Why and how different ownership matters in foreign investment?

Comments on G.E. Anderson “How do Australia’s foreign investment rules apply to China?” 18/08/2009, http://www.eastasiaforum.org/2009/08/18/how-do-australias-foreign-investment-rules-apply-to-china/

What does the ownership in terms of public versus private make to owning some shares of a firm in another country? All firms in a country are subject to the regulations of that country, whether they are owned domestically or by foreign investors. A country can always regulate the behaviour of the firms operate in its land. So what are the concerns or fears of a firm is owned by a public firm of another country? It defies logic to understand the reasons behind.

In many countries, foreign investment is subject to government review and approve. In Australia, there is a Foreign Investment Review Board (FIRB) that does reviews and advises the Australian Treasurer on foreign investment matters. Reuters reports that the FIRB is described by critics as secretive and sometimes unpredictable. It says the following:

“Australia approves about 99 percent of large foreign investments, the vast majority being routine property purchases, but it does occasionally reject contentious deals that it deems to be against the national interest. It rarely, if ever, gives a detailed public reasoning for such decisions.”

This seems to suggest that there is not much transparency in government decisions to block foreign investments. As a result, it may be used as an unfair protection or discrimination against foreign investments.

Also, there are few internationally agreed rules governing international investments. This is an area that has huge potential to impede international capital flows, because a review of foreign investments can not only slow the process and create inefficiency, but also create difficulties for large investments.

There is an urgent need for transparency in government regulations of foreign investments and a need for an international agreement on international capital flows to remove discrimination and barriers to foreign investments.