Australia

Australia offers overseas investors diverse business opportunities across a broad range of world-class industry sectors.Some of the sectors are:

Financial Services

Finance and insurance is the fourth largest sector in Australia’s economy, generating 8.1 per cent or A$81 billion of real gross value added in 2007-08. This contribution is up from 6.5 per cent two decades ago and its expansion has also aided growth in related sectors such as communications, property and business services.

Highly developed financial markets make Australia one of the major centres of capital markets activity in Asia and Australia’s large and mature financial services sector has assets of more than A$4.3 trillion, which is equivalent to almost four times GDP.

Underpinning much of Australia’s financial services strength is the growth of its investment funds sector. Australia has one of the largest pools of contestable funds under management globally, valued at about A$1.3 trillion (US$850 billion).

Investors in Australia can also look to Australia’s financial services industry for investment financing. In October 2008, the World Economic Forum assessed Australia as having the third best regulation of securities exchanges and the fourth soundest banking system in the world (Source: World Economic Forum, The Global Competitiveness Report 2008-09), while Australia’s percentage of non-performing loans is among the lowest in the world (Source: IMF, Global Financial Stability Report, October 2008, Statistical Appendix, Table 24). Financial sector regulation is recognised as world best practice, and provides a transparent and secure base for expansion within the region.

Clean Energy

A resilient economy, proximity to the fastest growing region in the world, and strong government initiatives to address climate change, mean that Australia’s clean technology industries are poised for growth.

• Abundant and diverse renewable energy resources, supported by world-class research and industry knowledge
• 90 per cent of Australia absorbs over 1,950 KWh of sunlight per metre per year
  
• Hottest non-volcanic geothermal environment in the world with temperatures of 280ºC at 5km under the surface
  
• Strong westerly winds, up to 10 metres per second, buffet southern Australia
  
• Wave energy capacity of 170,000MW
  
• Plenty of economical feedstock for biofuels and abundant and available biomass
  
• Large landmass suitable for clean energy infrastructure
  
• World-class research and development expertise
  
• Advanced science and technology for biological, chemical and mechanical testing.

The Australian Government is committed to the commencement of the Carbon Pollution Reduction Scheme (Emissions Trading Scheme) on 1 July 2011.

The Renewable Energy Target (RET) has been expanded to reach 20 per cent of electricity generation in Australia by 2020. This will increase the current Renewable Energy Target by more than four times – to reach 45,000 gigawatt-hours in 2020.

The Australian Government’s initiatives on climate change include a commitment of A$4.5 billion in funds and building demonstration projects through:

• The A$1.6 billion Solar Flagships Program with a target to create 1,000MW of solar electricity generation
  
• The A$2.4 billion Carbon Capture and Storage (CCS) Flagships Program with a target to create 1,000MW of low emission fossil fuel generation, and
• The A$560 million to support research, development and demonstration of low-emissions energy technologies.
  

Advanced Manufacturing

Australia has a proud record of originality in advanced manufacturing. It is the country that gave birth to the ultrasound scanner, the black box flight recorder and the bionic ear.

Today, advanced manufacturing accounts for around half of Australia’s A$104 billion annual manufacturing output and is one of the fastest growing export sectors.

Part of this success is due to cross-fertilisation between R&D institutions and the manufacturing sector. For example, co-operative research centres have been established to provide links between industry and the research community. They help to commercialise technologies in specialist fields such as advanced composite structures, automotive technologies, cast metals manufacturing, railway engineering, polymers and spatial information.

As a result, manufacturing currently attracts more than $3.9 billion annually in R&D, or 39 per cent of all business expenditure on R&D. (Source: Australian Bureau of Statistics, Cat. No. 8140.0, Business Expenditure of R&D, 2005–2006). Approximately A$10 billion is invested annually in new plant and equipment.

