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STRONG ECONOMIC CREDENTIALS

An economy positioned for recovery

Australia's reputation as a highly competitive economy continues to strengthen. In 2009, the Australian economy was ranked in the top three countries in the Asia-Pacific region for its overall competitiveness. Among countries with a population of 20 million or more, Australia ranks second in the world, behind only the United States. (Source: IMD, World Competitiveness Yearbook, 2009).

For many years Australia has outperformed OECD economies in both growth and resilience of the economy. For six of the last eight years, the Australian economy has been found the most resilient in the world and its average growth rate from 1998-2009 was 3.4 per cent. (Source: Ibid)

This, together with a strong and independent financial sector and an effective and proven regulatory financial system, means the Australian economy provides a sound platform for foreign direct investment and business growth.

Australia is a serious trade and investment player, generating more than 20 per cent of GDP from exports and more than 36 per cent from FDI stock and its economy is now predominantly services-based, with services accounting for just over 60 per cent of economic activity. (Source: Australian Bureau of Statistics, June 2008)

Australias exposure to and engagement with the Asian region - which still has the most dynamic growth potential in the world C offers a strategic advantage to companies looking to position themselves for global growth opportunities.

While Australia, as elsewhere, has been affected by the global economic downturn, the Australian Government responded quickly to counter recessionary pressures by spending proportionally more and earlier in terms of fiscal stimulus. (The IMFs aggregate target for fiscal stimulus is 2 per cent of GDP and in Australia fiscal measures account for 2.1 per cent of GDP. This percentage is greater than that of the G20 PPP-GDP weighted average and higher than the UK, US, Canada, Germany, France and Japan - as of March 2009). Australias recession looks like it will be smaller than in much of the rest of the developed world. (The IMF World Economic Outlook [April 09] indicates Australia will recover more quickly in 2010 and with higher growth than the UK, US and Eurozone).

Looking ahead, the Australian market is open for trade and foreign investment and has the capacity to deploy both our own and other peoples capital carefully and profitably. The Government has not had to give direct financial support to the banking system and Australia will be free of the difficult governance and exit strategy issues that such support is raising in a number of other countries.

Few countries have as an attractive proposition to offer to international investment capital and to their own citizens over the years ahead. (Source: Glenn Stevens, Governor of the Reserve Bank of Australia - speech available from www.rba.gov.au) 

GROWING FOREIGN INVESTMENT

Australia is an attractive destination for foreign direct investment

Australia is seen as an attractive destination for foreign direct investment (FDI). Over the last five years, inward FDI stock has increased by an average of 5.8 per cent per annum.

Australia now attracts a high level of FDI compared to other developed economies. The ratio of FDI to GDP is almost 36 per cent which is well above the average for comparable developed economies of 25 per cent (IMF/UNCTAD/AUSTRADE).

As of 30 July 2010, the stock of inward FDI in Australia was A$436 billion. The top four source countries were the United States, the United Kingdom, Japan and the Netherlands.

Out of the top 10 source countries, Singapore, Japan, Germany and the Netherlands have shown the strongest growth in FDI stock into Australia over the last five years.

The European Union remains Australias largest regional bloc source of FDI, accounting for close to 34 per cent of total FDI stock in 2009.

(Sources- ABS 5352.0 - International Investment Position, Australia: Supplementary Statistics 2009, UNCTAD World Investment Report to 2009)

DEMOCRATIC AND POLITICALLY STABLE

Business in Australia has a high degree of certainty

Australia is a safe destination for investment. The country's political and regulatory environment is stable, open and progressive, providing investors with a high degree of confidence and certainty.

Australia's strength as an investment destination stems, in part, from a political system that has been assessed as being highly effective in responding to economic challenges and policy direction. The adaptability of Australian government policy to changes in the economy has been ranked in the top two countries in the region (Source: IMD World Competitiveness Yearbook 2009). Similarly, the transparency and effectiveness of government are also rated highly (Source: Ibid).

Efficient and transparent legal framework

Australia also has an open, efficient and transparent legal framework. Corruption levels are judged lower than those in the US, the UK, Canada and most regional countries (Source: Ibid).

These results can be attributed to a strong system of checks and balances, and a highly respected judicial and law enforcement system. 

Stable political environment

The benefit to companies of a stable political environment can flow right through to the bottom line.

'Australia is one of the most important markets for Ericsson in the Asia-Pacific region. Australia hosts a growing economy; a stable political and business environment; a skilled, well educated and multi-lingual workforce; a strategic time-zone and a competitive cost base. These factors provide a sophisticated market and the right environment enabling Ericsson to drive innovation and technology.'

- Hans Vestberg, Executive Vice President, Chief Financial Officer and Head of Group Function Finance, Ericsson. 

BUSINESS FRIENDLY REGULATORY ENVIRONMENT

It's easy to do business in Australia

Australia has one of the most transparent and efficient regulatory environments in the world. Through proactive reforms, the Australian Government has shown a strong commitment to providing businesses with the right conditions for growth and investment. 

Best practice regulation 

Australia's business friendly regulatory environment is undisputed. In 2006, the OECD cited Australias approach to regulation as a best practice benchmark for other OECD countries (Source: OECD Going for Growth, 2006).

