Every country wants its own investment-screening regime
SINGAPORE BECAME the latest country to erect barriers to investment in the name of national security on November 3rd. It plans to review, and potentially block, investments in entities “critical to Singapore’s national-security interests”. That should come as little surprise to dealmakers from the free-trading city-state who have watched the proliferation of similar policies abroad. Last year Singaporean firms filed more notices with the Committee on Foreign Investment in the United States (CFIUS), America’s powerful inbound-investment watchdog, than investors from any other country. That includes China, whose globetrotting companies have been the primary target of efforts to beef up existing investment-screening regimes and adopt new ones. A report from the OECD, a club of mostly rich countries, calls this protectionist turn “historically unprecedented”.
Companies of all nationalities must now navigate a complex patchwork of broad rules and opaque decision-making much more novel than the antitrust regimes which have historically caused them grief. Plenty are getting caught. On November 20th Safran, a French engine-maker, said the Italian government had exercised its “golden power” to oppose the firm’s acquisition of an Italian subsidiary of Collins Aerospace, an American firm. Safran’s biggest shareholder is the French government, which last month scuppered an attempt by Flowserve, an American industrial firm, to purchase Velan, a Canadian business that helps kit out its submarines.
Investment watchdogs are working overtime even in the midst of a dealmaking drought. Start with CFIUS. Foreign investment flowing into America fell by half last year compared with the year before, yet CFIUS reviewed a record 286 notices from companies hoping to have their deals rubber-stamped. That is hardly surprising given the committee’s expanding brief. In September 2022 President Joe Biden directed it to…
2023-11-23 10:08:13
Source from www.economist.com
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