Australia risks Chinese backlash by cracking down on foreign investment laws

Australia's treasurer Joe Hockey has risked severe backlash from Chinese investors by ordering one of the country's wealthiest men, Hui Ka Yan, to sell a 30.4 million U.S. dollar property in Sydney.

Australian company Golden Fast Foods, which is owned by Hui's Hong Kong-based group Evergrande, bought the Villa del Mare property last year, however, was found to have breached strict foreign investment laws in doing so.

Hockey suggested the company, which has been classified as an overseas company, failed to seek approval from the Foreign Investment Review Board (FIRB) before purchasing the 1,500-square- meter mansion. "We are very serious about integrity in our foreign investment system," Hockey said in a statement on Wednesday. "We welcome foreign investment. It is hugely important. But it is vitally important that every Australian knows that the rules relating to foreign investment are going to be enforced."

The property was sold by real estate agents Ken Jacobs ( Christie's International) and Bill Malouf (LJ Hooker), who say the decision is"completely out of left field" and that they had received no contact from the FIRB. "This is what I was told, the purchasing entity warranted that FIRB approval was not required,"Jacobs told News Ltd. on Wednesday. "It was definitely an Australian company that purchased it."

Those comments were echoed by Malouf, who said"As far as we know, it's a legitimate sale."

Property experts have warned that the decision could have potential repercussions as foreign investors, particularly from China, begin to have second thoughts over whether they are welcome overseas.

The Shanghai-based co-chief executive of property portal juwai. com, Simon Henry, told News Ltd. that there are already concerns in China regarding whether foreign investment has a long-term future in Australia. "Chinese social media thinks this move is a little punitive; that this property clearly won't impact first-home buyers,"Henry said. "So what's the issue? It's not going to stop investment, but it' s certainly going to make people question whether foreign investment is welcome."

Hui, who is listed as China's 15th richest man by American business magazine Forbes and is worth approximately 5.9 billion U. S. dollars, has 90 days to sell the property.

If he does not comply, the case may be referred to the Commonwealth Department of Public Prosecutions. Enditem