What is foreign investment?
Foreign investment occurs when an individual, business or an investment vehicle (such as a superannuation or pension fund) from outside Australia decides to establish a new business in Australia or purchases property or shares in an Australian-owned business.
Foreign investment has been a longstanding part of the development of Australia's economy, and it continues to benefit Australia, including by providing capital to finance new industries and enhance existing industries, boosting infrastructure and productivity, and creating employment opportunities.
There are two main ways in which foreign residents or companies can invest funds in the Australian economy:
- Portfolio investment refers to the purchase of securities (such as stocks or bonds) or equity and debt transactions that do not offer the investor any control over the operation of the enterprise. Common examples include the purchase of property, shares in Australian companies or government bonds by foreign superannuation or pension funds.
- Foreign direct investment (FDI) is when an individual or entity from outside Australia establishes a new business or acquires 10 per cent or more of an Australian enterprise, and so has some control over its operations. Common examples include the establishment of Australian branches of multinational companies or joint ventures between Australian and foreign companies.
What is the Australian Government's approach to foreign investment?
Australian Government policies encourage foreign investment and recognise the many benefits of foreign investment.
To ensure foreign investment proposals are consistent with Australia's national interest, the government reviews foreign investment proposals on a case-by-case basis through the Foreign Investment Review Board.
The government protects Australians investing overseas and promotes foreign investment, including through:
Why invest in Australia?
Australia offers many advantages compared with other countries seeking foreign investment including:
- consistent economic growth
- highly skilled workforce
- strategic location
- strong governance and legal systems
- good infrastructure.
Find out more: Why invest in Australia?