Data Alert 

9 May 2012

Australia one of the worlds leading investment destinations

Australia continues to be a top destination for foreign direct investment (FDI), with total FDI stock growing 6.6 per cent to reach a record A$507 billion in 2011. This growth reflects the upturn in global FDI activity since 2010 and Australias strong competitive position in the global economy. The countrys robust economy, strategic location, strong global trade and investment ties, and proven track record of innovation position Australia as an ideal investment destination; Australia ranks amongst the top 10 in those projects highlighted by FDI Intelligence and A.T. Kearneys 2012 FDI Confidence Index.

In 2011, FDI stock in Australia increased by 6.6 per cent to a record A$507 billion. In the five years since 2006, Australias inward FDI
stock has grown by a compound annual rate of 8.5 per cent.1

Last year, the US and UK dominated FDI stock in Australia accounting for 24 per cent (A$122 billion) and 14 per cent (A$70 billion)

respectively. Other major contributors include Japan with 10 per cent (A$52 billion), the Netherlands with 6.5 per cent (A$33 billion), and Switzerland with 4.5 per cent (A$23 billion). These top five sources of FDI stock have all registered simultaneously positive growth for the first time since 2006. It is worth noting that the UKs value of FDI stock in Australia soared by 28 per cent in 2011 after a 12 per cent decline in the previous year. over the last five years. In particular, Chinas FDI into Australia has grown almost 90 per cent per annum since 2006. In 2011, China, together with Hong Kong, was ranked as the sixth largest source of Australias inward FDI stock with a total combined value of A$20 billion and a market share of 4 per cent.

Of Australias top 10 FDI stock source countries, China, Bermuda, Singapore, Canada and Japan have shown the strongest growth

Stock of Foreign Direct Investment in Australia (FDI, A$ Billion) % share % change % CAGR
2006 2007 2008 2009 2010 2011 2011 2010-11 since 2006 USA UK Japan Netherlands Switzerland Singapore Canada Germany China Bermuda France Hong Kong New Zealand Belgium Norway Malaysia Saudi Arabia South Korea Cayman Islands Luxembourg South Africa Sweden Italy Ireland Russian Federation Total All Economies OECD APEC EU ASEAN 86.6 100.9 100.4 100.3 116.9 122.4 24.1 4.6 7.2 55.8 62.4 59.6 61.5 54.4 69.7 13.7 28.2 4.6 23.8 31.1 36.7 45.6 51.1 52.3 10.3 2.4 17.1 24.6 24.8 19.2 32.4 30.2 32.9 6.5 8.8 5.9 16.6 16.4 19.5 17.8 20.9 23.0 4.5 10.1 6.7 5.6 14.2 10.4 16.5 18.8 20.0 3.9 6.3 29.0 7.7 7.2 7.3 11.6 12.8 17.3 3.4 35.2 17.7 10.6 19.8 15.5 18.1 16.8 14.3 2.8 -14.8 6.3 0.6 np 3.6 9.1 12.9 13.4 2.6 3.1 89.3 1.2 5.6 5.8 9.7 8.5 7.8 1.5 -7.9 44.7 11.7 12.6 12.9 13.0 13.0 6.8 1.3 -47.9 -10.4 4.8 7.2 9.1 5.4 6.6 6.7 1.3 1.3 7.1 9.6 7.8 5.6 6.2 6.4 6.0 1.2 -6.0 -9.0 2.3 2.9 5.2 5.6 6.2 5.6 1.1 -9.2 19.7 np 2.8 np np np np na na na 2.9 np np 4.5 3.7 np na na na np np np np 2.7 np na na na np np 1.0 1.3 2.1 np na na na np np 1.3 np 1.5 np na na na np np np 3.2 1.5 2.3 0.5 60.7 na np 1.0 1.3 1.5 1.6 1.7 0.3 5.2 na 1.5 1.7 1.7 1.3 1.8 1.5 0.3 -12.9 0.7 0.3 np 0.5 0.5 0.6 np na na na np np np 0.9 0.3 0.1 0.0 -70.1 na np np np 0.2 0.2 np na na na 336.9 396.9 396.4 442.5 475.7 507.4 100.0 6.6 8.5 261.8 302.6 299.8 330.5 348.7 367.8 72.5 5.5 7.0 144.5 174.0 180.3 201.9 235.7 249.8 49.2 6.0 11.6 114.4 136.0 127.7 146.3 137.3 143.4 28.3 4.5 4.6 10.5 17.7 16.1 21.8 25.9 27.7 5.5 7.1 21.5

np = Not available for publication but included in totals where applicable, unless otherwise indicated. na = Not applicable. CAGR = Compound annual growth rate Sources: Australian Bureau of Statistics 5352.0 International Investment Position, Australia: Supplementary Statistics, 2011 (Released 3 May 2012); Austrade

1. A  ustralian Bureau of Statistics, ABS 5352.0 International Investment Position, Australia: Supplementary Statistics, 2011 (Released 3 May 2012).

