Australia Should Retain FDI National Interest Rules-Official.

Australia should retain the right to use national interest in its assessment of foreign purchases of agricultural land after the issue was used last week as a reason for lawmakers to scupper a 8.4 billion Australian dollar (US$8.78 billion) deal that would have seen the country's main stock market operator fall into the hands of Singapore Exchange Ltd. (S68.SG), a panel of inquiry into new propsoed land investment legislation was told Tuesday.

Frank diGiorgio, a senior advisor on foreign investment to the Treasury defended the clause on Tuesday during testimony infront of a Senate Economics Committee inquiry in the capital, Canberra. "It's about flexibility," said diGiorgio.

The Senate inquiry was established to review legislation proposed by independent senator Nick Xenophon and Greens senator Christine Milne to establish a national interest test on proposed foreign acquisitions of farm land. At present, the treasurer only has to assess purchases by foreigners of farm land valued at A$231 million or more.

Treasury argues that the proposed introduction of a five-hectare threshold will impose burdens on investors while legislation on specific national interest criteria will reduce flexibility in the government's screening of foreign investment proposals without adding to protection of the national interest, nor to transparency. Wayne Swan, the country's Treasurer, cited concerns over national interest in his rejection last week of the Singapore Exchange's attempt to merge with ASX Ltd. (ASX.AU).

"There is a real risk that the changes could discourage foreign investment in this sector of the economy," said the Treasury in a written submission to the inquiry. "The bill doesn't present a sufficiently strong case to justify the regulatory changes it is suggesting."

Xenophon previously told the Senate that purchases of farm land had accelerated since the global food shortage in 2008, naming China, South Korea, Japan, India, Saudi Arabia and the Gulf states as buyers who have been most aggressive in their purchases. The government's Australian Bureau of Statistics is undertaking an agricultural land and water ownership survey, the results of which will be issued in September, Adrian Bugg, and officer of the bureau told the inquiry.

Source : automatedtrader.net