Economic Synergies: The Rising Tide of Australia-UAE Investments | Kanebridge News
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Economic Synergies: The Rising Tide of Australia-UAE Investments

Australia and UAE Forge Stronger Economic Bonds, Capitalizing on Strategic Advantages in Finance and Real Estate.

Tue, Jun 4, 2024 12:24pmGrey Clock 4 min

Amidst evolving global trade landscapes, Australia and the United Arab Emirates (UAE) are poised to significantly enhance their economic ties. With both nations seeking to diversify and strengthen their international relationships, this partnership emerges as a crucial development.

It centers on increasing finance and property transactions, aiming to capitalize on unique strategic advantages—Australia’s gateway status to the Asia-Pacific and the UAE’s position as a pivotal Middle Eastern hub.

The relationship between Australia and the United Arab Emirates has steadily grown, with both nations recognizing the potential to leverage each other’s economic strengths. As Australia concludes significant trade deals globally, the focus shifts towards enhancing its ties with the Middle East, with the UAE at the forefront as a key partner. This initiative reflects a strategic alignment with broader economic and diplomatic goals, aiming to bridge the gap between East and West through robust economic exchanges and investments.

The UAE is well-known for its significant global investments in real estate and infrastructure, focusing on long-term strategies over immediate returns. Australian markets offer compelling opportunities for UAE investors, especially in sectors such as commercial real estate and major urban development projects. Additionally, the UAE’s dedication to sustainability is evident in its considerable investments in renewable energy worldwide, which aligns well with Australia’s environmental objectives and initiatives.

Why invest in Australia?

Kanebridge News recently engaged with key figures in the financial sector to gain insights into the current dynamics of foreign investment in Australia. Matthew Bode, Partner at leading Australian law firm Gadens, Hilton Wood, President at Overseas Bankers Association of Australia, and Ronnie Rahme, Development Director of KDMC in Sydney provided expert opinions on why Australia is becoming an increasingly attractive destination for investors from the Middle East.

Matthew, who has over 30 years financial services experience in Australia, London, Cayman Islands and Hong Kong, explained that the Australia-UAE Comprehensive Economic Partnership (CEPA) is currently collaborating to strengthen investment between the two countries, focussing particularly on reducing barriers to improve trade and enhance investment flows from the UAE into Australia.

Matthew says that “Australia is an attractive place for investors, particularly from the UAE and other parts of the Middle East, as Australia offers consistent economic growth opportunities, a stable government, a legal system derived from English law principles, and proximity to the dynamic markets of Asia Pacific”.

Investing in Australia offers several compelling benefits. The country boasts a resilient economy, ranked 12th globally in terms of GDP, and offers exposure to key industries including energy, resources, property, and education.

The nation’s growth and development prospects are sustained by record levels of immigration and significant infrastructure projects. Notable among these are the 2032 Olympic Games set to be held in Brisbane, the development of the Western Sydney International Airport in New South Wales, and new rail connections in Victoria and New South Wales.

Additionally, Australia’s strategic positioning provides an alternative gateway to the dynamic Asia-Pacific region, further enhancing its appeal as a prime location for investment.

Banking landscape

Whilst the “Big 4” major banks (ie ANZ, CBA, NAB and Westpac) continue to dominate the Australian banking market, international banks continue to expand their foothold into Australia.

Hilton Wood agreed and commented “we are seeing over 70 foreign banks now represented in Australia, from representative offices to foreign branches and fully licensed subsidiaries. It is true that some banks had exited the Australian market, but most of them are back and we are noting more and more second tier banks arriving as they see strong yields, coupled with an excellent regulatory environment. They are attracted by our strong performing property markets and increased activity in infrastructure, PPPs, trade finance and renewables”.

As Matthew explained, “The Australian banking landscape is highly regulated, as is capital raising and investment fund managementApart from offshore lenders looking to obtain licensing in Australia, I am seeing an increase in enquiries from overseas clients looking to set up their own investment vehicles in Australia or to directly invest in already established structures. There is always an interest in our real estate/ property market or investment into our natural resources or agricultural sectors. Other clients are increasingly investing in wind and solar farms (particularly those seeking green renewables), or asking about our market-leading IT industry, medical equipment or education sector, for example.”

Ronnie Rahme also noted the significant need for housing, particularly in Sydney, saying ‘Australia has experienced record immigration since COVID which has further increased the demand for critical housing for both new ownership and rental across all states.  The Government(s) are investing heavily into major infrastructure projects, reforming planning laws and accelerating rezoning to enable investment into much needed projects, such as midrise reforms and multifamily housing.

Regulation on foreign investment

Australia’s Foreign Direct Investment (FDI) is monitored and administered by the Foreign Investment Review Board (FIRB). FIRB examines foreign investment proposals on a case-by-case basis and makes recommendations to the Australian Government Treasurer, who has the responsibility for making decisions on foreign investment proposals. FIRB is multi-layered with specific thresholds and rules applying to different types of investors and the type of investment made.

