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Why Do Business in Australia?
Australia is one of the easiest places in the world to do business. According to rankings published by the World Bank that compare the ease of doing business in different countries, Australia rose four places to 14th position in 2020.
When comparing economies with a population of more than 20 million, Australia now ranks fifth in the world, behind Korea (first), the US (second), the UK (third) and Malaysia (fourth). Australia ranked fourth for gaining credit, sixth for enforcing contracts and seventh for starting a business.
Australia is an open market with minimal restrictions on imports of goods and services making it an ideal place in which to do business. Australia’s highly educated workforce and abundant and diverse natural resources attract high levels of foreign investment. The country is also internationally competitive in financial and insurance services, technologies and high-value-added manufactured goods. Australia’s historical connections to the United Kingdom and the United States, combined with being in similar time zones to Japan, China, and the booming economies of South East Asia, means it is well placed to act as a centre of operations for European or US companies that want to access markets in Asia.
A strong legal framework protects property rights and Australia’s robust rule of law minimises corruption. Enforcement of contracts is reliable and outcomes are predictable. Australia’s stable political environment supports a strong judicial system which operates independently and impartially. Australia plays an active role in the WTO, APEC, the G20 (2019 GDP was A$1.89 trillion), and other trade forums. Australia has free trade agreements with major regional and global economies and the domestic economy enjoys the support of a sophisticated and diverse consumer market with a large and wealthy middle class.
But don’t just take our word for it. The Australian Trade and Investment Commission (Austrade) recently published the Benchmark Report 2021 which sets out a number of reasons why Australia is the ideal place to establish and business a business, including:
- Strength and Resilience of the Economy - Our diverse economy has kept us strong and Australia’s resources, energy and agriculture exports kept growing during the COIVD-19 pandemic. A fiscal stimulus equivalent to 18% of GDP helped sustain households and businesses. And an effective public health response stemmed community transmission. Decisive action helped the Australian economy to outperform, according to global comparisons. Australian GDP was 2.4% lower in 2020 than in 2019. This decline was far smaller than the average across advanced economies. In financial terms, Australia remains rock-solid. The Australian public sector debt ratio will be just 49% of GDP by the end of 2021. On current forecasts, this will be one of the lowest among developed economies.
- World Leading & Dynamic Industries - Resources and energy exports reached A$290 billion after growing by an average 8.9% per year since 2000–01. Asia’s economies are our principal customers. Investment in Australian critical minerals is growing fast. This is due to soaring demand for lithium-ion batteries, renewable energy plants and high-tech manufacturing. Fresh investment in new mines and processing facilities will create a reliable source of global supply.
Exports of agri-foods also reached a new high of A$48 billion in 2019–20. Beef alone generated exports of A$11 billion in 2019–20. A national reputation for high agricultural standards and clean, green produce means Australian exporters earn premium prices. Australia’s A$10 trillion financial sector continued to grow in 2019–20, with total assets growing 9% per year consistently over two decades.
- Innovation & Skills - Australian academics are global leaders in 20 critical fields, including space science, physics, computer science and clinical medicine. Australian universities are globally renowned and the quality of their education builds our world-leading talent. Today, seven Australian universities rank in the world’s top 100, and spending on education exceeds the OECD average. Australians now rank in the global top 10 for skills.
Our talent is not just home-grown. In 2019, Australia had the third highest proportion of foreign-born citizens among OECD countries. This is twice the average for OECD countries.
- Global Ties - In 2020, Australia joined the world’s largest free trade agreement, the Regional Comprehensive Economic Partnership (RCEP). The RCEP encompasses 2.3 billion people and 30% of global GDP. Australia is negotiating further trade agreements with the United Kingdom (UK), the European Union (EU) and India. Around three-quarters of Australia’s two-way trade occurs within the Asia-Pacific region. Market diversification is underway to build a resilient trading network. Australia also maintains strong trading links with traditional partners. The EU and the UK together account for 13.2% of Australian trade and the US another 9.3%.
- Enterprise & Optimism - Australian enterprise and optimism go hand in hand. Australia is one of the best places in the world to start a company, gain credit and conduct business. Our entrepreneurial streak is underpinned by sound regulation, a lack of corruption and the rule of law. These qualities make Australia a secure base for expansion into the Asia-Pacific region. There’s another reason why companies invest in Australia: people like living here. Australia’s capital cities are the envy of the world. They support a free and easy lifestyle that appeals to immigrant families and global professional talent. Australia is a natural place to nurture new, global teams.
It is no surprise that our cities top ‘liveability’ rankings in the Asia-Oceania region. Our cost of living is relatively low.
The Australian government provides extensive support and assistance for foreign businesses looking to establish themselves in Australia. The Global Business & Talent Attraction Taskforce was set up with the express purpose of supporting high-value businesses and extraordinary individuals to bring their talents to Australia.
However, even with government support doing business internationally can be difficult. At Australian Corporate Governance, we have been helping clients manage cross border business for more than 20 years. Some of the cities our team have called home include London, Tokyo, Hong Kong, Dubai, and Singapore. We know from our own experience in operating across international borders that different business practices, time zones, culture and language can make even the simplest task difficult. Working with trusted, locally based advisors like ACG to set up your business so that it meets all local legal, regulatory, tax and cultural expectations will give your new business every chance to succeed.
We understand the challenges and opportunities generated by doing business across international borders and our services are informed by the commercial realities of doing business in the international market-place. Ask us how we can help you manage your international business for success in Australia.