Australia is an industrial nation with a mixed economy, growing broadly along the lines of other OECD countries.

Traditionally, the nation’s wealth came from agriculture with wool, meat and sugar topping the list. While an increasingly diversified agricultural sector continues to be important, manufacturing, minerals and services have all grown in value.

In fact the services sector is the fastest growing in Australia’s economy. Finance, property, tourism and business services are attracting large investment from both domestic and overseas sources.

Australia is rich in minerals and exports significant quantities of coal and aluminium, iron ore, copper, lead, zinc, gold, diamonds, nickel and minerals sands. Plentiful energy resources, coal, oil, natural gas and uranium- contribute to export earnings and allow low energy prices. In turn, this has encouraged the competitive development of energy-intensive industries, aluminium, iron and steel.

With the introduction of technology on a wide scale, Australia is now among the world leaders in areas of scientific application, such as fibre optics, micro-electronics, medical equipment and telecommunications.

Australia manufactures and exports a wide range of goods, including pharmaceuticals, information and communications technology, paper products, steel, chemical and plastics, machinery, motor vehicles, and processed food.

The robust construction industry is also a significant contributor to Australia’s economic activity.

Australia is one of the largest economies in the Asia Pacific region after Japan, China and Korea. The European Union, as a single entity, is Australia’s largest trading partner, followed by Japan and the USA.

Australia’s time zones span the close of business in the USA and the opening of business in Europe.

Australia has an affluent domestic market. Home, vehicle and personal computer ownership is amongst the World’s highest.

Prime office space in Australia is the lowest-priced in the developed region and amongst the most competitively priced in the World according to the Global Office Occupancy Costs Survey 2004. Australia’s telecommunications costs are also amongst the lowest in the region.

Australia is a leading financial centre in the Asia Pacific region. Its stock exchange is the second largest in the region after Japan and its financial futures exchange is the regions largest. Its alliance with markets throughout the region is increasingly providing business people with a comprehensive range of financial services in the Asia Pacific region (cf. DFAT, Australia: The new centre of global finance and www.asx.com.au).

The official currency of Australia is the Australian dollar (AUD or AUST$). It is a relatively free-floating currency.

Australia has exchange control regulations although since financial deregulation in the 1980’s the regulations have had a restricted application and now have little impact upon most transactions. There are generally no restrictions on the transfer of funds into Australia but reporting requirements may apply to certain transactions under the Financial Transactions Reports Act (Austrac) in relation to cash movements.

The Reserve Bank of Australia is Australia’s central bank, responsible for monetary and banking policy. It also supervises the Australian banking system in accord with international guidelines.

The banking sector in Australia comprises major Australian and International banks. Australian banks are well capitalised.

In addition, there are well over 100 merchant banks operating in Australia, and a substantial number of other financial institutions, such as credit unions, finance companies and building societies, providing a wide range of financial services.

The Commonwealth Development Bank and Primary Industry Bank of Australia support small business and the rural sector with development finance, while the Australian Industry Development Corporation offers finance to industry and participates in major development projects.

Finance may be raised in Australian capital markets by a wide variety of means and a number of innovative financing techniques have been used in recent years. International capital raisings are also common.

As a protection to the investing public, there are restrictions on public capital raisings, other than by banks and other financial institutions which are subject to similar regulations (such as building societies and credit unions). One such restriction is that an approved prospectus may be required to be issued before funds can be raised.

The six principal stock exchanges in Australia are in Sydney, Melbourne, Brisbane, Perth, Adelaide and Hobart. These exchanges have amalgamated and now operate as a unified national stock exchange, known as the Australian Stock Exchange Limited (“ASX”). The ASX is an active stock exchange, on which a number of international companies have obtained listing in recent years. A spread of Australian shareholders is a precondition to the listing of an international company.

Listed companies are required to comply with applicable securities and takeover laws and with the ASX Listing Rules.

Takeovers are regulated under the Corporations Act, 2001. The Act applies to all companies and not only to listed companies, although there are a number of exemptions available.

The Companies Act is overseen and administered by the Australian Securities & Investments Commission (“ASIC”).

The Australian Government welcomes and encourages foreign investment consistent with community interests. Australia’s screening process for foreign investment is transparent and very liberal. The Australian Government has the power to block proposals that are required to be notified and which are determined
To be contrary to the national interest.

The Foreign Investment Review Board (FIRB) is a non-statutory body that examines proposals by foreign interests to undertake direct investment in Australia and makes recommendations to the Australian Government on whether those proposals are suitable for approval under the Australian Government’s policy and in compliance with the Foreign Acquisitions and Takeovers Act 1975 (Cth).

FIRB can also provide information on Australia’s foreign investment policy guidelines and provide guidance, where necessary, to foreign investors so that their proposals may be in conformity with the Australian Government’s policy.

The types of investment proposals which require FIRB approval and therefore should be notified to the Australia Government are:

• acquisition of substantial interests in existing Australian business with total assets over $50 million or where the proposal values the business at over $50 million
• proposals to establish new businesses involving a total investment of $10 million or more
• portfolio investments in the media of 5 per cent or more and all non-portfolio investments irrespective of size
• takeovers of offshore companies whose Australian subsidiaries or assets exceed $50 million; (“Summary of Australia’s Foreign Investment Policy” dated January 2005 at www.firb.gov.au)
• direct investments by foreign governments or their agencies irrespective of size.
• acquisition of interests in urban land (including interests that arise via leases, financing and profit sharing arrangements and the acquisition of interests in urban land corporations and trusts) that involve the:
  
  - developed non-residential commercial real estate, where the property is subject to heritage listing, valued at $5 million or more;
  - developed non-residential commercial real estate, where the property is not subject to heritage listing, valued at $50 million or more.
  - accommodation facilities irrespective of value.
  - vacant urban real estate irrespective of value.
  - residential real estate irrespective of value; or
  - proposals where any doubt exists as to whether they are notifiable. (funding arrangements that include debt instruments having quasi-equity characteristics will be treated as direct foreign investment).