Prosperity Chinese Client to tackle Sydney to Hobart

Good Luck to Prosperity client Wilson Lee and his crew, on their debut as the first Chinese entry representing Shanghai’s Noahs Sailing Club on ARK323 in the Sydney to Hobart Yacht race this year.Wilson Lee syd to hobart

Prosperity Asia Business Desk Principals Luke Malone and Don Lee wish Skipper Chuanbao Zhao all the best.

Yacht

Ark323

 

 

 

 

 

 

 

 

 

The crew of 12 sailors have been drawn from the best China has to offer. They come from all parts of the mainland and are very excited to be part of the race.

Mr Lee said, “We made a decision to enter the Rolex Sydney Hobart because of the nature of the prestigious event and the challenge it presents. It is also one of the ultimate platforms to showcase the Chinese team and the Club’s passion to increase a Chinese presence at international yachting events.”

Mr Wilson Lee has extensive business interests in China including in the hospitality and property sectors and is one of an increasing number of Ultra High Net Wealth Chinese investing in Australia. Mr Lee has been a client of Prosperity’s Asia Desk Team for four years.

Prosperity Director, Luke Malone said, “Our cross border experience has equipped our team with an indepth understanding of the investment, taxation and regulatory frameworks throughout Asia and Australia. Increasingly in demand our bi-lingual team bridges the cultural gap and ensures our clients meet the needs of Australian and Chinese regulators.

Government initiatives to further boost inward investment

Prosperity Fountainguard Advisers welcomes the Federal Government initiatives announced under the Industry and Competitiveness Agenda that will expand the Investor Visa Programme.

The Government will reform the programme to encourage more high net worth individuals to make Australia home and to better direct additional foreign investment, while maintaining safeguards to ensure the migration programme is not misused. The changes to the programme will:

  • streamline and enhance visa processing, further promoting the programme globally and strengthening integrity measures, to both increase the attractiveness of investing and settling in Australia while ensuring Australia’s interests are protected;
  • align the criteria for complying investments with the Government’s national investment priorities. The investment eligibility criteria will be determined by Austrade in consultation with key economic and industry portfolios;
  • introduce a Premium Investor visa (PIV), offering a more expeditious, 12 month pathway to permanent residency than the SIV, for those meeting a $15 million threshold;
  • and task Austrade to become a nominating entity for SIV (complementing the current State and Territory government’s’ role as nominators) and to be the sole nominating entity for PIV.

We led a nine city investor roadshow throughout China in June, and saw that although there is strong interest in Australia as an immigration and investment destination, and there is a reasonable pipeline of SIV applications, we face strong competition from other jurisdictions. Recent changes in NSW have made this State more attractive with the removal of the need to invest $1.5m in Waratah Bonds recently removed and the Commonwealth measures will only assist to further attract high wealth investors in the future.

Discussions with potential investors in China revealed certainty and clarity of the process were issues that are front of mind for potential SIV applicants when considering which country to pursue.  While the initial detail is scant, it appears the initiatives proposed will assist on those fronts. There is uncertainty in other countries SIV programs at the moment and the Government’s focus to enhance the scheme and encourage investment in the right areas as well as remove red tape will continue to make Australia an attractive destination.

Prosperity Fountainguard have a second investor delegation en route to Shanghai at the moment and they will present to over 20 potential investors in the higher net wealth category who are looking to invest $20m plus in Australia.  The proposed Premium Investor Visa will no doubt assist that group with their decision making and the revised program commencing in 2015 that allows an applicant to gain residency after twelve months is likely to be highly attractive.

We are eager to understand the detail of the new investment eligibility criteria.  These are no doubt designed to temper some of the strong interest in property development.  However, if the measures are too prescriptive, it may serve to stifle investor inflows or move them away from areas that Chinese investors are typically attracted to.

New South Wales fights for a bigger share of Significant Investor Visas as the Federal Government tries to curb leverage

New South Wales (NSW) has introduced measures to increase its competitiveness in attracting Significant Investor Visa candidates. The NSW Government has recently removed the requirement for NSW bound significant investor visa applicants to invest $1.5M of their $5M investment for residency into NSW Treasury Bonds.  At the same time the Federal Government has also flagged likely changes to remove the current practice where many SIV applicants borrow against their $5M investment in Australia and essentially recycle money back offshore.

The NSW Treasurer Andrew Stoner in announcing the changes recently said, “From 1 September, overseas investors considering NSW nominations will be able to choose how to invest every dollar of their complying investment.

“This change will further consolidate NSW’s globally competitive position as a preferred investment destination for investor migrants.

“NSW is more than Australia’s business headquarters – it’s the State that’s driving Australia’s economy. “Rich in business opportunities, with a stable and strong government, and an economy that is robust, diverse, dynamic and easily accessible to the rest of the world, there has never been a better time to invest in NSW.”

