Foreign investments by sovereign wealth funds must have pure commercial basis: FIRB chairman
Foreign investments by state-owned enterprises in Australia must be made on a “purely standalone commercial basis” and should not be driven by a political agenda, according to Brian Wilson, the recently appointed new chairman of the Foreign Investment Review Board (FIRB).
The comments from Wilson, who was appointed in April, suggest where the FIRB will focus its attention when considering whether to approve future foreign investment requests by sovereign wealth funds.
In value terms, the most recent FIRB annual report revealed that about a quarter of foreign investment applications are for real estate purchases.
Wilson’s comments come as the debate over foreign investment becomes even more politicised following opposition leader Tony Abbott delivering a speech in Beijing calling for tougher rules governing foreign investment.
Abbott said it was seldom in Australia’s interest to allow a foreign governments to control an Australian business.
But Wilson stressed the test should always be commercial.
“Australian businesses, however they are owned, should be run on a purely commercial basis and not as an extension of the policy, political or economic agenda of a foreign government,” Wilson told Dow Jones Newswires.
ANZ chief executive Mike Smith has also weighed into the debate, warning that Australia needs foreign investment and calling on politicians to do a better job of explaining the role it plays in the economy.
"I understand the public opinion around [the foreign investment debate], but a lot of it is not based on fact but on shock. It is the duty of politicians to forge public opinion, to inform the public about what is good for the country, rather than pandering to it in a populist manner,” The Australian reported Smith as saying.
The FIRB's most recent commercial decision was to allow Yancoal Australia Limited, a subsidiary of Hong Kong and New York-listed Yanzhou Coal Mining Company Limited, to merge with Gloucester Coal Limited.