The Treasurer has announced changes to Australia’s foreign investment review framework, effective from 10.30pm AEDT on Sunday 29 March 2020, relating to monetary thresholds and timeframes for reviewing applications. Details are available in our Guidance Note, updated on 18 May 2020, which addresses the effects of the changes. All material on this website should be read in light of the Treasurer’s announcement.

Speech to the 3rd China Overseas Investment Fair, China World Trade Centre

Frank Di Giorgio 
General Manager Foreign Investment and Trade Policy Division Australian Treasury and
Executive Member Foreign Investment Review Board


Good morning ladies and gentlemen.

It is a pleasure to be able to join you here today to discuss the investment environment in Australia.  

I would like to express my thanks to the China Industrial Overseas Development and Planning Association and the China Development Bank for hosting the Overseas Investment Fair.  Events like this are important.  They facilitate the exchange of knowledge, new ideas and understanding.  They bring us closer together.

Bilateral economic relationship

Since diplomatic relations were formally established in1972, the relationship between China and Australia has flourished.  We share important common interests and continue to work together in regional and global forums, such as the G20, APEC and the East Asia Summit.  Our two economies enjoy strong complementarity, and it serves the interests of both countries to advance economic, trade and investment cooperation.

The rapid expansion of the Chinese economy has had profound implications for Australia’s economy.  In the last twenty years, the total value of trade between our two countries has grown from around $2 billion to $106 billion.  China has become Australia’s most important trading partner with total two-way merchandise trade making up almost a quarter of our total trade with the rest of the world. This is evidence of our complementarity:  Australia being a long term stable supplier of mineral and energy resources to China, and China a competitive supplier of goods to Australia.  There is also great potential for the trade relationship to develop in other areas such as agriculture, services and tourism.  

The growth in trade is a truly impressive achievement and it highlights just how important the bilateral economic relationship with China is.  The investment relationship is also a prominent and growing part of our bilateral economic relationship and I would like to focus on it today.

Today, I hope to highlight some of the benefits of investing in Australia and explain to you how our foreign investment approval system works, and in particular, clarify what the Government thinks about when it reviews foreign investment proposals.

Australian economy

Before I discuss investment, let me paint an economic picture of Australia today. Despite heightened global instability, Australia's economy continues to display underlying strength and resilience.  GDP is growing steadily, we have moderate inflation and the unemployment rate is low at around five per cent. In addition, Australia has a healthy financial system and very low government debt. We are also experiencing a record terms of trade and a surge in business investment.

But while Australia’s economic fundamentals are strong, the Government realises there is no room for complacency.

Australia is reforming its economy to respond to the challenge of meeting demand from our rapidly growing Asian trading partners.

It is investing in infrastructure, education, skills and innovation. 

This will improve its competitiveness and productivity.

As a country with a small population and a relatively high demand for capital, there will be many opportunities for foreign investors.

Chinese investment

At the end of last year, China was ranked 12th among our largest investors.  

But this is a new investment relationship, with the total stock of Chinese investment is still relatively small with less than one per cent of the total.

In comparison, the United States has 28 per cent; the United Kingdom: 24 per cent; and Japan: six per cent.  This reflects the entrenched investment relationship that Australia has had with those countries over many years – that is a relationship that we hope to see repeated with China.

And from what we have seen in recent years, China is well on the way. Chinese foreign investment into Australia has increased considerably over the past four years, with the Australian Government approving Chinese investment (including investment in business and real estate sectors) worth over $70 billion.  This includes around 280 Chinese business proposals.

At the beginning of the last decade, China was ranked around 20th in terms of the value of approved foreign investment business proposals.  Over the last few years, it has risen to second (behind only the United States).

Australia – a leading investment destination

Australia is a globally competitive location to do business.

It offers many attractions and rich opportunities for businesses to succeed : rich and abundant natural resources, a highly skilled workforce, a culture of innovation, a sound economic policy environment and political stability.  

This is underpinned by a strong legal system based on a fundamental belief in the rule of law.  All companies – both foreign and domestically owned – are treated equally before the law.

