SYDNEY (Reuters) - Australian Treasurer Wayne Swan announced an easing of foreign-investment rules 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 notification to the Foreign Investment Review Board (FIRB).
“We want to ensure Australia’s regulatory framework promotes our competitiveness and attractiveness as a destination for international capital,” he said.
“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 (11.5 billion pound) tie-up with Anglo-Australian miner Rio Tinto (RIO.AX) (RIO.L).
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 (108 million pounds) 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.
The new rules will mean that around 20 percent of all business applications will no longer need to be screened by the board, based on investment proposals lodged for the year to June 2009, Swan told the Newsmaker event, the first to be held in Australia.
The government, which aims to make the changes in September, 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, scrapped by Rio Tinto while Australian investment approval was still pending, upset China, where some critics blamed delays in Australia’s approvals process for creating uncertainties and undermining the deal.
Investment experts argue that Australia’s 34-year-old foreign investment regime remains murky and can turn off investors.
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.
(Reporting by Mark Bendeich and Anirban Nag; Editing by Jonathan Standing)
$1=1.195 Australian Dollar