From: OVERSEAS BUSINESS REPORTS (AUSTRALIA)
University of Missouri-St. Louis
National Trade Data Bank
ITEM ID : IT MARKET 111092444
DATE : Oct 28, 1996
AGENCY : USDOC, International Trade Administration
PROGRAM : Market Research Reports
TITLE : AUSTRALIA - OVERSEAS BUSINESS REPORT - OBR9406
Program key : IT MARKET
Update sched. : Monthly
End year : 1995
Date of record : 19950321
AUSTRALIA - OVERSEAS BUSINESS REPORT - OBR9406
SUMMARY
This article is derived from a report dated June 1994, prepared at the U.S.
Department of Commerce - Washington, DC. The article consists of 40 pages
and discusses the economic and commercial climate in Australia, with
emphasis on information useful for potential U.S. sellers and investors. It
includes the following sections:
FOREIGN TRADE OUTLOOK
BEST EXPORT PROSPECTS
DISTRIBUTION AND SALES CHANNELS
COMMERCIAL PRACTICES
SELLING TO THE FEDERAL GOVERNMENT
FINANCING
ADVERTISING AND MARKET RESEARCH
INDUSTRY TRENDS
INVESTMENT IN AUSTRALIA
FORMS OF BUSINESS ORGANIZATION
ORGANIZATION OF FOREIGN FIRMS
REPATRIATION OF CAPITAL
INTELLECTUAL PROPERTY PROTECTION
INVESTMENT INFORMATION SERVICES
LABOR RELATIONS
TAXATION
TRADE REGULATIONS
GUIDANCE FOR BUSINESS TRAVELERS
WEIGHTS, MEASURES, AND ELECTRICAL CURRENTS
SOURCES OF ECONOMIC AND COMMERCIAL INFORMATION
MARKET PROFILE
MARKETING IN AUSTRALIA
Export Guide
June 1994
Prepared by:
William Golike, Office of the Pacific Basin
and
Claire Zsirossy, US&FCS Sydney
with contributions from US&FCS Australia staff
Edited by:
George Paine, Office of the Pacific Basin
CONTENTS
FOREIGN TRADE OUTLOOK
BEST EXPORT PROSPECTS
DISTRIBUTION AND SALES CHANNELS
Import Channels, Marketing Areas, Distribution Centers,
Wholesale and Retail Channels
COMMERCIAL PRACTICES
Quotations and Terms of Payment, Export Credit Facilities
SELLING TO THE FEDERAL GOVERNMENT
FINANCING
Banking System and Other Financial Institutions,
Availability of Capital
ADVERTISING AND MARKET RESEARCH
Advertising Media, Market Research and Trade Organizations,
Trade Fairs
INDUSTRY TRENDS
INVESTMENT IN AUSTRALIA
FORMS OF BUSINESS ORGANIZATION
ORGANIZATION OF FOREIGN FIRMS
REPATRIATION OF CAPITAL
INTELLECTUAL PROPERTY PROTECTION
INVESTMENT INFORMATION SERVICES
LABOR RELATIONS
TAXATION
TRADE REGULATIONS
Recent Tariff Reductions, Multilateral Trade Agreements,
Import Tariff System, Basis of Duty Assessment,
Licenses and Tariff Quotas, Drawback and By-Law
for Export Schemes, Entry and Reexportation, Samples and Advertising Matter,
Advance Rulings on Customs
Classification, Anti-dumping Provision, Internal Taxes,
Shipping Documents, Marking and Labeling Requirements,
Nontariff Import Controls
GUIDANCE FOR BUSINESS TRAVELERS
Entrance Requirements, Customs Procedures, Business
Etiquette, Commercial Language, Business Hours, Holidays, Accommodations and
Services, Climate and Dress
WEIGHTS, MEASURES, AND ELECTRICAL CURRENTS
SOURCES OF ECONOMIC AND COMMERCIAL INFORMATION
Government Representation
MARKET PROFILE
FOREIGN TRADE OUTLOOK
Australia's economic outlook is encouraging. Although the economy is still
feeling the effects of a three year recession, the economic upturn has
begun, with real growth, according to Australian government predictions, of
4.5% for FY 1994-5 (July-June), following 4 percent growth for FY 1993-94.
Inflation is expected to remain close to 2 percent for next year. The
balance of payments deficit has been scaled back, and Australian exports are
expanding and are becoming more diversified. Unemployment, however, is at
record levels, and is expected to remain high for the next several years.
Australia is the twelfth largest export market for U.S. manufactured goods.
In 1992, U.S. exports to Australia exceed $8.9 billion, of which $5.2
billion is a trade surplus. U.S. foreign investment in Australia was in
excess of $40 billion in 1992.
The Australian Government remains committed to its program of comprehensive
economic reforms begun in the mid-1980s. This program is designed to bring
about growth and stability, and to force Australia into the international
economic mainstream. During 1992, it continued its vigorous national
initiative aimed at standardization of national, service systems,
privatization of government-owned and -operated services, tariff reduction
and regulatory reform aimed at making Australian businesses more competitive
in the global marketplace.
U.S. exports to Australia are concentrated mainly in the areas of aircraft
and associated equipment and parts, computers (ADP equipment), computer
parts and accessories, measuring instruments and non-electric parts of
machinery. Australia also provides a sizable market for U.S. automotive
parts and accessories, books and other printed materials, agricultural
chemicals, medical equipment and industrial chemicals.
BEST EXPORT PROSPECTS
As mentioned, Australia's economic prospects appear favorable for the long
term. Therefore, the country's market will provide opportunities for a
variety of exports from the U.S.
Computers & Peripherals: Australians rank among the world's top users of
PC's and laptops. The ratio is one PC or single-user computer for every
6.37 Australians. In the near term, parts and peripheral should increase,
as should LAN and WAN installations. Most PC's sold in Australia are IBM
compatible MS-DOS based. The Apple Macintosh is the second largest sector.
Other systems, such as OS/2, Unix and other, hold significantly smaller
market shares. Australia's total market size for computers and peripherals
is roughly $3,780 million, in which the U.S. is the dominate supplier in
every market sector. The estimated average annual market growth rate for
the next few years is 4%. Most computer products enter duty free.
Aircraft & Associated Equipment & Parts: Because its 17.5 million people
are scattered over a land area approximately the size of the continental
U.S., Australia has a high per capita use of light aircraft. Cessna
aircraft account for almost 40% of the total number of aircraft registered.
The Australian fleet is composed of more than 60 types of aircraft. This
results in strong dependence on imports, particularly U.S. imports.
Domestic airline deregulation compounded with subsequent privatization of
the state-owned airlines, Qantas and Australian Airlines, is expected to
increase air travel and therefore increase demand for new aircraft and
replacement parts. Australia's total market size for aircraft and
associated equipment and parts was roughly $2,680 million in 1992. The
estimated average annual market growth rate for the next few years is 20%.
Industrial Chemicals: Industrial chemical imports should continue to
increase as tariffs decline and more pressure is applied on domestic
chemical manufacturers to remain environmentally safe. Many domestic
chemical plants are finding it harder to survive. At least one
Australian-based chemical manufacturer, the United Kingdom-owned chemical
giant ICI, has bowed to tariff and environmental pressures, closing 17
plants around Australia. Imports are increasing rapidly, and are expected
to do so for the years until 1994. U.S. strength lies in the broad base of
chemicals it can supply to the Australian market. The U.S. doesn't dominate
in any major subsector, but contributes to and competes in most.
Australia's total market size for industrial chemicals was estimated to be
$1,800 million in 1992. Until 1992, the estimated average annual market
growth rate is 6%.
Plastic Material and Resins: The Australian market for imported plastics is
growing due to tariff cuts and a belief by domestic plastic producers that
the domestic chemical industry does not adequately meet their quality and
"value for money" needs. Australia's recessed economy has meant a shrinking
domestic plastics industry, which has been impacted further by a continued
export push from the U.S., Europe and Japan. There is also an excellent
market for a wide variety of competitively priced, U.S.-made polymers.
Australia's total market size for plastic material and resins was roughly
$1,790 million in 1992. The estimated average annual market growth rate is
2% until the years 1994.
Paper and Paperboard: Imported paperboard and paper products will continue
to increase over the next four years, particularly with market strengths in
the package and printing industries. Australian printers are becoming more
competitive. Magazines need glossy paper, much of which is imported. Paper
and paperboard used in packaging is another significant growth subsector
where U.S.-made products compete. The U.S. is not competitive in
newsprint. Australia's total market size for paper and paperboard is
estimated at $2,200 million in 1992. The estimated average annual market
growth rate is 6% until the year 1994.
Telecommunications Equipment: Australia has two telecommunications network
operators, the government-owned AOTC (Australia Overseas Telecommunications
Corporation) and privately-owned Optus Communications. Expenditure on
telecommunications equipment is expected to increase from 1993 onward as
Australia's economy improves and Optus increases operations. Also, as AOTC
introduces a GSM-based digital mobile phone network, Optus links up
Australia's second GSM mobile phone network and a third GSM mobile phone
network is selected demand will rise. AOTC is continually upgrading its
regular network, which Optus will also use for some years to come.
Telecommunications is continually revolutionizing and both Australia's
network operators are acutely aware they must keep up with international
developments and remain at the "cutting edge" of the industry. Industry
Developments Arrangements (IDAs) demanding local content commitments for
Customer Premises Equipment, end mid-1993. Network operators are already
making "strategic arrangements" with key telecommunications manufacturers,
which are usually the Australian-based arm of a multinational. Australia's
total market size for telecommunications equipment is estimated at $2,600
million for 1992. The estimated average annual market growth rate is 10%
until the year 1994.
DISTRIBUTION AND SALES CHANNELS
Import Channels
Sales agents, importer-distributors, direct importer-users, and combinations
thereof are the principal import channels of operation. In 1992, there were
over 900 U.S. firms registered to do business in Australia, marketing more
than 10,000 different products.
Sales agents are commonly used to sell a variety of products, including raw
input materials and consumer goods for distribution to large wholesalers and
retailers.
Using the services of an agent offers many distinct advantages. An agent's
knowledge of the local market and ability to gain access to buyers to
arrange appointments for visiting exporters "can prove invaluable," in
addition to the ability to conduct follow-up visits to complete negotiations
of orders. A sales agent also can check space allotted for display of an
exporter's products, help arrange displays, monitor sales, maintain a
continuity of contact, and help solve problems on location. Although the
preference for buying direct from manufacturers is spreading in Australia,
the use of sales agents is still the preferred means of doing business.
Agents or importer-distributors (distributors who import and stock certain
lines and take orders for direct shipment of others) are a common channel
for the distribution of products involving technical knowledge, service,
repairs and parts, and other, more involved services, for the manufacturer.
Typical products handled are metalworking machinery and equipment,
agricultural and electrical machinery, transportation, medical and
scientific equipment, measuring and testing instruments, and certain kinds
of consumer durables. Importer-distributors are also frequently used to
sell certain kinds of chemical products, textiles, foodstuffs, and other
consumer goods when stocking is an important factor. A number of large
retailers also buy through purchasing offices in the United States and other
countries.
Numerous subsidiaries of foreign manufacturers import direct from parent
companies and distribute products to round out or supplement their domestic
production. Importing and distributing by an Australian branch or
subsidiary is common when the volume is substantial and the foreign parent
company wishes to retain control over distribution.
A number of well-established companies with nationwide networks of offices
perform a broad range of other functions in addition to trading activities.
These functions include financing, customs brokerage, transportation,
packaging, manufacturing and distribution at both the wholesale and retail
levels. These firms are usually excellent representatives for new products
seeking market penetration, although they usually import products to
complement existing lines.
