INTRODUCING: AUSTRALIA
Getting acquainted is the first step to starting any business. First of all it is important to research some basic information about a country. Then, with such a foundation in place, one can start to fully realize the potential business opportunities. Let us start by recalling some important facts.
Australia is the sixth largest country in the world - one and a half Europe! Population - 25 million people. The country is part of the British Commonwealth, the head of state is the Queen of Great Britain. That is why cultural, educational and scientific ties with the entire English-speaking world are strong here, and the best British traditions are preserved.
Australia’s economy is the 12th largest in the world. Australia is self-sufficient, and has the largest world reserves of gold, iron ore, uranium, bauxite, nickel, cobalt, natural gas, and coal.
Australia has well-developed financial markets, including the fifth largest pool of managed funds in the world, the ninth largest stock market, the tenth largest foreign exchange market, and the fourth largest retirement asset pool in the world.
Australian agriculture leads the world in efficiency, technology and sustainability. The country is a major world producer of beef, wool, wheat, wine, raw cotton, lamb, barley, sugar, fruits, livestock, lamb, coffee, and nuts. Australia has the largest area in the world for organic farming.
Australia is ranked as one of the most favourable countries for doing business. Regulation is transparent and efficient; businesses are provided with full government support. The country is open to innovation - there is favourable legislation for development of knowledge-intensive industries and fintech. One of the most stable financial systems in the world allows companies to easily secure funding.
Australia is a trading country. With 14 free trade agreements in place, approximately 70% of Australian trade enjoys liberalized access to overseas markets.
In November 2020, Australia joined the Free Trade Agreement, which was signed by the 15 largest economies in Asia. This Agreement created the world’s largest free trade zone with approximately 2.2 billion consumers and a GDP of US $ 28 trillion, which is more than 32% of the world’s total GDP. The document indicates the abolition of tariffs for at least 92% of traded goods between the participating countries, and also includes measures to simplify customs procedures.
The country has high growth rates of foreign investment. Australia’s FDI is in excess of AU $ 1 trillion. The largest investors in Australia are USA, Great 52 Britain, Japan, Netherlands, and Hong Kong.
Australia has overtaken many advanced economies. At 3.2% per annum, Australia’s GDP growth since 1992 has outpaced most comparable economic regions, including the Eurozone (1.6% per annum), the United Kingdom (2.1% per annum) and the United States (2.6% per annum) year. Australia’s economy also outperformed the G7 and mediumgrowth advanced economies.
Despite the pandemic, Australia’s GDP in Q4 2020 grew by 3.1% QoQ, while in the previous quarter the economy grew by 3.4%.Australia’s economy is expected to grow this year by 4.4% compared to June last year.
The country is also recognized for its high standard of living. In 2018, Australia ranked third in the Human Development Index, ahead of many other major developed economies and all G7 members. In terms of the quality of ICT infrastructure, human capital and research publications, Australia is among the top 10 countries in the world.
In 2019, GDP per capita reached a high level of US $ 54,000. The average Australian household has a net worth of A$1,022,200. Australia’s richest 20% of households – about two million of them – have an average net worth of A$3.2 million. Therefore, it is not surprising that for the past few years Australia has reached the first place in the number of millionaires who had chosen the country as their new home, overtaking the United States and Switzerland. In 2019, this was 12,000 families.
The country realized that it was not sustainable to rely on its wealth of natural resources and vast agricultural land, and therefore implemented policies towards diversifying the economy. And today income from education and services is catching up with income from the sale of natural resources.
Australia pays great attention to the development of human capital. There is no shortage of highly skilled workforce. Excellent schools and universities supply the labour market with modern talent for every industry. For a business, this means that you can spend less money and time on employee training, and more on marketing and promoting products and services.
Australia is the third most popular country for international students. According to educational rankings, seven Australian universities are included in the top 100 best universities in the world.
It should be noted that there are other important facts, without which the picture would be incomplete. Australia is a huge nature reserve. Magnificent white sand beaches, unique national parks, rare animals, rich underwater world. And at the same time world-class urban conglomerates, international-class resorts, comfortable climate conditions, excellent ecology: clean air, clean ocean, clean products. All this creates the largest market for global tourism.
The country is located in several climate zones. Therefore, you can choose the climate to your liking - from hot tropics to snow-capped mountains.
