The Federal Government is changing investment rules to make it easier for foreign businesses to buy land and set up in Australia, in a move to drive down food prices.

Under current rules, foreign investors have just 12 months after purchasing land to begin substantial development, but with these new changes retailers such as Wal-Mart, Costco, Aldi and Ikea will have up to five years to develop vacant commercial land.

According to Assistant Treasurer Chris Bowen the new rules will give foreign companies a better chance to compete with local supermarket chains such as Coles and Woolworths.

"This reform creates a more level playing field, and pulls down the barriers to entry to foster competition," Bowen told The Sydney Morning Herald.

"The current time limit on foreign investors discourages new competitors from entering the market and prevents some existing competitors from expanding their business, because they can’t secure forward purchases of land in growth areas and greenfields sites,” he said.

Foreign chains such as Aldi and Franklins welcomed the decision as it creates the opportunity for more investment. German-based Aldi currently operates 167 stores in Australia, mainly on the Eastern coast, while South African-owned Franklins has about 80 stores in NSW.