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Australia to ease investment rules after China saga
(Agencies)
Updated: 2009-08-04 14:23 SYDNEY: Australian Treasurer Wayne Swan announced an easing of foreign-investment rules on Tuesday as the nation looked to reassure investors that its door was open despite recent tensions over Chinese investment. Swan, speaking to a Thomson Reuters Newsmaker event in Sydney, said the rules would be changed to effectively fast-track investments by allowing more of them to go ahead without being vetted first by the Foreign Investment Review Board (FIRB). "Looking forward, the investment outlook will be less bullish, as a consequence of the slower global economy," he said. "We want to ensure Australia's regulatory framework promotes our competitiveness and attractiveness as a destination for international capital. Our mission is to compete globally more effectively, to take a larger slice of a currently smaller pie." The FIRB, which critics describe as secretive and sometimes unpredictable, will remain the gate-keeper for major foreign investments such as China's recently failed $19.5 billion tie-up with Anglo-Australian miner Rio Tinto But Swan said the threshold for triggering a notification to the board would be roughly doubled for private investments in existing businesses to A$219 million from A$100 million ($84 million) now, with the new amount to be indexed for inflation. The new threshold applies only to private-sector foreign investors, leaving the existing arrangement for close scrutiny of all sovereign foreign investments unchanged. Swan denied that his meant the new rules could actually discriminate against Chinese investment, which is predominantly from state-owned enterprises. State or sovereign investments are always reviewed by the FIRB, regardless of the size of the deal.
The government aims to make the changes in September. The new rules mean that around 20 percent of all business applications will no longer need to be screened by the FIRB, based on investment proposals lodged for the year to June 2009, Swan told the Newsmaker event, the first to be held in Australia. Opening the door wider The government has had a torrid time managing foreign investments after a new wave of Chinese state investment arrived on its shores late last year looking to secure access to Australia's natural resources. Chinese investors, mainly state-owned firms, announced more than $12 billion in investment into Australia in the first five months of 2009, almost four times the amount they invested in all of 2008, though this year's tally includes money that would have been invested in Australia under the failed Rio Tinto deal. The demise of the deal, which was scrapped by Rio Tinto while Australian investment approval was still pending, upset China, where some critics blamed delays in Australia's murky approvals process for creating uncertainties and undermining the deal. Australia approves about 99 percent of large foreign investments, the vast majority being routine property purchases, but it does occasionally reject contentious deals that it deems to be against the national interest. It rarely, if ever, gives a detailed public reasoning for such decisions. No housing bubble, but.... Australia dodged a recession this year, with massive government stimulus and record-low interest rates offsetting a sudden and heavy fall in business investment. Some economists even worry the stimulus announced since last October, equal to about 5 percent of gross domestic product, might end up being too successful and they point to early signs of a bubble in its housing sector. Swan played down concerns over rising house prices, but he added that interest rates would inevitably rise at home and that the global economic outlook looked challenging once government stimulus tapered off and firms completed rebuilding their stocks. "To those who suggest we should wind back stimulus, I say that would be pulling the rug out from under the recovery," he said. |