It is evident that NSW is keen to increase it’s share of significant investor visa candidates that choose NSW as their preferred place of investment. Of the 1,650 expressions of interest registered at 31 August 2014, Victoria (VIC) represented 846 of the candidates and NSW 550. In terms of granted visa’s again VIC leads the way with 193 granted as against 146 in NSW.

The change in the requirements around investing a portion of the investment in a lower yielding investment is only likely to enhance the share of SIV applicants seeking out Sydney and NSW as their destination of choice. The Federal Government has plans to grow the program to approximately 700 SIV approvals per year, with the view to attracting $3.5 Billion of inbound investment in the Australian economy through the program and it is clear that NSW wants a larger piece of the action.

In further changes to the scheme on 10 September 2014 Immigration Minister Scott Morrison, in a media release stated will no longer be able to recycle their investment funds offshore by using products that allow them to borrow against their SIV compliant investment. Minister Morrison referred to concerns with the significant investor visa scheme, which requires foreigners to invest a minimum of $5 million for four years, as money was being invested and subsequently borrowed against and recycled offshore again. The intention of the scheme is to attract foreign investment and enhance economic activity through longer term investment in Australia.

Mr Morrison flagged changes to the investor rules which would require investments to remain unencumbered or without a debt against them, for the entire four years duration of the visa. This change should only be a positive for the economy in allowing funds to remain in Australia unencumbered over the four years.

Don Lee, Luke Malone, Martin Zhao and Gavin Fernando are Directors of FountainguardProsperity’s Asian Business Desk team who provide a full range of accounting, financial and wealth management advice to the Chinese market.

Prosperity’s China Investor Roadshow featured in AFR

 

 

 

 

 

 

 

 

Click on link to view article http://tinyurl.com/l93fxz8

 

 

Chinese investors heading our way

As most of us brace for depths of winter, having recently returned from a whirlwind ten day, invest in Australia roadshow to China things are only getting hotter over there. 

As the Chinese enter their summer my recent travels there taught me that the Chinese entrepreneurial spirit and passion for growth is stronger than ever and things are likely to continue to heat up. What do I mean by this? Well it was obvious to me travelling through cities including Guangzhou, Xiamen, Nanjing, Dalien, Harbin, Jilin, Changchun, Shenyang and finally to Beijing in northern China that the Chinese people and China never stands still.

On a popular Chinese social media site, one of the most-tweeted lines is: “If we don’t pursue dreams today, we will be too old to do so tomorrow.” The pace of change and growth in China is phenomenal and a significant dream for many Chinese is to expand their business interests into other markets while also giving themselves a safe haven for some of their wealth and an opportunity to live or spend an amount of time in a western environment.

The purpose of our trip was to further strengthen our relationships with immigration agents and their clients in these cities. We presented to over 400 interested people during our visit with a number of our presentations sponsored by the private banking arms of Bank of China and HSBC. In our presentations we partnered with an Australian immigration lawyer to outline to these interested people what it is like living in Australia, the business environment, the types of visa’s available and how we can help them and their families with a smooth transition for their business and family lives in Australia.

A poll of Chinese millionaires reveals that 65% of them want to gain permanent residence in overseas Countries. They give various reasons for wishing to do so such as a desire to access better education for their children, a desire to escape the extreme pollution found in much of China and legal uncertainty about the status of their wealth in China. After twenty years of rapid economic growth, it is estimated that there are some one million US dollar millionaires in China. Hurun, a Chinese company based in Shanghai interviewed 400 such millionaires about their attitudes to emigration. The poll found that 65% of those interviewed wanted to leave the country or, at least, to obtain a permanent residence visa which would enable them to live elsewhere if they wished to. 30% of those interviewed had already acquired foreign permanent residence visas.

Australia is an attractive proposition for many wealthy Chinese and it has been reported that Chinese make up 91% of the significant investor visa applications in Australia. And it has never been more attractive. Particularly in northern China the natural attraction for many Chinese has been Canada and the US. For many years Canada ranked among the top choice for Chinese investor-immigrants given its relaxed immigration policies and generous health and education systems. But in February this year Canada scrapped its longstanding Immigrant Investor Program, which allowed individuals to effectively gain permanent residency. Australia is a real alternative for these disheartened people and as we moved through China we spoke to many who will now proceed to an application in Australia.

The Australian significant investor visa program which was announced in 2012, has so far had 1,446 EOI’s (expressions of interest), 928 Applications and 255 SIV Grants been issued as at 31 May.  The approval rate has climbed from 29 to 40 per month over the past two months and the Government has recently announced they are looking to speed up the typical 4 to 6 month application process to further encourage applications. The visa and permanent residency requires an applicant to invest $5m in Australia, be that in an active trading business or approved managed funds / cash assets. The invested funds need to remain in Australia for a period of four years and the applicant is required to spend 160 days in Australia over four years before gaining permanent residency.

