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In partnership with King & Wood Mallesons (KWM), ACBC Victoria welcomed three expert panellists to share their insights and experiences regarding foreign investment, with a particular focus on investment from China.
Over 80 guests arrived before the formal proceedings to enjoy a sit-down lunch and take in the incredible views of Melbourne from fifty floors up. Mr Will Heath, Partner at KWM introduced the panellists before handing over to Mr David Olsson, China Practice Consultant at KWM and Chair of our Financial & Investment Services working group, who facilitated the panel discussion. David was pleased to welcome Mr Malcolm Brennan, Partner at KWM and Chair of the Law Council’s FIRB Committee, Mr Rob Donelly, Executive Member of FIRB, and Mr Michael Fuge, CEO at Pacific Hydro Australia.
The beginning of the discussion was centred around the recent changes to the foreign investment regime and the implications of this on inbound investment and the Australian economy as a whole. All panel speakers believed the changes were a step in the right direction and would bring about more secure and profitable investments into Australia. Rob Donelly emphasised the importance of ensuring that investors focus on national interest issues such as impact on the economy, community, competition and national security when applying for foreign investment. He also touched on FIRB’s recent introduction of fees, thresholds and penalties, in addition to the changes to the act, which will streamline and build the efficiency of foreign investment processes and regulatory measures.
Malcolm Brennan moved on to discuss the reactions of businesses in Australia. He outlined that while the overall effects on businesses have been immensely positive, the negative reaction from the Australian media has had adverse effect on public opinion. All three panellists expressed their concern with negative media reporting that creates a fear of foreign investment, particularly from China. They suggested that there needs to be greater acknowledgement of the multitude of positive investment outcomes such as the $183 billion of Chinese investment into the Australian economy from nearly 1000 applications and also more effective dissemination of the facts.
Michael Fuge spoke about his experience at Pacific Hydro Australia and the process involved in recently becoming 100 per cent foreign owned. He attributed the success of the deal to a number of factors. Their buyer, State Power Investment Corporation, began researching the company and analysing the Australian market early while also engaging with FIRB throughout the whole process which increased transparency and legitimacy. Both Australian and Chinese counterparts also sought and were open to the advice from multiple advisors which led to higher awareness of issues and improved decision making.
The panel discussion was followed by an engaging Q&A session which touched on issues such as dispelling misconceptions about foreign investment, the need to effectively communication positive information and the benefits of foreign investment to the Australian public. One question asked whether there was the potential to depoliticise the decision-making process given the high turnover in political leadership experienced by Australia in the past decade. Malcolm emphasised how important it was that the final decision is made by the Treasurer, as it is paramount to maintain the faith of the community in the system. This can only be ensured with the ultimate responsibility resting with elected officials at ministerial level – rather than an independent body. This is most pertinent in cases which must be measured against national security interests, although Malcolm noted that there are many cases which do not fall into this category. To conclude his response, Malcolm stated that dealing with each situation on a case-by-case basis allowed for crucial flexibility, as each case is different. However, he did state that in his view, the complexity of the legislation can lead to problems, and remains an area to amend in order to lessen confusion.
To draw a close to the event, David asked the panellists to share what they thought was the most important piece of advice for foreign companies looking to purchase Australian companies. Rob’s point illustrated the benefits of engaging with FIRB at an early stage. He noted that by doing so, FIRB’s familiarity with the company and its understanding of the context is enhanced – leading to a smoother process. Malcolm followed this point by encouraging companies to be prepared to share their ownership details with the government. He reminded the audience that this information remains confidential, and that it significantly assists in building reciprocal trust between the company and the government.
Michael rounded out the panel by emphasizing the importance of carefully and diligently seeking advice from a wide net of sources in order to gain a more thorough engagement with the process.
ACBC thanks Mr Rob Donelly, Mr Malcolm Brennan and Mr Michael Fuge for their time and effort in delivering an insightful and detailed presentation. We also extend our thanks to Mr David Olsson for his facilitation of the event, and warmly thank King & Wood Mallesons for generously hosting the event.