Australia’s foreign investment review board and the regulation of Chinese investment

Abstract

Foreign investment has played an important role in the Australian economy since the country's foundation. Part of the latest wave of foreign direct investment (FDI) in Australia has been by Chinese firms, and largely by state-owned enterprises with connections to the Chinese state. Despite the value it has generated for the Australian economy, Chinese FDI has been controversial and has exposed some of the shortcomings in Australia's foreign investment review process. This article evaluates Australia's foreign investment regime, and pays particular attention to the Foreign Investment Review Board (FIRB). Questions are asked about how closely the FIRB's role and processes resemble regulatory best practice. The article also considers whether greater fidelity by the FIRB to principles of good governance could better serve Australia's broad policy interests and reduce Chinese perceptions of an opaque and discriminatory foreign investment regime.

The Australian Public’s Preferences Over Foreign Investment in Agriculture

“…All investments from foreign governmentowned companies require FIRB scrutiny, irrespective of their dollar value. This distinction was introduced in 2009 and was widely perceived as a response to growing investment interest in Australia by Chinese government-owned companies (Mendelsohn and Fels 2014). Larem (2011) found that these regulations have contributed to perceptions by Chinese investors that Australia was a more difficult place to invest compared with other countries.…”

“…It does, however, sit within a broader body of literature that seeks to provide critical reflection on the state of the foreign investment approvals regime. For example, Drysdale and Findlay (2009) and Drysdale (2011) considered whether investment from government-owned enterprises, particularly those from China, warranted special attention in the approvals process, while Mendelsohn and Fels (2014) examined whether the role and processes of the FIRB matched regulatory best practice.…”

Cohesion and differentiation in Australia's elite suburbs

“…Real estate investment, especially by Asian new middle-class and super-rich investors, is growing rapidly in many global cities and is a key political issue in academic, policy, and public debates (Rogers & Koh, 2017;Wong, 2017). Although foreign investment has long played an important role in the Australian economy (Mendelsohn & Fels, 2014), extensive media and political debates on the topic suggest high levels of public concern regarding this phenomenon. A survey by Rogers, Wong, and Nelson (2017) found that most Sydneysiders see foreign real estate investment as a key driver of house price inflation.…”

Untitled

“…All investments from foreign governmentowned companies require FIRB scrutiny, irrespective of their dollar value. This distinction was introduced in 2009 and was widely perceived as a response to growing investment interest in Australia by Chinese government-owned companies (Mendelsohn and Fels 2014). Larem 2011found that these regulations have contributed to perceptions by Chinese investors that Australia was a more difficult place to invest compared with other countries.…”

“…It does, however, sit within a broader body of literature that seeks to provide critical reflection on the state of the foreign investment approvals regime. For example, Drysdale and Findlay (2009) and Drysdale (2011) considered whether investment from government-owned enterprises, particularly those from China, warranted special attention in the approvals process, while Mendelsohn and Fels (2014) examined whether the role and processes of the FIRB matched regulatory best practice.…”