Japanese Investment in

Australia

Updated 28 September 2012

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Agenda

• Recent Foreign Direct Investment (FDI) trends to

Australia

• Japanese investment in Australia

– From Japanese perspective

– From Australian perspective

• Austrade’s Investment attraction business model and

priority sectors

• Business examples

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Australia is a top destination for foreign direct investment

• Foreign direct investment (FDI) into Australia grew by

8.6% in 2012 to a record A$549.6 billion, following a

7.1% rise in 2011. This was more than double that of 10

years ago.

• Australia ranked as the world’s sixth most attractive

destination for FDI (A.T. Kearney’s 2012 FDI Confidence Index)

• The US and UK remain the most dominant direct

investors, making up a combined 38% of Australia’s FDI

stock. The EU remains Australia's single largest source

of FDI stock with a 28% share

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Stock of FDI in Australia by major markets

131,255

79,417

61,202

32,268 23,823 22,527 21,233

16,741

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

UnitedStates ofAmerica

UnitedKingdom

Japan Netherlands Singapore Switzerland Canada China

2009 2010 2011 2012

(A$ m)

Source: Austrade Benchmark Report, ABS

Japan is Australia’s third largest investors, stock increased 13.1% over 2011

to $61.2 billion

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FDI Stock in Australia

• Major Asian nations have been fast-growing sources of direct investment.

• Chinese FDI stock in Australia recorded a CAGR of over 45% in the five years to 2012. Chinese FDI stock now stands at A$17 billion. (3% of Australia’s total FDI stock)

• The first inwards FDI stock for India - A$1.2 billion

• Over the past five years, the fastest growing sources of foreign direct investment into Australia have been*:

– Luxembourg +25%

– Singapore +19%

– China +16%

– Japan +13%

– UK +13%

* Compound annual growth rate since 2007

Source: Australian Bureau of Statistics, International Investment Position, 2012 (released 2 May 2013)

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FDI into Australia by sector 2007-2011 - continues to

grow across major sectors

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

2007 2008* 2009 2010 2011

+7.3%

Source: ABS

+13.8%

+16.1%

+13.9%

(A$ m)

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Japan’s Outward FDI (Level of Investment at End of Year)

$286,529

$237,800

$122,269

$94,444 $93,215

$61,344

$15,107

0

50,000

100,000

150,000

200,000

250,000

300,000

U.S.A. EU ASEAN Netherlands

China Australia India

2007 2008 2009 2010 2011 2012

(US$ m)

Source: JETRO Japan's Total Outward FDI by Country/Region (International Investment position)

Japan’s total outward FDI recorded over US$1,040 billion in 2012 (+8.6%).

Australia – 4th preferred destination

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Japan’s FDI in Australia

• Australia’s third largest investor with the total stock

values of $61.2 billion in 2012

• Approximately 11.1% of total FDI stock into Australia

• Japan’s FDI stock in Australia recorded a CAGR of

14.5% between 2007–2012

• Japan’s outward FDI to Australia accounts for 4% of

Australia’s GDP

• fDI Markets Report (2003-13) – top 5 Investment sectors:

Sector No of projects

Coal, Oil and Natural Gas 14 (11.7%)

Industrial Machinery, Equipment & Tools 13

Business Machines & Equipment 12

Communications 11

Financial Services 11

Total 120

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fDi Markets Report – Japan’s Investment in

Australia: Key Trends (2003-2013)

Company name No of

projects

Global

projects*

% of global

projects**

Toyota Motor 11 455 2.4

Fujitsu 6 107 5.6

Mitsubishi

Corporation 5 315 1.5

Inpex 4 9 44.4

Sumitomo

Group 4 232 1.7

Yokogawa

Electric 3 15 20

NEC 3 85 3.5

Marubeni 3 50 6

Sumitomo

Mitsui

Financial

Group

3 40 7.5

Sekisui House 3 7 42.8

• 120 FDI projects

• The largest number of projects

was announced in 2009, with 20

projects

• 67 Japanese companies invested

in Australia, out of a total 43,099

companies investing in FDI

globally

• Top 10 companies accounted for a

combined total of 45 projects

(37.5%)

*Total number of projects worldwide from the company regardless of report criteria.

** The share of global projects from the company which match report criteria.

Source: fDi Intelligence from The Financial Times Ltd

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J-A Investment Historical Continuity

0

25,000

50,000

75,000

100,000

125,000

150,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

China Japan Netherlands Singapore UK USA

FDI Stock in Australia (A$ m)

Austrade’s Role in

Investment

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Austrade’s role and mission

What is Austrade?

