The Federal Government has approved the selling of Australia’s largest Tasmania-based dairy farming business, Van Diemen’s Land Company, to a private Chinese firm named Moon Lake Investments.
The approval has proved that the Australian government is open to foreign investment options despite suffering from tensions over the sale of primary agricultural land. Treasurer Scott Morrison has announced on Tuesday that after receiving recommendations from the Foreign Investment Review Board, he did not believe that the acquisition of Australian dairy by Chinese billionaire Lu Xianfeng worth $280 million would have any negative impact on the market. Therefore, the government has approved the proposal.
The sale is subject to the performance of the businesses according to new legal regulations with an aim to cut tax minimisation when foreign investments are involved. “It will ensure increased employment and investment in an important industry sector in Tasmania, while the safeguards we have put in place will ensure they pay their tax,” Morrison said in a statement.
According to the Wall Street Journal, takeovers by foreign companies is a sensitive decision to be taken by Australian government as local/national politicians are always prepared to oppose such deals, keeping in mind the fear posed to food and water security during a global demand rise. Investment by Chinese firms is of even more concern as the nation mainly has state-owned business firms.
Although the federal government has given its consent to the Chinese investor to buy VDL, several Tasmanians have criticised the decision of selling the business to a foreign private firm. This is because there were already two offers for VDL that came from local business owners. One was from ex-Tasmanian businesswoman and Kathmandu clothing firm owner Jan Cameron and the other was Rob Woolley’s TasFoods company.
The Australian reported that VDL has welcomed the decision taken by the Australian government and said that the business still be for customers, suppliers, and staff. However, federal MP Andrew Wilkie indicated his disappointment on the sale of a largest national dairy farm business to a foreign firm.
VDL will have to request for assistance from the Australian Taxation Office as soon as it enters the foreign market. It would be expected to follow complex tax minimisation measures, including transfer pricing that will entail goods transported with holding companies having lower tax jurisdictions. “A breach of these conditions could result in prosecution, fines and potentially divestment of the asset,” Morrison said.