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Ross Israel and Garry Bowditch
QIC's Ross Israel and Customer Stewardship Australia's Garry Bowditch discuss the implications for investors of bilateral disputes between countries.
As the extent of the pandemic became increasingly clear in early 2020, countries around the world restricted international travel and threw up hard borders. A general turn inwards economically accompanied this, with trade disrupted and nations understandably prioritising support for domestic businesses and individuals. In some ways, economic nationalism had already been a dominant theme before […]
One of the new rules includes lowering the threshold that would trigger a FIRB review of foreign investment in infrastructure assets from A$275m to A$0.
Opposition party sponsoring the move says it is ‘not protectionism, but common sense and protection of sovereignty’.
While the West has long distrusted Chinese investment in infrastructure, in 2018 this has been extended beyond China, exposing worrying trends.
The lowering of the ownership threshold from 25% to 10% has received a lukewarm response from industry and the Chinese government.
Treasurer Josh Frydenberg said the move should not be seen as an ‘adverse reflection’ on CK Group and that Australia still welcomes foreign investment that is not ‘contrary to our national interest’.
The government uses development bank KfW to buy 20% of the transmission system operator to prevent the state-backed firm taking a stake in the country’s ‘critical energy infrastructure’.
The proposed divestment package – an attempt to satisfy FIRB and ACCC regulatory requirements – is not seen as including APA’s best assets.
Populist sentiment may be putting pressure on politicians to tighten regulation, but improving communication between the public and private sectors – and changing the tone on both sides – is key to managing political risk.
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