An international survey of foreign fund managers has found an uncompetitive taxation system and perceptions of high business costs are some key barriers preventing foreign fund managers from basing their Asia-Pacific operations in Australia.
The Foreign Fund Managers Survey, conducted last month by Henry Davis York (HDY), reported that 61 per cent of those considering starting up a funds management operation in the Asia-Pacific region picked countries other than Australia to base their operations.
Australia had 39 per cent of the vote when it came to the preferred country in which to start up a funds management operation.
Hong Kong (16 per cent), China (11 per cent) and Singapore (11 per cent) were the other popular financial hubs regarded as conducive for funds management businesses.
Of 70 surveys completed, almost a third considered Australia's tax system and rates to be a key barrier for foreign fund managers to establish operations and many saw it as a key driver in their decision to set up in a different Asia-Pacific country.
The survey showed high business costs were the second most cited reason that prevented international funds from picking Australia.
The survey reported that this perception is inaccurate, with Austrade's 2009 Benchmark Report showing Australia's business infrastructure to be
competitively priced.
"We were not surprised to find that Australia's tax system and rates were considered to be a key barrier for fund managers setting up in Australia and a significant driver in their decision to set up in other countries in the region," HDY funds management partner Liz Gray said.
"Australia clearly needs a competitive tax system to enable it to develop as a financial services hub. We anticipate this will be identified in the Australian Financial Centre Forum's report due shortly," Gray said.
