Offshore Investment by Australian Firms

The establishment by Australian firms of operations overseas typically complements their domestic activities, according to a research paper released today by the Productivity Commission.

The Commission research paper — Offshore Investment by Australian Firms: Survey Evidence — presents the findings of a new survey by the Commission on what motivates Australian firms to operate or relocate their headquarters offshore, and the implications for Australia. (It updates and extends a similar survey conducted in 1995 for the Commission’s inquiry into the Implications for Australia of Firms Locating Offshore.)

Commission Chairman, Gary Banks said ‘The survey demonstrates that the commercial imperative of getting close to the customer is still the main driver of offshore investment. Governmental influences are of secondary importance, with tax being the most significant’.

The survey confirms that relatively few firms are relocating their headquarters offshore. The main influences on relocation decisions were improved access to overseas markets and proximity to foreign equity interests. The Australian taxation regime was the next most important influence, outweighing other government-related factors.