Business & Finance Economics

Regulation of Foreign Investments in Australia Update

The Australian Government has recently announced that it is evaluating the bureaucracy and compliance costs for companies that seek to invest in Australia.
With this in mind, new regulations could come into force as early as September 2009 that would reduce the number of companies that is required to submit to screening through the Foreign Investment Review Board.
In these tough economic times, it is especially crucial for Australia to continue to attract foreign investment and ensure that it does not remain on the back burner as companies view other nations with more interest.
A competitive edge is essential in this international marketplace and thank goodness, the Australian Government has identified the fact that changes need to be made to the overall accessibility and desirability for such organisations to place their funding here.
It may be fair to say that few other countries are taking the time to focus on this essential part of their economy.
First, the proposed new regulations have noted that an easier system needs to be introduced to attract more investment.
This will mean that the present four tier threshold system for private investment will be reduced to just one.
Effectively, this single system will be the highest of the current four and will be set at an amount of $219 million.
This will end up meaning that fewer companies will be required to submit themselves to a review with the Foreign Investment Review Board and this, in itself, should be far more appealing to the organisations that have been keeping an eye on the country.
In fact, by using last financial year's figures as an indicator, it looks likely that around 20% of all investing companies will not even need to apply for a review.
Second, currently there is a requirement for all companies looking to establish a new business in Australia that is valued over $10 million to notify the Government accordingly.
In the past, this was bound to have dissuaded certain companies from investing here and it would be likely that they took their investment elsewhere.
Under the proposed new regulations, this will no longer be the case and again this would provide for yet another clear incentive to potential foreign investors.
  As the Australian economy is currently one of the few developed nations that is not in a recession, it would appear the Government is making some prudent decisions.
The Government seems to realise that fast action and truly sound decisions are required in the immediate term and that, by making these now, while other countries are probably just riding out the doom and gloom, we can ensure that the country is better placed to move forward on the world stage and remains as a leading competitor.
  Foreign investment is important to any country's economy and in terms of the employment and revenue that comes into Australia, when action is taken in the short term, this will more likely than not help boost the coffers of the country more than would be available through other external sources.

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