AMID fears of a Chinese bid for Rio Tinto, the Treasury department has warned that the power of sovereign wealth funds needs to be curbed.
A Treasury study has called for the International Monetary Fund to impose standards that would stop investment funds owned by sovereign governments from buying a majority or controlling stake in foreign corporations.
"Attempts by foreign interests to purchase controlling stakes in strategic industries or iconic domestic companies can sometimes cause broadly based domestic concerns," the study says.
"Resistance can be even stronger if the purchaser is an overseas government, and can raise suspicions over whether the purchase is ... for strategic or other non-commercial reasons."
The Treasury paper follows concerns raised by BHP Billiton chairman Don Argus at the company's annual general meeting about Asian sovereign wealth funds buying mining assets.
"If you get producers and consumers co-ordinating, you really have a different dynamic in all economies ... we will contribute to the debate in the various countries around the world where this affects us in the context of sovereign assets," Mr Argus said.
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