Australia’s Foreign Investment Review Board will now review all proposed foreign investments into the country, regardless of their value or investor type.
The federal government moved to tighten foreign investment rules this week for an indefinite period, following multiple reports in the Australian media that officials were growing concerned about foreign companies, particularly from China, launching takeovers of distressed Australian firms.
The new rules mean that all proposed foreign investments into Australia will require approval from FIRB.
Previously, different value thresholds applied depending on the sector and the nature of the investor, while a $0 threshold already applied to any entity classed as a foreign government investor, which included public pension funds or sovereign wealth funds. For acquisitions in sensitive businesses, which include infrastructure assets such as telecommunications and transport, the threshold stood at A$275 million ($169 million; €152 million).
Treasurer Josh Frydenberg said in a statement that, effective immediately, the monetary screening thresholds for all sectors and investor types has been reduced to $0.
In addition to the new thresholds, Frydenberg advised that the FIRB assessment process will be extended from 30 days to six months.
One fund manager told sister title Infrastructure Investor that the changes would capture more deals than before, but that most infrastructure transactions were already subject to review because of the presence of foreign government investors in funds or as co-investors, and because many infrastructure assets are classed as sensitive.
Frydenberg moved to reassure businesses by saying the changes were “not an investment freeze”.
“Australia is open for business and recognises investment at this time can be beneficial if in the national interest,” he said, adding that the government would prioritise “urgent applications for investments that protect and support Australian business and Australian jobs”.
FIRB chairman David Irvine was supportive of the changes and said: “These temporary measures have been necessitated by extraordinary economic circumstances. Foreign investment is and will continue to be critical to Australia’s prosperity.
“These temporary measures are necessary to protect the national interest during an historically challenging time for the economy, businesses and the broader community.”