SYDNEY, Australia - Prime Minister Julia Gillard Sunday warned critics of the planned merger between Singapore and Australia's stock exchanges against seeking to "disturb" long-standing foreign investment processes.
Gillard said she discussed the proposed 8.2 billion US dollar (S$10.6 billion) takeover of the Australian Stock Exchange (ASX) with Singapore Prime Minister Lee Hsien Loong during talks at the ASEAN summit in Hanoi.
She said both understood the community interest in the bid which needs approval from both Australia and Singapore and aims to create the world's fifth biggest exchange with a market capitalisation of 12.3 billion US dollars.
"We also both understood that there is a clear process to be gone through here, a clear process from the Australian point of view with our Foreign Investment Review Board and that that process would be gone through," Gillard told ABC television.
The proposed merging of the Sydney and Singapore stock exchanges faces political opposition in Australia, where Gillard heads a fragile minority government which relies on the Greens and independents to hold power.
Gillard said it would be inappropriate for her to speculate on whether the merger would be approved by the foreign investment watchdog, an important step in it being given the green light, and called for due process to be respected.
"I certainly hope that no one would seek to criticise or disturb what have been long-standing and bipartisan arrangements to assessing foreign investment and assessing it through the prism of our national interest," she said.
"That's what the Foreign Investment Review Board does - ask the question: is this in Australia's national interest?"
The Singapore-Sydney tie-up, which will also need the approval of Australia's parliament to go ahead, has been strongly criticised by Greens leader Bob Brown who said he would oppose it because of the city state's "appalling" rights record.
But the conservative opposition has also raised concerns over the deal, noting concerns about competition in the finance sector and control over the ASX.
"We need to see whether that, in any way, is compromised by the proposed takeover," opposition finance spokesman Andrew Robb said last week.
Independent MP Bob Katter also said he would oppose the deal, saying: "I have a desire some things in my country are left owned by my country. I do not wish to live in a country of serfs working for foreign landlords."
Singapore is Australia's sixth largest trading partner but the debate over the stock exchange merger echoes that over SingTel's 2001 takeover of Optus, Australia's second-largest telecom.
That deal raised national security fears but was ultimately approved.
"Xenophobia appears to be the only barrier standing in the way of the ASX Ltd being taken over by the Singapore Exchange," an Australian Financial Review commentary noted this week.
Singapore Exchange chief Magnus Bocker has argued the merger will be good for Australia by allowing investors from all over the world to invest in the country's resources boom.
But potential sticking points could include the Singapore government's large stake in the SGX, which could raise sovereign ownership concerns, and the board's composition with 11 Singapore representatives and four from Australia.
The proposed deal, scheduled to complete in mid-2011, will be reviewed by Australia's securities, foreign investment and competition watchdogs, as well as the central bank, and must be approved by Treasurer Wayne Swan.
Parliament - where Gillard holds a slim one-vote majority in the lower house - will then have to pass an amendment on ASX ownership rules.