country brief - India & GCC

Australia:

In the 2006/07 financial year Australian exports generated a record of $215 billion in international sales, of which exports services contributed to $44 billion. Australia exports around 70 percent of it agricultural production, 80 percent of its resources production and just over 18 percent of its manufacture goods.

Australia traditional export markets have been the UK, USA and New Zealand. These countries while continuing to be a significant part of its export success have now been joined by major Asian economies particularly Japan, which has been the largest export market for the last forty years.

Increasingly the future growth in Australia’s export performance is being shaped from emerging high-growth markets, such as the new economic giants China and India as well as rising powerhouses such as Russia and the Gulf countries.

India:

India with its population of 1.2 billion has a growing middle class currently estimated to be between 300-400 million offering major opportunities for Australian business. Australian merchandise exports to India rose by 37 percent bringing the subcontinent to fourth on the lists in merchandise export behind Japan, China and Korea.

Australian companies are confident about the future direction of the Indian economy doubling their level of investment in India in 2006 to over $2 billion. Indian investment in Australia is also growing quickly.

The Indian Government has identified that to sustain a growth rate of 8 to 9 per cent over the long term significant infrastructure development is required. Investments of the order of $US500 billion are expected to take place in the coming years for developing ports, airports, roads, railway and real estate.

India’s optimism and dynamism are attracting Australian services companies to establish Indian operations.

The Leighton Group, for example, has become the fourth-largest infrastructure developer in India in a matter of a few years. By next year it could be the second biggest.

Linfox started its Indian operations with one customer in July 2006. After two years, it now employs 700 people. Over the next two years, Linfox plans to invest more than $300 million and employ up to 5,000 people, including expanding the vehicle fleet to up to 500 trucks and introduce dozens of new warehousing and distribution sites across India.

And Woolworths has linked with India’s second largest business house, Tata, to supply electrical consumer goods into the Indian market.

Thiess India has won contracts worth $1billion to develop and operate open-cut mines in north-east India. In the burgeoning consumer market, the Gloria Jean’s coffee franchise has just set up operations in India.

And the business engagement is increasingly two-way. Indian businesses are doing well in Australia.

For example, this Tata Power and Sedgman announced they have jointly invested in Australian mining technology firm Exergen. And Gujarat NRE listed on the Australian stock exchange last year and is now Australia’s largest coking coal producer.

The greater levels of investment evident in the Australia-India economic relationship is a truly transformational change in the way Australian companies conduct international business.

(Acknowledgements – speeches by the Australia Minister for Trade Hon. Simon Cream)

Business in the Gulf is booming. The economies of Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates form the Gulf Cooperation Council (GCC) and have been carrying out reforms to encourage private sector growth and diversify their economies away from oil. While oil remains the dominant sector, oil revenues are being channeled into economic development projects, developing new sectors and attracting a variety of businesses.

GCC

The GCC is home to a population of around 35 million people, with a combined GDP of around US$ 656 billion in 2006*, only marginally lower than Australia’s GDP which is around 676 billion. In recent years, they have achieved impressive economic growth – Qatar’s per capita GDP US$ 70,745 now rivals some of the wealthiest countries in the world.

The economies remain highly dependent on oil and gas revenues. The United Arab Emirates, Saudi Arabia and Bahrain have the most diversified economies of the six. The emergence of the gas industry in Qatar, home to the third largest known reserves of natural gas in the world, has helped the country supplement volatile oil revenues with more stable gas revenues.

Other sectors are emerging and the governments recognise the need for further diversification and are actively encouraging new industries. The services sector, particularly tourism and financial services, is a key sector in a number of the economies. Energy intensive industries, such as aluminum smelters and fertiliser plants, are also being developed. Dubai aluminum is renowned for its 98.98 percent high purity aluminum contributes to some AED 2.2 billion to Dubai’s GDP.

Export from Australia to the GCC in 2006-07 exceeded 5,500 million. Non-monetary gold, motorcars, zinc and meat were the major contributors.

Each country faces different futures. The United Arab Emirates, particularly Dubai, has been the regional leader in reforms encouraging private business through their free trade zones, but competition, both within the United Arab Emirates and from other economies, is increasing. For Bahrain and Oman, development of non-oil sectors is a more urgent priority as they manage dwindling oil reserves. Kuwait’s and Saudi Arabia’s abundance of oil and gas reserves may act as a restraint on reforms, but provides it with substantial revenues to invest and develop new sectors; Qatar’s growing gas revenues are likely to support a number of development plans.

To varying extents, all these economies are focusing on development paths that rely less heavily on oil revenues to provide growth and employment. As they attempt to move away from oil dominated economies, further business opportunities, such as those in education, construction, IT, tourism etc. are emerging. Australia’s is currently negotiating a Free Trade Agreement with the GCC and focus attention on Australian commercial capabilities.