Prime Minister Scott Morrison has announced a foreign investment overhaul.

The Foreign Investment Review Board (FIRB) will now have to approve all investments in any “sensitive national security business”, regardless of the value of the deal.

It is expected to apply to businesses in communications, technology, energy and major infrastructure such as ports and defence.

FIRB advises the Treasurer and Federal Government on whether to approve foreign investments in Australia. Its overhaul comes as fears are raised that foreign funds will seize Australia firms that have been hollowed-out by the COVID-19 pandemic.

Before the changes, FIRB approval was required to investigate a foreign investment worth more than $275 million or more than $1.2 billion for Free Trade Agreement partners.

The proposed changes scrap the monetary value threshold and make FIRB’s involvement dependent on the nature of the business.

Additionally, the Treasurer will be given “call in” powers to assess an investment before, during, or after an acquisition, and even order a divestment if national security risks emerge after an investment is approved.

Treasurer Josh Frydenberg said it is a necessary change.

“Of the nearly $4 trillion of foreign investment in our country, more than 20 per cent comes from the United States, more than 10 per cent from each of the United Kingdom and Japan, and a little over 5 per cent from China,” he said.

“Foreign investment regulatory framework has always sought to strike a balance between, on the one hand, welcoming and inviting foreign investment to this country but on the other ensuring that those foreign investment proposals that succeed are in our national interest.”

The Government wants to pass legislation to have the new system in force by January 1, 2021.