Marketing Areas
Australia is one of the most sparsely inhabited countries in the world, yet
also one of the most urbanized. More than 75 percent of Australia's
population lives on the east coast; with over 71 percent of the population
living in the state and territory capital cities. The principal marketing
areas, including their populations, are: Sydney (New South Wales), 3.7
million; Melbourne (Victoria), 3.1 million; Brisbane (Queensland), 1.3
million; Adelaide (South Australia), over 1 million; Perth (Western
Australia), 1.2 million; Hobart (Tasmania), about 183,500; and Canberra
(Federal Capital), about 310,000.
For farm materials and equipment suppliers, the principal marketing areas
for the sheep-raising industry exist throughout Australia, except the
Northern Territory; cattle raising -- Queensland, the Northern Territory,
and Western Australia; for grains -- New South Wales and southwestern
portion of Western Australia and areas around Whyalla and Adelaide in South
Australia, and Brisbane in Queensland; for dairying -- the southwest portion
of Australia, the plains around Adelaide, in the western and Gippsland area
of Victoria, northern Tasmania, coastal New South Wales, and southeastern
Queensland; for sugar -- Queensland; and for cotton -- northern New South
Wales and the Ord River District of Western Australia.
New South Wales is the principal financial and information technology center
of Australia, with Sydney, the capital of the state, serving as the
principal marketing center of Australia. Newcastle, the second largest city
in New South Wales, functions both as an outlet for the nearby coal fields
and as the center of Australia's heavy metal industries.
The State of Victoria closely rivals New South Wales industrially and
commercially. Victoria has a highly developed and widely diversified
industrial sector and accounts for one-third of the country's manufacturing
capacity. In addition to being the center of the aircraft and automobile
industries, the state is also prominent in the fields of engineering,
chemicals, foodstuffs, textiles and computer manufacturing.
Most of Victoria's factories are located in Melbourne, the state's capital
city, or in nearby Geelong. Geelong and Dandenong serve as the centers for
the manufacture of textiles and motor vehicles, while Altona is the site of
a large petrochemical complex.
During the last 25 years, Victoria's population has increased from 2.2
million to over 4.4 million, while its factory production has increased
about five times. Melbourne is the country's second principal financial
market after Sydney and serves as the headquarters for a majority of
Australia's largest manufacturing and mining companies. Melbourne is a
major oil production center due to its proximity to the Bass Strait oil
reserves.
In Queensland most industry involves the processing of products from the
area's extensive agricultural, pastoral, and mining industries, including
sugar, meat, timber, copper, and alumina. Brisbane, the capital of
Queensland, is a center of heavy industry devoted primarily to oil refining
and fertilizers. Tourism is a major industry along Queensland's coast; the
Gold Coast south of Brisbane for instance resembles Miami Beach. The Great
Barrier Reef, the country's major tourist attraction, is noted for its
abundant coral and fishing. Numerous new tourism resorts have been
constructed along the Queensland coast. The greatest population growth in
Australia is occurring in Queensland, especially in the tourism sector.
The State of South Australia is one of the country's main centers for the
production of consumer durables, such as motor vehicles and domestic
appliances. The majority of the state's factories are located in Adelaide,
the capital, and nearby Salisbury and Elizabeth. Whyalla and Port Pirie are
both centers for industries based on the state's mining activity (iron ore,
silver, lead, and zinc). Whyalla is also noted for a shipyard capable of
building vessels exceeding 100,000 tons.
The Adelaide Science-Technology Park seeks research and development firms
from within the country and foreign nations. South Australia is a major
market for irrigation equipment, due to its many vineyards.
Perth, the capital of Western Australia, is the state's center of commerce
and industry, while neighboring Kwinana is the site of an industrial complex
with steel mills, oil refineries, fertilizer plants, and nickel and alumina
refining facilities. Large iron ore developments also are located in
Western Australia at Mount Tom Price and Mount Newman in the central
northwest region.
Tasmania, the island state, is the smallest of the Australian states, but is
an important producer of foodstuffs, fruit, pulp and paper, mining products,
such as copper, zinc, aluminum, and iron ore.
The Northern Territory covers a huge area and has the potential of major
mineral finds. Large amounts of uranium are currently processed there.
The Australian Capital Territory, a separate enclave within New South Wales,
is where Canberra, the nations capital, is located.
Distribution Centers
As previously stated, markets are highly concentrated, mainly on the east
coast and around the six state capital cities. Hundreds and sometimes
thousands of miles separate these cities, and thus distribution and freight
costs are very high. Therefore, it is often better to ship directly to the
area for distribution via the nearest port, if possible.
Sydney is the leading commercial and industrial center in Australia for
importers and for manufacturers' agents in many product lines. It is also
the largest wholesale center. It is followed closely by Melbourne in
importance as a distributing center. Regional offices of the largest
distributors and agents are usually located in the capital (or port)
cities. It is very difficult for an exporter to develop the Australian
market without a good local sales representative. Generally, broad,
countrywide coverage can be provided by distributing firms headquartered in
Melbourne or Sydney, many of which have representatives in the other state
capitals. Distributors in the other capitals are likely to be more local in
character. However, representation confined to one area of Australia may
warrant only localized distribution. Western Australia, for example, has
become an active area in which a number of agents have located opportunities
for U.S. firms.
Wholesale and Retail Channels
With the growth of the Australian economy has come a shift and blending of
the traditional distribution channels. In the past, wholesalers provided
the link between manufacturers and retailers. At present, large department
and chain stores deal directly with manufacturers who have factories oftheir own, or through associations of retailers who buy in bulk account for
a significant volume of goods. In addition, many manufacturers have
established organizations for the purpose of selling direct to retailers,
while smaller manufacturers often sell to retailers located in the area
adjacent to their factories. Wholesalers also now frequently extend the
scope of their activity into the field of manufacturing and retailing.
Wholesaling. - Statistics on wholesale trade in Australia are not available,
except from the Australian Trade Commission. Wholesale traders dealing
exclusively in products exempt from sales tax are not required to furnish
returns, thus statistics on wholesale trade in nontaxable items are
understated.
Retailing. - The total value of retail sales of goods (excluding motor
vehicles, parts, gasoline, and the like) in Australia (excluding the
Northern Territory and Australian Capital Territory) during FY 1991 was
roughly US$67,700 million compared with US$65,850 million for FY 1990.
Australian retailing is carried on by 110,500 retail establishments, as of
1989. Of these, retail food stores numbered 39,416; motor vehicles dealers,
gasoline, and tire retailers, 26,516; clothing fabrics, and furniture
stores, 17,908; and household appliance and hardware stores, 8,196. Service
establishments included 17,702 restaurants and licensed hotels, 2,265
hairdressing and beauty salons, and 3,243 licensed clubs.
COMMERCIAL PRACTICES
Quotations and Terms of Payment
Quotations should be based on an f.o.b. U.S. port price, including the cost
of outside packaging and inland freight to the nearest port of export.
Prices should be quoted in the currency used within the terms of the sales
contract. Exporters making quotations in Australian dollars should consult
their bank for the prevailing exchange rate.
To determine the most suitable payment terms for its needs, a business firm
must also take into account the type of products involved. The foreign
departments of most major U.S. banks are well equipped to give service and
advice in matters of foreign trading and, particularly, terms of credit.
Credit information and reliability regarding individual Australian firms is
available through World Traders Data Reports (WTDR), which are compiled by
commercial officers at overseas posts. These reports are available from the
U.S. Department of Commerce district offices. This information is also
available from private agencies. Principal U.S. credit reporting agencies
include the Foreign Credit Interchange Bureau, National Association of
Credit Management, 475 Park Avenue, South, New York, N.Y. 10016; and Dun and
Bradstreet, Inc., 99 Church Street, New York, N.Y. 10007.
U.S. companies may also obtain credit information by asking their own local
bank to obtain a "bank opinion" from its Australian correspondent bank
located nearest to the company in question.
Export Credit Facilities
Major banks in principal U.S. seaports and industrial centers maintain
large, experienced, foreign departments. These banks account for the bulk
of export financing in the United States.
The Export-Import Bank of the United States (Eximbank) is one possible
source of credit. An independent agency of the United States, it
facilitates export financing of major capital equipment, requiring repayment
terms over 5 years, by extending direct loans to foreign buyers for a
portion of the required financing.
Commercial banks generally provide the remainder of the financing. Eximbank
also guarantees a portion of the repayment of medium-term (181 days to 5
years) export credit extended by U.S. commercial banks to foreign buyers
without recourse to the U.S. exporters. As such, a bank retains a share of
the commercial risk for its own account; it is, however, protected by the
Eximbank guarantee against all political risks. Other programs include
loans to overseas banks that arrange financing of their customers' import
requirements. All disbursements are made against evidence of shipment from
the United States.
As with most other export credit agencies in industrialized countries,
Eximbank operates a supplier credit program. Eximbank is prepared to extend
its comprehensive guaranty of repayment (against specified risks) for
nonrecourse export financing to participating U.S. banks, which the banks in
turn can extend to their U.S. customers.
Business representatives and bankers (both U.S. and overseas) are invited to
make use of Eximbank's counseling services, which include information on
money markets in the United States, credit information on overseas buyers,
and details regarding Eximbank's programs. Requests for further information
may be addressed to Export-Import Bank of the United States, 811 Vermont
Avenue, N.W., Washington, D.C. 20571.
SELLING TO THE FEDERAL GOVERNMENT
Australia has not yet signed the GATT Government Procurement Code. It did,
however, following persistent pressure from the U.S. Government, formally
abandon civil offsets requirements under the National Civil Offsets
Agreement in December 1992. The national Civil Offsets Agreement covered
sales of information technology, medical and certain other items to
Australian Governments in excess of a single contract value of $2.5 million
or accumulated yearly purchases of the same value, where the imported
content of the items exceeded 30%. Individual State Governments may still
require offset-type clauses in large contracts, but these are most likely to
be local work program inclusions. Offsets on defense purchases are still
required, but are likely to become subsumed into general industry policy
during 1993.
Very large government procurement, such as aerospace, are accompanied by an
MOU between the supplier and the government which sets out the extent to
which local industry will benefit through subcontracting and technology
transfer.
The Partnership for Development Program is still in place, with information
technology companies still carrying out seven-year programs of local R&D and
export to import targets.
In February 1992, the Australian Government established the Systems
Integration Panel (SIP). The SIP is made up of 20-25 private companies
selected by government through which it will source all federal information
technology requirements involving systems integration activity, except for
purchases of less than A$1 million. The charge having been laid that the
panel is restrictive and discriminatory, as some of the 43 companies which
tendered but did not succeed in being selected are claiming that they will
now be prevented from bidding on government procurement which was available
to them previously.
The nature of the panel also makes it difficult for new companies to obtain
panel membership. Firms which wish to become panel members must first
demonstrate "competence, commercial viability and potential to contribute to
government policy objectives, including expansion into Asian-Pacific
markets." It is unlikely that Australian legislation would allow such a
panel in the private sector, and its establishment is likely to face
continued opposition from industry.
The U.S. Government has expressed concern at eligibility criteria and will
oppose any restriction of trade that may result from the SIP.
FINANCING
Banking System and Other Financial Institutions
The Reserve Bank is the focal point of the banking system in Australia,
regulating its financial markets, with responsibilities comparable to those
of any other country's central bank. It is controlled by a board consisting
of a governor and deputy governor, a secretary of the treasury, and seven
other members. The Reserve Bank guarantees deposits of all authorized
banks, excluding those of building societies and non-bank financial
institutions. The major commercial banks are Westpac Banking Corporation,
ANZ Bank, National Australia Bank and the Commonwealth Bank of Australia.
These banks have extensive domestic networks and international operations.