For more information email info@austrade.gov.au or visit www.austrade.gov.au

 The 2012 A.T. Kearney FDI Confidence Index confirms Australias position as a top destination for FDI. The Index surveys the

investment intentions of the worlds leading corporations to determine future prospects for global FDI flows. Australia ranked sixth in the study behind China, India, Brazil, USA and Germany.2 In 2011, FDI Intelligence tracked a total of 290 investment projects in Australia from 261 companies with total capital investment of US$11.2 billion, or 1.3 per cent of global investments.

Australia also ranked as a top 10 investment destination for 2011 in the Financial Times FDI Intelligence database, fDiMarkets.com.

Global Foreign Direct Investment by Destination Country 2011

Destination Country 1 USA 2 China 3 UK 4 India 5 Germany 6 Brazil 7 Singapore 8 UAE 9 Russia 10 Australia Other Destination Countries Total No of Market Capital Investment (US$ Million) Projects Share % Total Market Share % 1,568 1,270 898 869 558 491 347 328 318 290 6,822 13,759 11.4 9.2 6.5 6.3 4.1 3.6 2.5 2.4 2.3 2.1 49.6 100 54,252 94,626 34,255 57,487 14,012 61,994 19,899 10,997 20,661 11,159 479,664 859,005 6.3 11.0 4.0 6.7 1.6 7.2 2.3 1.3 2.4 1.3 55.8 100 Average 34.6 74.5 38.1 66.2 25.1 126.3 57.3 33.5 65.0 38.5 70.3 62.4

Sources: fDi Intelligence from The Financial Times Ltd; Austrade

Between 2007 and 2011, a total of 1,243 FDI projects were recorded in Australia from 933 companies, representing an average

annual growth rate of 15.4 per cent. Altogether, these projects had a total capital investment of US$122 billion. Greenfield investments accounted for 84.8 per cent of projects over the five year period. Services; Communications; and Coal, Oil and Natural Gas. Between 2007 and 2011, the Software and IT Services sector attracted the majority (20 per cent) of FDI projects in Australia while the Chemicals sector recorded the highest growth at 60 per cent per annum on average. Marketing and Support topped the group, accounting for around 35 per cent of projects tracked. The business activity, Customer Contact Centre, recorded the highest average annual growth at 142 per cent. country accounting for one-third of projects tracked in Australia, while the Netherlands had the fastest average annual growth rate at 142 per cent. Over the five year period to 2011, both China and Switzerland soared by 60 per cent per annum, well above the average rate of 15 per cent.

Sixty per cent of all projects in Australia were in the following five sectors: Software and IT Services; Business Services; Financial

FDI Intelligence also categorised investment projects by business activity, with a total of 17 business activities recorded. Sales,

From a total of 52 source countries, the top five account for two-thirds of all FDI projects in Australia. The USA is the top FDI source

Foreign Direct Investment Projects in Australia by Sector, Business Activities and Source Country
Sector Software & IT services Business Services Financial Services Communications No of No of Projects Projects Share AAGR 2011 2007-11 % % 65 42 32 30 255 180 139 96 83 70 62 52 33 29 244 1,243 20.5 8.8 Business Activities Sales & Marketing2 Business Services Manufacturing Logistics
3

No of No of Projects Projects Share AAGR 2011 2007-11 % % 108 433 34.8 12.1 71 297 23.9 19.3

Source Country USA UK Japan Germany China India Netherlands France New Zealand Switzerland Other Countries Overall Total

No of No of Projects Projects Share AAGR 2011 2007-11 % % 108 50 8 13 21 4 12 8 7 8 51 290 414 251 66 57 44 33.3 23.9

14.5 43.2 11.2 13.5 7.7 52.2 6.7 41.7 5.6 54.4 5.0 -2.9 4.2 10.2 2.7 19.2 2.3 60.3 19.6 31.9 100.0 15.4

20.2 14.7 5.3 30.4 4.6 26.4 3.5 66.3

24 110 8.8 27.0 22 16 6 14

5

77 6.2 46.7 64 5.1 15.4 59 46 4.7 -11.0 3.7 123.3

Coal, Oil and Natural Gas 12 Industrial Machinery

1

Headquarters Extraction ICT & Internet4 Design & Development Customer Contact Centre Education & Training Other Business Activities Overall Total

21 12 10 7 7 52 290

41 3.3 0.4 35 30 29 27 249 1,243 2.8 142.3 2.4 43.8 2.3 26.7 2.2 66.3 20.0 7.2

Transportation Metals Food & Tobacco Chemicals Other Sectors Overall Total

9 3 4 13 290

45 3.6 16.8 19 19 74 1.5 142.4 1.5 6.0 na 38.2 15.4

1,243 100.0

100.0 15.4

1. Industrial Machinery, Equipment & Tools; 2. Sales, Marketing & Support; 3. Logistics, Distribution & Transportation; 4. ICT & Internet Infrastructure; 5. Design, Development & Testing AAGR = Average annual growth rate between 2007 and 2011 Sources: FDI Intelligence from Financial Times Ltd; Austrade

2. P  articipating companies represent 27 countries and span 17 industries, and together comprise more than US$1 trillion in annual global sales.

For more information email info@austrade.gov.au or visit www.austrade.gov.au