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[Please see ‘How to Save a Life’ post below for explanation]

Topic 3: Foreign Investment Review Board

I don’t know terribly much about FIRB, so I won’t attempt to summarise the articles in any great detail.

Basically, the FIRB has always existed and basically every country has one. Noone really paid much mind to it until Chinalco because approval was almost automatic. It was just a technicality you had to do, like the Registrar General of lands. You don’t expect her to reject you if you’ve got all the ticks signed.

Applying the characterisation approach (Fairfax v FCT per Kitto J) the FIRB has a broad, unstructured discretion. It simply has the power to deny every application if it is in the national interest to do so, though the national interest is undefined. For example, it only applies to acquisitions over $15m (or something). There is no right of appeal.

I can think of two major issues with FIRB

1) Uncertainty

This unstructured and unconfined discretion more or less strikes out of the blue to destroy carefully negotiated and near-completed deals. It destroys business confidence in Australia. It sounds like protectionism (though, as I emphasised, every country has one).

2) Relationship with China

Think of the context of when the Rio/Chinalco deal happened – Stern Hu etc etc. Think of the effect that has on Chinese investments with Australia when most Chinese businesses are state owned and the Chinese have difficulty distinguishing between different groups in Australia. For example, they assume the Australian government is responsible for Australian media criticism of China.

I couldn’t find a good article on the economics of things. But I didn’t search particularly hard, cause I have to head out soon.


How FIRB Works

How the guidelines work:

Criticism of how FIRB works:

Recent deals involving FIRB




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