Foreign Direct Investment opportunity in Australia
Let give an idea about economy before start discussion on foreign direct investment opportunity in Australia. The Commonwealth of Australia, with per capita GDP 49,927.82 USD and 1.258 trillion USD as nominal GDP is one of the biggest market economies in the world. It is the number two wealthiest nation in the world in terms of adult wealth following Switzerland. With 99% literacy rate it has the huge wealth of talented workforce.
Foreign Direct Investment FDI
The investment can be made by a company of a country or an individual of a country in another country through establishing either a Subsidiary or Associate Company or a Joint venture or by means of a Merger and securing an effective control or influence over the establishment. For Foreign Direct Investment opportunity in Australia, the free economies of the world are usually considered by the businesses. The FDI flows are measured in USD and as a share of GDP. FDI creates stable and long-lasting links between economies.
► The World Bank
|Indices||Rank in 2017||Rank in 2016|
|Starting a Business||7||8|
|Protecting Minority Investors||63||62|
World Bank [190 nations are in compared]
► Global Competitiveness Report [GCR] of World Economic Forum [2016-2017 editions] ranked the Commonwealth of Australia 22ndh out of 138 countries of the world.
► UNDP’s HDI [Human Development Index] ranked the Australia 2nd out of 168 countries of the world.
► Third Global Infrastructure Investment Index Australia ranked 11th out of 41 countries in the world
The FDI Inflows to Australia
The Commonwealth of Australia is one of the most open countries to foreign direct investment inflows among the OECD [Organization for Economic Cooperation and Development] nations. Foreign Direct Investment accounts for over a third of the Australia’s GDP. Australia is big in terms of area it possesses but comparatively narrow in terms of market prospects. But the continued strong economic growth of the last two decades made it a key destination for investments compensating for the poorer market size and geographical isolation.
FDI inflows to Australia have been strong since 2011 following the nose-diving of the World’s economies. Of course, the year 2015 recorded a negative growth in FDI inflows. FDI inflows reached USD 48.2 billion in 2016, securing a place among the top 10 destinations for foreign direct investments. Australia is ranked 9th amongst 25 countries in the AT Kearney’s Foreign Direct Investment Confidence Index 2017. Australia is in the top 10 slot for the seventh consecutive year, reflecting its appealing investment infrastructure and positive environment. In addition, the country is in the top five economies of the world as far as FDI inflows are concerned.
The sector that attracted the maximum FDI in the Australia is the mighty mining sector grossing A$310 billion, a 39 per cent share of the total FDI inflows into Australia. Following are the manufacturing sector at A$91 billion [11.5 %], real estate at A$84 [10.6%] and financial services at A$67 [8.4%] billion. Among the Industries, the real estate with A$84 billion, professional, scientific and technical services with A$5 billion and construction with A$20 billion remained as the focal points of investments in 2016.
Well, United States remain by far the biggest investor in Australia accounting for almost 25% of total FDI inflows to Australia. Apart from the US, the Asian nations like China [25% between 2009 and 2016], Hong Kong [12%] and Malaysia [14%] too showed greater interests in Australia.
|Key Investing Nations||% in 2015|
Source: OECD Statistics.
|FDI Inflows to Sectors||% in 2015|
|Finance & Insurance||8.1|
|Information and communication||3.4|
|Transport and storage||2.8|
|Retail & Wholesale||7.1|
|Electricity. Gas. Water Treatment||1.0|
Source: OECD Statistics.
There are some criteria to attract FDIs into a country such as Ease of Business, Skilled and disciplined workforce human resources, Quality infrastructure and logistic support, Smooth and speedy communication system, Stable government and economy, Good law & order situation, Protection of Investors, Business friendly laws and regulations openness of economy etc. By any standard, Australia is belonging to all of them and this is why foreign direct investment opportunity in Australia is higher than many countries.
Armed with a 99% literacy rate, the Commonwealth of Australia ranks 6th out of 118 nations in the Global Talent Competitiveness Index GTCI’ 2017.
Protection of Investors
So far, no case has been filed against the Australia for non-complying of any contract with overseas investors. Investors are entitled to lodge claims for compensation in case of any expropriation. Being a signatory to various bilateral agreements It has guaranteed the Freedom of enterprises in its territory
Comparison for the Protection of Investors
|Index of Transaction Transparency||8.0||6.0||7.0||5.0|
|Index of Manager’s Responsibility||2.0||5.0||9.0||5.0|
|Index of Shareholders’ Power||5.0||7.0||4.0||8.0|
|Index of Investor Protection||5.8||6.5||6.5||6.0|
World Bank 2017 ** More values denote more strength
Aid to Investments
Forms of Aid
The Australia has been endorsing tax abatement, duty exemptions, cash grants, location incentives to encouraging FDI. Apart from freedom of establishments, it permits acquisition of holdings by the foreign investors.
Following sectors in the Australia are considered highly potential for Foreign Direct Investments:
Agriculture II the mining and agricultural sectors II logistics II Biotechnologies II environment II infrastructures.
Investment Aid Agencies in the Australia to contact
Foreign Investment Review Board [FIRB]
Invest Australia [international/invest]
Other useful Link for Investment Incentives in the Australia
The Department of Industry, Science and Tourism [DIST]. The Australian government prefers foreign investment inflows importantly in the fields of Research and Development [R&D] and in developing new ideas and new industries. The Department of Industry, Science and Tourism [DIST] plays a pivotal role in materializing the government policies. Allowances and incentives are offered to investors who invest in such Research and Development activities in high technology sectors and as we said earlier there is many foreign direct investment opportunity in Australia.
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