Practical Guide to New Zealand’s Business ImmigrationApr 12 • Categorized as Citizenship & Residency,Investments
by Evgeny Orlov, Barrister
For potential business migrants to New Zealand there is a wealth of opportunity. However before embarking on the journey, migrants are wise to make enquiries regarding the New Zealand business environment, the opportunities for investment, the economy, and most importantly Immigration New Zealand’s business migration criteria. We shall discuss all these matters below and give valuable practical guidance for both potential business migrants and also for advisors in the field whether they are lawyers, investment consultants, accountants, government officers or immigration agents.
In order to understand the current opportunities for investing in New Zealand, one has to understand New Zealand’s past, present and future from both historical and economic perspectives.
NEW ZEALAND’S BUSINESS MIGRATION HISTORY
New Zealand has always been a migrant country. It’s past, present and future have been politically and economically shaped by migrants.
In general terms we can see that New Zealand was “settled” by predominatly English, Scottish and Irish migrants initially and this group predominantly made New Zealand a farming community and imported English traditions.
Subsequently a wave of Croatian, Dalmatian, Yugoslavs and Polish migration from Europe shaped New Zealand’s wine and fishing industries as well as small goods cheeses and meats.
Russian, Japanese and Chinese financing in joint venture with Maori industries shaped what are today some of New Zealand’s major industries, aquaculture and fisheries.
Wherever we look New Zealand’s growth industries and its new industries are shaped, formed and founded by new migrants with new ideas. Indeed, migrants are directly responsible for 33% of New Zealand’s economic growth in this five year period.
For some time, successive New Zealand governments gained significant votes from trying to stem migration and restrict investment. This has caused a reversal of migration and an outflow of skills, capital and labour. Recognizing this, the current Government have attempted to encourage migration by making it easier to invest and do business in New Zealand.
As we can see over the course of New Zealand’s business migration history, the industries that have developed and blossomed have changed over time. The New Zealand government’s primary concern is that new business migrants will engage in businesses that benefit New Zealand.
This means that business ideas and business plans need to address in detail how an operation will benefit New Zealand. Before addressing this issue in detail we will look at the general framework for the Long Term Business category.
LONG TERM BUSINESS CATEGORY
Before contemplating whether to make an application under this category, an applicant should look at whether they meet the general criteria for business migration.
These requirements can be briefly summarized as below:
a) Being of Good Character – An applicant should ideally have no criminal convictions or only minor convictions if they are to meet Immigration criteria [although there are provisions to have these requirements waived].
b) Being of Good Health – An applicant should not have medical conditions that will place an undue burden on New Zealand’s health system [although there are provisions to have these requirements waived].
c) Having the requisite level of English – note this varies depending on the category but generally level 4 IELTS will suffice which is quite easy to obtain. This can in some cases be avoided if the principal applicant can demonstrate that they have an English-speaking background, or qualifications obtained in English – (it is also to be noted that family can pre-purchase English lessons to meet criteria). In reality very few applicants explore this option whereas the exceptions to the IELTS score requirement are actually very wide and should be explored in depth.
It is to be noted there are no maximum or minimum capital requirements for a business and hence business plans can be approved for even the smallest business ventures.
What many forget is that the long term business visa is simply an application to be permitted to be self employed in a business in New Zealand.
Essentially, this means that the visa is granted for involvement in a business that is not of “a passive or speculative nature” i.e. the applicant must be involved in the management of the business. On some occasions that does not necessarily mean he has to live in New Zealand during the whole course of the visa.
