June 2004 - Association of Dutch Businessmen

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BUSINESS Doing business in Australia By Michelle Owen/ Grayling Public Relations Australia has become a very popular place for Singaporeans to do business, due to its close proximity to Singapore, stability of the Australian political system and the soundness of the nation’s economy. In addition, more and more Singaporeans are sending their children to study in Australia, buying properties in Australia and migrating to Australia. Over the past few years, there has been a growing trend for international businesses to locate their regional headquarters in Australia. With relatively low cost rentals, services, education, salaries and expatriate cost of living, Australia is a highly desirable base for businesses operating through the region. Free Trade Agreement Australia has been leading the push for trade and investment liberalisation with the goal of open and free trade. Singapore is Australia’s seventh largest trading partner overall, so it comes as no surprise that Singapore was on the top of the list for the signing of a free trade agreement. The bilateral Singapore-Australia Free Trade Agreement (SAFTA) has resulted in tariff elimination, market access for service suppliers, transparent customs procedures, promotion of fair competition, access to government procurement markets, increased integration of capital markets, easier entry for business visitors, mutual recognition agreements and co-operation in the education sector. The SAFTA is expected to create greater opportunities for both countries. Singapore Minister for Trade and Industry, George Yeo said in a media statement at the time of the agreement, “SAFTA is an affirmation of the strategic relationship between Singapore and Australia which is based on mutual trust and a commitment to work more closely together in the future. It is a forwardlooking agreement that will enhance business opportunities in both countries, stimulate greater two-way investment and create jobs. Beyond tariff savings, SAFTA will strengthen the roles that Australia and Singapore can play in the region.” Starting a business in Australia Although it is relatively easy to start a business in Australia, Australian and foreign business entities should be aware that they are subject to regulation by a number of authorities responsible for the regulation of financial and securities markets, competition and fair trading, taxation, and incorporation and business operations. However, Australia is keen to promote and develop foreign investment in Australia. Singapore’s A$11.5 billion in direct investment makes it the fourth largest foreign investor in Australia. One of Australia’s key organisations for assisting in the growth of foreign investment in Australia is the Federal Government’s national investment agency known as Invest Australia. Another program created to encourage foreign investment is the Australian Trade Commission, known as AUSTRADE. State Governments have also developed their own programs to generate the growth of foreign investment within their jurisdiction. 5 Vol.14 • No. 6 • June 2004
BUSINESS Incentives are offered in a wide variety of forms including grants, tax exemptions, tax deductions or the provision of infrastructure services at discounted rates. When UBS Warburg established its Asia Pacific Regional IT Technical Support Centre in Australia at the end of last year, it was the first international bank to open its work operations in Australia, and brought 200 jobs to New South Wales (NSW). The chairman and CEO of UBS in the Asia Pacific, Clive Standish, praised the Government’s assistance in bringing the project to fruition. “The manner in which the Government facilitated, encouraged and supported our desire to establish this centre in NSW has helped create these jobs,” Mr Standish said. Other international firms which have chosen Australia as a key place to do business in Asia include Deutsche Bank, which moved its entire Asian funds management from Tokyo to Sydney, and IBM, which chose Sydney over Singapore for its e-Innovation Centre. The Straits Times reported at the time that “it is understood that Singapore offered a better incentive package in dollar terms but IBM was swayed by the large pool of experienced IT professionals in Australia.” Henry Wang, Invest Australia’s Senior Investment Manager, SE Asia says, “One of the most significant benefits of Australia as a place for business is our highly-skilled and multilingual workforce. Australia provides investors with a robust, competitive and diverse economy, characterised by strong and consistent growth. Australia also offers a sophisticated telecommunications infrastructure, and offers a clear advantage of adopting new technology, and being a test bed for new product launches.” Foreign investment Generally, prior approval from the Australian Government is required before acquiring or establishing a new business. Approval will need to be sought from the Foreign Investment Review Board (FIRB) for the acquisition of shares in a corporation or the purchase of a business where the total assets exceed A$50 million, where the establishment of a new business with total investment exceeding A$10 million, and where the takeover of offshore companies whose downstream Australian assets have a value exceeding A$50 million or account for 50% or more of the target company’s global assets. The process to obtain approval is renowned for being quick and efficient. Once lodged, the application activates a time clock so that if action is not taken against the proposal within 40 days, the Government loses its ability to block or impose conditions. In most cases, a decision is made within 40 days of lodgement and approval is normally granted unless the proposal is contrary to the national interest. The FIRB claims that over 98 per cent of applications are approved. Although approval will still need to be sought for other share acquisitions, business purchases and the establishment (in most industry sectors) of new businesses, these will normally be automatically approved where the total underlying assets are less than A$100 million. The Banking, Civil aviation (International and Domestic), Airports, Media, Newspapers, Broadcasting, and Telecommunications sectors are subject to stricter legislation. Once approval is obtained by the FIRB, a foreign company carrying on business in Australia must then register as a foreign company with the Australian Securities and Investment Commission (ASIC). One particularly important piece of legislation under Australia’s common law system for businesses to be aware of is the Trade Practices Act 1974. It contains anti-trade provisions and other key restrictions, with the aim of consumer protection. It deals with mergers, anticompetitive conduct, misleading or deceptive conduct and unconscionable conduct. The Australian Competition and Consumer Commission (ACCC) is the principal regulator in regard to the Trade Practices Act. Australia provides investors with a robust, competitive and diverse economy, characterised by strong and consistent growth. Australia also offers a sophisticated telecommunications infrastructure, and offers a clear advantage of adopting new technology, and being a test bed for new product launches. Melbourne Business tax Major reforms have recently been made to the tax system to improve it. The reforms lowered the corporate tax rate from 36 per cent to 30 per cent and reduced the capital gains tax. Quite a number of direct and indirect taxes are levied by both 6 Vol.14 • No. 6 • June 2004
Page 1 and 2: June 2004 MITA 373/03/2001 BUSINESS
Page 3 and 4: A monthly publication of the Associ
Page 5: BUSINESS Singaporeans consume aroun
Page 9 and 10: DUTCH NEWS 2004, Dutch Media/Newspa
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Page 13 and 14: EUROPE Of course, this does not mea
Page 15 and 16: INTERVIEW An interview with … Rob
Page 17 and 18: WEB WIZARDS Find Article Would you
Page 19: POP AND DROP A QUESTION nights. All

June 2004 - Association of Dutch Businessmen

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