Australian law is based on fairness and consistency which offers foreign companies stability and predictability.  Also, our regulatory climate – our rules and regulations – promotes stable and sound business practices, supports growth and provides a favourable investment environment.  In return, Australia expects all companies to respect its laws and maintain the highest standard of corporate conduct. 

All these factors provide a solid foundation for business to prosper. They make Australia one of the most attractive countries to do business in the world.  

On any important measure of economic openness: business freedom; trade barriers; price stability; investment openness; banking efficiency; property rights; freedom from corruption; and labour freedom we are amongst the best in the world.

Indeed Australia has a long and consistent history of welcoming foreign investment.  Moreover, foreign investment has proved to be a key driver of our development as a nation.  As a large, resource rich country with a relatively high demand for capital, Australia has historically relied on international finance to open new investment opportunities and to develop our natural resource endowments.

Foreign investment has provided additional capital for economic growth, support for existing jobs and created new employment opportunities.  It has introduced new technologies, improved consumer choice and promoted healthy competition amongst Australia’s industries.  Foreign investment has helped deliver competitiveness and productivity to our economy and will continue to do so into the future.

Foreign investment – some historical context

So, Australia welcomes foreign investment, including from China, because of the benefits it provides our economy. But, like many other countries, the Government reviews foreign investment applications to ensure that the investment is consistent with Australia’s national interest.

Understanding a little of our economic history helps explain current practice.

Historically, Australia has experienced successive waves of foreign investment.  At the beginning of last century, most foreign investment came from the United Kingdom.  After world war two, investment surged from the United States, as multi-nationals invested in Australia’s growing industries, including manufacturing and mining.  This was welcomed for the obvious benefits of increasing post-war jobs and technology transfer.

In more recent times, there has been an increase in investment from Asia – first, large parcels of investment from Japan, and now, increasingly from emerging economies such as China.  Each successive wave of foreign investment reinforces the pattern of success in trade leading to success in investment.

So, although the source of foreign investment has evolved, one element has remained the same: foreign direct investment has played an important and beneficial role in the Australian economy, has been crucial for our prosperity and will continue to be so.

It is important to understand that these periods have generated public interest in foreign investment and sometimes controversy.

The public wants to know that particular foreign investments do not harm the national interest.  

It is for this reason that the Government has foreign investment review arrangements.  They were put in place in the mid 1970’s to allow the Government to confirm that a particular foreign investment proposal is not detrimental to Australia.  

These arrangements also ensure that sensitive foreign investments are assessed against a set of checks and balances.  

This gives the Australian public comfort and a sense of security, knowing that the Government is looking after its best interests.

As foreign investment is so important to our economy, the Government is conscious that our review mechanism needs to operate in a way that allows inward investment to flow efficiently.  Interventions are rare.

So how does it work?

Under the foreign investment rules, the Government has the power to decide whether to raise objections to individual proposals, or whether to impose conditions.

If the Government considers it appropriate to impose conditions, they will be designed to uphold the national interest.  That is, they will ensure that an investment can proceed in a revised form which meets the best interests of the Australian community.  Any conditions will be determined in consultation with the parties involved.

I should note that it is very rare for the Government to block completely a foreign investment proposal and uncommon for a proposal to be approved with conditions.  Since 2001, only two business proposals have been blocked, one was in 2001 and the other was the proposed acquisition of the Australian Securities Exchange Limited by Singapore Exchange Limited earlier this year.

There were strong national interest reasons for blocking both of these proposals.

Overview of the national interest considerations

What I would like to do now is spend a few moments describing how foreign investment proposals are reviewed.

Privately-owned foreign investors need to seek approval from the Government when acquiring an interest of 15 per cent or more in an Australian business valued above $231 million.  In addition, all foreign governments and their related entities must seek prior approval before making a direct investment in Australia, regardless of value.

It is important to stress that consideration of foreign investment proposals is on a case-by-case basis.  The Government prefers this flexible approach to hard and fast rules.  Rigid laws that prohibit a class of investments too often also stop valuable investments.  The case-by-case approach maximises investment flows, while protecting Australia’s national interest.

Last year, the Government released an easy-to-read version of Australia’s Foreign Investment Policy which is also available in Mandarin.

