Foreign Investment
Review Board

Annual Report
2005‑06

 Commonwealth of Australia 2006
ISBN 0 642 74375 4
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11 December 2006

The Hon Peter Costello MP
Treasurer
Parliament House
CANBERRA   ACT   2600
Dear Treasurer
In accordance with the Foreign Investment Review Board’s responsibility to advise the Government on foreign investment matters, I submit the Board’s Annual Report for the financial year 2005‑06.
The Report outlines the activities of the Board, provides a summary of the year’s foreign investment proposals, and reviews trends in foreign investment in Australia and Australian investment abroad. The Report also has a number of Appendices that provide supporting material on foreign investment policy, including a copy of the relevant legislation.
Yours sincerely

M J Phillips AO
Chairman

Contents
Acronyms and abbreviations	ix
Glossary	xi
Main points	xv
Chapter 1:  Foreign Investment Review Board
Functions of the Board	3
Board membership	3
Relationship of the division to the Board	4
Administration of foreign investment policy	5
Advice and education	5
Consideration timeframe	6
Examination and approval process	6
Consultation arrangements	7
National interest	7
Handling of commercial‑in‑confidence and personal information	8
2005‑06 outcomes	9
Cost of the Board’s operations	9
Consideration of proposals and enquiries	9
Policy review	10
Monitoring and compliance activity	11
Chapter 2:  Foreign investment proposals
Features of these statistics	15
Applications considered in 2005‑06	18
Applications decided in 2005‑06	19
Approvals by value	22
Approvals by sector	24
Agriculture, forestry and fishing	25
Finance and insurance	25
Manufacturing	26
Mineral exploration and development	27
Services	28
Tourism	28
Real estate	29
Residential real estate	29
Commercial real estate	31
Annual programmes	32
Real estate by location of investment	33
Approvals by country of investor	35

Chapter 3:  Overview of the Foreign Acquisitions and Takeovers Act 1975
Introduction	41
Notification	42
Examination	43
Foreign‑to‑foreign transactions	44
Prior approval for contractual arrangements	44
Foreign control	44
Enforcement provisions	45
Other aspects of foreign investment policy	45
Foreign portfolio shareholdings	45
Foreign government investment in Australia	46
Taxation	46
Chapter 4:  International investment issues and Australia’s international investment position
Introduction	49
Multilateral investment issues	50
OECD Investment Committee	50
OECD Guidelines for Multinational Enterprises	51
World Trade Organization	53
Asia‑Pacific Economic Cooperation	53
Bilateral investment negotiations	54
Free trade agreements	54
Existing agreements	54
Current negotiations	55
FTA feasibility studies	55
Investment protection and promotion agreements	56
Australia’s international investment position	56
Foreign investment levels	56
Foreign direct investment levels by country	57
Foreign investment flows	58
Foreign investment by sector	61
Useful references on international investment issues	62
Appendices
Appendix A:	Summary of Australia’s Foreign Investment Policy	67
Appendix B:	Legislation and regulations, media releases and policy statements and publications	83
Appendix C:	Chronology of policy measures	91
Appendix D:	Foreign Acquisitions and Takeovers Act 1975	103
Appendix E:	Foreign Acquisitions and Takeovers Regulations 1989	163
	Foreign Acquisitions and Takeovers (Notices) Regulations	183
Appendix F:	OECD Guidelines for Multinational Enterprises	191
Appendix G:	Contact details	211

Tables
Table 2.1:	Applications considered 2000‑01 to 2005‑06 – number of proposals
Table 2.2:	Applications decided 2000‑01 to 2005‑06 – proposed investment
Table 2.3:	Total approvals by value 2002‑03 to 2005‑06
Table 2.4:	Total approvals by industry sector in 2005‑06
Table 2.5:	Manufacturing sector approvals in 2005‑06
Table 2.6:	Mineral exploration and development sector approvals 2004‑05 to 2005‑06
Table 2.7:	Services sector approvals in 2005‑06
Table 2.8:	Real estate sector approvals in 2005‑06
Table 2.9:	Real estate sector approvals in 2005‑06 – location of investment
Table 2.10:	Approvals by country of investor in 2005‑06 – location of investment
Table 2.11:	Approvals by country of investor in 2005‑06 – industry sectorTable 4.1:	Foreign investment flows 2001‑02 to 2005‑06

Charts
Chart 2.1:	Applications decided 2000‑01 to 2005‑06 — number of proposals
Chart 2.2:	Applications decided 2000‑01 to 2005‑06 — proposed investmentChart 2.3:	Total approvals by value 2002‑03 to 2005‑06 – number of proposals
Chart 2.4:	Total approvals by value 2002‑03 to 2005‑06 – proposed investmentChart 2.5:	Total approvals by industry sector in 2005‑06 — proposed investment value
Chart 4.1:	Level of foreign direct investment by country at 31 December 2005
Chart 4.2:	Foreign investment flows 2001‑02 to 2005‑06
Chart 4.3:	Foreign ownership of Australian equity by sector 2002‑03 to 2005‑06