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October 2015

[This is the title of a well-known Australian journalist's recently published book, which provides a useful platform for comparing the law and politics of foreign investment regulation in other Asia-Pacific countries. The following is an un-footnoted version of the first part of my paper for a special issue of the NZBLQ, following the lively "FDI Roundtable" hosted in June 2015 by Amokura Kawharu at the University of Auckland.]

1. Introduction

According to the FDI (Foreign Direct Investment) Regulatory Restrictiveness Index compiled by the Organisation for Economic Co-operation and Development (OECD), Australia scored 0.13 overall in 2014 compared to an average of 0.10 across 55 countries (including all OECD and G20 countries) and the OECD average of 0.07. In terms of significant world economies, this places Australia in a group with somewhat above-average restrictiveness towards FDI, including also Korea (0.14), Canada (0.17) and Russia (0.18). Another group is even more restrictive, including China (0.42), Indonesia (0.34), India (0.26) and – intriguingly – New Zealand (0.24). At the other extreme are major economies with more permissive regulatory regimes: the Netherlands (0.01), Japan (0.05), the United Kingdom (0.06) and the United States (0.09).

The FDI Index is based on:
• foreign equity limitations;
• screening or approval mechanisms;
• restrictions on the employment of foreigners as key personnel; and
• operational restrictions (eg on capital repatriation or land ownership);
and the OECD acknowledges that: “is not a full measure of a country’s investment climate. A range of other factors come into play, including how FDI rules are implemented. Entry barriers can also arise for other reasons, including state ownership in key sectors”. Indeed, a detailed academic study shows that the screening mechanisms are conceptually similar in China and Australia, but now applied in a much more liberal manner in Australia.

Index data since 1997 shows how restrictiveness has gradually diminished, as in other OECD countries. But it is revealing to outline (in Part 2. below) the longer-term historical evolution of Australia’s regulatory controls and broader public debates over FDI. This analysis usefully sets the scene for a close analysis of a topical issue nowadays: treaty-based investor-state arbitration (Part 3 [omitted below, but discussed generally elsewhere on this Blog]). Some parallels and contrasts can then be drawn with New Zealand, its close trade and investment partner (Part 4 [omitted - but further elaborated here, also comparing Korea]).

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Japanese Law in Asia-Pacific Socio-Economic Context
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