Question

In March 2020, the Australian Treasurer announced that the Foreign Investment Review Board would assess all foreign proposals to acquire Australian firms. He said in a statement that "These measures are necessary to safeguard the national interest as the coronavirus outbreak puts intense pressure on the Australian economy and Australian businesses." Evaluate the argument that the Australian government should impose restrictions because a depreciation Australian dollar offers a significant financial advantage to foreign bidders for Australian firm/assets.

Answer 1

Australian treasurer has announced that foreign investment review board will be accessing all foreign proposals to acquire foreign funds because this is important in order to protect the interest of the companies of Australia as Australian currency has subsequently depreciated against major currencies of the world so it is offering a good chance for the foreign companies to acquire the Australian companies at a discount and these foreign companies also want to take the control over the Australian companies by purchasing the shares of Australian companies at the subsequent discount.

Due to the uncertainty arising out of coronavirus outbreak, majority of domestic currencies among developing Nations have crashed substantially and Australian currency have also depreciated against major currencies of the world and it is offering a great chance for those companies who have already wanted to acquire the Australian companies but could not acquire them due to higher prices, and the currency depreciation of Australian dollar is providing them a good chance of acquiring the stake of these Australian companies and influence the decision-making processes.

If I had to elaborate that many Chinese companies and Chinese government representatives organisations are trying to acquire different companies in Australia as Australian government has amended its foreign investment laws in order to protect from foreign invasion of these company against depreciation of Australian Dollars.

Foreign companies especially Chinese companies are trying to gain control over Australian companies in order to influence the decision-making processes of these companies and also gain geographical competition advantage over another Global companies by acquiring the Australian companies at a lower price so Australian government has proactively amended its rules and regulation in order to protect itself from any kind of foreign intervention in the Australian economy.