Speech
Address to Arab Diplomatic Corps
Parliament House, Canberra
August 11, 2009
Introduction
I’d like to welcome you warmly to Parliament House on this winter evening in Canberra.
- I’d also like to acknowledge the Dean of the Arab Diplomatic Corps, Your Excellency Mr Ghanim al-Shibli,Iraq’s Ambassador to Australia.
- And I note also the presence of Robert Newton, the CEO of the Australian Arab Chamber of Commerce and Industry, an organisation which has done so much to foster commercial ties between Australia and the Arab world.
I must say I have fond memories of a terrific trip I took to Dubai a couple of years ago, where I met many senior business people and politicians from the United Arab Emirates.
So I am delighted to be hosting this gathering of Ambassadors from the Middle East, an area of the world that is of great strategic and commercial importance to Australia.
Trade and Investment Ties
As many of you will know, Australia’s trading ties with the Middle East are in excellent shape.
Between 2007 and 2008, our merchandise exports to the Middle East grew by nearly 30 per cent, while our merchandise imports from the Middle East grew by 33 per cent.
In 2008, Australia exported nearly A$9 billion in goods and services to the Middle East, and imported A$4.5 billion.
Notably, the Middle East is now Australia’s biggest market for passenger motor vehicles, a trade worth about A$2 billion a year. Additionally, it is pleasing to note that trade with Iraq has rebounded in 2008.
Australia hopes to strengthen these trading ties even further through the Free Trade Agreement it has been negotiating with the Gulf Cooperation Council.
Yet there is more to global trade than exports and imports. The Australian Government also regards investment, especially foreign direct investment, as a critical part of developing international trade.
In December 2008, the level of total foreign investment in Australia was $1.724 trillion, whilst Australian investment abroad reached $1 trillion. It is noteworthy that for financial year 2008–09, more than 77 per cent of Austrade’s investment outcomes by value were achieved by the Europe, Middle East and Africa region.
Direct foreign investment was $392 billion, with 34% of that from the EU.
We strongly believe that trade and investment are closely interrelated.
There is a good reason for this belief. Many exporters now seek to expand their overseas markets by doing more than simply putting goods on ships.
Exporters are moving abroad to build facilities which give them access to bigger markets and interconnected global supply chains.
This transfer of capital, managerial know-how and technology has a positive effect on growth, one which is quite similar to the impact of exports.
What this means is that promoting trade also requires promoting investment, both inward and outward.
In Australia that is the responsibility of the Australian Trade Commission, or Austrade, the host of this investment briefing.
Tonight, I’d like to say a few words about exactly why Australia is a great place to invest, especially in the current global economic climate.
The Australian Economy
Australia has weathered the Global Financial Crisis better than most, a fact alone which should encourage investors:
- Our economy remains the strongest performing economy in the OECD.
- In the December quarter of last year, Australia did have a period of negative growth but in the March quarter of 2009 our economy was still growing.
- Official interest rates are at a nearly fifty year low of 3 per cent, providing extra confidence to consumers and business people at this critical juncture.
- Our financial system is stable and well regulated. Our banks were largely immune to the toxic assets which wrought such havoc in the United States and Europe.
- Australia is a sophisticated, politically stable nation which enjoys one of the highest living standards in the world.
- Moreover, Australia is blessed with great endowments of natural resources and the skills and experience of one of the world’s most successful multicultural societies.
Synergies between the Middle East and Australia
We welcome the fact that investors in the Middle East are taking a stronger interest in Australia, especially in agriculture, tourism, property and manufacturing.
Some interesting Middle Eastern investments in recent times would include:
- The ruling family of Ras al-Khaimah of the UAE has bought a 6.9 per cent stake in the Strathfield Group, a well-known phone and electronic retailer based in Sydney.
- The Emirate of Dubai, through Dubai Ports, has bought P&O’s operations in Australia, a very significant investment in this nation’s infrastructure.
- Emirates Airlines has bought a 49 per cent stake of an in-flight catering firm, Alpha Flight Australia, which will help service its Australian operations.
- Borouge, a provider of innovative plastic solutions based in Abu Dhabi, has established a sales and services office in my home town of Melbourne as part of its expansion into the region.