They are licensed by the Federal Treasurer, and operate under Reserve Bank
supervision, together with 17 foreign owned banks following their
establishment when the banking system was substantially deregulated in
1985. Australia has a total of 35 authorized banks.
U.S. licensed banks in Australia are Bankers Trust, Chase AMP, Bank of
America and Citibank. Citibank is the only American bank involved in
consumer operations following Westpac's purchase of Chase AMP's retail arm
for A$30 million in June, 1991. Another 20 U.S. banks have local
representative offices.
Availability of Capital
Australia's banking industry has good access to foreign markets.
Conversely, foreign investors and exporters have good access to Australia
markets, largely due to unencumbered regulations and financial
availability. Trade finance for Australian importers is readily available
to solvent and on-going enterprises.
Banking is the dominant sector in the Australian finance industry,
accounting for 65% of total financial sector assets. Financial services to
business, however, are provided also through a wide range of non-bank
institutions. Unlike their U.S. counterparts, Australian based banks are
free to participate in virtually all forms of financial services, including
overdrafts (a traditional form of borrowing), fixed-term loans, commercial
bills of exchange, letters of credit, domestic and international debt and
equity issues, underwriting, leasing and Euro currency borrowing.
Additionally, a number of industrial banks have been established to
encourage the development of local industry and resources. These include
the government-owned Australian Industry Development Corporation (AIDC) and
the Primary Industry Bank of Australia. AIDC provides development finance,
equity funding and financial advisory services. The Primary Industry Bank
provides or refinances loans to primary products for longer terms than are
ordinarily available.
Commercial banks are the major source of medium-term loans. Numerous
merchant banks also provide short-to-medium term funding. A wide range of
merchant banks operate in Australia, many of which are directly associated
with some of the world's largest banking institutions. Venture capital
finance is usually available from management and investment companies, which
are funded by tax-deductible capital subscriptions. Other alternatives
include sourcing funds from finance companies (including leasing
arrangements), building societies, credit co-operatives or unions, insurance
companies, pension and superannuation funds and cash management trusts.
Long-term financing is usually supplied by syndicated Australian and
overseas bank lending.
ADVERTISING AND MARKET RESEARCH
Advertising Media
Expenditures for advertising in Australia, one of the most promotion-minded
countries in the world, amounted to almost A$5 billion in 1992, as compared
with A$4.7 billion in 1991. Television handles the largest percentage of
advertising in Australia (33 percent), closely followed by the metropolitan
newspaper (27.2 percent), other newspapers and magazines (21 percent),
outdoor (6.2 percent), radio (8.8 percent), and cinema (1.6 percent). There
are 203 commercial radio stations and 563 commercial television stations.
The advertising industry is highly organized and is national in scope, with
the decision making in national campaigns and programs, particularly in TV,
radio, and outdoor work, largely centered in Sydney and Melbourne.
Companies are staffed and equipped to provide integrated services of almost
any nature in virtually any marketing area. A number of major Australian
and American advertising agencies have offices in Sydney and Melbourne, and
some maintain branch offices in the other state capitals. There are local
companies in each of the states providing programs and facilities for
advertising. Public relations firms are both local and national in scope,
while movie advertising is predominantly local and is oriented primarily
toward the promotion of domestic consumer goods. There are some
quantitative restrictions on the use of foreign-made commercials on
Australia's broadcasting system.
Market Research and Trade Organizations
Marketing Research. - In the Australian market, research firms are oriented
primarily toward consumer goods. Market research, covering all generally
recognized objectives of such studies, are offered by a number of firms and
individuals.
Reports and findings of Australia's leading economic research organizations
frequently provide valuable source material for marketing studies. Several
of the organizations are interested primarily in fields directly related to
marketing, such as retailing, consumer behavior and wholesaling. Further
information concerning marketing research facilities in Australia may be
obtained from the Institute of Applied Economic and Social Research,
University of Melbourne, Grattan Street, Parkville, VIC 3052 (tel.
61-3-344-5330, fax 61-3-344-5630) and the Market Research Society of
Australia, P.O. Box 697, North Sydney, NSW 2060 (tel. 61-2-955-4830, fax
61-2-955-5746).
Trade Organization. - There is an Australian trade association for almost
every form of agricultural, commercial, and industrial endeavor. Australian
trade organizations conduct market research on behalf of their members and
prepare a variety of other reference materials. They sometimes provide
information to non-members, but may do so only within the framework of a
reciprocal exchange of data.
In addition to the National Chamber of Commerce in Canberra, individual
chambers have been established in each of the six state capitals and in
Darwin. These chambers provide services similar to those of their U.S.
counterparts.
The American Chamber of Commerce with over 1,500 members in Australia,
offers assistance to American business in Australia. Its head office is
located at Suite 4, Gloucester Walk, 88 Cumberland Street, Sydney, New South
Wales, 2000, with branch offices in Adelaide, Brisbane, Canberra, Melbourne
and Perth.
Trade Fairs
Australian trade fairs are important sales tools and present excellent fora
for introducing new firms and products to the Australian market. These
fairs also serve as meeting places for producers to check on competitive
lines, for licensors to negotiate arrangements, and for technicians to
exchange ideas and learn of recent developments in their fields.
Although Sydney and Melbourne are the principal sites for the international
trade fairs held in Australia each year, Brisbane, Perth and Adelaide also
host major international fairs. The trend in Australia is toward the
specialized vertical fair and away from the so-called universal or
horizontal multi-industry fair. This trend is well established, so that
Australian business executives in specialized fields usually have only a
limited number of fairs a year that they regularly attend or in which they
exhibit products.
Space is limited and often rented by perennial exhibitors. Therefore,
newcomers interested in participating must apply early. Australian customs
regulations permit foreign products to enter duty free for display at
scheduled fairs and exhibitions. Additional information may be obtained
from the Office of Trade Development, International Trade Administration,
U.S. Department of Commerce, Washington, D.C. 20230.
INDUSTRY TRENDS
Gross Domestic Product
Australia's economy is gradually emerging from a prolonged recession brought
on by several years of government efforts to fight inflation, low world
commodity prices and a generally weak global economy. The value of
Australia's gross domestic product in 1992 is estimated to be $294,444
million. Despite an actual decline of 2% in 1991, Australia's GDP is
expected to have an average growth rate of 2.5% in 1993 and 3.5% in 1994.
Agriculture
In recent years, Australia has liberalized and deregulated its farm economy
to improve its competitive position in world markets. As a low-cost
producer and major exporter of temperate-zone products, Australia is
competitor of the U.S. in many areas. Farm exports are valued at about 70%
of production, with the major sectors being wool, wheat and beef. Other
exports include dairy products, hides, skins, live sheep, barley, rice,
sugar, horticultural products, forest products and cotton. Japan, Taiwan,
Korea, the Middle East, the European Community, the United States, the
countries of the former Soviet Union and China are Australia's principle
export markets.
Australia's farm economy has been in a recession over the past few years,
caused by low world prices and drought-reduced crops such as wheat, barley,
wool, sugar and cotton. Despite firm export returns from beef, cotton,
dairy products, fruit and wine, overall farm exports and income have dropped
sharply. Australian farm income and exports are estimated to have declined
in 1992. In 1991, the Government of Australia announced a broad-based
assistance package, providing structural adjustments and financial aid to
the rural sector. However, the support price for wool was canceled, forcing
growers to depend on market prices. In April 1992, Australia abandoned its
plans to deregulate the dairy industry, thereby continuing to subsidize
dairy product exports through the use of levies on milk production.
Mineral Resources
The Australian mining industry has undergone considerable stress in recent
years in line with falling world prices accompanying the global economic
downturn. Following a period of rapid growth in industry output and exports
in the mid-1980s, the 1990s have seen a period of consolidation rather than
expansion. Nevertheless, Australia has retained its role as a major
supplier to international markets, and is set to hold this position well
into the future.
Australia produces around 65 commercially significant minerals, whose
production contributes 5% to the country's GDP. Export earnings from the
mining industry totalled US$21 billion in FY 1991-92, or just over 50% of
commodity export earnings. Australia remains the world's largest coal
exporter, with exports reaching 123 million metric tons in FY 1991-92.
Australia is also the world's largest producer of lead, bauxite, alumina,
zircon and monazite, the second largest producer of zinc and iron ore, and
contributes 10% of the world's uranium exports. Australia is the fourth
ranking gold producer in the western world, with export earnings of US$3.1
billion in FY 1991-92 ranking it with coal and wheat as a major export
earner.
Australia is also over 70% self-sufficient in crude oil, and has reserves of
both oil and natural gas.
Industrial Sector
Australia commenced a basic reorientation of its economy over the past 10
years from an inward-looking, import substitution approach to an
internationally competitive, export-oriented model. This has caused the
composition and direction of Australia's exports to have changed
significantly in recent years, with value-added manufactured goods growing
rapidly, while traditional agricultural commodity sales have weakened.
Industrial self-sufficiency has been vigorously pursued, and a great deal
has been achieved. A domestic market of about 17.5 million people will not
economically support some classes of industry, such as the manufacture of
certain specialized machines, heavy fabricating, electrical equipment, some
industrial chemicals, and sophisticated scientific equipment. Apart from
these items, the market is generally supplied by domestic manufacturers
supplemented with imports.
Processing Food. - Food processing is an area of excellence in Australia.
It is one of the nation's largest and most efficient industries, accounting
for more than 20% of manufacturing output and 16% of manufacturing
employment. It is very diverse in its products and markets, and comprises
some 3,500 factories ranging from small firms concentrating on specialized
foods to large multinational companies. The industry originated from
companies which were established to serve the domestic market. Many of the
companies - even those which operated both import manufactured line - found
their manufacturing operations to be highly competitive. Local production
soon dominated the home market across virtually every product range.
This pattern continues today and the local food, beverage and tobacco
processing industry sector holds more than 90% of the US$22 billion home
market. No other manufacturing sector in Australia approaches such local
market dominance. So efficient is Australian food processing that many
companies are now engaged in substantial export drives, particularly to
neighboring Asia. Australia exports almost every category of processed food
- meats and small goods, dairy products including cheeses, confectionery,
cereals, bakery products, beverages including wines, and pet foods. Exports
of Australian processed foods nearly doubled in the 1980s and are now
running at more than US$7 billion a year, of which US$2.2 billion were
highly processed.
Forest Products. - Industries based on timber and wood pulp have accounted
for about 8% of secondary industries' production value in recent years.
Capacity in the sawmilling industry exceeds log supply. Australian sawn
timber provides 80% of the demand, including virtually all the hardwood
requirements. Capacity for manufacturing wooden furniture is adequate to
satisfy the local market.
Automobile Industry. - The Australian automotive industry is one of
Australia's major manufacturing activities. Production of motor vehicles
and components accounts for around 5% of value added and nearly 6% of
employment in the manufacturing sector. The industry's value added
represents around 1% of Australia's total GDP. In 1991, the automotive
industry employed some 50,500 people in the production of cars and
components with a further 55,000 employed in the distribution, retailing and
servicing. Some 271,000 locally produced vehicles were sold in Australia
representing an ex-factory value of US$3.9 billion. In addition some 20,000
Australia vehicles were exported in 1991 and these plus component exports
provided Australia with US$.94 billion in export earnings. This makes
automotive exports Australia's largest elaborately transformed exports.
In 1992, the automotive industry employed around 45,000 in the production of
cars and components and a further 2,000 in the importing sector. Australia
now has four automobile manufacturers: General Motors-Holden, Ford, Toyota
and Mitsubishi. In late 1992, Nissan ceased vehicle production in
Australia. Total local production of motor vehicles in 1992 was 262,056.
Total automotive exports for 1992 was US$960.54 million, an annual growth of
7.9% over 1991 exports. This is a growth of 225.7% over 1984. Tariff rates
for passenger motor vehicles and their derivatives and original equipment
are currently at 32.5%, reducing by 2.5% per year to 15% in the year 2000.
