Japanese investment in Australia is expected to hit new highs this year as the demand for green energy drives deals, but Tokyo’s concerns about state royalty increases andA report by law firm Herbert Smith Freehills released on Monday showed Japanese activity in Australia rose markedly in 2022 as investors returned to complete due diligence on multibillion-dollar deals in the energy sector after borders reopened.
He said Japanese companies seeking partnerships in energy security, food security and defence would further drive activity this year. High-level interactions between Japanese and Australian politicians at the G7 summit in Hiroshima on May 19-21, followed by the Quad summit in Sydney would also boost confidence in Australia.
The report highlighted the Japanese government’s concerns about the reliability of gas and coal supplies from Australia because of a domestic energy shortage and soaring electricity costs. “Concerns have been expressed that these sudden changes in policies reflected Australian federal and state government unpredictability and, in the future, similar sudden changes could be applied to new energy exports and critical minerals,” the report warned.“Any increase in the risk profile will increase the rate of return required for Japanese companies to pursue an investment and potentially reduce Australia’s competitiveness relative to other investment destinations.