Likewise, Australian investors are increasingly travelling to the Middle East to do business or tapping capital for investment from Middle East funds.
Some examples include:
- BQT Solutions, which sells security products such as retinal scans, facial recognition and fingerprint identification to Scotland Yard and Qantas, raised A$9million through a Dubai firm. The capital will allow BQT to expand its operations.
- Mining firm Citigold has successfully raised investments from the Middle East to fund an expansion of their gold mining operations in Charters Towers in Queensland.
Tonight, I am happy to announce a successful new Australian investment in the Middle East.
WWWProjects, an ICT firm in Nunawading, Victoria, has won a $74 million contract to project manage, design, integrate and install the telecommunications and IT infrastructure, for what will be one of the world’s largest ports in Qatar.
WWW Projects will deliver cutting edge communications and security infrastructure to make the Ras Laffan harbour a highly efficient and secure facility for managing the export of Qatar's leading product, liquefied natural gas,
The company will network around 60 km of roads and 90 new buildings for the port precinct.”
The contract will allow WWWProjects to employ up to 120 people as it builds the ICT infrastructure for what will be one of the world’s biggest ports.
Overall, there seems to be a growing commercial synergy between our two regions, enhanced, perhaps, by our growing World Cup football rivalry.
Since 2005, for example, the number of Australian companies which have a presence in the United Arab Emirates jumped from about 100 to over 600.
As well, there are now between 15,000-20,000 Australians living in the United Arab Emirates and a further 10,000 present across the Middle East.
By the end of the year, three Middle East airlines—Emirates, Etihad and Qatar Airways--will be flying out of and into Australia, bringing our two regions into closer commercial contact.
And I note that Ahmed Fahour executive director of one of Australia’s largest banks, the NAB, has recently been appointed to become the chief executive officer of Gulf Finance House.
Gulf Finance House is a Middle East investment bank with a charter to expand Islamic banking in the international system.
Australia’s Investment Priorities
The Middle East has several of the worlds biggest sovereign wealth funds. Under pressure from the Global Financial Crisis, many are feeling the need to diversify into safer, long-term investments and countries with a stable economic history.
These funds include the Abu Dhabi Investment Authority, with US$627 billion in holdings; Saudi Arabia’s SAMA Foreign Holdings, worth US$431 billion; the Kuwait Investment Authority, worth US$202 billion; and the Investment Corporation of Dubai, worth US$82 billion.
Australia promotes outward and inward foreign investment and there are many innovative and profitable ways in which Middle Eastern investors can do business here.
In this light, Australia has priority sectors which we would like to see developed through greater investment, including partnerships with Australian businesses.
Many of these will be profitable industries of the future which will help solve the global challenge of climate change and renewable resources.
Our priority sectors include:
- The clean and renewable energy industry, including solar and wind power, carbon capture and storage technology, green urban design and services.
- Renewable water technologies, such as desalination plants.
- Financial services, including Islamic finance. Australia has the world’s fourth largest pool of funds under management and we are keen to export these skills.
- Infrastructure, resources and agriculture, especially food security.
We believe one workable paradigm would be for Australian firms to form joint foreign ventures which would provide both parties with a platform to expand into Asia.
Another is to promote the location of new regional headquarters in Australia which could act as a springboard into Asia.
Conclusion
Let me conclude by saying that it is a good time to invest in Australia for several reasons which go beyond Australia’s prosperity, stability and proximity to Asia.
Last week, for example, Australia’s Treasurer, Wayne Swan, announced that he would reform Australia’s foreign investment review laws later this year.
These reforms would make it easier for foreign investment applications to be approved, allowing any investment under $219 million to proceed without review. This means about 20 per cent of applications would no longer be screened.
As well, the federal Government’s Budget contained a 40 per cent tax credit for local and foreign investors, who spend money on research and development.
Added to this is the Government’s overall commitment to stabilising the economy with stimulus packages and infrastructure programs, all of which create a more positive investment climate.
I’d like to thank Austrade for organising this briefing tonight, and I urge you to consider Austrade as a first stop in your investment and trade planning.
I hope the briefing will give you some insight into why Australia remains one of the world’s best investment destinations.
Thank you.
ENDS