Agricultural Machinery. - The agricultural implement industry is of special
importance because of the demand for mechanized equipment, including
large-scale wheat farming machinery. Several types of tractors are produced
locally. Following an encouraging start, Australia's 1992 agricultural
machinery sales slumped at mid-year. The reason for this slump are blamed
on a slow recovery from the recession, political uncertainty leading up to
the March 1993 federal elections and continuing difficulties in resolving
the GATT negotiations. Drought in some parts of the country, and excessive
rains in others also contributed to Australia's continuing low agricultural
equipment sales. No significant improvement is expected before the end of
1994.
Chemicals. - The chemicals industry (excluding pharmaceuticals and alumina)
has a turnover of around US$13.6 billion annually, employs around 80,000
people and accounts for approximately 10 percent of value added by
manufacturing in Australia. A wide range of products are produced including
synthetic resins and rubber, fertilizers, industrial gases, inorganic
chemicals (e.g., caustic soda, soda ash and titanium dioxide), specialty
chemicals and agriculture and veterinary chemicals. The industry is
dominated by multinationals who have established operations in Australia
primarily to service the domestic market. For FY 1991-92, imports were
valued at US$3.4 billion, and exports less than US$1.1 billion, representing
a trade deficit exceeding US$2.27 billion. This trade situation is
improving and exports of some products (e.g., polypropylene) have increased
markedly.
The industry is concentrated in the States of Victoria and New South Wales.
The petrochemicals and polymers industry is presently undergoing an
investigation to determine areas to achieve cost reductions and to increase
competitiveness. Australia has an abundance of raw materials ranging from
salt, soda ash and various minerals to gas and oil. Various initiatives are
being developed to add value to these resources and new project proposals
are facilitated by government.
INVESTMENT IN AUSTRALIA
Value of U.S. Investment
The Australian Government welcomes foreign investment. The U.S. is the
largest source of foreign capital, with the stock of U.S. direct investment
exceeding US$16 billion. The other top investors in Australia are the
United Kingdom and Japan.
Government Policy on Foreign Investment
Liberal investment regulations and a stable government have made Australia
an attractive market for investment dollars. However, there are drawbacks.
The Australian economy is gradually emerging from a prolonged recession.
The economic upturn begun in 1992 is moderate, with real growth rates
expected to be in the 2%-4% range for the next few years. Also,
unemployment is at record levels, and is expected to remain high for the
next several years. However, inflation is now well under control, the
balance of payments deficit has been scaled back, and Australian exports are
expanding and are more diversified.
An element in the Australian situation that is perhaps most attractive to
prospective U.S. investors is political stability. Firmly based on
traditions of justice, due process of law, and civic responsibility of the
individual, Australian institutions are only in a few respects dissimilar to
those in the U.S. In addition to its high standard of living, major
supplies of natural resources, and growth prospects, Australia is in close
proximity to the rapidly developing Asian-Pacific markets. Nearby New
Zealand also constitutes a market of approximately 3.5 million people.
Regulation of foreign investment is based on the Foreign Acquisitions and
Takeovers Act, 1975, as amended in 1989, and 1991 regulations issued
pursuant to this Act. Foreign investment in three sectors is severely
limited. In the media industry, the Broadcasting Services Act of 1992
provides that a foreign person may not exercise control of a television
license, or have company in such a license exceeding 15%, and two or more
foreign persons may not have company interests in such a license exceeding
20% in aggregate. Foreign investments in mass circulation newspapers are
reviewed on a case-by-case basis. In the civil aviation area, foreign
airlines flying to Australia can generally expect approval to acquire up to
25% of the equity in a domestic carrier individually or up to 40% in
aggregate. All other foreign investors (including those that do not operate
an airline service to Australia) may acquire up to 100% of a domestic
carrier or establish a new aviation business. The purchase of urban real
estate by foreign interests is regulated closely. Generally, Australia
seeks to assure 50% equity participation by Australians in such ventures.
Where such participation is not available on reasonable terms and
conditions, however, applications for up to 100% foreign ownership will be
considered.
The Federal Treasury administers foreign investment regulations with the
assistance of the Foreign Investment Review Board (FIRB), which screens
investment proposals for conformity with Australian law and policy.
On February 26, 1992, the Australian Government announced major
liberalization in the field of foreign investment. In the banking sector,
Australia now will permit the issuance of new banking authorities to foreign
owned banks where the Reserve Bank is satisfied the bank and its home
supervisor are of sufficient standing, and where the bank agrees to comply
with Reserve Bank prudential supervision and arrangements. In addition,
foreign owned banks will not be precluded from bidding for the smaller
banks, i.e. for banks other than the four major Australian banks. In the
mining sector (excluding uranium), the 50% Australian equity and central
guideline for participation in new mining projects, and the economic
benefits test for acquisitions of existing mining businesses, have been
abolished.
The February 1992 announcement also increase dramatically the threshold
below which foreign investment proposals are exempt from FIRB examination so
long as they involve one of the following sectors: rural properties;
agriculture; forestry; fishing; resource processing; oil and gas; mining
(excluding uranium); manufacturing; non-bank financial intermediaries;
insurance; stockbrokers; tourism (hotels and resorts); and most other
services. Proposals to acquire 15% or more of a company or business with
total assets below A$50 million (US$35 million), establish a new project or
business with a total investment below A$50 million, or takeover an offshore
company with Australia subsidiaries or assets valued below A$50 million
threshold in the listed sectors will be automatically approved. Proposals
above the threshold will be approved unless found contrary to the national
interest.
The above changes do not apply to uranium mining, civil aviation, the media
and urban real estate. Nor do the February 1992 changes alter the
notification requirements of the Foreign Acquisition and Takeovers Act. The
following categories of investment proposals must be notified to the FIRB:
o Acquisitions of substantial interests in existing Australian businesses
with total assets over US$3.85 million (US$2.3 million for rural properties);
o Plans to establish new business involving a total investment of over
US$7.7 million;
o Investment in the media, irrespective of size;
o Direct investment by foreign governments or their agencies, irrespective
of size;
o Acquisitions of non-residential commercial real estate valued over
US$3.85 million;
o Acquisitions of residential real estate, irrespective of size (unless
exempt under the regulations);
o Takeovers of offshore companies whose Australian subsidiaries or assets
are valued over US$15.4 million or account for more than 50% of the target
company's global assets; and
o Proposals where any doubt exists as to whether they are notifiable.
Traditionally, Australian officials and the general public have recognized
the indispensable role of overseas capital, market access technology, and
know-how for the development of their immense mineral-rich but thinly
populated land. Private U.S. investors and prospective investors have found
the authorities to be receptive and cooperative. However, the general aim
is to import long-term developmental capital and technology, rather than
short-term speculative capital. The government seeks Australian
participation in mineral exploration. It has indicated that because of
risks involved and the country's limited capital resources, it is preferable
to obtain high Australian equity participation at the production rather than
exploratory stage.
This policy, centered on longer-term direct investment, is based on two
principles: first, the importance that foreign capital can contribute to
the development of Australia's resources and industries; and second, to
ensure that Australians have the opportunities to participate in this
development. The government stresses Australian participation in new
projects in a 50-50 equity ratio. Although the 50-50 ratio is not a
specific guideline, approval of projects without it is difficult.
Although strong awareness of the role of foreign capital still exists, some
officials have expressed concern that key sectors of the local economy might
be dominated by foreign interests, to Australia's detriment. The takeover
of local firms by larger overseas concerns has become a matter for
particular scrutiny.
In an effort to decentralize industries, Australian states offer important
incentives for locating industries outside their major cities. Incentives
include low-interest loans to buy land, erect factories, and provide housing
for key personnel. Subsidies are provided to train employees as well as to
offset increased freight costs.
The Australian Embassy and Consulates in the United States, along with
Australian banks represented in the United States, supply information on all
aspects of Australian industry to any person or company interested in
establishing itself in Australia. On the whole, advice and assistance in
the development of new companies is given by branches of the various state
governments. As most regulations concerning the establishment of a business
in Australia are state-executed and administered, it would be to the benefit
of the prospective business executive proposing to establish a business in
Australia to work in harmony with state authorities. These authorities are
as follows:
o New South Wales -- Department of State Development, Sydney;
o Victoria -- Office of Trade & Investment, Department of Business &
Employment, Melbourne;
o Queensland -- Department of Business, Industry and Regional Development,
Brisbane;
o South Australia -- Department of Industry, Trade and Technology, Adelaide;
o Western Australia -- Department of Commerce & Trade and Department of
Resources Development, Perth;
o Tasmania -- Department of Industrial Development and Resources, Hobart;
o Canberra -- Economic Development Division, Chief Minister's Department,
Canberra; and
o Northern Territory -- Department of Industries and Development, Darwin.
Foreign Ownership of Real Property
Land tenure in Australia is a complicated matter as each state and territory
has separate but somewhat similar legislation and procedures. However, this
complexity is not of special concern to investors interested in
nonagricultural investments. Land necessary for purposes other than
agricultural or pastoral use is still plentiful, and exclusive of Crown
lands (government-owned), which are principally in the State of Queensland,
aliens are generally able to acquire land on a basis equal with Australian
citizens. Land for industrial or commercial establishments can be obtained
with a minimum of legal or procedural difficulty on either a freehold basis
or a long-term lease.
In New South Wales and Victoria, nearly all Crown lands have already been
alienated. In the less-developed states, opportunities still exist for
large-scale pastoral development. However, an investor interested in a
pastoral development should consult local counsel regarding the various
restrictions governing the alienation of such land to non-Australians.
Acquisitions of real estate for development are generally approved unless
they are deemed contrary to the national interest. Acquisitions of
developed nonresidential commercial real estate require 50% Australian
equity participation, unless Australian equity is not available, in which
case 100% acquisitions are approved if not contrary to the national interest.
The acquisition of residential real estate was previously permitted up to a
value of US$460,000 without FIRB approval. However, this threshold was
abolished in September 1987, and all proposed acquisitions of urban,
including residential, real estate by foreign interests now require FIRB
approval. Property developers may sell 50% of units in new developments to
foreigners without approval.
Each of the six states has a Land Department under the direction of a
minister, who is charged generally with the administration of acts relating
to the alienation, occupation, and management of Crown lands. In the
Northern Territory, this function is carried out by the Administrator; in
the Australian Capital Territory, by the Department of the Capital Territory.
Various cities and municipalities have town-planning programs, and
prospective property owners should give consideration to existing or
proposed plans of this nature before acquiring a particular site. Failure
to do so may involve refusal by municipal authorities of permission to
construct or enlarge industrial facilities.
Foreign Ownership of Business Entities
U.S. nationals are, in general, permitted to own property and carry on
business in Australia on the same basis as Australian citizens, and foreign
companies are free to participate in most industries, subject to compliance
with relevant provisions of state and federal law. Life insurance companies
are required to register under the Life Insurance Act.
Foreign companies desiring to establish a place of business in Australia are
subject to licensing requirements to the same extent as an Australian
company.
Generally, Australia does not impose any restrictions relating to the
nationality of officers, directors, or shareholders. Neither are there any
legal provisions requiring local participation in equity capital or
management of companies established in Australia by foreign interests.
However, prospective foreign investors should take into consideration the
public sentiment that more opportunities should be made available for local
capital participation in foreign investments in Australia.
During recent years, as previously mentioned, special attention has been
given to plans for taking over Australian firms by foreign firms or other
Australian companies, and to preventing the use of takeover methods which
are unfair to a company's shareholders as a body. Guidelines have also been
designed to give the government more time to intervene or express a view on
takeover proposals that might involve the national interest.
FORMS OF BUSINESS ORGANIZATION
The following forms of business organization are most frequently used in
Australia.
Sole Proprietorship
As in the United States, a person may, subject to various formalities and
authorizations that apply to specific types of activities, create or
purchase a business without forming a corporation. The owner has the sole
responsibility for the operations in which he or she engages. In settlement
of debts, not only business assets, but also personal goods and property, in
addition to business assets, may be attached.
