Proposed EU regulation will harm foreign investors

Last week, the European Commission proposed a draft regulation to assume greater power in approving foreign direct investment in the sectors which could affect security and public order. The regulation will come into effect only after the European Union member states and the European Parliament approve it.

According to the draft, sectors such as energy, transportation, communications, data storage, financial infrastructure, artificial intelligence, robotics, semi-conductors, cybersecurity, and space and nuclear technology are key areas that need stricter monitoring and supervision. And foreign investors could be prevented from investing or doing business in those areas for "security reasons".

The EC says that since less than half of the EU states have a strict national screening system in place, more coordination is needed at the EU level to minimize the threats to the EU's security and public order. Other developed economies such as the United States and Japan have already established such screening systems to "safeguard" their national interests.