Australia was identified as having the fewest restrictions on product markets of the 30 OECD countries, the least public ownership of business and the least restrictive impact of business regulation on economic behaviour. 

Regulatory standards

In fact, with regulatory procedures taking just two days, Australia has been ranked as the third fastest place in the world to start a business (Source: The World Bank Doing Business 2009).

Businesses can invest in Australia with confidence in the security and transparency of Australia's regulatory systems. This provides predictability and certainty for business planning. 

Unlike many countries in the region, there are no foreign exchange controls in Australia and the currency is fully internationalised.

Capital flows, profit remittances, capital repatriation, transfer of royalties and trade related payments remain largely free from regulation.

Transparency in government policy is considered third best in the region, and Australia's legal and regulatory framework has been rated one of the top six economies in the world for encouraging enterprise competition (Source: IMD World Competitiveness Yearbook 2009).

The Australian Government's commitment to continuous improvement in areas such as intellectual property (IP) reform and business immigration ensures a streamlined, business-focused regulatory environment.

Recent reforms focus on greater labour market flexibility, trade liberalisation, industry deregulation, reductions in tariff barriers and the development of a better tax system C resulting in strong productivity and enabling businesses to be highly responsive to economic conditions. 

Corporate governance

Not only is government policy in tune with business imperatives, but so too is corporate governance. Australian corporate boards are ranked sixth most effective in the world and second in the region for the supervision of the management of companies (Source: Ibid).

In addition, Australia is ranked seventh in the world and second in the region, after New Zealand, for the implementation of ethical practices in companies (Source: Ibid). 

Transparency

Australia has a highly professional and transparent public service, which is reflected in its rating in the top seven countries in the world (Source: Ibid).

The inherent value system in the society promotes competitiveness and has been rated fourth most supportive of business competitiveness in the world (Source: Ibid). 

Intellectual property

As the knowledge economy gathers pace, a strong intellectual property framework is critical to business success.  Australia ranks highly for its enforcement of intellectual property rights C second in the region and eighth globally.

In terms of adequate protection of cyber security, Australia ranks thirteenth globally and in the top four countries in the Asia-Pacific region (Source: Ibid).

For personal security and protection of private property, Australia ranks sixth globally and first in the region (Source: Ibid). 

HIGHLY SKILLED AND MULTI-LINGUAL WORKFORCE 

Australia's population is a diverse and rich multicultural mix

Ask any executive what makes their business successful and chances are they could sum the answer up in two words: our people. So it is in Australia.

Over the past decade Australia has enjoyed a sustained period of strong productivity growth, attributable largely to a highly educated and competitive workforce. Australias workforce offers substantial multilingual and cross-cultural capabilities at relatively low cost, and is characterised by a strong work ethic and positive approach to change.

Rising productivity, falling labour costs

Australias skilled workforce and investment in business innovation has enabled the country to achieve high levels of productivity, and real unit labour costs have fallen consistently since 2000. Consequently, Australias workforce is one of the most competitive workforces in the Asia-Pacific region.

Educated resource pool

The intellectual gene pool of Australia's workforce is constantly replenished by an internationally acclaimed tertiary education sector (ranked ninth in the world by the IMD World Competitiveness Yearbook 2009), in combination with an immigration policy that is attuned to the needs of industry.

Australia's 41 universities have trained hundreds of thousands of scientists, architects, engineers, financial advisors and other professionals now working in Australia, the US, Europe and Asia. These universities have diverse and rigorous research programs backed by quality facilities. Australia has been ranked equal first in the world for general literacy (Source: Ibid), and on average across all industry sectors, 24 per cent of Australias workforce holds a tertiary qualification.

In addition, Australias working environment has proven to be highly attractive to skilled workers, ranking third in the world for attracting and retaining talent in a study of 57 key economies. The country was also found to have the fourth most attractive business environment for highly skilled foreign students and has the highest number of foreign tertiary level students per 1,000 inhabitants (Source: Ibid). As a result, Australia workforce has continued to grow steadily C in recent times, by more than 200,000 people per year.

Australias workforce is also considered to be technology savvy, having the third highest number of Internet users and the seventh highest number of computers per thousand people (Source: Ibid).  

Multilingual workforce

Australias citizens originate from more than 200 countries, and the country is home to one of the most multilingual workforces in the Asia-Pacific region, giving it the capacity to offer workforce solutions requiring multilingual and multicultural sensitivities.

Some 5.5 million people living in Australia, representing approximately a quarter of the countrys population, were born overseas, with substantial representation from European, Asian and Middle Eastern countries.

Approximately three million Australians C or 25 per cent of the labour force C speak a language other than English at home, with around 400 different languages spoken in homes around the country. Almost 1.2 million Australians are fluent in major European languages, and nearly 1.5 million speaking an Asian language at home (with more than 500,000 speaking a Chinese dialect) (Source: Australian Bureau of Statistics C 2006 Census).

Australias linguistic diversity, the proficiency with which the languages are spoken, and strong cultural links with Europe and Asia provide an ideal mix for multinational organisations setting up or expanding their business in Australia.

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