An individual is free to carry on a business without formal registration
requirements unless that individual elects to trade under a business name
other than his Christian surname. In the latter event, registration is
necessary and involves a disclosure of the true name, address, and
occupation of the individual concerned.
Partnerships
The general principles relating to the rights and liabilities of partners
are similar to those applying under American law. Except as stated below,
Australian law and Partnership Acts the various states and territories rule
that an association or partnership formed for the purpose of carrying on a
business may normally not consist of more than 20 persons. An exception is
made, however, in the case of an association or partnership which may be
made and can consist of up to 50 persons. Accounting firms may consist of
up to 200 partners. There is no requirement that any or all of the partners
be Australian residents.
Companies
In 1990, each State and Territory in Australia passed legislation
(collectively called, "the Corporations Law") to enable the introduction of
a new national scheme for the regulation of companies and securities with
took effect from January 1, 1991. This legislation replaced a co-operative
State scheme that had existed since 1981.
A single national regulatory authority has been established for the
administration of companies and securities law throughout Australia called
the Australian Securities Commission (the "Commission"). The Commission
replaces the previous National Companies & Securities Commission and the
State Corporate Affairs Commissions.
A company may be limited by shares, limited by guaranty, or unlimited. The
large majority of incorporated manufacturing and commercial enterprises are
established as limited-liability companies, which may be either public
(Ltd.) or proprietary (Pty, Ltd.) in organization.
Proprietary companies are formed to obtain the advantages of limited
liability for family businesses, small companies closely akin to
partnerships, and companies that are subsidiary groups and divisions of
other companies. If the desire is to impose restriction on the transfer of
shares, and if the capital required by the undertaking can be raised without
the necessity of offering shares to the public, incorporation as a
proprietary company is the more convenient form, particularly in the
establishment of an Australian subsidiary by an American corporation. A
proprietary company is one that restricts the right to transfer its shares;
limits the number of its members, exclusive of present or former employees;
prohibits any invitation to the public to subscribe for shares or debentures
of the company; and prohibits any invitation to the public to deposit money
with the company. Any two or more persons or corporations may form a
proprietary company.
The following regulations also apply to the formation of a proprietary
company: the term "proprietary" must be included before the word "Limited"
(frequently abbreviated to Pty, Ltd.) in the name of the company; a
proprietary company may commence business immediately upon incorporation,
and the memorandum and articles need not be accompanied by the directors'
written consent to act.
The term "public company" is normally used to describe a limited company
other than a proprietary company. The public company form of organization
is used when it is deemed advisable or necessary to raise capital by
offering shares to the general public. Any five or more persons may
incorporate a public company.
Special provisions exist in all states and territories permitting mining
companies to be incorporated on a "no liability" basis. Every company of
this type shall have the words "No Liability" or the abbreviation "N.L." as
part of and at the end of its name.
Registration
Applications for registration in the various states must be made with the
Australian Securities Commission in Sydney, Melbourne, Brisbane, Adelaide,
Perth, Hobart, or in Canberra for the Australian Capital Territory.
Companies wishing to do business in the Northern Territory should register
with the Registrar of Companies, Darwin, Northern Territory. If the company
intends to carry on business in Australia outside the place of incorporation
(other than the Northern Territory), the company is required to register its
name in that state and to establish an office there.
The application for registration is accompanied by a memorandum of
association (charter), articles of association (bylaws), other papers, and
fees. Expenses incurred include filing fees to the Corporate Affairs
Commission (approximately US$130) and legal costs for drafting the charter
and bylaws.
A company may not be registered by a name that is, in the opinion of the
Registrar, undesirable or is a name or names of a kind that the Registrar
has been directed by the government not to accept for registration. A
similar direction has been given to the Registrar in each state and
territory. The Registrar would normally treat as undesirable names
identical with or too closely resembling that of another company or business
or a name that is misleading as to the nature and objects of the company.
The Registrars also forbid registration, except with government consent, of
names suggesting connection with the royal family, the Crown, the
Commonwealth of Nations, the Government of Australia, or a state of any part
of the Queen's dominations, possession, or territories; with the government
of a foreign country or the United Nations; or with a government department,
authority, or instrumentality or a municipal or other local authority.
Names containing certain words such as "trust," "trustee," "chartered,"
"guarantee," "bank," "banking," and the like are also forbidden. Although
the type of name which is forbidden appears to be wide, in actual practice
it is not unnecessarily restrictive.
Share Capital
A copy of every prospectus issued by a public company must be registered
with the appropriate state or territory registrar before the prospectus is
issued. Shares must be distinguished by appropriate numbers, and share
certificates may be issued only under the seal of the company. Fully paid
redeemable preference shares may be redeemed only out of profits or the
proceeds of a fresh issue made for that purpose.
A company limited by shares may, if authorized by its articles, increase its
share capital; consolidate and divide all or any of its share capital into
shares of larger amounts than its existing shares; convert its paid-up
shares into stock and convert that stock into paid-up shares of smaller
amount than is fixed by its memorandum; cancel shares that at the date of
the passing of the relevant resolution have not been taken or agreed to be
taken; or reduce its capital, subject to court approval.
However, notice of any increase or reduction of capital must be given to the
state or territory Registrar of Companies. There is no minimum amount of
authorized capital, but a public company must have at least five
shareholders; a proprietary company must have at least two. The registered
shareholders may hold their shares as nominees of beneficial owners.
Shares must be of a fixed amount. Bearer and non-par value shares are not
allowed. Shares available for sale include common, preferred, deferred,
convertible, and redeemable preference. The company is required to keep a
record of shareholders and the number of shares owned.
ORGANIZATION OF FOREIGN FIRMS
In Australia, a foreign company is usually defined as any company
incorporated outside the state in which the business is situated. For
example, for legal purposes, a company incorporated in the United States or
in New South Wales would be defined as a foreign company if applying for
registration in Victoria.
Each foreign company must, within one month after it establishes a place of
business or commences to carry on business in a state or territory, obtain a
certificate of incorporation and register certain documents with the
Registrar of Companies in that state or territory. The two basic documents
which must be registered are the Memorandum of Association and the Articles
of Association. The Memorandum of Association states the name and purpose
of the company, as well as the number and nominal value of the shares. As
the Memorandum limits the scope of the company's powers, it also defines the
purposes for which company funds may be employed. The Articles of
Association defines the procedures to be followed by the company, the
election of directors, and similar matters. Both the Memorandum and
Articles may be altered by special resolution of a company meeting (a
majority of at least 75 percent of members present is required). The
authorized capital of a company need not be fully paid up at incorporation.
A company may not, however, reduce its capital without the court's consent.
In general, when these requirements have been satisfied and a filing fee
paid, a certificate of incorporation will be issued proclaiming that the
company has been registered under the State Companies Act. Upon receipt of
this certificate, the company is granted substantially the same rights,
powers, and privileges as any company incorporated in that state. The
foreign firm must register in other states as well.
Subsidiary Companies
In general, subsidiary companies are granted the same rights and privileges
accorded to other companies in Australia. A company is deemed to be a
subsidiary of another company if that other company controls the composition
of the board of directors, controls more than half of the voting power,
holds more than half of the issued capital of the first-mentioned company,
or if the first-mentioned company is a subsidiary of any company which is
that other company's subsidiary.
If an American company wishes to establish a subsidiary company in
Australia, whether as a public or a proprietary company, instructions to
effect the registration of such a company may be given to some person, firm,
or corporation in that state in which registration is desired.
For purposes of registration, a number of the members of the Australian firm
or corporation concerned would arrange to subscribe for one share each in
the new company. Upon completion of registration of the subsidiary company,
the Australian subscribers would execute declarations of trust in the usual
manner to the effect that the shares were held on behalf of the American
parent company, and the usual share-transfer forms in blank would be
executed at the same time.
Agents and Representatives
Representatives and agents may be appointed in Australia without difficulty,
and many well-established Australian firms serve as agents and
representatives for American companies. Normally, agencies are subject to
few requirements. A letter of agreement, drawn by the Australian agency and
the American company and properly signed and attested, generally is the only
documented required.
REPATRIATION OF CAPITAL
Repatriation of dollar capital to the United States is normally not
restricted by the Australian Government in any way. However, in the case of
emergencies, the government does have the power to restrict, or even
prohibit, such transactions.
INTELLECTUAL PROPERTY PROTECTION
The Australian legal system accords substantial protection to most property
rights, including intellectual property rights. Australian membership in
the Berne and Universal Copyright Conventions affords reciprocal protection
for works first published in other signatory countries. The Paris
Convention for the protection of industrial property gives inventors
priority if they file for an Australian invention patent within 12 months or
a design patent within 6 months of applying in another convention country.
Any trademark recognized as valid in the U.S. will be valid in Australia,
under terms of the international convention for the protection of industrial
property (Paris Union Treaty). No federal or state legislation attaches
property rights to trade secrets.
INVESTMENT INFORMATION SERVICES
U.S. Government services to assist U.S. business are available from the
Australia Desk, Room 2036, International Trade Administration, U.S.
Department of Commerce, Washington, D.C. 20230, and from the Commerce
Department district offices in the principal U.S. cities; and the American
Embassy in Canberra; as well as the American Consulates-General in Sydney
and Melbourne, and Consulates in Brisbane and Perth.
The American Chamber of Commerce in Australia also offers assistance to
American business in Australia. Its head office is located at Suite 4,
Gloucester Walk, 88 Cumberland Street, Sydney, New South Wales, 2000; branch
offices are located in Adelaide, Brisbane, Canberra, Melbourne, and Perth.
The Australian Trade Commissioner (AUSTRADE) offices in New York, Chicago,
Houston, Honolulu, San Francisco, and Los Angeles are also prepared to
discuss U.S. investment in Australia. The following Australian states are
represented by investment promotion offices in the United States:
oNew South Wales.-- Suite 2250, 2 Century Plaza, 2049 Century Park East, Los
Angeles, Calif. 90067; telephone 213/552-9566.
oVictoria.-- Victoria Investment Office, 3550 Wilshire Blvd., Suite 1736,
Los Angeles, California 90010; telephone 213/387-3111.
LABOR RELATIONS
At the beginning of 1993, the Australian civilian work force totaled just
over 8.5 million persons, or 63 percent of the civilian population aged 15
years or older. Following a period of sustained employment growth (1.6
million new jobs were created between 1983 and 1990), the 1990-91 recession
ate into previous gains. Unemployment, which stood at 700,000 in 1983,
broke the 1 million mark for the first time in February 1993. Although
Australia's economy emerged from recession in the third quarter of 1991, the
pace of recovery has been insufficient to reduce unemployment. As in the
United States, many Australian companies restructured themselves for a more
competitive world market, suggesting that many jobs lost in the recent
recession are gone for good. Australia's labor market began to deteriorate
from the end of 1989. Whereas the unemployment rate averaged 7 percent in
1990, it reached a historic high of 11.4 percent in November 1992.
Addressing unemployment is the dominant focus of government economic policy.
Presently in Australia, about 80% of wage and salary earners are covered by
a system of industrial "awards," which are legally binding prescriptions of
minimum pay and working conditions. Awards may apply to an occupational
grouping, to an industry or to an enterprise and can be created or altered
by independent industrial tribunals set up for the conciliation and
arbitration of industrial disputes, following representations from
employers, unions, and, where relevant, governments. In addition to the
award rate of pay, actual wages often include "over award" payments
negotiated more directly between workers and management (productivity
bonuses, for example).
Australian labor costs are competitive with other members of the
Organization for Economic Cooperation and Development (OECD). Based on U.S.