• The Australian Trade Commission (Austrade) is the

Australian Government’s trade, investment and education

promotion agency

What is Austrade’s mission?

• To assist Australian companies to grow their international

business, attract productive foreign direct investment into

Australia and promote Australia's education sector

internationally

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The Australian Trade Commission, in cooperation with State and Territory governments, provides free and confidential assistance

1. Initial coordination of all investment enquiries and assistance

2. Information on the Australian business and regulatory environment

3. Market insights and investment opportunities. Create a strong business case for an investor to consider Australia, including specific state and territory business cases

4. Identification of suitable investment locations and partners in Australia

5. Advice on Australian government programs and approval processes - Ability to leverage the ‘badge of Government’ for the benefit of Australia

Assistance to Investors

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Key functions of Investment

Austrade undertakes five functions in its role as an Investment Promotion

Agency: Research & Strategy

Austrade-offshore/onshore

Department/States & Territory Governments-

onshore

Promotion

Austrade/Department/States & Territory Governments-

offshore

Department-onshore

Attraction

Austrade-offshore/onshore

Department/State & Territory Governments-

onshore

Facilitation

State & Territory Governments/Department-

onshore

Austrade-offshore/onshore

Aftercare

State & Territory Governments/Department-

onshore

Austrade- offshore/onshore

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Investment Priorities

Major

Infrastructure Clean Energy

Digital Economy

(including ICT)

Resources

Technology, Services

and Processing

Agricultural Science,

Food Technology &

Processing

Multi-State Priorities

Innovation Tourism

Infrastructure

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Japan – Investment Priority Market

Major

Infrastructure Clean Energy

Digital Economy

(including ICT)

Resources Tech,

Services and

Processing

Agricultural

Science, Food Tech

& Processing

Innovation

Life Sciences Advanced Manufacturing

(Material Sciences)

Unconventional Gas

Infra Finance

Construction

Tourism

Infrastructure

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Austrade’s Investment Network

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Business Examples

Eurus Energy Holdings Corporation

JV between Toyota Tsusho and TEPCO

Invested in the first wind farm Hallett 5 in SA

(May 2012). AGL intiially developed the wind

farm and continue to work closely with Eurus,

continuing to buy all of the electricity as well

as operate and maintain the facility under

long term arrangements.

Austrade has been supporting Eurus Energy

by providing information on Australian clean

energy industry capabilities and insights,

potential project opportunities and introduing

to stakeholders.

Source: http://eurus-energy.com/en/press/index.php?id=133

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Business Examples

Septem Soken Co., Ltd – SPTM R&D Australia

In 2011, SPTM R&D Australia was established within the Eskitis Institute for Cell and Molecular Therapies at Griffith University located in QLD to assess the efficacy of natural products and conduct collaborative research with the Institute.

SPTM R&D has full access to the Eskitis natural products library and screen them with the aim of discovering new active natural ingredients for new cosmetic/pharmaceutical products.

Austrade helped Septem overcome information asymmetries associated with the Australian market by removing language barriers, providing information on industry capabilities and regulatory information, refered to legal, tax professionals and TGA consultants.

Source: SPTM R&D,

Griffith University http://app.griffith.edu.au/news/2013/06/24/eskitis-leading-the-way-to-natural-beauty/

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Business Examples

• Rakuten LinkShare - Affiliate marketing network company, a subsidiary of Rakuten, has opened an office in Sydney as part of the company's international expansion plans. The company will work with local online retailers, as well as companies wishing to reach customers in Australia. (October 2012) Austrade New York and Tokyo assisted to develop the business case, supported LinkShare’s Australia site visits and introduced them to industry contacts and stakeholders.

• Sony Bank - Sony Bank, a wholly-owned subsidiary of Japan-based Sony, announced the opening of a representative office in Sydney. It will open the office with the purpose of researching the Australian financial market, given that its customers' demands for investment into this market are high. The comapny provides commercial banking services. (July 2011) Austrade assisted the company to introduce to APRA, industry contacts and stakeholders and provided information on the banking industry and regulatory requirements.

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Austrade Investment Website (www.austrade.gov.au/Invest)

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Why Australia - Benchmark Report

The Australia Benchmark

Report considers the key

investor Indicators of Growth,

Innovation, Talent, Location,

and Business and compares

Australia's position with other

countries.

http://www.austrade.gov.au/Invest/Rep

orts-Resources/Benchmark-Report

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Contact Austrade

• Call 13 28 78 and speak to one of our advisers

• Visit www.austrade.gov.au

• Email info@austrade.gov.au