From the shadows to the spotlight: The Asian investments that deserve a greater recognition

For many years, the narrative of foreign investment in Australia, particularly from an Asian perspective, has been dominated by Japan and China.

These two East Asian giants continue to hold prominent positions in the rankings of Asian investments in Australia, and remain vital sources of capital for the Australian economy.

However, over the past decade, substantial investments made by other key Asian economies in the Australian market have been noteworthy and are accelerating.

Five years ago, the combined investment measured by the Australian Bureau of Statistics from Singapore, Korea, Malaysia, India, and the UAE stood at $169 billion. This has grown by more than 10% annually and now stands at $254 billion, with Singapore leading the way in terms of scale and India in terms of growth rate.

“The channels for this investment have been primed by Free Trade Agreements (FTAs), strategic partnerships, and other bilateral agreements, as well as shared priorities in free trade, security, decarbonisation, and clean energy,” says Jasmin Kaur, an Advisory partner who heads the India and Malaysia Desks at PwC Australia. 

Kaur also observes that Australia's strong people-to-people connections with Asia, along with the significant role of Australia's Asian diasporas in strengthening Asia literacy within Australian businesses, have been pivotal. 

 “These Asian-Australians, including myself, leverage their network to foster business engagements with Asian businesses, serving as a key knowledge base for Asian businesses seeking to invest in Australian businesses.”

The result has been a growing level of investment activities across a wide range of sectors over the past decade between 2014 and 2024:

So what have been the key enablers of this surge of investment from these nations? And what does the future hold?

"Australia's robust economic fundamentals, including its strategic geographic position, diverse and highly educated workforce, and sound legal and regulatory frameworks, create an ideal environment for Asian businesses aiming to make strategic investments as part of their global growth strategy,” says Sridharan Nair, Chairman of PwC Asia Pacific.

"As the global economy evolves, Australia remains as a stable and resilient market, offering significant opportunities for value creation. The deep economic complementarity between Australia and Asia strengthens its position as a premier investment destination. In an era of heightened complexity, these synergies will drive strategic acquisitions and partnerships, ensuring mutual prosperity for both Australia and its Asian partners." 

For many Asian businesses, particularly those from Singapore, engaging in overseas investment, whether for the first time or as part of an existing global presence, has had a beneficial impact on their local operations.  This has resulted in improvement in revenue, profits, valued-added and employment.

Another factor is the alignment of business interests and the high complementarity of the Australian economy with Asia, especially with "like-minded partners" from the region. This alignment has become increasingly important for the Australian Government as it navigates the Australian economy and its sustained prosperity in an era of heightened geopolitical complexity.

Australia's vast reserves of critical minerals and renewable energy sources have driven investment from these nations as they progress on their decarbonisation journeys. Bilateral agreements, such as the Singapore-Australia Green Economy Agreement, further facilitate Singaporean investment in these areas.

And geopolitical tensions have heightened interest in Australia’s critical minerals and energy resources among Asian countries seeking greater resource supply chain security. These nations have invested in accessing Australian critical minerals reserves and related industries often with the support of their own government-backed financiers, including sovereign wealth funds willing to provide early-stage funding for higher-risk projects.

These opportunities have been enhanced of late by recent pricing pressures in lithium, rare earth metals and other similar materials.

The Australian government has been proactive in facilitating this investment through initiatives such as the Australian Critical Minerals Strategy and the Future Made in Australia plan, a $22.7bn initiative focused on transition to net zero. These blueprints offer significant opportunities for Asian investors and provide a strategic framework to ensure Australia remains a key investment destination.

Government actions have also facilitated investment through various bilateral trade agreements binding Australia and these five countries. For instance, the Singapore-Australia Free Trade Agreement was signed in 2003, followed by agreements with Malaysia (MAFTA) in 2013 and Korea (KAFTA) in 2014. In the current decade, Australia inked similar economic partnership agreements with India (2022) and the UAE (2024). These deals aim to lower barriers to investment and trade between participating nations and have successfully fostered inbound investment.

These agreements are crucial for investment attraction, establishing benefits and ground rules for investing in Australia. In the case of Korea, Singapore, India, and Malaysia, the relationship with Australia is augmented by Comprehensive Strategic Partnership status. In addition, Australia has a range of Memorandums of Understanding (MoUs) with each of the nations covered in this report, covering areas as diverse as human capital, technology, security, education, agriculture, climate, and space industry collaboration.

