Investing in Australia
Pocket Guide to the Lucky Country
Deloitte Global Chinese Services Group published Inbound Advisory Services – Pocket guide to The Lucky Country, this bi-lingual guide provides an insight into some of the challenges and top eight potential issues that foreign investors should be aware of to ensure a successful expansion in Australia.
Australia’s reputation as ‘The Lucky Country’ is well deserved. It has demonstrated sustained economic resilience over the years, particularly during periods of global uncertainty. Heralded by leading institutions such as the International Monetary Fund, Australia’s economic and social fundamentals provide prudent foreign investors an opportunity to expand their global footprint.
Amid the clouds of global turbulence, Australia’s economic fundamentals continue to outshine many global peers. With 25 years of successive growth, Australia remains a favoured destination for overseas investors seeking a prudent return to expand their footprint.
While Australia is a great place to invest, we recommend cautious optimism as it is critical to understand the pitfalls as well as the opportunities. Complacency will always deliver poor results.
The guide outlines the top eight potential issues when considering an Australian adventure.
Not all sectors are as lucky
Although Australia’s growth over recent years has surpassed most western economies, a closer look shows that this performance is not universal across every geography and sector.
A combination of low interest rates, vast growth potential and low operating risks makes Australia a prime location for investment. With a significant number of public sector infrastructure projects in the pipeline, and many government assets in line for privatisation, foreign investment is needed.
Foreign Direct Investment hotspot
Australia has always been a hotspot for foreign investment, as our country offers high capital returns with relatively low barriers of entry. Recently, however, the debate around foreign ownership has resurged in local media, and precipitated changes to our foreign investment regulatory framework.
The Sovereign risk thing
Australia’s political environment has been the subject of much overseas interest. Senior leadership challenges, elections returning unclear majorities, and wide ranging legislative reform has impacted the funding of state and federal governments.
Australia’s housing market has seen significant growth over the past few years, propelled by low interest rates, strong investor-led demand and large house price gains. While we expect the market to continue growing, it’s important to heed caution as housing market conditions change in the face of low affordability and high costs.
Beware of what lies beneath
Corporate earnings are being influenced by lower than ever interest rates, fluctuating commodity prices, weak wage growth and uncertainty surrounding proposed company tax reforms. However, the future is uncertain and more than ever before, prospects require close scrutiny.
What will the tide wash up next?
The raft of recent and impending tax and accounting changes is likely to impact the future earnings of many corporates. An understanding of these changes is important when developing your growth strategy.
Our island home – the tyranny of distance
Australia’s geographic position provides unique benefits and challenges to foreign investors. Significant risks contradict foreign acquirers seeking to integrate and monitor their Australian investments without proper on-the-ground support.
We hope you find this publication a useful guide for Chinese investors with interest on Australian market.