The matters that need to be addressed are:
a) Satisfactory evidence that there is access to sufficient capital to finance the proposal (and realistic financial forecasts). This means that the capital may be borrowed or part of a larger investment. The key is that there is proper research and evidence of the establishment and running costs and not just a speculative plan. That is why simply using an accountant for business projections does not work without serious research into the business by for example taking the running costs of similar businesses and using them as a base.
b) Has relevant business experience – this criteria is actually rather wide since the question is of relevant experience which can mean training, education or conduct of business generally in ten parts or active involvement in a business via management.
c) Can maintain themselves in New Zealand – many forget the importance of this criteria, sufficient funds need to be available to ensure that the applicant and their family can support themselves via accommodation, schooling etc whilst in New Zealand on a long term business visa. The living costs need to be addressed properly which will demonstrate that the applicant has sufficiently thought about them.
d) Knows about the business and the New Zealand business environment [and ‘genuinely interested in establishing a business in New Zealand”]. There are a number of good business plans and ideas that fail on this alone because the way the plan was drafted demonstrated that the person does not genuinely wish to set up a business but wishes simply to use this as an immigration vehicle. Setting up business simply for immigration is contrary to policy. Sufficient thought must be given that the business will genuinely be profitable and will be realistic. In this regard, engaging a market research consultant or firm able to analyse the viability of the business will significantly increase the prospect of success since it demonstrates that the applicant has thought about the venture seriously.
Benefit to New Zealand
The primary criterion for a Long Term Business application which cannot be stressed enough is that the main task of the immigration specialist is to determine whether the business will benefit New Zealand.
This is outlined in policy BC 4.15 as a business which promotes New Zealand’s economic growth through:
1. Introducing new, or enhancing existing technology, management or technical skills;
2. Introducing new or enhancing existing products or services;
3. Creating new or expanding existing export markets;
4. Creating employment;
5. Revitalizing an existing business.
It is interesting that beyond this policy there are few written guidelines as to what is or is not a benefit to New Zealand. However it should be noted that a proper business adviser first analyses the trade figures and statistics for a particular location – for example a milk bar or dairy may be of no benefit in Auckland where there are already a number of such businesses but would be beneficial in a small town where there are no such businesses.
Indeed like in China establishing a business in Shanghai may have no economic benefit to the city’s economy whereas the same business in Harbin may be considered eligible for government subsidies. The location of the business may determine its benefit in case of small to medium sized businesses involving retail, wholesale, hospitality or tourism.
Thus for example buying a run-down hotel in Auckland may bring little benefit to the economy whereas buying the only hotel in small town would revitalize the town.
In this regard surprisingly little attention is paid to New Zealand’s smaller town and cities which offer an opportunity not only for investment but the possibility of close relationships with city councils who would be willing to support any venture.
As an example opening a yum cha restaurant in Auckland may not be a benefit since there are so many such restaurants, however opening a restaurant in Taumaranui would pass the test.
Many do not look at these options because they wish to live in Auckland. However there is no requirement to live at the business address, since for example the owner may be more useful operating the business from Auckland and putting staff in place to run the business at the location.
How to choose a business project that meets immigration criteria
The question of benefit to New Zealand should be looked at as a dynamic rather than a static i.e. the economy changes and businesses which may have been valuable 20 years ago have reached saturation point now.
Generally and at the risk of generalization there are numerous areas or industries which would be regarded as beneficial as an example:
Any business which tends to promote New Zealand tourism especially in growing markets such as china would be favorably looked on. There are surprisingly few operators running fishing, hunting, an eco tourism ventures designed for the Chinese market or hotels catering to the Chinese. These would almost automatically represent a boom industry for the future.
New Zealand’s organic products and foods industry is growing as is the world’s organic market. There is huge potential to export New Zealand organic products to China. There are a number of available consultants in this field.
New Zealand has recently indicated that it will open up its aquaculture industry. The clam waters of New Zealand combined with the success story of the mussel industry suggest a strong indication that aquaculture in areas such as eel farms, prawn farms, fish farms, mussel and oyster farms for export will be both profitable and considered beneficial to New Zealand.
New Zealanders are known as innovators, there are a number of new inventions and technologies which have immense potential that can be sourced through various databases such as trade and enterprises as well as trade expos. Such innovative companies are always looking for joint venture partners and capital. They range from novel boat and yacht design and application to new software technologies. The set up of software industries deserves special note- most people think that such projects require vast capital but in New Zealand for example the multi-million ‘Trade Me’ site started out at a purchase price of around $8000. Linking New Zealand products with export software applications is certainly something which is an emerging industry in New Zealand.