Advanced manufacturing has become a prime avenue for inward investment. In 2006, the value of FDI in Australian manufacturing reached A$60 billion (Source: Australian Bureau of Statistics, Cat. No. 5352.0, International Investment Position, Table 21a). Some industry sectors have attracted particular attention among overseas high-technology companies. These include: Boeing and BAE Systems for specialist aerospace components; Ford, General Motors, and Toyota in the automotive sector; BASF and DuPont in the chemicals industry; and Siemens in energy and water treatment technology.

Excellent research facilities, world-class scientists and a strong but flexible regulatory regime have made Australia a powerhouse of biotechnology and pharmaceutical innovation.

Biotechnology

Australia is home to a thriving network of 470 biotechnology companies. Of these, 49 per cent are involved in therapeutics, 15 percent in agricultural biotechnology and 13 per cent in diagnostics.

In 2008, the BioIndustry Review reported that 399 alliances had been announced involving Australian life science companies in the previous 12 months. Of these, over 70 per cent were with international organisations – 101 with North American organisations, 100 with European organisations and 57 with Asian organisations (Source: Hopper and Thorburn, 2008 BioIndustry Review: Australia and New Zealand).

Australia has a well established medical device industry, a strong position in nanobiotechnology and is internationally regarded for its expertise in stem cell research.

Australian biotechnology companies continue to develop and bring drugs to market, including:

• CSL – the cervical cancer vaccine – Gardasil – marketed by Merck & Co
  
• Biota – the influenza drug Relenza – marketed by GlaxoSmithKline
  
• Peptech (now Arana Therapeutics) – IP related to anti-tumor necrosis factor (TNF) drugs – Remicade – marketed by Centocor, and Humira – marketed by Abbott Laboratories
  
• Sirtex Medical – the liver cancer treatment – SIR-Spheres
  
• Acrux – a spray on hormone replacement therapy for women – EvaMist – launched in the US in April 2008 through KV Pharmaceuticals .

The Australian Government places a premium on world-class innovation and actively promotes R&D. Multinational enterprises that conduct R&D in Australia, but hold the associated IP in their home jurisdictions, can gain access to an R&D tax concession worth 175 per cent of their R&D investment.

Infrastructure

Spurred on by the vibrant economy and a lifestyle of international renown, immigration into Australia keeps growing. Since 2000, the population has grown by about 4,000 people per week (Source: The Economist Newspaper Limited, Pocket World in Figures: 2007 Edition)

As population centres expand, local governments have increased spending on large-scale infrastructure projects. Together with the resource sector boom, this accounts for extremely high levels of activity in the civil engineering and construction sector.

In particular, transport and utilities projects have become a focus for long-term investment. In 2005, the Australian Government established an Export Infrastructure Task Force to identify priorities and reduce impediments to investment.

More recently, the Government established Infrastructure Australia to coordinate a national approach to Australia’s future infrastructure needs. The agency has completed an audit of the nation’s economic assets and identified key themes to drive development of Australia’s infrastructure. These include: broadband; energy grids: port productivity and land transport; public transport; and water supply.

Continued strong demand means the Government is keen for more foreign companies to enter the infrastructure development market, both to increase competition and relieve construction bottlenecks.

Agribusiness

The Australian agribusiness sector occupies a significant place in the Australian economy and has a strong track record in attracting international investment throughout the agricultural supply chain.

Australia’s diverse climate, rainfall patterns and soil types sustain a wide range of agribusiness enterprises, including: tropical and temperate horticulture; inland and coastal aquaculture; the production of grains, oilseeds and fibres; grazing and feed lotting of livestock; thoroughbred breeding, forestry and the production of timber products.

Australia enjoys several advantages. Our geographic isolation and leading quarantine and monitoring regime help preserve a reputation for high quality production. Proximity to Asian economies, extensive free trade agreements and counter-seasonal production for the northern hemisphere means that trans-national companies sourcing from Australia can deliver produce throughout the year; this assists to drive demand for Australia’s products in world markets.

Australian agriculture has consistently financed and developed science-based farming for the sector. This has maintained an average agricultural productivity gain of two per cent over the past 50 years.