Paul Yoo, who heads the Korea Desk at PwC Australia, points out that with Korea, the scope of MoUs and bilateral agreements extends to defence, where the two nations share objectives as allies of the United States in the Asia-Pacific region.

“Australia has been developing a deeper defence relationship with Korea, similar to the relationship it has developed with Japan. Economically, this has spurred increased investments in the Australian defence industry by Korea's leading defence companies, promoting modernisation and innovation in the Australian defence industry and job creation.”

Similarly, with Singapore, Australia has growing defence ties anchored by the 2020 agreement for Singapore’s armed forces to train extensively in Australia known as the Treaty on Military Training and Training Area Development. The two nations’ armed forces participate in the biennial Exercise Trident joint exercise aimed at enhancing preparation and interoperability. Australia and Singapore have executed a range of MoUs on intelligence co-operation, personnel exchanges and defence science and technology.

These types of arrangements are likely to be conducive for future investment in defence related opportunities from Singapore.

Broadly speaking, bilateral agreements lay the groundwork for investment in multiple industry sectors, but ultimately, all investors seek commercial returns beyond any ancillary benefits.

While smaller than the US and European markets, Australia boasts a stable economy with a high GDP per capita and a high level of disposable income, leading to robust consumer spending. The population is steadily increasing due to both organic growth and policy-driven immigration.  And it has shown economic resilience, even during global downturns. This stability makes Australia a reliable environment for investment, especially in the retail and consumer sector, where there has been a notable rise in both organic and direct investments from Asian businesses. 

In the real estate sector, particularly in the commercial segment, Australia's robust political and legal systems, coupled with its transparent real estate market, which consistently ranks highly in the Global Real Estate Transparency Index, has been a compelling driver of investment for these Asian economies.

Activity from among the nations examined here include in investment in shopping centres by Singaporean and Malaysian players, and in office towers and hotels by Korean, Malaysian, and Singaporean investors.

Beyond real estate, Australia has also seen investment in utilities from Malaysia, in logistics operations from Singapore and the UAE, and in toll roads from the UAE.

This adds up to a comparatively rosy picture for Australia, but there are risks to the outlook in terms of investment attraction, not least of which is the current state of the Australian economy.

Australia's economic growth is subdued but lifting, with projected annual growth of around 2.3% for the next few years, off the back of 1.1% growth through the year to December 2024.

Like most developed economies following the pandemic, tight monetary policy has been employed to bring inflation under control. Fiscal stimulus in the form of income tax cuts and energy rebates has sought to alleviate some of the impact on household disposable income, but consumption is weak and private spending flat.

“The key immediate challenge ahead for Australia is to lift labour productivity, household consumption and housing supply; while continuing to bring prices down” says Amy Lomas, Chief Economist at PwC Australia. “Beyond the immediate economic conditions, Australia's business environment has some features that reduce its attractiveness to investors – increasing regulation, policy uncertainty and comparatively high levels of taxation all present commercial barriers for business. On the upside significant funding has been allocated by the Australian Government to improve economic efficiency and reduce regulation."

Furthermore, there is a view that legal and legislative framework that safeguards investment in Australia has become too restrictive, particularly concerning resources and planning approvals.

There is also increased potential for regulatory scrutiny of deals from a competition perspective. While foreign investment is broadly welcomed in Australia, and the Foreign Investment Review Board (FIRB) process is well understood and effective, there is a noticeable trend towards increased scrutiny of foreign investment in sensitive sectors.

While it is important to acknowledge the challenges and evolving environments for foreign investors in Australia, it remains a popular destination for foreign capital, and for good reason. It is an open economy with ample resources and a mature framework for welcoming foreign investment.

Decades of surging Asian investment in Australia have left the nation with an enviable pool of large conglomerates from the region. There are now 136 large Asian companies with annual revenue of more than $500 million operating in Australia, according to PwC research.

These companies are significant contributors to Australian GDP as well providing employment opportunities and, in some cases, quality goods and services to Australians.

The potential benefits of collaborating with these companies are significant, from sourcing investment capital and technology transfer to solving problems and accessing bigger markets. However, it is not on the radar for many Australian companies.

The question is not only what more can be done to attract investment from abroad, particularly from our nearest region, but also what more can be done to take advantage of investments from Asia and the presence of Asian companies in Australia.