One can say that Australia is always ‘in the eye of a storm’. When a storm is raging in the world, even in the most difficult periods for the planet - world wars, pandemics - the Green Continent remains an island of comfort, security and stability.
The political landscape is calm - Australians are friendly and positive. Life expectancy is high thanks to the excellent health care and social insurance system. And, if you remember, there are only 25 million inhabitants, 28% of whom were born outside Australia - which means a tolerant and multicultural environment.
What other economies in the world have a similar platform for survival and prosperity in our volatile and unpredictable world?
BUSINESS OPPORTUNITIES
Australia is one of the most businessfriendly countries in the world. It is generally accepted that in Australia the laissez-faire principle applies, that is, minimal government intervention in the economy. It ranks 4th in the world according to the Index of Economic Freedom. It has a stable, friendly business environment.
Regulation, as already mentioned, is transparent and efficient. Sustainability is based on core principles - good governance, strong government institutions and the rule of law. The World Bank gives Australia some of the highest ratings in the Asia-Pacific region for the integrity of its legal system. In an unstable world, this makes Australia a safe place for foreign investment.
The country is distinguished by the highest level of digitalization. Australia outperforms most developed countries in banking system reliability, according to a 2019 World Economic Forum survey.
Liberal legislation, serious government support for business - opens the broadest opportunities for investors.
Below we will outline some of them.
Manufacturing
In August 2020, the government adopted a new manufacturing development strategy, according to which 1.5 billion Australian dollars will be spent on the creation of new industries.
For foreign investors investing in the creation of new large enterprises with their own research base, the state offers joint investment and is ready to cofinance up to one third of the cost. There is an accelerated procedure for obtaining business visas and permanent residence not only for the investor and their family, but also for key employees. Investors creating small and medium-sized enterprises will receive government funding on a joint investment basis up to 50% of the project costs. Employers can attract highly qualified foreign specialists.
Australia has identified the following strategic national production priorities:
· mining;
· technologies for processing of strategic minerals;
· food and beverage manufacturing;
· medical supplies;
· recycling and clean energy;
· defense;
· space.
Financial Technology (FinTech) projects
Neobanks, cryptocurrency, exchanges, blockchain solutions, insurance business - all this is supported by the state and attracts many foreign investors to the country.
The legal structure for activities of IT companies has been simplified. The industry was named among the priority areas for the economy. Simplified regulation and incentives have attracted many foreign investors to the country. In 2019, more IT companies opened in Australia than in the United States. From 2015 to 2019, the number of FinTech companies increased fivefold.
Australia is one of the best places to host an Initial Coin Offering, or ICO. The country is open to companies whose activities are related to cryptocurrencies and blockchain.
The Visa Fintech Fast Track program offers accelerated business visas and permanent residence for investors in financial technology companies (neobanks, cryptocurrency exchanges, etc.).
The Early Stage Venture Capital Limited Partnership (ESVCLP) program aims to stimulate the early stage venture capital sector in Australia. The program helps fund managers raise pooled capital so they can raise new venture capital funds ranging from AU $ 10 million to AU $ 200 million to invest in innovative ventures at an early stage, and offers tax incentives for fund managers and investors. The program connects investors with early stage businesses.
Agricultural Technology (AgriTech)
One of the most profitable and reliable industries. The growing global food crisis makes Australia, with its powerful agro-industrial complex and vast, yet undeveloped territories, very attractive to investors. Legislation quickly responds to requests - for example, the country has legalized the cultivation and production of medical hemp products, and the licensing of new food developments has been simplified.
Australian agriculture leads the world in efficiency, technology and sustainability. This helps Australian farmers attract investment from around the world and new buyers for organic products, especially in the Asian premium food markets.
Australia is also ranked among the 14 largest agricultural producers in the world and is a leader in the production of premium quality organic products.
A country of trade
In Australia, exports and imports of goods and services in 2018–2019 accounted for 42% of GDP. And in 2020, Australia recorded a trade surplus of A $ 72.7 billion.
Numerous free trade agreements make the export business a profitable destination, especially given the proximity and size of Asian markets.
The “Made in Australia” brand is an additional competitive advantage, as the quality of the country’s goods and services is appreciated all over the world. Many manufacturing companies open their branches here in order to quickly and profitably enter the world market with their products and developments, primarily in the AsiaPacific region.
