Foreign investment reforms: Key changes

The Australian Government recently announced reforms to its foreign investment framework and released an updated Foreign Investment Policy and exposure draft regulations to exempt interfunding transactions from foreign investment approval processes. The reforms will largely be implemented via changes to the Australian Government's Foreign Investment Policy, rather than through legislative changes (other than for the interfunding exemption). It is expected that the guidance notes published by the Foreign Investment Review Board will be updated over the coming months.

The recent federal Budget release noted that the Australian Government will provide A$15.7 million towards these reforms to attract significant foreign capital flows while protecting the national interest.

The key objective of the reforms is to ensure that a risk-based approach is undertaken in administering the foreign investment framework. Key changes include:

• Streamlining assessment processes to provide faster approvals for lower-risk foreign investment proposals (ie. investments proposed by known investors with good compliance records, in non-sensitive sectors such as manufacturing, professional services, commercial real estate, new housing and mining of non-critical minerals) to bring in the capital Australia needs.
• Introducing a new performance target of processing 50% of investment proposals within the 30-day statutory decision period from 1 January 2025.
• Investment proposals in sensitive sectors (such as critical infrastructure, critical minerals, critical technology, investments in proximity to defence sites, and investments that involve sensitive data sets) will be subject to greater scrutiny.
• Removing unnecessary regulatory duplication in the assessment of competition issues through the merger reforms.
• Incentivising early applications and greater participation of foreign capital in the Australian economy by providing a fee refund of 75% for foreign investment applications that were unsuccessful in a competitive bid process.
• Allowing foreign investors to buy established Build to Rent developments and applying lower application fees to these investments to support investment in Australia’s new housing stock.

Norton Rose Fulbright has extensive experience advising clients on Australia’s foreign investment framework. We advised on the foreign investment framework for one of Australia’s largest forestry deals, and also advised global consulting construction, engineering and operating company, Egis on its acquisition of Australian and New Zealand company, Calibre Professional Services.

If you would like to discuss how the proposed changes may affect current or future Australian investments, please contact us.