Bureau of Labor Statistics measures of hourly-manufacturing labor costs,
they are substantially less than Germany, slightly less than the U.S. and
Japan, marginally less than the U.K., but substantially higher than New
Zealand.
In 1992, just under 40 percent of total employees in Australia were members
of a union, compared to 50 percent 10 years earlier and a historical high of
60 percent in the 1950s. Unions are, for the most part, organized on a
craft or semi-industrial basis, which, in practice, means that in the usual
plant the workers are represented by several unions.
In recent years, there has been a dramatic reduction in the number of trade
unions due to amalgamations. There were 227 unions in 1992, down from 326
in 1986. The process of union rationalization is continuing, with an
ultimate aim of 20 mega-unions. Unions are affiliated with the Australian
Council of Trade Unions (ACTU), which determines national trade union
policy. The ACTU leadership, however, envisions that the mega-unions will
assume greater independence from the parent body in an effort to extend the
unions' delivery of services and grass roots outreach.
American businesses must recognize the important role unions have on all
aspects of doing business in the country. Clauses in sales or dealer
contracts that relieve the seller of penalties due to cause by strikes or
taking out strike insurance are two ways U.S. businesses can handle labor
disruptions, but foreign companies which work with employer groups and
appropriate unions from the earliest stages of investment generally
experience far fewer labor disputes than those that treat industrial
relations as a secondary consideration.
TAXATION
The Australian Taxation Office administers taxation at the federal level.
Only the Federal Government levies income tax. However, in addition to
income taxes, the Federal Government collects numerous indirect taxes.
These include customs duty, sales tax, and excise duties on gasoline,
tobacco, and alcohol. The fiscal tax year ends on June 30. Alternative
fiscal years are occasionally permitted. On the state level, governments
raise revenue mainly through levying payroll taxes, stamp taxes on business
transactions, and land taxes.
Partnerships and joint ventures are not taxed as separate entities, but the
individual partners or joint venturers are taxed on their proportion of the
taxable profits, together with any other income derived in their own right.
Under certain circumstances, interest and dividends may be exempt from
withholding taxes. Royalties or similar payments made by an Australian
licensee to a licensor resident in the United States under a
patent-licensing agreement are liable to Australian income tax. When the
recipient is a U.S. corporation, the company rates of taxation would apply;
for individuals, the graduated scale of rates applies.
Further information concerning Australian taxes may be obtained from the
Commissioner of Taxation, Australian Taxation Office, Canberra, A.C.T. 2600,
Australia.
Company Income Tax
The Australian company income tax rate is 33 percent. Special tax rates
apply to certain classes of companies, e.g., life insurance, cooperative,
and nonprofit companies. Companies are subject to full taxation if they are
Australian resident. Residence is determined by where the central
management is situated, or if controlling shareholders interest is held by
Australian residents. Most U.S. corporations operate through Australian
subsidiaries. The subsidiaries, but not the parent companies, are
considered residents for Australian tax purposes.
Foreign source income of residents is taxed at standard rates in Australia,
with a credit applied toward the foreign tax paid against the assessed
Australian tax value. Nonresident companies are taxed only on income
derived in Australia and on certain capital gains. The assessable income of
a nonresident does not include interest and dividends received, as these are
subject to the Withholding Tax.
A company's taxable income is the total income derived in a tax year less
those amounts that are specifically stated as tax exempt, minus any
permitted deductions. Allowable deductions include all expenses incurred in
gaining or producing assessable income other than those of a capital,
private or domestic nature. Research and development concessions and
depreciation of plant and equipment are allowable deductions. No deduction
is allowed for entertainment purposes.
Personal Income Tax
Individuals are either resident or nonresident in Australia. An expatriate
based in Australia is deemed a resident if a "continuous or intermittent
period" of not less than one half the year of income is spent in Australia
starting from the day of arrival in Australia.
All employees are taxed on a pay-as-you-earn system. Income tax is levied
on a progressive scale. The top tax rate is 47 percent. There are three
lower income tax scales: 46, 38 and 20 percent. No tax is payable on
personal income of up to US$4,150. Deductions are not allowed from
assessable income for payments of a private nature, such as medical
expenses. However, qualifying medical expenses are subject to a tax rebate
if they exceed US$770 in aggregate. A concessional expenditure rebate of 25
percent of any excess over the US$770 is available to be offset against an
individual's tax liability. A rebate of tax is also granted to resident
individuals in respect of spouses who receive virtually no income in their
own right.
The following table presents, in Australian dollars, the tax rates
applicable on taxable income earned by a resident individual for the full
tax year ending July 1, 1992.
Personal Tax Rates For Residents
Taxable Income (A$) Tax Rates (%)
0 - $ 5,400 none
$ 5,401 - $20,700 20
$20,701 - $36,000 38
$36,001 - $50,000 46
Over $50,000 47
All Australian-source income is subject to Australian tax regardless of the
residence of the taxpayer.
Apart from the convention for the avoidance of double taxation, personal
remuneration paid to nonresident persons who act as directors, technicians,
and the like, in a manufacturing, mercantile, or mining business or a
business of primary production during a visit to Australia may be exempt
from taxation for a limited period if a tax is paid in the country where the
nonresident is ordinarily resident. If a tax is not paid in the country of
residence, the Australian tax payable will not exceed the amount that would
have been payable in the country of resident if a tax had been levied on the
income by the country.
The individual tax rates are scheduled to decline at July 1, 1994 and again
at January 1, 1996. The top marginal rate will remain at 47 percent.
Information concerning current tax rates may be obtained from the
Commissioner of Taxation, Australian Taxation Office, Canberra A.C.T. 2600.
Withholding Tax
A withholding tax generally applies to dividends and interest derived from
Australia by residents and by foreign subsidiaries resident in Australia.
In accordance with Australia's double taxation agreement with the United
States, the rate of withholding tax on dividends paid to residents of the
United States is limited to 15 percent.
Under the dividend imputation system, franked dividends, which are
distributions from resident company profits that have borne tax at the
corporate rate, are not liable to withholding tax, but instead carry an
"imputation tax credit" to be credited against the shareholder. Interest
withholding tax is levied at the rate of 10 percent in all cases. There is
no withholding tax on royalties.
TRADE REGULATIONS
The Australian Government has historically used high tariff rates, quotas
and import licenses as a means of assisting Australian industries against
import competition. These policies, however, began to change in the late
1980s when the government launched broad new initiatives aimed at
restructuring and strengthening the national economy, and redirecting its
focus toward the global economy.
Recent Tariff Reductions
The Australian Government's 1988 plan for the progressive reduction of
tariff protection for local industry is continuing its course. By July 1,
1996, the program aims to achieve a general tariff rate of 5 percent, with
the exception of certain automobile products, and the traditionally
protected textile, clothing, and footwear (TCF) industries.
Despite pressure from industry and the union movement, the government has
kept the reforms on track. The trade-weighted average for Australian duties
has so far been reduced from 8% in 1990 to 7 percent in 1992. During 1993,
this is expected to be reduced further by one percentage point, bringing
Australia closer to the U.S. and EC level of 5 percent.
On July 1, 1992, tariffs over 15 percent were reduced to the 15 percent
level, and those between 10 percent and 15 percent were reduced to 10
percent. The exceptions are TCF and automobiles. Out-of-quota penalties on
TCF imports were reduced by half on March 1, 1992 and were eliminated on
March 1, 1993. By July 1, 2000, apparel and certain finished textile
tariffs (47 percent) will be reduced to 25 percent; footwear, sheeting and
woven fabrics (37 percent) to 15 percent, and existing nonquota TCF products
to 10 percent.
The 1993 automobile tariff of 32.5 percent will be reduced in phases to 15
percent by the year 2000.
The United States should benefit progressively from these tariff reforms,
and will encourage continuation of the program. The U.S. will also press
for increased binding of tariffs to GATT.
Multilateral Trade Agreements
The Australian Government is a signatory to the GATT Import Licensing Code,
the Meat and Dairy Products Code, the Customs Valuation Code, the
Antidumping Code and the Subsidies Code (with reservations) and the
Technical Barriers to Trade Code (Standards Code). However, Australia is
not a signatory to the GATT Civil Aviation Code, Government Procurement
Code, and the Counterfeit Code.
Import Tariff System
Australia's tariff system is a dual-column schedule, which provides for both
general and preferential duty rates. Preferential rates are applied to
goods from developing countries, declared preference countries, and a wide
range of products from South Pacific Forum Island countries, as well as to
certain imports from Canada, New Zealand, and Papua New Guinea. The general
rate applies to all other countries.
All preferential rates are set at 5 percentage points below the general rate
or are free when the general rate is 5 percent or less. For textiles,
clothing, and footwear (TCF) products, the margins are generally 10
percentage points for countries that do not exceed a certain share of
imports in a 12-month assessment period. Countries that exceed the
threshold are excluded from preference for the relevant calendar year. A
uniform five point margin is applied to TCF products from all developing
countries. A wide range of handicrafts enter duty free without quota
limitations.
In 1984, Australia and New Zealand enacted the Closer Economic Relationship
Agreement (CER). The CER supersedes the New Zealand-Australia Free Trade
Agreement of 1966. The CER agreement calls for the progressive elimination
of tariffs on goods exported between the two countries. Since the majority
of trans-Tasman trade already comes in duty free, there will not be a major
loss of duty revenue. The CER does offer opportunities for U.S. firms to
enter the Australian market where the duty may be high or other restrictions
imposed. To qualify for preference status goods must comply with the
conditions prescribed for the granting of preferences set out in the Customs
Act and Regulations.
An important provision of the Australian tariff system is the Commercial
Tariff Concession System (CTCS), which allows for a reduction in duties on
imported goods where it is established that no goods serving a similar
function are produced or capable of being produced in Australia. Goods
currently admissible under the CTCS are listed in the "Schedule of
Commercial Tariff Concessions," an Australian customs publication.
Applications for reduced tariffs are usually submitted by Australian
importers or users of the imported goods to the Australian Customs Service.
Therefore, the U.S. exporter should contact the appropriate Australian firms
directly. Applications should be made to the Tariff Concessions Branch,
Department of Industry and Commerce, Canberra, ACT, 2600 Australia.
Information regarding Australian duty rates on specific products may be
obtained from the Australia Desk, Room H-2036, International Trade
Administration, U.S. Department of Commerce, Washington, D.C. 20230, or from
any U.S. Department of Commerce district office. Inquiries should contain
the Harmonized System (HS) commodity classification number. The HS
classification number can be obtained through the U.S. Department of
Commerce Census Bureau at telephone number (301) 763-5200.
Basis of Duty Assessment
Australia implemented the International Harmonized Tariff System in 1988.
Duty rates are assessed on the customs value on the price actually paid or
payable for the good, f.o.b. port of shipment. Applicable rates of customs
duty may be ad valorem (i.e., a percentage of the customs value), fixed,
composite, alternate (e.g., 20 percent or, if higher, US$0.16/kg), or free.
Import duties are payable in Australian currency. The official rate of
exchange at time of publication is [US$1.00 = A$1.39]. The dutiable weight
for the collection of specific duties in Australia is generally the actual
weight of the imported merchandise. Therefore, packing and wrappings have
no effect on the dutiable weight. Australia uses the metric system.
Licenses and Tariff Quotas
Australia is phasing out import licensing requirements. However, they still
exist for certain goods, including secondhand earthmoving and similar
equipment.
In the past, tariff quotas were used to restrict the import of certain goods
into Australia. Rates of duty for goods subject to a quota were set at a
high level and then duty concessions were offered to those importers who
held quotas. Tariff quotas existed for the textile, clothing, and footwear
industries. However, these tariff quotas were terminated on March 1, 1993.
Drawback and By-Law for Export Schemes
The Customs Service administers two provisions that exempt goods imported
into Australia and then later exported from customs duties, excise duties,
and sales tax collection. These are 1) Drawback and 2) By-Law for Export.
