Foreign investment could deliver business benefits

16th June 2015

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Investing overseas could be just what the Australian economy needs in order to thrive, but it seems that small and medium-sized enterprises (SMEs) are failing to recognise the advantages. This is according to Bentleys' The Voice of Australia Business Survey, which highlights a lack of understanding the in the sector.

Company director Alan Ling explained that this lack of understanding could be hampering SMEs' progress - and that of the wider economy. Almost two-thirds (64 per cent) of those polled said they had no idea of how much foreign direct investment contributes to Australia's gross domestic product.

Mr Ling highlighted the importance of business accounting software when dealing with overseas companies, especially as they expect transactions to be streamlined and error-free.

"Foreign investors generally require audited accounts, an independent valuation of the business and a robust governance framework before they can enter into discussions, but most SMEs do not have these in place," he commented.

The majority (87 per cent) of SMEs polled said they are not proactively making preparations for foreign investment. This may be because they are worried about the effect that it would have on control within the business, which was named as a core concern by 15 per cent of respondents.

Now could prove the right time for Australian companies to expand overseas, especially as the latest figures point to improvements in confidence over recent weeks. Roy Morgan Research's Business Confidence Survey increased 9.6 points in May, following the federal budget announcement.

This brought it to the highest level since January, although there is still room for improvement as sentiment remains below the five-year average. The current reading stands at 114.9, whereas the half-decade average registered at 117.3.

Roy Morgan concluded that business confidence is responsive and easily impacted by events, but the outlook for the future of the economy nevertheless remains relatively strong.