in a non-democratic jurisdiction.
Clauses 4–12; particularly Clause 11
This bill introduces significant structural changes to New Zealand’s foreign investment regime, yet the public was given no opportunity to engage during its negotiation phase, nor to scrutinise its deregulatory elements prior to introduction.
Major reforms to overseas investment policy should:
Instead, the investment regime was quietly amended through trade-alignment provisions, introduced as a government bill, and presented to the public only after the deal was signed and sealed.
This legislative strategy—privileging investors while excluding the public—erodes trust in the very democratic process it purports to serve.
While some components of this bill (customs alignment, tariff schedule updates) are expected and appropriate under the UAE CEPA, the overseas investment amendments introduced in Subpart 2 of Part 1 should not pass in their current form.
I urge Parliament to:
New Zealand must not permit trade negotiations to become a backchannel for private privilege and quiet deregulation. Our overseas investment laws exist to protect long-term sovereignty and ensure that economic decisions serve the public—not just geopolitical expediency or capital flow.