Recap: SelectUSA Investment Dialogue
Monday, 19 February 2018
Article by AmCham Australia
Last Friday, AmCham's CEO April Palmerlee was invited to be a panellist at the SelectUSA US-Australia Investment Dialogue along with Simon Jackman (CEO at United States Studies Centre at the University of Sydney), James Carouso (Charge d’Affaires at the US Embassy), The Hon. Peter Collins (Chair at Industry Super), Brett Himbury (Chief Executive at IFM Investors), and Ben Brophy (CEO and Co-Founder at Upwire). The speakers discussed the opportunities and obstacles for business expansion and investment in the US.
SelectUSA provides information, counselling and networking opportunities for businesses hoping to expand into the US, and their Investment Summit in Washington DC is a key step. The summit features an exposition with government delegates from most US states, allowing companies to understand the states’ taxation systems, as well as their corporate and cultural environments.
Event moderator Simon Jackman highlighted some of the key findings in a major study undertaken by the USSC and AmCham in 2017 on the US-Australia Investment relationship, entitled “Indispensable Economic Partners”. He pointed out that, “despite the long history and large scale of impact from this relationship, it’s easy for Australians – particularly younger generations – to underestimate the value of Australia’s relationship with the US.” The study aimed to increase awareness of the importance of US investment in Australia, which represents more than a quarter of all foreign investment in Australia for many decades and totals A$860 million in cumulative stock.
Acting US Ambassador, James Carouso, began the conversation by stating the current situation for Australian investment in the US. “Australian businesses find the US too big and overwhelming with the complex tax systems, and felt that they are unable to compete with large US companies.” At the same time, when asked about why US is an attractive location for Australian businesses, he believes that “rule of law is a big reason! You know you will get a fair go in the US.”
As a result of this close connection, US policies can have a significant impact on Australian policy-makers and businesses. AmCham CEO, April Palmerlee, discussed her concerns on the implications for Australian foreign investment from President Trump’s new tax reforms. In addition to high uncertainty in energy and immigration policies, Australia now has one of the highest corporate tax rates in the OECD. Furthermore, according to PwC’s recent survey, Australian CEOs now predict growth for their companies in the US instead of the Asia-Pacific region, a shift possibly due to the increased opportunities and capital flows created by tax reform. April reaffirmed that AmCham has been actively working with the Australian government through doorknocks and advocacy papers to aid our members in addressing issues affecting their business, as well as encouraging US investment within Australia. She also sees AmCham as the platform for Australian companies hoping to expand into the US to gain first-hand information from US companies on the opportunities and challenges.
The Hon. Peter Collins and Brett Himbury then discussed an important area of growth and investment, especially under the current Trump administration: infrastructure. Currently, 12 – 14% of Australian industry super funds are invested in infrastructure, and The Hon. Peter Collins sees this week’s National Governors Association (NGA) Meeting as an excellent opportunity for US and Australian leaders to share insights and strategies on super fund and infrastructure investment. According to Mr Himbury, infrastructure development is an issue that has bipartisan support in the US government as it provides long-term productivity benefits and supports GDP growth aspirations. He also revealed that under the Asset Recycling Program, NSW contributed to 99% of GDP growth despite constituting only 30% of national GDP. This not only affirms that the investment in the program is likely to gain governmental support, but also that infrastructure initiatives can be a state-led strategy.
Ben Brophy then shared his unique insight on investment in the US based on his experience as a tech start-up. His company Upwire provides Application Programming Interface to help companies adapt to the rapidly-changing customer demand and information processing. Despite the common perception of Silicon Valley or the Bay Area as the “go-to” for tech companies, Ben encourages tech companies to seek opportunities in other states, noting that “in places like Texas, you can easily garner talent from local universities, and the staff would actually stay with you. The atmosphere for innovation is ripe in many states at a much lower cost.” Furthermore, he believes that the US has a big appetite for risk taking, that “no matter how bad your ideas are, someone will invest in them – you just need the crazy ideas.” Drawing on his own experiences expanding into the US, Ben acknowledges that there are abundant resources and support for such growing businesses. In many cases, US state governments are often actively seeking companies to do business in their states. For example, the Pittsburgh government cooperated with Carnegie Mellon University to provide talent, resources, and research funding for companies investing in the area. April Palmerlee also added that delegates from US state governments have been coming to Australia with the goal of inviting businesses to invest in their states.
To conclude the conversation, the panel identified defence and medical technology as the next promising areas for significant investment opportunities based on their experiences and interactions with government and businesses.