Australia: Investing

FDI in Figures

After an economic slowdown, FDI flows to Australia have been strong thanks to the energy sector: according to the World Investment Report 2023 published by UNCTAD, FDI inflows rose by 194.9% year-on-year in 2022, totalling USD 61.6 billion, making the country the sixth-largest recipient worldwide. In the same year, the total stock of FDI reached USD 758 billion, around 44.5% of the country’s GDP. Meanwhile, outflows from Australia rose from USD 3.4 billion to USD 117 billion, mainly due to the acquisition of BHP (United Kingdom) from BHP (Australia). The main investing countries in Australia are the United States (24.1%), the United Kingdom (22.2%), Belgium (7.9%), Japan (5.7%), Singapore (3.3%), and Hong Kong (2.9%). These investments are mainly oriented towards the mining sector (32.1%), real estate (13%), finance and insurance (12.6%), manufacturing (10.6%), and trade (6% - data Department of Foreign Affairs and Trade). While Australia’s resources sector, which has traditionally been attractive for foreign investment, continues to receive investor interest, the services sector is now receiving greater attention. Furthermore, investments in battery storage have also been on the rise. The latest figures from the OECD show that investment inflows decreased to USD 7.8 billion in the first half of 2023, down from a peak of USD 48.4 billion in the same period one year earlier.

Australia is one of the most open to foreign direct investment among OECD member states, with FDI representing over a third of GDP. FDI through both majority and minority ownership supports 1 in 10 jobs in Australia (DFTA). That is thanks to its economic liberalism, stability, transparency of its legal system and strong economic growth over the last 25 years, which compensate for the narrowness of its market and its geographic isolation. The business environment is attractive, and the trading environment is conducive considering the strategic positioning of the economy within the Asia-Pacific region and the political links that it has with the United States. Australia is also involved in mega trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership. The new legislation is designed to ensure that foreign investment is appropriately assessed and that national interest factors are properly considered. The government supports a case-by-case approach to considering foreign investment proposals, and in case proposals are found to be contrary to the national interest they can be either rejected or asked to be modified. This flexible approach is preferred to hard and fast rules because the government believes that rigid laws that prohibit a class of investments can stop valuable investments. Moreover, the country recently revised the 2015 Foreign Acquisitions and Takeovers Regulation to clarify specific elements of the foreign investment review system and simplify the procedures for less sensitive investment categories. Furthermore, updates were made to the Guidance Notes pertaining to agriculture, commercial land, mining, residential land, securities, and other investment sectors. Australia ranks 24th among the 132 economies on the Global Innovation Index 2023 and 13th out of 184 countries on the 2023 Index of Economic Freedom. The country also stands at the 10th position in AT Kearney’s Foreign Direct Investment Confidence Index 2023.

What to consider if you invest in Australia

Protection of Foreign Investment

Procedures Relative to Foreign Investment

Freedom of Establishment

Yes

Acquisition of Holdings

Foreign persons can be required to obtain approval under Australia's foreign investment framework, which includes the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA). 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. From 30 March 2020, temporarily, proposed foreign investments into Australia which previously did not require Foreign Investment Review Board (FIRB) approval because the value of the transaction/target was below an applicable monetary threshold will now require FIRB approval, regardless of the nature of the foreign investor.

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 authorisations necessary for setting up business in Australia. Some investments must be declared to the FIRB.
These include acquisitions, substantial acquisitions of holdings, and taking control of Australian companies whose assets are valued at more than AUD 50 million; the creation or setting up of a new business when it goes over AUD 10 million (over AUD 100 million of investment the FIRB will make a detailed study) and direct investments carried out by foreign governments.
The applications, related to foreign investment in an Australian business, agricultural land or sensitive commercial land will be processed by the Treasury. While the applications concerning foreign investment in residential real estate or non-sensitive commercial land, as well as non-sensitive internal reorganisations, will be processed by the Australian Taxation Office.

Competent Organisation For the Declaration

FIRB

Requests For Specific Authorisations

Sensitive sectors in which FDI proposals are subject to special scrutiny include real estate, civil aviation, television broadcasting, mass circulation newspapers and telecommunications. In many of these sectors restrictions on FDI have been relaxed in recent years so that actual levels of foreign ownership and control have increased. 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

Temporary residents, foreign residents, or short-term visa holders from any country need to apply to the Foreign Investment Review Board (FIRB) to purchase real estate in Australia. Government policy aims to channel foreign investment into new housing, to create additional jobs in the construction sector and help support economic growth. It can also increase government revenue, through stamp duty and other taxes, and through the overall higher economic growth that flows from additional investment.

Risk of Expropriation

Private property can be expropriated for public purposes in accordance with Australia’s constitution and established principles of international law.  Property owners are entitled to compensation based on “just terms” for expropriated property. There is little history of expropriation in Australia.

Investment Aid

Forms of Aid

The Australian Government and state and territory governments provide support to assist investors set up and run a business in Australia. The form of assistance available will vary by location, industry, and the nature of the business activity. The main forms of assistance available to businesses are grants, discounts and cost reductions, tax exemptions, loan guarantees, payment of personnel training expenses, R&D tax incentives and major project facilitation.

Privileged Domains

The Australian government encourages investment essentially in Research and Development and in the creation of new industries. In particular, Austrade welcomes investments in Agribusiness and food; Infrastructure; Resources and energy; advanced manufacturing and space; Circular economy; Digital technologies and Health.

Privileged Geographical Zones

None

Free-trade zones

There are some free zones in Australia, such as the Northern Territory Trade Development Zone, which have been established to attract multinationals.

Public aid and funding organisations

The Australian Trade and Investment Commission – Austrade – is the Australian Government’s international trade promotion and investment attraction agency.

Investment Opportunities

The Key Sectors of the National Economy

Agri-food, the mining and agricultural sectors, logistics, agrarian machines.

High Potential Sectors

Biotechnologies, environment, infrastructure

Privatization Programmes

Electricity production

Tenders, Projects and Public Procurement

AusTender , Annual Procurement Plan List
Tenders NSW , Public Procurement opportunities in NSW
SA Tenders and Contracts , Public Procurement opportunities in South 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.

Finding Assistance For Further Information

Investment Aid Agency

Austrade (Australian Trade and Investment Commission)
Invest Victoria
Invest in New South Wales
Invest in South Australia
Invest in Western Australia
Invest in Queensland
Invest in Northern Territory
Invest in Tasmania

Other Useful Resources

Australian Department of Industry, Innovation and Science
Investment opportunities in Australian Tourism
Doing Business in Australia (Gadens)

Doing Business Guides

International Tax Australia Highlights (Deloitte)
Foreign investment and trade in Australia (MinterEllison)
Doing business in Australia (Thomson Reuters Practical Law)

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