All proposed foreign investments into Australia are to be checked, as the government seeks to protect distressed Australian assets from the economic fallout of the coronavirus crisis.
The government has not frozen foreign investment, but will subject all foreign investments to an approval review, regardless of the value or the nature of the investment. The Foreign Investment Review Board will extend its review timeframes from 30 days to six months, as it works through the government’s new measures.
The treasurer, Josh Frydenberg, said the government was not looking to stop international investment, but to monitor it. Urgent applications, designed to keep businesses open and jobs attached, would be given priority.
“This temporary change will be achieved by reducing to $0 the monetary screening thresholds for all foreign investments under the act,” Frydenberg said.
“By temporarily reducing the foreign investment threshold, the Australian government will ensure appropriate oversight over all proposed foreign investment during this time.”
Under the current systems, reviews kicked in at staggered thresholds, depending on the asset. For businesses classified as “non-sensitive”, where free trade agreements are in place, that is as high as $1.192bn, while it may be as low as $275m for investors from non-free trade agreement partners for industries deemed more sensitive, such as agriculture.
As much of the western world locks down economies as the implications of the coronavirus pandemic grip harder, China has made moves towards restarting its own economic activity, raising concerns distressed foreign assets could be bought without appropriate checks and balances.
Frydenberg said investment remained crucial to Australia’s economy, even as it entered a period of suspended animation, but stressed the need to ensure it remained in the national interest.
“Even in these uncertain times, Australia continues to welcome foreign investment, which remains vital to our long-term economic success and stability. The government recognises that foreign investment will play an important part in helping many businesses get to the other side, securing jobs and supporting economic recovery,” he said.
“However, these measures are necessary to safeguard the national interest as the coronavirus outbreak puts intense pressure on the Australian economy and businesses.”
Frydenberg said the new measures would remain in place for “the duration of the current crisis”.
The government has previously said that any new measure it puts in place is considered active for at least six months.