Much of New Zealand is underdeveloped and the development of residential and commercial property is about to commence a further boom cycle, those investing in this will be encouraged to bring in new capital and skills.
An area which is booming is English language schools and the general education sector. Industries which train a foreign language (for example Chinese schools or Kindergartens) or are involved in the education sector will be welcomed.
All of the above may appear rather capital intensive but there is absolutely no barriers to establishing small businesses. Restaurants, nightclubs, hotels, small farms, and even dairy stores have all been approved in the past.
Finally, an area we specialize in (insolvent businesses) is an area which is rarely considered. The criteria of “revitalizing an existing business” are met by acquiring and making solvent an insolvent operation.
In this economic climate many businesses fail because of lack of capital, poor management, relationship breakdowns or other matters totally unconnected with the viability of the business. In such a situation the business can be purchased for a fraction of the set up cost. Indeed sometimes the former power or receiver will allow you to purchase the business without up-front capital.
The purchase of such a business meets the criteria of benefit if some employees can be trained and the business can be saved. Further in such business the hard work of set up, figures and business analysis has already been completed. Of course only viable businesses should be looked at and that is why you need a competent business lawyer and migration specialist to source and analyse the right business for you.
The importance of communication and presentation
One issue that should not be overlooked when preparing a Long Term Business application is the importance of communication and presentation. The INZ operational manual refers to the “streamlining” of business migrants. This means that Immigration is required by policy to process applications quickly and in priority to others as well as have them assessed by Immigration Business Specialists.
In addition, it is now policy that NZIS branch managers will provide liaison services for the business immigration specialists to facilitate contact with applicants.
This means that your application needs to be made from the perspective that it will be assessed by a competent specialist, quickly and efficiently. In such matters not only is the quality of your information and ideas a must but also you or your adviser should regularly communicate with your assessor. This communication allows you to develop or modify your business plan to meet or address the concerns or suggestions of your immigration adviser.
The mistake made by many is that, they see this as a one off application process, but that is not the intention of the policy which is not only to process applications but to facilitate interaction with the applicant.
Because immigration officers understand that establishment of a business in a foreign country is a lengthy and difficult process, such communication is in fact welcomed and often the immigration specialist should be seen more as a business consultant or partner rather than simply as an assessor.
A Final Note – Flexible Criteria
What many of those looking to migrate to New Zealand are rarely advised about is that the long term business visa criterion is extremely flexible allowing migrant a number of options including:
a) Forming a joint venture with an existing business by buying 25% or more;
b) Buying a franchise;
c) Buying a business which is currently insolvent and revitalising that business (this indeed represents a very cost effective entry into the market);
d) Buying an existing business or;
e) Establishing an completely new business;
f) Relocate your existing business to New Zealand.
If for example you relocate a business you will be eligible to bring some of your key employees with you.
As can be seen, the above criteria offer an extremely flexible immigration policy that allows up to a 3 years visa (with subsequent residency) what many advisors and applicants fail to appreciate is that even these flexible criteria may on occasion be waived.
In BC8 it is stated
“If an applicant fails to meet policy, business immigration specialists must weigh up all the circumstances of the case to see whether an exception to policy is justified. In doing this, they will take into account any circumstances that would warrant an exception”.
This means that in special circumstances, requirements such as the English language requirement can be waived. An example would be that for example the business does not require English since it may for example involve only export to China.
Business immigration criteria are necessarily complex and before a migrant applies for business migration it is strongly advised that they seek the advice of a suitably qualified professional. One thing is clear, New Zealand needs new business investment and the National government has stated that it will welcome investors in the business and entrepreneur categories. There is no time like now to apply for business migration to New Zealand.
Editors Note: For additional information on this and similar topics, please see PremierOffshore.com