FIRB regulates the investment of ‘foreign persons’ in Australia, and includes individuals who are not an Australian resident; a foreign government or foreign government investor; a corporation, trustee, or general partner of a limited partnership in which a foreign corporation, foreign government or an individual not ordinarily a resident in Australia and holds a substantial interest (being at least 20 percent); or a corporation, trustee, or general partner of a limited partnership in which two or more foreign persons hold an aggregate substantial interest (being at least 40 percent).

Investment structure

There are numerous ways to invest in Australia, including through the more traditional Managed Investment Schemes (MIS) or the newly legislated structure know as a Commercial Collective Investment Vehicles (CCIV) structure.

CCIV is a collective investment funds vehicle, limited by shares, and is established as an umbrella investment vehicle comprised of one or more sub-funds (with segregated assets and liabilities referable to each sub-fund).

Unlike an MIS, which is typically structured as a unit trust and which may or may not require registration with the Australian Securities and Investment Commission (ASIC), a CCIV is a fund that is a company registered with ASIC.  Matthew commented that, “..the main benefits of using a CCIV structure are actually from a tax perspective, as CCIVs are taxed in Australia on a flow-through basis like a unit trust, whilst offering the benefits of segregation of assets and liabilities for each sub-fund”.

Matthew Bode has extensive experience in establishing investment structures suitable to foreign investment in Australia, and Kanebridge International can help facilitate an introduction to either Matthew or Hilton Wood, should you be interested.*

 

* This article is general commentary only and should not be construed or relied upon as financial or legal advice.

 



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Innovative Future-Driven Initiatives unveiled by UAE Ministry of Finance Unveils

New initiatives to drive the country’s future growth and boost its global competitiveness.

Fri, Jun 21, 2024 3 min

The UAE Ministry of Finance has introduced a series of innovative initiatives aimed at propelling the country towards future growth and boosting its global competitiveness. These initiatives align with the ‘We the UAE 2031’ vision and support the UAE’s ambition to establish itself as a global hub for the new economy over the next decade.

These initiatives are designed to create significant positive impacts across all sectors in a short timeframe. They play a crucial role in accelerating the UAE Government’s strategic foresight objectives, with a strong emphasis on financial outcomes that align with the ‘We the UAE 2031’ vision. This vision requires intensified efforts to meet key national indicators, which will positively influence society and the country’s diverse industries and sectors.

The UAE Ministry of Finance today announced the implementation of transformational projects that support the country’s efforts to transition towards the future and enhance its competitiveness, in line with the ‘We the UAE 2031’ vision and the UAE’s efforts to become the global hub for the new economy over the next ten years.

These projects are unique in achieving a significant positive impact in all sectors within short periods of time. These projects support the UAE Government’s efforts to accelerate the achievement of the government’s foresight objectives, with a focus on achieving financial results in line with the ‘We the UAE 2031’ vision, which requires doubling efforts to achieve key national indicators of the vision positively reflecting on society and the country’s various industries and sectors.

His Excellency Mohamed Hadi Al Hussaini, Minister of State for Financial Affairs, highlighted that the UAE, in its second 50-year journey, prioritizes developing governmental work to be able to meet the future requirements of the nation by adopting new methodologies and ways of working through the digital transformation. He noted that these are pursued by the UAE to achieve a quantum leap in project implementation, budget preparation, and resource management.

His Excellency emphasized the Ministry’s efforts to develop government services by focusing on areas that enhance the competitiveness of the economic environment and its ability to attract foreign investments. Among these efforts are empowering Emiratis to represent the UAE internationally.

Transformational Projects

The first project, ‘Developing the Local Debt Capital Market in the Country’, is a joint project with the Central Bank of the UAE by establishing programs for issuing local public debt instruments, represented by bonds and Islamic treasury sukuk in dirhams, and primarily trading them in the primary and secondary local markets, aiming to build and enhance the yield curve in UAE dirhams and provide reference pricing points for local financing operations carried out by financial institutions within the state, thereby enhancing market activity, expanding the investor base, and developing a highly efficient financial market in the UAE.

The Ministry of Finance is also working on implementing the project ‘Enhancing the Presence of Specialized Emirati Leadership in the Financial Field at International Forums’ which serves as the main supporter in making the UAE the most prominent in international cooperation over the next ten years. This is a joint project with the Ministry of Foreign Affairs, aimed at investing in empowering national talents to occupy Emirati memberships in leadership positions within international organizations, their committees, or federations linked to the country’s agenda. This will enhance the UAE’s presence in international forums and support its participation in shaping international strategic decisions and building economic partnerships with countries worldwide, through the leadership and membership of national talents from the Ministry of Finance in various international organizations, forums, and boards of directors.

 

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