Drawback provisions provide a duty and sales tax refund previously paid on
goods if they are later exported. By-Law for Export provisions provide for
duty-free admission of imported goods that are intended for later export.
The two schemes cover goods that are imported and used in the manufacture of
products for export or are exported in their original state.
However, goods that are not ingredients in the end-product, such as fuels,
lubricants, solvents, and the like, are not eligible for concessions. In
addition, secondhand goods, i.e., goods that have been used in Australia,
are not eligible for concessions. By arrangement with the Australian
Customs Service, the concessions of Drawback and By-Law for Export may be
allowed when imported and Australian materials of a like nature are mixed in
the manufacture of products for export. Identification of the imported
goods may be established by documentary evidence rather than by physical
inspection. The exporter is thus relieved of the necessity to segregate the
imported and local material.
Entry and Reexportation
Entry. - All imported goods enter under the specific control of the
Australian Customs Service. Within 7 days of entry, all goods must be
registered for home consumption, warehousing, transshipment, or removal to a
place specified in the entry documents. Australia has one free trade zone,
located in Darwin. If it is necessary to place the goods in quarantine,
they are allowed entry 7 days after release from quarantine. All imports
are subject to the usual harbor, wharfage, and handling charges.
Irrespective of size or value, all shipments to Australia require an
invoice, which must include a description of all goods, quantities, number
of packages, and identification marks of docking ship or aircraft. The
invoice must show sufficient identification to permit calculation of the
value of duty, such as selling price, f.o.b. charges, and certificate of
value and origin.
Goods may, by permit, be repacked or shipped on the wharf. Transit goods
may be landed at a wharf or airport, or transshipped direct to the vessel or
air transport. They may enter for warehousing to be reexported at a later
time. No fee, other than handling fees, are charged on transit shipments.
Goods stored in warehouses may be reexported without payment of duties even
though they have been declared for consumption but have not cleared through
customs. If goods have been cleared for consumption and a decision is later
made to reexport them, it is possible to obtain a refund of the duties paid
(except on spirits, wine, beer, tobacco, cigars, cigarettes, or opium) if
they are reexported in the original packages in which imported or in
packages packed in the presence of an officer. If goods are reexported in
other than the original packages, reshipments must be made within 3 years
from payment of duty.
If the owner of the goods cannot immediately supply the full details for
complete entry and makes a declaration to that effect, a sight entry may be
allowed, which, upon approval by the collector, will serve as a warrant for
the landing and examination of the goods. A completed entry of the goods
must then be made within 7 days from the date of issue of the sight entry.
Merchandise not entered within 7 days may be removed to a warehouse.
Merchandise not claimed and properly entered within 6 months from date of
warehousing may be sold by the collector. Perishable goods may be sold at
any time by determination of the collector, before or after warehousing.
Entry of goods under invoice or trade designation is preferable to entry
under tariff item description, although the appropriate tariff item number
should be noted as well.
Warehousing. - Customs warehousing provisions permit the deferment of duty
payment on goods until the imported goods are entered into the general
commerce of Australia. All imported goods except those that do not require
an import duty or are prohibited goods can be warehoused.
Warehouses operate under strict licenses issued by the Customs Service.
There are four general classes of licensed warehouses: 1) general
warehouses, for warehousing goods; 2) private warehouses, for warehousing
goods belonging to the licensee only; 3) machinery warehouses, for
warehousing machinery and similar heavy or bulky goods; and 4) warehouses
for storing goods for use, under such conditions as may be prescribed for
such warehouses, in any manufacture, trade or process, and for carrying on
in such warehouses any manufacture, trade or process.
Operations permitted in licensed warehouses are as follows:
ostorage;
oblending of petroleum products;
oblending, reducing, or bottling of spirits;
orepacking of goods provided the character of the goods is not changed;
opreventive maintenance of machinery or other goods liable to degeneration
due to natural causes; and
oreassembly of goods partly disassembled for the purpose of transport, e.g.,
motor vehicles.
In addition, a warehouse license may authorize specific classes of
manufacture or processing of goods beyond the scope of those normally
permitted activities as detailed above.
As a general rule, the display of goods is not permitted in licensed
warehouses, with the exception of duty-free shops. Designated duty-free
shops are licensed warehouses that are permitted to display and retail goods
specifically for export.
Samples and Advertising Matter
Advertisements and product samples with no commercial value can enter duty
free, provided the materials are not designed to advertise the sale of goods
in Australia. Samples of commercial value and other printed advertising
matter are subject to an import duty of approximately 25 percent.
Arrangements may be made for the temporary admission of dutiable samples,
either by importers in Australia or by commercial travelers, by depositing a
security for the duty amount, subject to refund or cancellation if the
samples are reexported within 6 months from the time of entry. Customs
officials require a statement describing the goods and specifying the
purpose of importation and the port of reexportation. To facilitate
examination, customs officials should be notified when the goods are to be
packed for reexport.
Advance Rulings on Customs Classification
Australian customs officials willingly render an advance ruling on goods
prior to shipment, provided a sufficient description is given so that the
customs classification may be determined. Such decisions are regarded as
binding, with no responsibility for subsequent tariff rate changes assumed
by the customs authorities. U.S. exporters, Australian importers, or any
other interested parties may make application for an advance customs ruling.
Anti-dumping Provision
Under Australian legislation, dumping occurs when the f.o.b. price at which
goods are exported to Australia (the "export price") falls below the price
at which the same goods are sold domestically in the country of export.
When this occurs, dumping duties are imposed on those exports, provided it
is also shown that the dumped goods cause or threaten material injury to
Australian manufacturers of the same goods. If any dumping duties are
imposed, they are payable on importation by the importer.
To ascertain whether dumping is occurring, the Customs Service compares the
export price against the normal value. Normal value is defined as the fair
market value in the country of export; price in the country of export to a
third country; fair market value in a third country; or production costs,
plus f.o.b. export charges, plus selling costs and profit.
Cash securities equal to the price may be required during the investigation
of dumping charges and before final dumping duties are imposed.
Internal Taxes
In addition to customs duties, a sales tax and excise duties may be levied
on imported goods. The sales tax is imposed by the Federal Government on
the sale value of certain goods at the time of the last wholesale sale. It
is payable by the final wholesaler, or by the manufacturer or importer if
there is no wholesaler. The retailer passes the tax on (in the selling
price) to the consumer or user. Sales tax is charged according to a scale
of percentages applicable to different classes of goods. Services by
themselves are not subject to sales tax, but where supplied as part of a
contract for the sale of goods, they can be subject to the tax. Goods which
are not exempt are taxable at either 10 percent, 20 percent or 30 percent of
the wholesale value. Consumers at the point of last sale are not notified
of any sales tax included in the sales price as is the case with retail
sales tax.
Excise taxes are imposed mainly on beer, spirits and wine, and tobacco and
petroleum products. The tax is levied as a specific rate per unit of
quantity.
Shipping Documents
An invoice is required for all commercial shipments (surface or air) to
Australia. It is important to supply all pertinent information required on
the invoice, including the declaration of value and certification of the
country of origin of the goods.
Consular visa or notarial signatures are not required. However, the
signature on the invoice must be that of a person able to declare, with full
knowledge of all circumstances, as to the correctness of the details shown
on the invoice. In most cases, it is not possible for a forwarding agent in
the United States to have this information. The Bureau of Customs in
Australia will query any invoices that are signed in this manner by a
forwarding agent, and case deposits may be requested from the importer
pending the results of inquiries in the United States. Exporters must
complete each invoice column with precision. Marks, numbers, and number of
packages must be clearly indicated, and goods must be fully described. The
selling price must state whether the f.o.b. charges have been "included" or
"excluded" from the amount shown on the invoice.
A bill of lading is required on ocean shipments, but no special form is
required. "To order" bills of lading are permissible and are protected
under the law. Waybills may be required on shipments by air.
In an attempt to expedite clearance of products sent by ship through
customs, invoices can be sent to Australian Customs by the shipping lines
when the ship departs the United States. Electronically sent invoices often
reach customs agents several weeks before ship arrival at port.
Marking and Labeling Requirements
Australian law requires that the quantity of a commodity sold in a package
must be accurately stated on the main display panel of the package in metric
units, in letters of minimum print height, clear of other copy and with good
color contrast. The use of dual marking to indicate various systems of
weights and measures, though not prohibited, is not recommended. The word
"net" indicated in either upper or lower case, must always be used when
expressing quantity in units of mass.
Packaging laws require that certain articles must be packaged in prescribed
sizes. In 1991, the state governments agreed that any product, including
imports, meeting the legal requirements of one state could be sold in all
other states and territories.
All imported articles containing markings in a language other than that
ordinarily used by the country of origin is prohibited in Australia unless
it also contains a statement in English indicating the country in which the
articles were made or produced. Foreign goods bearing the name of an
Australian dealer or importer, or any indication that might be regarded as
Australian, must also be marked with the country of origin, for example,
"Made in U.S.A."
The importation of certain goods is prohibited unless there is applied, in
the form of a principal label or brand affixed to the goods or container, a
trade description that includes the name of the country of origin. These
goods are articles of food or drink and their ingredients; medicines and
medicinal preparations; fertilizers; agricultural seeds; plants; textile
products and articles of apparel, including boots and shoes; leather;
jewelry; china, porcelain, earthenware, and enameled hollowware used in
serving food and drink, including kitchenware and kitchen utensils;
electrical appliances, apparatus, and accessories; powder puffs; toys;
sanitary and lavatory articles; wall, hearth, and floor tiles; and watches,
clocks, and movements.
Certain clothing, household textiles, furnishings, piece goods, and yarns
supplied by Australian manufacturers or importers cannot be sold without
instruction on their care. A mandatory Care Labeling Information Standard
requires adequate instruction regarding general warnings and cleaning
instruction. The standard also provides guidance on the type of statement
that would be appropriate. Copies of the standard are available from the
Standards Association of Australia.
Electrical goods must be checked or approved with either the electricity
authority in each state or with the local supply authority, as appropriate.
In addition, Australian standard specifications apply to many products,
including certain structural building and electrical goods.
Nontariff Import Controls
Under Australian quarantine regulations, certificates of health or freedom
from disease are required for all imports of animal and plants. These may
be obtained from the local U.S. Department of Agriculture officer.
Importation of dangerous drugs, firearms, undesirable publications, and
articles deleterious to public health are either prohibited or subject to
stringent controls, and imports of certain other products may be subject to
special conditions from time to time.
GUIDANCE FOR BUSINESS TRAVELERS
Entrance Requirements
American citizens must possess a valid U.S. passport and obtain a visa in
order to enter Australia. If the travel is intended for business purposes,
but does not involve employment in Australia, the citizen should apply for a
Visitor's Visa and submit evidence of his intention to leave Australia
following the termination of his visit. It is generally possible for the
authorities at the Australian Embassy or consular posts in the United States
to issue a Visitor's Visa immediately upon receipt of an application. If
done by mail, allow 21 days' processing time.
Should a person plan to accept employment or remain in Australia, another
form of visa will be required. Additional information concerning the
issuance of various forms of visas may be obtained from the Australian
Embassy or the appropriate Australian Consulate General in the United States
(listed on page 43). Under the Australian health insurance system, visitors
to Australia are not covered automatically against the costs of medical and
hospital treatment. Coverage against medical and hospital expenses incurred
in Australia may be available through insurance companies and travel
agencies in the United States.
Customs Procedures
Persons entering Australia are required to make an oral declaration of their
belongings and, upon request, to open their baggage for inspection by a
customs officer.
