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As at 30 June 1999, $151.5 billion (or 55%) of the total foreign equity holdings of $277.7 billion, was in the form of direct investment, with the remaining $126.2 billion (or 45%) being in the form of portfolio investment. As at 30 June 1999, enterprises with majority direct ownership accounted for $134.3 billion (or 89%) of all direct investment equity. The direct investment equity associated with majority direct foreign ownership also accounted for 48% of all foreign equity and 14% of all equity issued in Australia. This chapter reviews Australia's attractiveness for FDI and the present status of foreign direct investments in Australia.
Australia's attractiveness for FDI are due to the huge endowments of natural resources which have proved attractive to the world's leading resource companies, and, the historical openness to FDI.
The concept of direct investment is broadly one of capital invested in an enterprise by an investor having a significant influence, either actually or potentially exercised, over the key policies of the enterprise (called a direct investment enterprise). Ownership of 10% or more of the voting shares (or an equivalent equity interest) is regarded as indicative of significant influence by an investor.
Three enterprise group dissections associated with three different levels of foreign influence: foreign control; significant foreign influence but not necessarily foreign control; and other foreign influence are discussed here. First, direct investment enterprise groups over 50% owned by their direct foreign investors are groups in which there is significant foreign influence that is clearly sufficient to allow foreign control. Second, direct investment enterprise groups 10-50% owned by their direct foreign investors are groups in which there is significant foreign influence but not necessarily sufficient to allow foreign control. Third, other enterprise groups are groups in which there are foreign equity interests that are below the threshold used in defining significant foreign influence, as no foreign investor holds 10% or more of the equity. Analysis of data on equity issued to non-residents by direct investment enterprise groups in Australia as a proportion of total equity on issue provides an indication of the amount of influence non-residents have as a result of their equity holdings.
As at 30 June 1999, $151.5 billion (or 55%) of the total foreign equity holdings of $277.7 billion, was in the form of direct investment, with the remaining $126.2 billion (or 45%) being in the form of portfolio investment. These amounts represented 15% and 13% respectively of the total equity on issue. These proportions vary significantly across sectors. In other words, 15% of the total equity on issue at 30 June 1999 was held by non-residents who had significant influence in the issuing Australian enterprises. This influence in most cases was sufficient to provide control, as most of the equity held by those non-residents was in enterprises where they had a majority interest.
As at 30 June 1999, enterprises with majority direct ownership accounted for $134.3 billion (or 89%) of all direct investment equity. The direct investment equity associated with majority direct foreign ownership also accounted for 48% of all foreign equity and 14% of all equity issued in Australia.
Source: International Investment Section of the Australian Bureau of Statistics.
The Great Australian Science Show held in August 2001 in Melbourne was a great exhibition where the various S&T organisations will present their latest research and technological innovation in an exciting interactive expo.