While there are other compliance obligations regarding verification of source of funds and other financial and tax requirements the visa in itself is relatively free of red tape if the applicant has the capital to invest.  At our presentations we discovered that there were numerous individuals who found this proposition very attractive and there are a number of individuals proceeding to application stage. Australia is also highly attractive given our climate, education and healthcare systems and financial stability.

You may ask how do you capitalise on this wave of Chinese investment. While many investment banks are developing SIV compliant managed funds and other products for applicants, and this will be attractive to many seeking a passive wealth diversification strategy, we have found that the entrepreneurial spirit in China is very strong. Many of our new clients are seeking active business interests in Australia. Investment in property development, agriculture and wineries while at the top of many applicants lists is certainly not the be all and end all for many.

We met individuals with a vast array of business interests across a diverse range of sectors who were keen to build relationships in Australia and partner with the right businesses or contribute capital to new business ventures. In this century, the Asian century, the region in which we live will become home to most of the world’s middle class. The Asian region will be the world’s largest producer of goods and services and the largest consumer of them. While Australia has strongly embraced the resources boom and the benefits in recent times we must continue to build strong relationships with China and Asia generally to not only grow economically but to further build on the social and cultural ties in the region.

Don Lee, Luke Malone, Martin Zhao and Gavin Fernando are Directors of Fountainguard Prosperity’s Asian Business Desk team who provide a full range of accounting, financial and wealth management advice to the Chinese market.

 

Are these the greatest opportunities in Asia right now?

As a privileged part of the Australian delegation to the Asian Financial Forum in Hong Kong last month, Luke Malone, the head of our Asian Business Desk, has his eye on Asia. 

The Asian Financial Forum last month brought together 1200 business leaders from throughout the Asia Pacific region and addressed many of the economic opportunities and issues that matter. 

Over coming months I plan to provide you with articles that give you an insight to these, so you can take advantage of our learnings as we navigate the Asian Century.

This week I want to talk about the three biggest areas of focus at the conference, and highlight what could be the most exciting opportunities for Australia in coming years:

1.  Food security and production for a growing Asian population

Food security in Asia is a large opportunity for Australian food businesses looking to produce and export into the region.  Recent data shows that we have the capacity and ability to produce food for over 500 million people here in Australia.  With growing population density throughout Asia and land shortage in many countries, the ability to produce the quantities of food for the emerging middle class in these countries seeks is becoming more and more difficult.  The changing socio-economic position of many has increased their desire to eat well, and their ability to afford high quality produce for which Australia is most renowned.  This is a trend that may change the allure of farming and food production investment in Australia in coming years.

2.  China and the ASEAN+6 Relationship will lower tariffs and build trust

This year, the 10 ASEAN Countries plus China, Japan, South Korea, India and Australia and New Zealand will start negotiating a Regional Comprehensive Economic Partnership.  The plan is to have a deal in place by 2015 creating a free trade zone that will encompass almost two thirds of the world’s population.  Lower trade barriers and greater trade integration should lower the tariff costs for businesses working across borders in these 16 countries.

3.  Chinese capital is freely flowing out of China seeking a return  

Recent figures on China’s foreign direct investment (FDI) shows two very interesting trends.  Outgoing FDI rose almost twelvefold from $5.5 billion a year to more than $65 billion per year from 2004 to 2011 and is expected to reach approximately $150 billion per year by 2015. In contrast, inward FDI fell 0.2 percent in October 2012 from a year earlier to $8.3 billion, the 11th fall in 12 months.  (Source: China Daily Jan 18-24 2013).  The sentiment of Chinese investors and businesses is strong despite some of the portrayed ‘slow down’ of the Chinese economy portrayed by the Western media.  My discussions with many prominent investors and high net wealth family groups during the Asian Financial Forum indicated that the desire for investments in Australian agricultural assets, resources, real estate and education remains strong.

Each of these issues presents terrific opportunities for Australia in an Asian context.  We are watching the trends closely with many of our Asian Business Desk clients, looking for ways that business and investment can benefit from the changes.

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About our Asian Business Desk

At Prosperity Advisers we have a dedicated Asian and Chinese business desk that understands the culture of doing business in China.

Our team includes Tax, Accounting, Corporate Advisory, Audit, Wealth Management and Mergers & Acquisitions Specialists who speak the language and have extensive Chinese and Asian business experience.  We currently act for a number of high net wealth Chinese investors and we help guide them on the transaction and regulatory path to both source investment opportunities in Australia by connecting them with the right people, while at the same time managing tax and other compliance objections.

For outbound investment into China, Luke and his team spend significant time in China and the Asian region and our connections in the region allow us to advise outbound Australian investors on the complex path of investing in China and Asia.  We are also a member of the Leading Edge Alliance, an accounting firm affiliation of some 4,000 members throughout the world and a strong presence in China and Asia.