From Bloomie:
There’s a well-known order of business for foreigners trying to invest in emerging markets. Before you do anything else, hand a slice of your consortium to a local oligarch who can open doors in government and help soothe nationalist sentiments.
Australia wouldn’t normally be included in that basket. The country tends to score highly on the World Bank’s ease of doing business index, and has been one of the world’s top 10 recipients of foreign direct investment over the past five years. But recent foreign-investment decisions are giving the country an increasingly frontier feel.
A group of outback cattle barons at the weekend bid A$386 million ($294 million) for S. Kidman & Co., a vast ranching business whose land holdings cover an area larger than South Korea.
…Treasurer Scott Morrison blocked the sale of that site to foreign buyers last November, but that wasn’t enough to deter the Chinese-owned Dakang Australia consortium, which bid A$370 million-odd for the remainder in combination with a 20 percent Australian partner in April.
That offer was in turn blocked by Morrison just nine days after being lodged. Without a national security justification to fall back on, he instead cited “the size and significance of the Kidman portfolio” — as plain a demonstration as you could get that the decision had been made purely on political grounds.
Another group of Australian oligarchs collected Ausgrid at a $5 billion discount to the Chinese offer. I could go on.
The Bloomberg article is overly simple in that it defines the rejection of all foreign investment as bad. Australia has a good case to protect itself from overly aggressive Chinese influence, as well as solid arguments against it on the basis of economic benefit where no value is being added to the purchase.
But the oligarchy charge still stands when you have arbitrary foreign investment rules and folks like Barnaby Joyce courting local billionaires as he and they pick choose which foreign purchases to resits and compete with (not necessarily in concert).
We desperately need a new set of rules for the treatment of Chinese investment.
