Relaxing rules around overseas investment will result in more profits being siphoned offshore, Opposition MPs said.
The Government announced yesterday that the vast majority of overseas investment applications would no longer need ministerial approval.
The changes were the first part of a two-part review, with the second part focusing on changes to the Overseas Investment Act itself.
Under the changes, ministers have delegated greater decision-making powers to the Overseas Investment Office, which will be able to decide all applications, other than rural sensitive land or land adjoining waterways.
The changes take effect immediately.
Mr English said 98 percent of all applications were approved anyway and the move would speed up the process and cut red tape.
In addition, several types of transactions of a minor, technical or temporary nature have been exempted from the Act.
These include some underwriting transactions and sales within a group of companies with shared ownership.
Decisions on investment thresholds, changing the strategic asset test which allowed the Government to veto some investments would be made in the next few weeks and passed by the end of the year.
Green Party co-leader Russell Norman said the moves would make New Zealand's chronic current account problem worse.
"Having more foreign owned companies in New Zealand will result in more profits being sent overseas," Dr Norman said.
"It's certainly true there's streamlining involved, but the objective clearly is to make it easier for more of the New Zealand economy to be sold into foreign ownership and we already have a major problem with foreign ownership within the New Zealand economy."
Dr Norman feared foreign investors would target the dairy sector.
"We've already seen what happens in the banking sector, billions of dollars get sent overseas every year."
Mr English said New Zealand needed foreign investment badly.
"Our message is stop being defensive, let's tell the world we are open for business.
"This is a great place to invest, not a place that is going to say `you look different from us, so we are going to make it as hard as possible'," Mr English said.
"It is going to be vital to get equity because credit is going to be difficult, particularly in a country that won't save...we need the money because we need the jobs."
Labour's associate finance spokesman David Parker opened the door to New Zealand being sold to offshore investors.
The changes would allow a strategic infrastructural asset such as Auckland Airport to fall into foreign hands and this would not be in the national interest, Mr Parker said.
"There is no doubting New Zealand needs foreign investment. But making it a buyer's market is not in the best interests of New Zealanders," Mr Parker said.
Council of Trade Unions economist Bill Rosenberg said loosening the rules would increase the current account deficit as investors would seek to take over existing companies and funnel the profits offshore.
There should be moves to push foreign investment into new investments and have more ministerial oversight, he said.