An addition to strong incentives, there is strong support from the influential government structure - AUSTRADE, which effectively helps to bring Australian products, R&D or services to foreign markets.
Real estate development
Australia is a country of immigrants. There is a constant and increasing population growth. Therefore, real estate development and rental in residential real estate, hotel and retail will be relevant regardless of economic shocks.
In addition the country has a large number of undeveloped territories, which creates opportunities for the implementation of the most ambitious projects in unique natural or urban areas.
The pandemic, which the country is successfully coping with, allowed Australia to maintain a wonderful free lifestyle and a minimum number of infections. This has made Australia a «fashionable place» for residents of Europe and the United States. In 2020 there has been an unprecedented increase in foreign investment and applications for visas and permanent residence. Accordingly, this has caused the emergence of an even larger number of new projects in the real estate development sector.
FinTech, FoodTech, EdTech, AgTech and MedTech
All these industries are widely represented in the country.
Australia has an innovative economy and a strong venture capital sector. This is the best place to commercialize innovation and start up new firms. Total expenditure on research and development (R&D) has grown by 7% per year since 2001. At the same time, commercial R&D is growing almost 2% faster than Australia’s GDP. The Green Continent accounts for more than 4% of the world’s scientific publications.
Australia has a long and unique experience in the commercialization of scientific research. There are many innovative hubs and accelerators in the country. The desire to become a leader in science and innovation is also expressed in real government support for science-intensive areas in business. Companies with patents or sound scientific business projects receive green light, including visa support for investors and scientists.
International organizations can collaborate with Australian research institutions. They can use their own patents, invest in development or use existing Australian solutions in products, and create joint ventures to bring products to the global market.
Tourism
Australia is the world’s seventh largest international tourism market, generating more tourism revenue in terms of GDP than France, United States, United Kingdom, China, Japan and Italy.
Unique nature, safety, well-developed infrastructure – all this attracts many travellers from all over the world. Even during the pandemic-related international travel restrictions, Australians, taking advantage of the country’s lack of lockdown, travel a lot domestically. Therefore, the construction of hotels, retreats or other projects related to tourism remains in demand.
The scope of this article, unfortunately, does not allow for a more detailed overview about all areas that could be of interest to a foreign investor. At the same time, it is worth at least to mention a few others. Green Energy solutions, winemaking, pharmaceutical manufacturing, wellness and sports industry. Movie production - numerous movies produced by Hollywood and Bollywood studios are made in Australia. That is, entrepreneurs from almost all areas of activity can find opportunities for themselves in this wonderful country.
AUSTRALIA – GATEWAY TO ASIA
Australia’s strong competitive advantage lies in the fact that it is part of the rapidly growing region of the world - Asia.
Australia, being a model of economic, political and social stability, possessing enormous natural resources and highly qualified personnel, is very attractive for foreign capital. Moreover, the country is considered not only as an opportunity for profitable and reliable investments, but also as a base for spreading influence over nearby Asian countries and a quick, preferential access to the growing AsiaPacific market.
Australia’s strong and established economic ties in the region, combined with an understandable Western entrepreneurial culture, advanced information and technology culture, have led tens of thousands of the world’s leading foreign companies to relocate their headquarters or open branches here.
Thus, those who own Australian companies have excellent opportunities to export goods to Asian markets without any trade barriers, at low or no tariffs at all.
IN CONCLUSION
Against the backdrop of 30 years of uninterrupted economic growth in Australia, the current global crisis has become a serious challenge for the country. And the Australian government had chosen, perhaps, the most correct course, the essence of which is maintaining a high standard of living for the population, saving and developing existing businesses and enterprises, attracting large foreign investors, highly qualified specialists and scientists, creating new high-tech projects and industries.
The Australian government announced that it had deliberately increases its external debt because it prioritizes the well-being of its citizens. Even in the worst-case scenario, the peak level of external debt will be half that of the US or UK. But the active economic measures being taken will make it possible not only to quickly restore the economy, but also to overtake many developed countries.
It seems that the members of FBA EAC could find many opportunities for effective and mutually beneficial cooperation, using Australia as a unique neutral platform for creating global internationl projects , especially taking into account the urgent need to develop the promising Asian markets.