Western Australia approaches

With the Clipper Round the World Yacht Race visiting the first of four berths in Australia, our latest Port Profile explores Fremantle and Western Australia.
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THE PLUSH surrounds of Fremantle Sailing Club, where Clipper Race crews berthed at the end of a 4,754-mile leg from South Africa, lies a kilometre or so south of the city’s busy port.

Fremantle is built around the mouth of the Swan River, approximately 25 minutes from Western Australia’s capital Perth. A combined 35m tonnes of goods, valued at about £15bn, passed through the city port and Kwinana harbour to the south in the last financial year.

And a fair proportion of that will have been from the UK, given Australia is Britain’s 14th biggest overseas market with latest figures showing exports of cars worth £770m and medicines/pharmaceuticals worth £400m.

According to the Department for International Trade, some 1,500 British companies – including hundreds of SMEs – do business Down Under each day. The UK’s total exports to Australia were worth £8.3bn in 2015 and Britain is Australia’s second-largest foreign investor, ploughing in more than £300bn.

British ministers have been viewing Australia’s potential post-Brexit, setting up a working group to scope out parameters for a potential free trade agreement emulating those Canberra has negotiated with China, Japan, the US and South Korea, among others.

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Personal connections are strong, too, with more British migrants moving to Perth than any other Australian city, according to the WA government. Many are undoubtedly attracted by the stunning natural environment, relaxed culture and good weather.

But the outlook isn’t universally sunny.

Fremantle’s ports are up for grabs as part of a sale of state assets aimed at funding the next tranche of infrastructure investment which, according to Deloitte economist Matt Judkins, was accounting for half of the state’s economic growth up to 2013.

But with the privatisation programme dogged by delays, and the state suffering since the end of the mining boom that had helped WA to average growth figures of 5.3% over a decade, Judkins’ June outlook was pessimistic.

Vehicle Imports at Fremantle, Western Australia

“Although commodity prices have recovered over the past year, the bounce back is unlikely to be sustainable,” said Judkins. “And without price certainty, the investment pipeline in WA continues to look sick – business investment in WA is not expected to grow in year-on-year terms until the middle of next decade.”

Still, he adds: “The legacy of the investment boom in WA is the production and exports boom that follows. As all those new resource projects reach construction completion and begin shipping, our export receipts are getting a bounce.

“WA now accounts for 40% of national exports (up from 22% in 2011-12), and net exports are set to make up almost half of our GSP.”

So where do opportunities lie?

With several liquefied natural gas plants coming online, the state is predicted to double capacity to more than 50m tonnes and become one of the world’s largest LNG exporters by next year.

“A range of business development opportunities in maintenance, service and support, research and technological innovation are emerging,” says the state government office in Europe (Wago).

Mineral industries continue to make up a large portion of WA’s economy, with government funding available for resource exploration, and opportunities in processing and R&D.

Some 180 WA-based defence companies have direct contracts with the federal government, and WA envisages profiting from expansion in the sector, including a doubling of Australia’s submarine force from six to 12.

WA has prioritised five areas – mining and energy; medicine and health; agriculture and food; biodiversity and marine science; and radio astronomy – as a focus for collaboration between industry and academia.

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And it’s seeking investment into the agrifood industry with the aim of doubling its value by 2025.

“Opportunities exist for investment partners to participate in continued growth in Western Australia’s export-focused agriculture, food and wine sectors,” according to Wago’s London office.

It lists key investment areas as:

  • Water infrastructure
  • Farms and wineries
  • Livestock
  • Cereal cropping and horticulture
  • Aquaculture and fisheries
  • Algae
  • Food processing
  • Forestry
  • Research and development
  • Product development

The office provides advice and support to companies seeking to develop bilateral trade between Western Australian and European countries.

The state boasts of a “highly skilled workforce, modern infrastructure, leading research and technology institutions and proximity to markets in Asia and the Indian Ocean Rim”.

“New and ongoing international research collaborations ensure the state is at the forefront of scientific discovery and new technological innovation,” it says.

So, is it an easy market to enter?

Australia places 7th on the World Bank’s Ease of Doing Business rankings. It takes just two days to set up a new business.

And Western Australia is eight hours ahead (seven in summer), meaning it’s possible to call during business hours in the morning.

The UK government highlights the common language and culture, familiarity of many products and service providers, and similar technical standards, business and legal practices as advantages for British firms entering the market. It also points to Australia’s strong business and consumer base, technology sector and IP protection.

However, it warns of “unique challenges”, including currency fluctuations, extreme weather and Australia’s vastness; it’s similar in size to the US, with Perth 3,300km from Sydney and covers three times zones.

Clipper yachts – including one backed by the UK government’s export-focused GREAT campaign – leave Fremantle for Sydney on December 2.

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Produced by the 2018 International Business Festival, in partnership with Wordscapes.