David Chin

Asia’s rich will be funding business and investment opportunities in Australia via the government’s Significant Investor Visa (SIV) scheme, according to David Chin, Managing Director and Founder of Basis Point.

18 months after launch by the then Labor government in November 2012, 255 primary SIVs have been granted, equating to $1.275 billion in new capital flowing into complying investments in Australia ($5 million to be invested per primary SIV x 255 SIVs).

Nearly all (90%) SIV applications have been from China.

The Liberal government is also committed to the visa scheme and has ordered an internal review by the Department of Immigration to ‘reboot’ the scheme to quicken the pace of approvals.

1000 SIVs are expected per year when the programme hits its stride in 2014/2015, according to forecasts by David Chin. 1145 invitations have already been issued by the Department for wealthy would-be migrants to formally lodge their applications. (as at 31 May 2014)

David Chin says two areas that could benefit from SIV capital are Australia’s financial services and agri-business industries.

China last month issued new guidelines that encourage its 114 securities brokerages to develop into investment banks. This means expertise will be sought in building asset management, proprietary trading and financial advisory services in China.

For Australian firms that can provide this expertise to a SIV investor, it will be a win-win-win, (triple win), according to Chin. The Australian firm gets a capital boost, the SIV investor gets a visa, and for both, there are opportunities to leverage the Australian IP to create a joint venture business in China.

In agri-business, a new sector is currently developing whereby Australian suppliers of premium foods can leverage the rapidly expanding B2C capabilities of China’s e-commerce platforms (Alibaba’s Tmall and rival JD.com) to take advantage of ‘Brand Australia’s’ clean and green image to sell premium foods to an expanding high-net-worth (HNW) and middle class consumer market worried about local food scandals and curious about Western foods.

Alibaba has already organised country-specific premium food sales in China over recent months. They include Chilean blueberries and king crabs, NZ lamb and kiwifruit, Canadian lobsters, Taiwanese custard apples, and 168 tonnes of US cherries (sold within 2 weeks).

SIV investors can leverage their Chinese connections and businesses to assist their investee Australian agri-business companies to quickly capitalise on this trend, says Chin.

While many of the 255 applicants have indicated investments in Australian bonds or cash, Chin says they will likely expand their investments once they arrive in Australia and can undertake closer due diligence on the range of opportunities available.

The SIV industry could generate $5 billion in new capital annually to Australian businesses and investment products. This is equivalent to nearly half of Australia’s private pension (SMSF) fund contributions each year, says Chin

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Detailed in the Federal Budget, the Significant Investor Visa (SIV) is available for those who invest A$5 million or more into complying investments which include ASIC regulated managed funds with a mandate for investing in Australia. It came into force on 24 November.

Today’s seminar, hosted by The Trust Company, is for funds managers, property funds and private equity funds as well as industry service providers to discuss the exciting opportunity for the industry.

The initiative aims to promote foreign investment in Australia and replicates similar schemes in the UK, New Zealand, Canada and Singapore.

The Trust Company – Australia’s only trustee with licenses in Australia, New Zealand and Singapore – has seen an increase in inquiries to its Singapore and Sydney offices, from those looking to capitalise on the SIV opportunity, said Mr Andrew Cannane, Head of Corporate Client Services.

“As a net importer of capital, Australia needs foreign investment and we expect the SIV will result in substantial capital flows into Australia” said Mr Cannane. He estimated that a billion dollars had already been committed to funds set up for this purpose.

The Trust Company has been appointed as custodian to one Significant Investment Visa Fund, which is available for investment for holders of the new Significant Investor Visa, and it is in discussion with other providers about the provision of RE and custody services for other upcoming offerings.

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