The Australian Federal Government keeps an eye on what is being bought up by overseas interests – in particular urban and rural land sales, and investment into Australian-owned businesses – via the Foreign Investment Review Board. The FIRB examines prospective overseas purchases which are above certain percentages in value – considering whether the sale is in the national interest, or whether it may be to Australia’s detriment – eg through reduced competition (monopolies) leading to large price rises, or the loss of Australian control of vital Australian resources – from energy and water supplies to food. Acquisition of more than 15% of an Australian company valued at more than $50 million, must be examined by the FIRB. However, unfortunately the FIRB is only an advisory body– the government of the day can choose to ignore the FIRB’s advice.
Classic examples of controversial foreign investment include this year’s potential sale of a large slab of mining giant Rio Tinto to Chinese-government owned Chinalco, one of Rio Tinto’s largest customers. In the field of agriculture, the issue of foreign investment has previously arisen with the sale of Australian meatworks to overseas-based companies, and Australian agricultural land to foreign owners.
But one has to wonder about the implications of Foreign Investment Reviews when paper values have dropped below real worth. Many stockmarket shares halved in value over the last 12 months. So a company valued on paper at $90 million last year may have dropped to $45 million this year – below what the assets are really worth, but right now, right under the FIRB’s $50 million radar. Obviously, now would be the time for cashed up foreign investors to sneak in without having to be reviewed by the FIRB.
Tags: Rural properties for sale and ownership, Rural foreign investment