Aus below global average in attracting FDI
A new 33 country comparison study released yesterday revealed Australia sits below the global average in attracting Foreign Direct Investment (FDI) as a percentage of GDP.
The study by UHY, the international accounting and consultancy network, looked at FDI as a percentage of GDP in the period since the credit crunch from 2008 to 2012, highlighting Australia sits in 10th place with a rate of 15.2%. This is compared to a global average of 17.1% and well below the EU average of 20%.
One of Australia’s regional trade competitors, Singapore recorded the second highest FDI with an extremely high 74% FDI as a percentage of GDP.
UHY Haines Norton Australia and New Zealand Chairman, David Tomasi said the study underlines the need for Australian policy makers to address a range of areas if it wants to improve its international FDI attractiveness.
“Favourable tax systems in countries like Singapore and EU countries like Ireland, Belgium, Estonia and Croatia have helped them to outperform the rest of the world in attracting Foreign Direct Investment in the five years since the global credit crunch,” Mr Tomasi said.
“In a country like Belgium, generous tax breaks for R&D and investment in capital goods, as well as fiscal incentives for hiring employees that Belgium provides have gone a long way to helping them achieve their top ranking and 91.4% of FDI as a percentage of GDP.
“While our R&D offset record is pretty good, UHY’s recent research highlighted that Australia is well down the international list when it comes to favourable corporate tax rates and low labour costs which unquestionably has an effect on attracting FDI.
“Workplace flexibility, increasing skilled migrant programs, tax holidays for new start‐ups and tax free zones to attract foreign investment for some of the key regional areas that require investment such as the Kimberley region, NT, far North Queensland would also improve our FDI fortunes.
“The benefits of increased FDI outweighs the downside and it is encouraging to see the federal government announce priority areas of FDI but there’s clearly more we need to do.” Mr Tomasi said.
Last month, following a meeting of State government Trade and Investment Ministers, Trade and Investment Minister, Andrew Robb announced Australia’s priority areas of FDI would include Agribusiness and food, Resources and energy, Major infrastructure, Tourism infrastructure and Advanced services, manufacturing and technologies.