NEW DELHI: G20 countries have fast-tracked policies to safeguard national security interests against threats associated with international investments amid the coronavirus outbreak, according to a joint report launched by United Nations Conference on Trade and Development, the Organization for Economic Cooperation and Development and the World Trade Organization.
The report has, however, not named any specific source of the threats, including China.
“With the breakout of the covid pandemic, Australia and India have temporarily adjusted their FDI (foreign direct investment) policies to enable tighter control over inward investment. Australia temporarily lowered the trigger threshold for its foreign investment review mechanism, and India temporarily added additional countries to the list of origins of acquirers who are subject to stricter review rules," the report added.
“Canada has not changed its policies, but announced that it will apply heightened scrutiny to the operation of its review mechanism in a policy statement—a posture that the EU (European Union) has also recommended in a communication addressed to its member states."
On 17 April, New Delhi had tweaked its FDI policy, mandating government clearance for all investments from countries that share a land border with India, to ring-fence domestic industry from opportunistic acquisitions by Chinese companies. Earlier, a similar policy applied to Bangladesh. Furthermore, if the beneficial owner of an investment into India is situated in or is a citizen of one such country, the investment needs prior government approval.
The government’s move followed the People’s Bank of China’s decision to raise its stake in Housing Development Finance Corp. Ltd from 0.8% to 1.01% through open market purchases. Investors were wary that the sharp sell-offs amid the coronavirus outbreak would make some stocks susceptible to acquisition through the foreign portfolio investment route.
Among other G20 members, France lowered participation thresholds that trigger its foreign investment review mechanism, and broadened its scope to include additional industries, while Australia increased screening thresholds for investors from certain countries under its inward investment screening mechanism through preferential trade agreements and established new rules for financial services licensing of foreigners in Australia.
The US also introduced new measures to manage national security risks associated with foreign ownership or control in the telecommunications and power sectors.