The Policy describes the process of approval and outlines the factors the Government typically considers when assessing foreign investment proposals.  These factors are:

National Security – the Government considers the extent to which an investment proposal affects Australia’s ability to protect its strategic and security interests.  

Competition – the Government favours diversity of ownership within Australian industries so that healthy competition can flourish.  For instance, the Government considers carefully proposals that involve a customer of a product gaining control over an existing Australian producer of that product.  This is especially the case if it involves a significant producer.

Also, the impact that a proposed investment has on the make-up of the relevant global industry may also be a consideration.  This would be especially relevant where acute concentration exists in a global industry to the point where competitive market outcomes may become distorted. Following on from this, ultimately there will be concern over the degree to which an investment may enable a firm to control the global supply of a product or service.

The third national interest consideration relates to other Australian Government policies. Individual proposals can, from time to time, impact on other areas of Government activity. These impacts are obviously relevant national interest considerations.  One example is the impact a proposal will have on taxation revenues; another is the impact of a proposal on the environment.

The impact on the Economy and the Community is also a consideration.  The Government might consider (for example): the impact of restructuring an Australian enterprise; the nature of the funding of the investment, as well as the degree of Australian involvement, the welfare of employees and the extent to which the investor will ensure a fair return for the Australian people.

The character of the investor is very important. The Government considers the extent to which the investor operates on a transparent commercial basis and is subject to adequate and transparent regulation and supervision.  Corporate governance practices of investors may also be relevant. Australia expects all investors to display best practice when it comes to corporate conduct.  

Additional consideration for government related investors

I should emphasise that these national interest considerations are non-discriminatory – we apply them equally to all investments, whether they are private investors or whether they are government investors.  

However, where a proposal does involve a foreign government or related entity, we also consider if the investment is commercial in nature or if the investor is pursuing non-commercial objectives that may be contrary to the national interest.

We look carefully at these proposals because the market disciplines that usually apply to public companies may not be present.  The mitigating factors that the Government will consider again relate to commerciality and transparency – such as for example, the existence of external partners in the project or whether the target will remain listed on the Australian Securities Exchange or another recognised exchange.

I acknowledge that this additional national interest consideration for foreign government related investors may impact more on some countries than others if many of their investors are state-owned enterprises.  I will stress that this is not a new consideration.  It is something that we have always considered.

Investing in Australian resources

China’s recent investment interest in Australian resources sector is a positive development that will further consolidate the bilateral economic relationship.

I mentioned earlier that the Government has approved around 280 foreign investment business proposals from China.  The overwhelming majority of these have been in resources.

Australia recognises that China has an interest in ensuring that we are able to supply the resources that it requires to fuel its continued economic growth.  Australia has a complementary interest in expanding its capacity to supply these resources.

So we will continue to welcome foreign investment in the resources sector – from China and others – because it plays a key role in expanding our supply capacity.

To conclude this afternoon, allow me to provide a practical and positive example of how Chinese investment has proved beneficial to both countries.

Traditionally, the iron ore industry in Australia has exploited a high-grade iron ore called haematite which is almost ready for export once it has been mined.  Because of its abundance, haematite accounts for most of Australia’s iron ore production.

Australia also has an abundance of a lower grade iron ore called magnetite.  But, Australians have traditionally not bothered to exploit magnetite iron ore.

However, Chinese investors have shown the necessary skill and willingness to mine and process magnetite in Australia.  By bringing Chinese expertise in magnetite production, Chinese investors are exploiting a mineral that other miners have not and a new iron ore industry is being established in Australia.  

This increases the potential supply of iron ore to China while benefiting the Australian economy through increased production and more employment.


Australia welcomes and encourages foreign investment and as a sophisticated modern economy, Australia offers diverse business opportunities across a broad range of industry sectors.

The Australian Government has a proud record of approving Chinese investment proposals and I hope I have increased your understanding about investing in Australia.  If you are considering a major investment in Australia, I strongly recommend that you get in touch with the Foreign Investment Review Board early in the process so that we can provide more information and advice to assist you.

Australia and China have much to gain by growing our economic relationship. Historically, Australia has been an importer of capital and our future growth relies on continued openness to foreign investment.  

Thank you again for the opportunity to speak here today.

9 November 2011