Aussie PM seeks to tighten rules on foreign investment

Farmland near the town of Bundaberg in Queensland. Mr Malcolm Turnbull wants a review of foreign investment rules to consider whether they should apply to state as well as federal deals. He downplayed concerns that the move was aimed at limiting Chin
Farmland near the town of Bundaberg in Queensland. Mr Malcolm Turnbull wants a review of foreign investment rules to consider whether they should apply to state as well as federal deals. He downplayed concerns that the move was aimed at limiting Chinese investment.PHOTO: REUTERS

Call comes amid recent, planned sales of sensitive assets to Chinese investors

Australian Prime Minister Malcolm Turnbull has proposed tougher scrutiny of foreign investors following growing concerns about a series of deals in which potentially sensitive assets are to be transferred to Chinese investors.

In one of the biggest shake-ups of foreign investment rules since they were introduced 40 years ago, Parliament last week passed new laws requiring extra screening of investment in farmland. But the long-awaited move, which requires scrutiny of farmland sales worth more than A$15 million (S$15.6 million) - down from the previous amount of A$252 million - is set to be accompanied by a further tightening of the rules.

Mr Turnbull said the government will review the foreign investment rules to consider whether they should apply to state as well as federal deals. He downplayed concerns that the move was aimed at limiting Chinese investment.

"That is purely an orderly administrative thing to do, to make sure there aren't gaps in the law," he told reporters. "That is a gap that has been there for some time."

The Senate has also proposed a separate inquiry into the rules, passing a motion last Wednesday to examine recent controversial deals. The inquiry is due to report back by Feb 4.

Mr Turnbull insisted his proposed review was not prompted by concerns about the recent lease of a port in Darwin to a Chinese firm with links to the Chinese military - a deal approved by the Defence Department. The lease sparked criticism from analysts in Australia and the United States - and a mild rebuke from US President Barack Obama. The port is a strategic asset and is close to a military base through which the US Marines have been rotating.

But the deal was not subject to automatic scrutiny by the Foreign Investment Review Board as it involved a lease by the Northern Territory government rather than the federal government.

Meanwhile, the federal government blocked foreign investors from buying cattle company S. Kidman & Co. The government said it was concerned that the property included parts of a weapons-testing site and insisted the move was not aimed at China, though the two main bidders for the firm were from Shanghai and Hong Kong.

Several other deals have raised concerns too. The government is reportedly considering selling a communications network that connects government buildings in Canberra and includes more than 1,500 cables and 160,000km of fibre.

There has also been criticism of the A$64 million sale of a property in Canberra next door to the headquarters of Australia's domestic spy agency. The property was bought by a Chinese firm linked to billionaire Liang Guangwei, a former People's Liberation Army soldier with high-level political connections in Beijing, according to The Australian Financial Review.

Australian Strategic Policy Institute executive director Peter Jennings said the sale and the Darwin port deal should have been assessed by the Foreign Investment Review Board.

But the proposal to raise scrutiny of foreign investors sparked criticism over concerns it would thwart investment. China last year was Australia's biggest source of investment approved by the review board, with A$27.7 billion. The US was second, with A$17.5 billion.

A version of this article appeared in the print edition of The Straits Times on December 01, 2015, with the headline 'Aussie PM seeks to tighten rules on foreign investment'. Print Edition | Subscribe