Competitiveness for agribusiness is derived from locally-developed production methods and technologies and international research and development collaborations. Continual innovation in farm machinery, sophisticated plant and animal breeding programs and intelligent transport solutions underpin the ability of Australian agribusinesses to bring world-class commodities to market.

As a major exporter of agricultural produce and services, more than two thirds of agricultural commodities produced on farms are exported each year. Among the agribusiness export industries, the average proportion of production exported ranges from 98 per cent for wool to 51 per cent for dairy products. The value of the agricultural exports in 2006-07 was $27.8 billion. Over the past twenty years, the production and exports of beef, wine and dairy products have increased significantly in response to growing overseas demand for higher value products.

In 2006-07, the gross value of agricultural production was globally significant at $38.5 billion.

Australia is a logical supply source for agricultural products, food and biofuels. The professional farming community also represents an educated and reliable supply chain partner for international customers. Considering the extensive range of agricultural resources and rural production, there are significant new agricultural opportunities available within a stable investment and regulatory environment.

Food and Beverage

Key food and beverage categories include meat, grains, dairy, horticulture, seafood, confectionery and beverages including wine. The industry supplies a diverse range of products to all distribution channels: retail, food service and food ingredients. Flexibility within the industry means product supply quickly matches consumer trends such as healthy and wellbeing, as well as convenience and value for money.

Food and beverage is a major industry sector for the Australian economy, in terms of both its financial contribution and employment. Food and beverage processing is Australia's largest manufacturing industry with sales exceeding A$70 billion in 2005-06 and accounting for around 18 per cent of manufacturing employment. Industry players are diverse in size - from multinationals producing large volume fast-moving consumer goods through to smaller players with flexibility to meet demand for niche gourmet items.

The industry is highly dynamic driven by demanding consumers seeking diversity, quality and value. The ethnic and cultural diversity of Australia is reflected in the food range available. Many specialty products have European, Asian and Middle Eastern influences. Foods with specific attributes including kosher, halal and organic are catered for by food certification systems and standards. The industry is internationally focused with exports to over 200 markets valued at A$23 billion in 2006-07.

Australia has a reputation for supplying clean and natural products with low chemical residues. Quality and safety is paramount with strict safety standards regulated and enforced along the supply chain. Excellent R&D facilities, both public and private, assist in the innovation process by facilitating development of new and differentiated products, as well as continual improvements to packaging and production processes.

A diverse range of produce is available from Australia due to large climatic differences across the Australian continent, from the tropical north to the temperate south. Australia also has a counter seasonal advantage when supplying international markets in northern hemisphere.

Well established education and training facilities catering to the food and beverage industry, create an exceptionally skilled and adaptable workforce with specialised skills.

Right across the supply chain, the Australian food and beverage industry has adopted innovative manufacturing, packaging, product development and marketing efforts. From paddock to port, the industry is supported by reliable and world-class transport and distribution infrastructure.

Information and Communications Technology (ICT)

A significant research infrastructure, highly skilled and experienced workforce, and technology-hungry, solutions-driven customer base makes Australia a strategic location for a range of ICT activities with a global and regional focus.

There are many examples of world recognised brands taking advantage of what Australia has to offer in ICT. Global names such as Avaya, Canon and IBM have built product development (R&D) facilities in Australia; Google Maps and Warner Bros have used their bases in Australia to develop profitable international digital content for business and entertainment sectors; Alcatel-Lucent, Cisco Systems and CSC run advanced technical assistance centres for operations around the world from Australia; and Logica CMG, Reuters and Infosys have made Australia central to their global risk reduction strategies.

The size of the market, its innovative outlook and a varied and sophisticated customer base combine to make Australia an ideal location to develop and test new ICT products and services. Software and processes that are built and adapted here are often rolled back into the global product development environment and subsequently used by customers worldwide.

