Australia: Investing

FDI in Figures

Australia is one of the OECD countries most open to foreign direct investment (FDI), representing over a third of GDP.

In terms of foreign direct investment (FDI), Australia is ranked 13th in the world but 3rd in the Asia-Oceania zone, behind Hong-Kong and China. Traditionally, Australia is an investment destination. Its economic liberalism, its stability and judicial system transparency, combined with strong economic growth of more than 15 years, make up for the narrowness of its market and its geographical isolation, and make it a desirable destination. The effects of the 2008-2009 financial crisis have not harmed its capabilities and Australia remains a valued destination to a number of investors.

Foreign Direct Investment	2008	2009	2010
FDI Inward Flow (million USD)	46,722	25,716	32,472
FDI Stock (million USD)	305,519	425,427	508,123
Performance Index*, Ranking on 141 Economies	61	69	-
Potential Index**, Ranking on 141 Economies	21	-	-
Number of Greenfield Investments***	239	252	-
FDI Inwards (in % of GFCF****)	15.3	7.2	-
FDI Stock (in % of GDP)	29.5	33.5	-

Source: UNCTAD - Last Available Data.

Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.

FDI Inflows By Countries and Industry

Main Investing Countries	2009, in %
United States	22.7
UK	14.5
Japan	10.3
Netherlands	7.7
Switzerland	4.0
Germany	3.8
Singapore	3.6

Main Invested Sectors	2009, in %
Mining	50.0
Services	17.0
Real estate	13.0
Manufacturing industry	11.0

Source: Australian Bureau of Statistics, International Investment Position: Supplementary StatistAustralian Bureau of Statistics, International Investment Position: Supplementary Statistics 2009 - Last Available Data.

Form of Company Preferred By Foreign Investors: Proprietary Limited companies (PTY Ltd)
Form of Establishment Preferred By Foreign Investors: The subsidiary company
Main Foreign Companies: All the multinationals and large world groups are present in Australia, from petroleum companies such as BP or CALTEX to aeronautical companies with BOEING and AEROSPATIAL, to telecommunication companies (VODAFONE, ALCATEL) or services (AXA, ALLIANZ). More than 900 multinationals have their regional headquarters or operational centers in Australia.
Sources of Statistics: Australian Bureau of Statistics

Why You Should Choose to Invest in Australia

Strong Points: The customary Australian dynamism, its economic robustness, its strong growth, stable and juridically reassuring business environment and position as a practical access platform for certain markets, like New Zealand and the Pacific islands, make this country a choice target for establishment.
Weak Points: Reduced competition in some sectors can limit returns on scale. Lack of investment in transport and telecommunication infrastructures sometimes slows down growth in some sectors.
Government Measures to Motivate or Restrict FDI: Foreign companies get assistance, especially for productive investment, R&D, professional training and job creation. For many years, the amount of administrative formalities for setting up foreign companies has been reduced.

Protection of Foreign Investment

Bilateral Investment Conventions Signed By Australia: Yes
International Controversies Registered By UNCTAD: No
Organizations Offering Their Assistance in Case of Disagreement: ICC , The International Chamber of Commerce
ICSID , International Center for settlement of Investment Disputes
Member of the Multilateral Investment Guarantee Agency: Yes

Country Comparison For the Protection of Investors

	Australia	OECD	الولايات المتحدة	Germany
Index of Transaction Transparency*	8.0	6.0	7.0	5.0
Index of Manager’s Responsibility**	2.0	5.2	9.0	5.0
Index of Shareholders’ Power***	7.0	6.8	9.0	5.0
Index of Investor Protection****	5.7	6.0	8.3	5.0

Source: Doing Business - Last Available Data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.

Procedures Relative to Foreign Investment

Freedom of Establishment: Yes
Acquisition of Holdings: There is a mixed regime which has been made more flexible since it was set up in 1975. However, the purchase of a local firm by a foreign company can always be refused by the controlling authority, on the grounds that it would be contrary to national interests.
Consult the FIRB (Foreign Investment Review Board) website.
Obligation to Declare: The agency for the promotion of foreign investment in the country gives information about the authorizations necessary for setting up. Some investments must be declared to the FIRB.
Acquisitions, substantiel acquisitions of holdings, and taking control of Australian companies whose assets are valued at more than 50 million AUD; the creation or setting up of a new business when it goes over 10 million AUD (over 100 million AUD of investment the FIRB will make a detailed study); direct investments carried out by foreign governments must be declared.
Competent Organization For the Declaration: FIRB
Requests For Specific Authorizations: The media, the banking sector, air transport and mining concessions are subject to restrictions; the FIRB can provide details.

Office Real Estate and Land Ownership

Possible Temporary Solutions: There are several temporary solutions: domiciliation of the company at the private address of the director, domiciliation in a business center, lodging in relay-workshops , company incubators and renting professional premises.
The Possibility of Buying Land and Industrial and Commercial Buildings: Production sites can be built with the help of INVEST Australia and administrations of the different Australian States such as the DSRD.
Risk of Expropriation: According to Australian law, foreign investors are entitled to compensation if they are victims of expropriation.

Investment Aid

Forms of Aid: Subsidies, discounts and reductions of costs, tax exemptions, loan guarantees, payment of expenses for personnel training
Privileged Domains: The Australian government encourages investment essentially in Research and Development and in the creation of new industries. The Department of Industry, Science and Tourism (DIST) plays a vital role in these incentive policies. Allowances are granted to investors who take part in certain Research and Development activities in high technology sectors.
Privileged Geographical Zones: None
Free Zones: There are some free zones in Australia, such as the Northern Territory Trade Development Zone, which have been established to attract multinationals.
Organizations Which Finance: Invest Australia is the agency for the promotion of investment in Australia. It finances aid to investment and publishes an investor's guide.

Investment Opportunities

The Key Sectors of the National Economy: Agri-food, the mining and agricultural sectors, logistics.
High Potential Sectors: Biotechnologies, environment, infrastructures.
Privatization Programs: Electricity production
Tenders, Projects and Public Procurement: AusTender, Annual Procurement Plan List
SA Tenders and Contracts, Public Procurement opportunities within Australia
Tenders Info, Tenders in Australia
DgMarket, Tenders Worldwide

Sectors Where Investment Opportunities Are Fewer

Monopolistic Sectors: The Australian government still maintains legal monopolies in public service companies: the postal service (Australia Post) and the rail network.
Sectors in Decline: Textiles, Shoes

Finding Assistance For Further Information

Investment Aid Agency: Invest Australia
Invest Victoria
Doing Business Guides: Government website on the subject
Deloitte "International Tax and Business Guide"
Australia Commercial Guide 2010 - Buy USA

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