Continued growth for Australia’s inward Foreign Direct Investment
26 May 2016
As Australia transitions from the end of the greatest mining boom in the country’s history, figures just released by the Australian Bureau of Statistics (ABS) show that Australia’s stock of Inward Foreign Direct Investment (FDI) continues to grow although net inflows have declined, primarily because of a fall in the value of mining sector investment.
Commenting on the new figures, Mark Thirlwell, Chief Economist for the Australian Trade and Investment Commission (Austrade), said that in recent years FDI into the mining sector had dominated direct investment net flows into Australia but that this pattern had started to change by 2014, and would change further as the adjustment process continues.
At the end of 2015, total stock of FDI in Australia stood at A$735.5 billion, an increase of a little more than seven per cent, or A$49.3 billion, over the previous year, while revised data from 2014 on net inflows, which showed a decline of A$15 billion, dropped to A$29.6 billion in 2015, a decline of 32.6 per cent.
The fall in the value of investment into the mining sector is reflected in the net FDI into mining and quarrying over the past three years: down from A$51.2 billion in 2013 to A$35.4 billion in 2014 and A$15.3 billion in 2015.
This drop in overseas investment in mining has been partially offset, however, by increased net inflows into transportation and storage, and finance and insurance.
Changing sources of FDI
‘The current ABS data series on the stock of inward FDI by country covers the years 2001 to 2015,’ said Mark Thirlwell in his online Austrade blog. Over that period, he noted, three regions have accounted for the bulk of Australia’s FDI inflows: the European Union (EU), North America and East Asia.
‘The main changes to this regional pattern during that time have been a marked increase in the importance of East Asia as source of direct investment, a substantial decline in the EU’s share of the FDI stock, and a quite modest decline in the North American share,’ Mr Thirlwell said.
While the United States remains the largest investor in Australia by far in terms of inward FDI stock, with almost 24 per cent of direct investments at A$173.5 billion, inflows from Japan surged ahead during 2015. The reported A$14.1 billion of transactions put Japan ahead of the US at slightly less than A$10 billion for the year, and well above the Netherlands, which notched the third highest inflow figures.