Certain personal and professional effects may usually enter Australia duty
free, provided they are the personal property of the traveler, accompany the
traveler on arrival, are suitable and intended for the traveler's own use,
are not imported in commercial quantities, and are not intended for
commercial purposes. These goods include clothing apparel; articles of a
strictly utilitarian nature of a kind normally carried or worn on the person
or carried in hand baggage (e.g., wrist watch, cigarette lighter);
binoculars; portable typewriter; exposed films of a transient's travel;
photographic cameras; radio sound entertainment appliances (radios and tape
recorders weighing not more than 4 pounds and 12 pounds, respectively);
surgical, dental, veterinary hand instruments; and portable equipment of a
kind normally owned by workers in following their particular trade (goods in
the category of tools and instruments must be of the kind held in the hand).
The final decision as to which articles are to be accorded duty-free
treatment rests with the Australian customs authorities and depends on a
traveler's accustomed habits, his occupation, and the duration of his
intended stay in the country.
Articles determined to be in excess of a traveler's actual needs may be
subject to import duty or may be temporarily admitted under bond. The
security deposit in the latter case will be released upon reexport of the
articles.
Incoming passengers are allowed to bring goods up to A$250 duty free into
the country.
Australia has stringent quarantine regulations; travelers are discouraged
from attempting to take into Australia foodstuffs and other quarantinable
goods as they will be subject to quarantine and possible seizure.
Travelers who plan to bring articles into Australia for demonstration
purposes are advised to make appropriate arrangements with the Australian
customs authorities for proper customs handling prior to arrival in the
country. This may be done directly through business partners, agents or
representatives in Australia. The importation of such goods generally
requires a bond or a carnet. The bond is a security deposit that is
refundable once the goods are exported. The carnet is an internationally
accepted document which allows goods to be taken in and out of a country for
1 year. Information on the bond is available from Australian Customs
Service, Australian Consulate General, 636 Fifth Avenue, New York, N.Y.
10011. The carnet is administered through the Carnet Division, U.S. Council
for International Business, 1212 Avenue of the Americas, New York, N.Y.
10036.
Business Etiquette
Business in Australia is conducted in much the same way as it is in the
United States. Appointments are made as far in advance as possible, and it
is expected that callers will be punctual. Expeditious handling of
correspondence, including the use of airmail and postal routing codes, is
indispensable. When addressing Australians, personal titles should be used.
Dress tends to be a little more relaxed in Australia due to the climate;
however, business attire is expected on appointments. After-hours
socializing is a part of the business scene and demonstrates the warm
hospitality of Australians.
Commercial Language
English is the official language of Australia.
Business Hours
In general, the 38-hour workweek is in effect. However, in some instances,
the number of hours constituting a full workweek may differ among
occupations in a given state or within the same occupation in various states.
Business houses and banks operate traditionally on a 5 day working week with
extended hours on Fridays and early opening and closing times for selected
branches in major centers. Some banks operate on Saturday mornings, and
there are innovative moves by some to operate loan facility outlets on
Sundays. Electronic funds transfer has become increasingly widespread,
including the availability of limited cash withdrawal services at some
retail outlets and multi-user automatic teller outlets. There is an
increasing tendency for insurance companies and other financial service
outlets to operate on a one-stop shop basis but opening times are generally
limited to 5 days.
The retail sector has seen a considerable shift towards extended trading
hours but some individual state laws still restrict widespread
deregulation. In most states, however, major shopping centers and malls are
open all day Saturday until 5 or 6 pm, and many also open on Sunday for
restricted times. Many smaller retail outlets are now open 7 days.
Holidays
There are 10 standard public holidays observed throughout Australia: New
Year's Day (January 1), Australia Day (usually observed on January 26), Good
Friday, Easter Saturday, Easter Monday, Anzac Day (April 25), the Queen's
Birthday (except Western Australia - usually observed on a Monday in June),
Eight-hour Day or Labor Day (observed in New South Wales, South Australia
and ACT on the first Monday in October; different dates in other states),
Christmas Day and Boxing Day (December 26). In addition, each state
generally celebrates an additional holiday, and there are sometimes
additional holidays which apply to a particular segment of the workforce.
Accommodations and Services
Hotels. - First-class hotels and restaurants can be found in every large
city and in many of the smaller cities. Advance reservations are
recommended, especially at the time of an international trade fair.
Secretarial Assistance. - Agencies located in a few of the larger Australian
cities can supply office help on short notice. Travelers may also check
with the local labor exchange and their personal business contacts. The
American Foreign Service posts in Australia may also be able to supply names
of former employees available for part-time work.
Climate and Dress
Because Australia is in the Southern Hemisphere, the seasons are opposite
those in the United States. The climate varies from tropical (Northern
Territory and Queensland) to subtemperate (Tasmania). Very light clothing
is appropriate from November to March. Winter, in the middle of the year,
is mild in the North, but cold in the South. Snow accumulates in the
mountains of Tasmania, New South Wales, and Victoria. Coastal cities like
Sydney and Melbourne tend to receive rain, rather than snow during the
winter.
WEIGHTS, MEASURES, AND ELECTRICAL CURRENTS
All packages must be marked to show metric equivalents.
Electric circuits generally carry 240 volts, alternating current, at a
frequency of 50 cycles per second.
SOURCES OF ECONOMIC AND COMMERCIAL INFORMATION
Government Representation
The United States maintains an embassy in Canberra located at Moonah Pl.,
Yarralumla, A.C.T. 2600 (tel. 61-6-270-5000, fax 61-6-270-5970). Other U.S.
Foreign Service posts are maintained at the following locations:
American Consulate
383 Wickham Terrace
Brisbane, QLD 4000
Tel: (61-7) 405-5555
Fax: (61-7) 832-6247
American Consulate General
6th Floor
553 St. Kilda Road
Melbourne, VIC 3004
Tel: (61-3) 526-5900
Fax: (61-3) 510-4660
American Consulate
16 St. Georges Terrace
13th Floor
Perth, WA 6000
Tel: (61-9) 231-9400
Fax: (61-9) 231-9444
American Consulate General
Level 59, MLC Centre
19-29 Martin Place
Sydney, NSW 2000
Tel: (61-2) 234-9200
Fax: (61-2) 234-8148 (Foreign Commercial Service - general)
232-7875 (Foreign Commercial Service - library)
Foreign Service Officers in the Commercial or Economic Sections of these
posts are available to brief and assist American business persons visiting
Australia.
The Embassy of Australia is located at 1601 Massachusetts Avenue, N.W.,
Washington, D.C. 20036 (tel: 202-797-3000). The Australian Government
maintains Consulates at the following addresses:
Australian Consulate General
630 Fifth Avenue
Suite 420
New York, NY 10111
Tel: (212) 245-4000
Fax: (212) 265-2768
Australian Consulate General
611 N. Larchmont Blvd.
Los Angeles, CA 90004
Tel: (213) 469-4300
Fax: (213) 469-9176
Australian Consulate General
321 North Clark St.
Suite 2930
Chicago, IL 60610
Tel: (312) 645-9440
Fax: (312) 645-1999/1912
Australian Consulate General
One Bush Street, 7th Floor
San Francisco, CA 94104
Tel: (415) 362-6160
Fax: (415) 362-0415
Australian Consulate General
Suite 800
3 Post Oak Central A.N.
1990 Post Oak Blvd.
Houston, TX 77056
Tel: (713) 629-9131
Fax: (713) 622-6924
Australian Consulate General
1000 Bishop Street
Penthouse 507
Honolulu, HI 96813
Tel: (808) 524-5054
Fax: (808) 531-5142
The role of the Trade Commissioners at the above offices is the promotion of
Australian products to the United States. They are available to answer
questions on investment, licensing, and joint venture opportunities.
MARKET PROFILE - AUSTRALIA
Foreign Trade
Imports: (f.o.b.) US$39,218 million in FY 1992 and US$37,625 million in FY
1991. Principal suppliers in FY 1992: United States (23 percent), Japan (18
percent), United Kingdom (6 percent), Germany (6 percent), South Korea (4
percent) and China (4 percent). Major imports from the United States are
aircraft and associated equipment and parts, computers (ADP equipment),
computer parts and accessories, measuring instruments and nonelectric parts
of machinery.
Exports: (f.o.b.) US$42,365 million in FY 1992 and US$40,306 million in FY
1991. Principal markets in FY 1992: Japan (26%), United States (9%),
Singapore (6%) and South Korea (6%). Meat, wool, minerals and sugar are the
principal exports. Major exports to the United States are aluminum ores and
concentrates, meat (fresh, chilled or frozen), passenger motor vehicles,
petroleum oils, crude, aircraft and associated equipment and parts.
Trade Policy: Selected domestic industries are protected by tariffs. The
government has implemented a tariff reduction scheme which will reduce
tariffs to an average of 5 percent by 1996. Commonwealth countries granted
preferential tariff, as are developing countries.
Trade Prospects: Trade prospects are good for sustained or increased level
of exports, particularly for computers and peripherals, aircraft and
associated parts and equipment, industrial chemicals, plastic material and
resins, paper and paperboard, and telecommunications equipment.
Foreign Investment
Total cumulative U.S. direct foreign investment in 1992 was roughly US$16
billion. U.S. firms are active in automotive, chemical, telecommunications,
food processing, mining, petroleum refining, and stock raising industries.
There is a U.S.-Australian double taxation agreement. There are over 900
U.S. companies registered to do business in Australia, marketing more than
10,000 different products.
Investment Prospects: Australia welcomes foreign investment. The government
has a Foreign Investment Review Board (FIRB), which screens investment
proposals for conformity with Australian law and policy. Two of the
categories of investment which require FIRB approval are acquisitions of
businesses valued over US$3.85 million and the establishment of new
businesses involving a total investment of over US$7.7 million.
Finance
Commonwealth Government Budget:
Receipts for FY 1991-92, US$71,765 million. Expenditures, US$78,950
million. The deficit was US$7,185 million.
Economy
The gross domestic product (GDP) in 1992 is estimated to be US$294,444. Per
capita GDP is estimated to be US$16,825. Manufacturing contributes about
14.5 percent of GDP; and agriculture, about 3.0 percent. Australia is the
13th largest economy in the world.
Industry: Australia's manufacturing industry is highly diversified. Over
42,289 establishments had a turnover of more than A$168 billion during the
FY 1991-92.
Agriculture: Of the country's total area, 5 percent is under cultivation,
and 68 percent is used for grazing. Australia produces almost one-third of
the world's wool and about 57 percent of the total fine-quality merino wool.
Communications: Australia has good domestic and international communications
services. At the end of 1992, there were almost 8 million telephones.
Transportation: Australia's transport system radiates from the industrial
centers at the main seaports in Melbourne, Sydney and Fremantle. These are
linked by railway systems, road, coastal shipping, and air.
Power: Electricity and gas are available in industrial regions and are being
extended into rural areas. In 1992, 147.3 billion kWh of electricity was
produced; about 80 percent generated from coal, 10 percent generated from
hydroelectricity.
Natural Resources
Land: 2,974,581 square miles.
Climate: Warm temperatures with mild winters.
Minerals: Valuable deposits of coal, lead, zinc, copper, iron ore, gold,
silver, tin, tungsten, uranium, antimony, wolfram, bauxite, zircon,
manganese, cobalt, and cadmium. Exports of minerals exceeded US$21 billion
in 1992.
Population
Size: 17.5 million in 1992. Highly urbanized. About 70 percent live in
cities over 100,000. The population growth rate is about 1.2 percent
annually.
Ethnic Groups: European, Asian, Aboriginal. Religions: Anglican 26 percent;
Roman Catholic 26 percent; Protestant 25 percent. Languages: English.
Literacy Rate: 98.5 percent.
Labor Force: 8.5 million in the beginning of 1993.
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This file extracted from Dept. of Commerce National Trade Data Bank (NTDB)
CD-ROM SuDoc No. C 1.88:996/11. Processed 03/12/1997 by software developed
by RCM (UM-St. Louis Libraries) / OBR_0025