Australia tightens scrutiny of foreign takeovers
Jamie Smyth reports from Sydney
The Australian government has tightened its scrutiny of foreign takeovers over concerns overseas companies could buy up strategic assets on the cheap during the coronavirus crisis.
It follows warnings from two government MPs that distressed companies in the aviation and freight sectors could become vulnerable to takeovers by state-owned enterprises from authoritarian regimes, including China.
Josh Frydenberg, Australia’s Treasurer, said on Monday all foreign investment and takeover proposals would now be scrutinised by the government’s foreign investment review board to protect the national interest. However, he denied the measures were aimed specifically at China, noting Beijing was only the fifth-largest overseas investor in Australia last year while the US was the largest.
“These are extraordinary times and we have seen the value of Australian companies, indeed companies right around world, be severely diminished because of the coronavirus and we don’t want predatory behaviour that is not in the national interest occurring,” Mr Frydenberg told Australian radio.
The temporary changes to regulations will apply to existing and new investment proposals. Previously, most foreign takeovers and investments proposed by private companies were not considered by the Australian government unless they were worth more than A$1.1bn.
Richard McGregor, analyst at Lowy Institute, said the new measures were no doubt made with Beijing’s state-owned enterprises in mind, especially as conspiracy theories are swirling about how China is using the crisis as an opportunity to assert its influence.
“But vultures come in many forms, and I think this will end up applying to lots more companies than just those from China,” he said.
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