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Charm offensive.

Summary: The Government of New South Wales, Australia's largest state economy, is on a charm offence - wooing Gulf investors to the state's infrastructure development projects

New South Wales (NSW) is about to get a facelift. A Government official was in the region recently to attract Gulf investors to key infrastructure projects. The visit comes as the Government is being urged to sell more public assets, including the state's electricity network and invest the cash in infrastructure projects.

Attracting investment into infrastructure and other sectors is an important part of the state Government's efforts to position Sydney as a leading international financial centre, Australian officials said.

The delegation, led by New South Wales Premier Barry O'Farrell, are trying to garner support for projects with a particular emphasis on bridges, railways, harbours and heavy industry (including oil, gas and mineral infrastructure).

In the 12 months ending September 2011 some AUD 19.7 billion ($19 billion) worth of infrastructure work had been undertaken in New South Wales. In spite of this, substantial new investments are still needed in the state. Citigroup estimates that more than AUD 770 billion ($744 billion) needs to be invested in infrastructure in Australia between now and 2018.

To support these growth opportunities, Australia's policy has shifted to create a competitive market for public and private suppliers. A range of financial solutions for infrastructure financing are now being offered and utilised (equity investment, bank debt market, bond financing, institutional investment, etc), the officials said.


The Australian delegation also discussed ways to develop the Islamic finance industry.With proximity to Southeast Asia, where Islamic finance is growing rapidly, Australia believes it could play a role in the industry. But efforts to pass the necessary legislation at a federal level have been slow, so the state Government wants to get involved.

Honourable Barry O'Farrell MP, Premier of New South Wales said; "Attracting conventional and Islamic finance investment into infrastructure and other sectors of NSW is an important part of the NSW Government's efforts to position Sydney as a leading international financial services centre."

Tax incentives might, for example, be offered for Islamic investors in public-private partnerships. Typically, 10 to 15 per cent of New South Wales infrastructure has been delivered using PPP, according to a government report. Granting special tax treatment for such projects cold avoid the need for a full tax amendment.


Meanwhile, the Dubai International Financial Centre (DIFC) announced the signing of Memorandum of Understanding (MoU) with New South Wales Trade and Investment. The new partnership presents opportunities for corporates in DIFC to connect with financial institutions in the state.

Abdulla Al Awar, CEO, DIFC Authority said, "We are confident that this MoU will take DIFC's and the wider region's economic relations with Australia to the next level, and unveil significant investment opportunities on both ends, particularly in infrastructure. The GCC region alone is expected to spend about $968 billion on projects including infrastructure developments over the next decade, while infrastructure expenditure in NSW is estimated to be in excess of $770 billion between now and 2018," Al Awar said.

The region has had strong economic ties with Australia for many years, particularly the UAE, which is considered Australia's largest merchandise trade partner in the Middle East with two-way trade at over $5.3 billion in 2010-11. Australian investment in the UAE was worth $1.060 billion in 2010. nBME

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Publication:Banker Middle East
Geographic Code:8AUST
Date:Jun 10, 2012
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