All foreign investment in Australia will now require government approval after an unprecedented move by Treasurer Josh Frydenberg.
The monetary screening threshold for foreign investment in Australia has temporarily been reduced to zero in order to “safeguard the national interest” as the outbreak puts “intense pressure” on Australian businesses.
“This is not an investment freeze,” Treasurer Frydenberg said.
“Australia is open for business and recognises investment at this time can be beneficial if in the national interest.”
The changes are meant to prevent “international raids” on those Australian companies hit hardest by the outbreak, says Baker McKenzie corporate partner Kate Jefferson.
“The Australian government wants to ensure appropriate oversight of foreign investment in the context of COVID-19 on Australian business and the broader community,” Ms Jefferson said.
“The changes apply regardless of value of the investment or the jurisdiction of the foreign investor, so no country has been specifically targeted unfairly as they apply across the board.”
According to Ms Jefferson, cross-border transactions in strategic sectors such as healthcare product manufacturing, may encounter more scrutiny, face a more prolonged approval process, and could be blocked.
“In recent times, FIRB had begun imposing stringent conditions, particularly around data protection and tax matters, as part of its approval of foreign investment transactions,” Ms Jefferson said.
“Further, in announcing these changes, FIRB confirmed that additional conditions may be applied to an approval given to address identified risks on a non-discriminatory basis.”
Treasurer Frydenberg was careful to stress that the measures were not aimed at China, despite widespread suspicion about the motivations of Chinese companies attempting to access Australian infrastructure projects, including the overhaul of the telecommunications system.
“This is not aimed at one particular country,” Mr Frydenberg told media.
“But what is very clear to us, and also the European Union and other countries around the world, have actually said very clearly that they need in these extraordinary times to more strictly assess the foreign investments that are coming into Australia.”
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