The Lowy Institute today released a study into Chinese attitudes towards investing in Australia. The research makes for sobering reading. In my view, we have made a complete hash of FIRB, to the point where its secret operations more resemble an arm of ASIS than they do a transparnent foreign investment review panel. The report concludes that:
Chinese concerns about discrimination reflect the additional scrutiny applied to investments from government-related entities, which account for the bulk of Chinese investment in Australia. A number of failed high-profile deals have also added to that perception, particularly Chinalco’s 2008 failed bid to take a controlling stake in Rio Tinto (see Box 2 below). Despite Australia’s popularity as an investment destination, many Chinese investors believe that Australia is a more difficult place to invest compared with other countries. In their view, discrimination is driven by Australian nationalism; the unfair Australian perception that state-related investors are not driven solely by commercial criteria; concerns about China as owner and customer; and, going further, Australian (and Western) geopolitical concerns about China’s rapid rise. Australian government policy towards Chinese investment is also seen as unduly driven by the media. Perceptions of discrimination are more likely to be felt by investors with limited experience of Western political and business culture. In response to these problems, Chinese investors are becoming more sophisticated in the pursuit of their commercial and strategic objectives
I really see no need for the secrecy that surrounds FIRB. I don’t object to FIRB rejecting foreign government owned takeover offers if they are deemed to threaten market failures, such as the Rio bid would have (which was not rejected openly). But the secrecy does nothing for anyone other than raising the suspicion that FIRB decisions operate at the whim of political currents.
The report’s conclusion – that we need greater transparency in foreign investment decisions – is most welcome.
