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In this page: FDI in Figures | What to consider if you invest in Australia | Protection of Foreign Investment | Procedures Relative to Foreign Investment | Office Real Estate and Land Ownership | Investment Aid | Investment Opportunities | Sectors Where Investment Opportunities Are Fewer | Finding Assistance For Further Information

 

FDI in Figures

Global foreign direct investment (FDI) flows in the first half of 2021 reached an estimated USD 852 billion, showing stronger than expected rebound momentum, with an increase of 78% of the partial-year growth rate on the previous year according to UNCTAD’s Investment Trends Monitor released on October 2021. The global FDI outlook for the full year 2021 has also improved from earlier projections. The current momentum and the growth of international project finance are likely to bring FDI flows back beyond pre-pandemic levels. Nevertheless, the duration of the health crisis and the pace of vaccinations, especially in developing countries, as well as the speed of implementation of infrastructure investment stimulus, remain important factors of uncertainty. Other important risk factors, including labour and supply chain bottlenecks, energy prices and inflationary pressures, will also affect final year results (UNCTAD, October 2021). Covid’s impact on developing markets and shifting investment from China are major trends that will impact foreign investment in 2022.

After an economic slowdown, FDI flows to Australia have been strong thanks to the energy sector. According to the World Investment Report 2021 published by UNCTAD, following the Covid-19 pandemic, FDI inflows halved to USD 20 billion in 2020 from USD 39 billion in 2019, as a result of low cross-border sales targeting chemicals and the financial sector. Australia was the 14th largest economy in the world in terms of FDI inflows in 2020, with FDI stocks reaching USD 790 billion.

The main investing countries in Australia are the United States, the United Kingdom, Belgium, Japan, Hong Kong, Singapore, the Netherlands, Luxembourg, China, and New Zealand. These investments are mainly oriented towards the mining sector, manufacturing, finance and insurance, real estate 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.

Australia was ranked 14th out of 190 countries in the last World Bank's 2020 Doing Business report, in a significant increase from 2019, when it ranked 18th. The country 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, 2022). 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 recently introduced a series of changes to its foreign investment framework by simplifying the existing regulation. The new legislation is designed to ensure that foreign investment is appropriately assessed, and that national interest factors are properly considered.  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 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. For that reason, they believe their approach maximises investment flows and protects Australia’s interests.

The latest United Nations Asia-Pacific Trade and Investment Trends Report provides additional information on FDI in Australia and Asia-Pacific in 2021 and 2022.

 
Foreign Direct Investment 201820192020
FDI Inward Flow (million USD) 68,47739,22420,146
FDI Stock (million USD) 701,316731,176790,655
Number of Greenfield Investments* 438433321
Value of Greenfield Investments (million USD) 18,29217,06118,587

Source: UNCTAD, Latest available data.

Note: * Greenfield 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.

 

FDI STOCKS BY COUNTRY AND INDUSTRY

Main Investing Countries 2020, in %
United States 23.3
United Kingdom 18.5
Belgium 10.2
Japan 6.6
Hong Kong (SAR of China) 3.5
Singapore 2.9
Luxembourg 2.6
Netherlands 2.1
China 2.0
New Zealand 1.7
Canada 1.6
Switzerland 1.4
Germany 1.2
Main Invested Sectors 2020, in %
Mining and quarrying 35.1
Real estate activities 11.7
Financial and insurance activities 11.0
Wholesale and retail trade 6.0
Information and communication 3.1
Transport and storage 2.5
Electricity, gas, and water 2.2
Construction 1.9
Accommodation and food service activities 0.9
0.0

Source: Australian Department of Foreign Affairs - Statistics on who invests in Australia - Latest 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

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What to consider if you invest in Australia

Strong Points

Economic conditions in Australia are excellent.  Australia's main assets are:

  • Strong growth
  • Stable and judicially reassuring business environment
  • Large reserves of natural resources
  • Good quality business climate and infrastructure
  • Strategic location close to Asia
  • Low public debt
  • An attractive tourism destination
Weak Points

Disadvantages for FDI in Australia are:

  • Reduced competition in some sectors can limit returns on scale
  • Lack of investment in transport and telecommunication infrastructure
  • High household debt (185% of gross disposable income)
  • Australia is vulnerable to variation in commodity prices
  • High dependence on Chinese demand (although the Australian economy has shown its resilience)
  • Particular vulnerability to climate change
  • Lack of qualified workforce
Government Measures to Motivate or Restrict FDI
The Australian Government 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. Foreign companies get assistance, especially for productive investment, R&D, professional training and job creation. Foreign investors benefit from the same rights as nationals.

The Australian government has a proactive policy towards FDI. Several agencies are working to implement its affect on the regional level. Austrade provides coordinated government assistance to attract and facilitate productive foreign direct investment (FDI) into Australia.

Consult the Australian government website, which outline aid available to investors.

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Protection of Foreign Investment

Bilateral Investment Conventions Signed By Australia
Australia has signed bilateral investment treaties (BITs) with numerous, amounting to a total of 24 BITs currently in force. To see a list of participating countries, consult UNCTAD website.
International Controversies Registered By UNCTAD
The ISDS Navigator contains information about known international arbitration cases initiated by investors against States pursuant to international investment agreements. Australia is involved in 7 cases as Home State of claimant and in 2 cases as Respondent State.
Organizations Offering Their Assistance in Case of Disagreement
ICCWBO , The International Chamber of Commerce
ICSID , International Center for settlement of Investment Disputes
Member of the Multilateral Investment Guarantee Agency
Australia is a signatory to the Convention of the MIGA.
 
Country Comparison For the Protection of Investors Australia OECD United States Germany
Index of Transaction Transparency* 8.0 6.5 7.0 5.0
Index of Manager’s Responsibility** 2.0 5.3 9.0 5.0
Index of Shareholders’ Power*** 8.0 7.3 9.0 5.0

Source: Doing Business - Latest 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.

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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.

Learn more about Foreign Investment in Australia on Globaltrade.net, the Directory for International Trade Service Providers.

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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.

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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 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.
 
 

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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

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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.

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Learn more about Investing in Australia on Globaltrade.net, the Directory for International Trade Service Providers.

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Latest Update: June 2022