2023: Doing Business In Australia

1. What is the current business climate in your jurisdiction including major political, economic and/or legal activities on the horizon in Australia that could have a big impact on businesses?

Australia stands as a prosperous and stable nation, offering abundant opportunities for foreign investment across diverse industries. Positioned strategically in the Asia-Pacific region, it boasts a stable political environment and a clear legal framework, providing certainty and protection amid global economic challenges. The nation's highly educated workforce, robust financial system, and abundant natural resources contribute to its global trade prominence.

Australia's proximity to major markets like China, Singapore, Japan, and South Korea makes it a crucial hub for trade and investment, particularly in mining, agriculture, and finance.

The business-friendly environment, supportive government policies, and well-developed infrastructure make it an ideal location for businesses looking to establish a foothold in the Asia-Pacific region.

The government has been implementing measures to support economic growth and innovation. The ongoing global transition to renewable energy and sustainable practices has also been a focal point in Australia, impacting sectors such as energy, infrastructure, and technology.

Additionally, Australia has been actively involved in trade agreements, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which could present opportunities for businesses.

Australia recently signed up to the AUKUS security partnership with the United Kingdom and the United States. The partnership is aimed at enhancing security and defense cooperation among the three countries, particularly in the Indo-Pacific region. The partnership involves significant cooperation on a range of security and defense issues between the three countries, including cyber capabilities, artificial intelligence, quantum technologies, and additional joint military exercises and operations.

Legal and regulatory changes, such as updates to taxation or labor laws, could impact the business landscape. In the past 12 months, we have seen the federal government introduce new competition and consumer legislation, lower monetary thresholds for foreign investment approvals, and a tightening on immigration laws.

Our Doing Business in Australia Guide details all the considerations required to do business in our region.

2. From what countries do you see the most inbound investment? What about outbound?

Inbound investment into Australia includes the United States, Singapore, China, Japan, and the United Kingdom. In recent years, we have also seen an uplift of interest from major European countries such as France, Spain, and Germany. These countries have consistently shown interest in various sectors such as real estate, infrastructure, healthcare, energy, finance, and technology.

For outbound investment, Australian businesses commonly invest in countries with robust economies and growth potential. The United States, the United Kingdom, New Zealand, and various countries in Asia have been recipients of Australian outbound investment. Industries like mining, finance, and real estate often drive Australian companies to explore opportunities globally. We also see a lot of businesses invest in offshore human resources from countries such as India or the Philippines.

3. In what industries/sectors are you seeing the most opportunity for foreign investment?

Despite global economic headwinds, Australia's investment outlook continues to remain comparatively positive. Inbound investment remains strong in a number of industry sectors, led by technology being ranked as the most attractive with the least risk, followed by financial services, real estate, and energy and resources.


4. What advantages and pitfalls should others know about doing business in your country?

Despite its advantages, businesses should consider challenges such as Australia's isolation, resulting in higher transportation costs, and a high cost of living that may impact operating expenses. Navigating a stringent regulatory environment (including foreign investment restrictions and competition laws), perceived labor market rigidity, and potential skill shortages in certain sectors can pose challenges. Climate-related vulnerabilities, currency fluctuations, and competition in specific industries add complexity. Cultural sensitivity, Aboriginal land rights considerations, and water scarcity in certain regions further contribute to the nuanced business landscape. Understanding these factors is vital for informed decision-making and successful navigation of the Australian business environment. Businesses that strategically address these challenges can leverage the numerous opportunities Australia presents for long-term success.

5. What is one cultural fact or custom about your country that others should know when doing business there?

In Australian business culture, an emphasis on informality and a laid-back communication style prevails. Directness, openness, and equality are valued, with individuals commonly addressed by their first names, reflecting a relaxed approach. Meetings involve straightforward, collaborative discussions, encouraging open expression of opinions. Understanding and embracing this informality is crucial for building effective working relationships and fostering a positive and collaborative environment in Australian business interactions.

Authors

Brendan Clark and Jeremy Blackshaw