Australia’s ICT market is worth nearly A$100 billion (Source: ABS, Cat. No. 8126.0, Information and Communication Technology Australia, 2006-07, October 2008). It is the fifth largest in the Asia-Pacific region, and the 14th largest in the world (Source: WITSA, Digital Planet: The Global Information Economy, May 2008). Between 2001-2008 the rate of growth in Australia’s ICT market was expected to be 13.8 per cent – faster than that of Japan, Hong Kong, South Korea and Taiwan’ (Source: WITSA, Digital Planet: The Global Information Economy, May 2008).

In 2008, the EIU ranked Australia’s IT industry the second most competitive in the Asia Pacific region after Taiwan and the seventh globally (Source: EIU: How Technology Sectors Grow. Benchmarking IT Industry Competitiveness 2008). It also benchmarked Australia fourth for e-readiness after the US, Hong Kong and Sweden (Source: EIU, E-Readiness Report 2008).

Approximately 400,000 Australians are employed in ICT occupations or specific ICT industry businesses (Source: ABS, Labour Force Survey, August 2008). There are around 30,300 such businesses (Source: ABS, Cat. No. 8126.0, Information and Communication Technology Australia, 2006-07, October 2008) and many industries employ ICT professionals – chiefly: property and business services, finance and insurance, government administration and defence, communication services, and manufacturing.

Australia’s ICT workforce offers extensive domain-level knowledge and quality technical expertise – particularly in architecture and integration. The result is targeted, clever and innovative ICT solutions for a range of companies across different industries.

The A$2.7 billion software industry has benefited from comparatively low development costs and a highly skilled workforce, and has consequently become a target for strategic ICT investment (Source: Microsoft Australia, Local Software Economy Initiative: Annual Report 2007). Companies such as IBM, Canon, Citrix, EDS, Fujitsu, Google and NEC have built major software development facilities in Australia.

Australia has also proved a particularly fertile domain for creative digital industries which generate in excess of A$23 billion per year(Source: ARC Centre of Excellence for Creative Industries and Innovation, Queensland University of Technology).The digital game development sector alone generated A$136.9 million in 2006-07, with 93 per cent derived from exports (Source: ABS, Cat. No. 8515.0, Digital Game Development Services, Australia, 2006-07). Working with the film industry, Australian digital content expertise has won global acclaim in productions such as the animated feature film 'Happy Feet'.

Resources

Thanks to abundant mineral resources, skilled industry professionals, advanced extraction processes and cutting edge technology, Australia is a leader in the global mineral industry. Australia has the world’s largest reserves of lead, nickel, uranium and zinc. It is the world’s largest producer of bauxite and alumina (using the Economic Demonstrated Reserves (EDR) measure) the second largest producer of zinc ore and nickel, and the third largest producer of iron ore and gold.

Mining and minerals activity currently comprises approximately eight per cent of the Australian economy, and 40 per cent of exports. The sector is expanding, driven primarily by huge demand for raw materials from China and other parts of Asia. Earnings from Australia’s mineral resources exports increased by 11 per cent to $116 billion in 2007-08, (Source: Australian Bureau of Agriculture and Resource Economics, Australian mineral statistics, June Quarter 2008) partly owing to a 25 per cent rise in export prices (these factors helped off-set a 14 per cent fall in the value of the Australian dollar).

The scale of our resource industry has helped Australia become a world leader in the development and manufacture of mining equipment, technology and services (METS). Australian firms are competitive right across the supply chain, which includes exploration, engineering, minerals processing, environmental management, mine safety, R&D and training.

For example, Australian companies design and manufacture large capital items such as mining trucks. And 60 per cent of the world’s mines use mining software that was developed in Australia. In total the METS sector generates sales of A$12 billion annually, and A$2.5 billion worth of exports.

Successful R&D in sectors such as radar exploration and minerals analysis has given birth to firms that now export niche technologies. As a result, the resources sector is one of the leading stimulants for R&D in the Australian economy, and foreign investors are increasingly focused on the potential for innovation as well exploration.

Source: Invest Australia

Updated: July 2010