UPDATE: Australia's Abbott: Chinese Foreign Investment Must Be In National Interest
17 Agosto 2010 - 3:05AM
Dow Jones News
Australia's Opposition leader Tony Abbott Tuesday indicated he
would not move to change the rules on foreign investment in the
country if he wins this weekend's federal election, though in a
reference to China he said he would not favor state-controlled
companies taking majority stakes in local businesses.
Abbott's remarks are his strongest yet on the subject of Chinese
investment in Australia and will soothe concerns a centre-right
government would take a harder line than the current Labor
government on foreign entities buying into local companies.
Investment in Australia by Chinese companies has been a thorny
domestic political issue, with relations between the two
governments hitting a low in the past year during the detention and
trial of four Rio Tinto (RIO.AU) executives, including Australian
national Stern Hu. Hu was convicted on charges of bribery and
stealing commercial secrets.
Relations have since thawed somewhat and, despite ongoing
concerns about China's move to secure future resource supply by
investing directly in companies and mining projects in Australia
and elsewhere, China's purchases of Australian businesses have
continued to win government approval, including the takeover last
year of coal miner Felix Resources Ltd. by Yanzhou Coal Mining Co.,
the largest Chinese takeover of an Australian company.
But some investors remain cautious on the view a change of
government in Australia could result in a tightening of the
national interest criteria applied on offshore buyers by the
Treasury Department's Foreign Investment Review Board.
Abbott, leader of the main opposition Liberal and National party
coalition, said if he is elected prime minister on Aug. 21 he
doesn't envisage making any changes to the existing rules set by
FIRB--though he added any foreign investment in Australia must be
in the national interest.
"I would not normally be in favor of Australia government
entities taking a majority position in Australian businesses,"
Abbott told reporters after delivering a key note speech in
Canberra.
"Similarly, I would be very careful about majority ownership of
Australian assets by government-controlled entities. I am not
singling out China," he said.
"We need foreign investment, we welcome Chinese foreign
investment, but it does have to go through the ordinary Foreign
Investment Review Board rules," Abbott said.
The Review Board has the final say on allowing investments to go
ahead, and last year outlined a preference for foreign
government-backed entities to keep investments in Australian miners
to less than 50%. Investments in new projects should be capped at
less than 50%.
Last year, Treasurer Wayne Swan knocked back a planned takeover
of OZ Minerals Ltd. (OZL.AU) by China Minmetals Nonferrous Metals
Co. on the ground one of its mines, Prominent Hill, was in a
military weapons training range. The deal was subsequently altered
before winning approval.
The opposition leader's comments on foreign investment come just
days before Australia's election, with opinion polls showing a
tight race between the conservative opposition and the ruling Labor
government under Prime Minister Julia Gillard.
Abbott said a Liberal partyy-led government would seek to apply
market principles to any investment and China businesses tend to
operate differently to Australian companies.
"A Chinese business is much more an arm of the Chinese
government than an Australian business would be an arm of the
Australian government," he said.
-By Enda Curran, Dow Jones Newswires; 61-2-8272-4687;
enda.curran@dowjones.com
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