A sophisticated hub for the Asia-Pacific
Australia has a sophisticated financial services sector and is ideally positioned as a centre for the Asia-Pacific region. This is demonstrated by deep and liquid financial markets and regional leadership in investment management as well as in areas including infrastructure financing and structured products. The strength of the financial services sector is underpinned by a mandated retirement savings scheme, highly skilled and multilingual workforce and advanced business infrastructure.
Finance and insurance is the fourth largest sector in Australia’s economy, generating 8.1 per cent or A$81 billion of real gross value added in 2007-08. This contribution is up from 6.5 per cent two decades ago and its expansion has also aided growth in related sectors such as communications, property and business services.
Highly developed financial markets make Australia one of the major centres of capital markets activity in Asia and Australia’s large and mature financial services sector has assets of more than A$4.3 trillion, which is equivalent to almost four times GDP.
Underpinning much of Australia’s financial services strength is the growth of its investment funds sector. Australia has one of the largest pools of contestable funds under management globally, valued at about A$1.3 trillion (US$850 billion).
Export
The Australian industry is looking to build on our capabilities to take advantage of emerging opportunities in the region and globally, with the active support of the Australian and State Governments. Australian-based firms are seeking to position Australia as a centre for excellence for funds management. A recent survey (a survey of members of the Investment and Financial Services Association, 2008) showed fund managers are rapidly expanding their operations around the globe, particularly in the Asia-Pacific region Australia is recognised for its innovation and sophistication in the provision and administration of managed funds products.
Finance
Investors in Australia can also look to Australia’s financial services industry for investment financing. In October 2008, the World Economic Forum assessed Australia as having the third best regulation of securities exchanges and the fourth soundest banking system in the world (Source: World Economic Forum, The Global Competitiveness Report 2008-09), while Australia’s percentage of non-performing loans is among the lowest in the world (Source: IMF, Global Financial Stability Report, October 2008, Statistical Appendix, Table 24). Financial sector regulation is recognised as world best practice, and provides a transparent and secure base for expansion within the region.
Investments
Australia offers global financial services institutions opportunities in a rapidly expanding domestic market and an ideal location for servicing markets in the Asian time zone.
The Australian Government is committed to building upon Australia’s strong regulatory environment and financial sector expertise, and firmly establishing Australia as a financial centre in the region. The government is taking a number of initiatives to support this objective.
The government has passed legislation which will progressively reduce the withholding tax rate on specified distributions from managed funds from 30 per cent to 7.5 per cent by 2010-2011, making it one of the most competitive in the world. The government has commenced a major review of Australia’s tax system, recognising the importance of taxation for our international competitiveness generally, and for the competitiveness of the financial services sector in particular.
The government is also looking at opportunities for simplification of Australia’s financial services regulation and negotiating mutual recognition agreements with key international markets. Agreements have already been signed with the United States, Hong Kong and New Zealand. In addition, the government has secured Australia’s status as an approved destination for investment funds under China’s Qualified Domestic Institutional Investor program.
The government has assembled a panel of experts comprising financial sector representatives, leading academics and senior government officials which – along side a dedicated team in the Commonwealth Treasury – will work to identify barriers to inward and outward investment and develop policies that will help Australia to grow its potential as a financial centre. |