Any likely problem for proposed business?

[Amin Rahman]

My client, who meets all the criteria for subclass 163, is a well established garments manufacturer (in partnership with others) in Bangladesh and has regular clients in Europe who order garments according to their specs. What my client intends doing is set up a business in NSW, get orders for garments on behalf of his newly set up Australian company from his existing clients (those who agree) in Eurpoe. The garments will be manufactured as before from his company in Bangladesh on behlaf of his Australian company and shipped to the buyers in Europe from Bangladesh. The payment will be made to his Australian company. That is the idea. Do you think such a business is likely to be approved? Your input/comments will be highly appreciated.

Regards.

Amin Rahman MARN 0322761

[Sheelagh Blanckenberg]

Hi Amin

In my opinion I think this type of investment will not be viewed well by the NSW authorities. While states are generally open to most commercial endeavours, some activities are excluded unless otherwise agreed in advance with the Manager of the Business Migration area.

Exclusions often include business ventures like the export of scrap materials, property development, export of commodities and all forms of passive investment. There can be others as well depending on the state.

Generally states look at the business delivering one or more of the following economic benefits:

• Development of business links with international markets
• Creation or maintenance of employment
• Export of Australian value added goods or services
• Production of goods or services that would otherwise be imported
• Introduction of new or improved commercial technology
• Addition to commercial activity and competitiveness within sectors of the Australian economy.

I am not sure whether the earning of forex will cut it. NSW in particular have very tough criteria for business skills applicants to meet.

Worth having a hypothetical discussion with the manager in charge of the business section of the Dept of Industry in NSW.

Please let us know how you get on as this sort of information will be very useful for others as well.

Kind regards
Sheelagh

[Amin Rahman]

Thanks Sheelagh.

Regards.

Amin

[Robert]

Sheelagh's cautionary advice needs to be carefully adhered to Amin.

There are two sets of eligibility requirements for 163, one is the State and other is Mig Regs.

First and mandatory requirement is the State sponsorship approval. These requirements vary from State to State. Without state approval you cannot move on to the Visa application.

Here is the curvy part. The State requirements are not prescribed, unlike Commonwealth visa legislation. State requirements are stated as policy level without force of law or formal appeal process. Each state has its own priority and allows room for negotiation. For example WA is quite flexible and is willing to consider any proposal that has the creation at least one employment and transfer of AUD about 400,000 to the state as overseas income. Sometimes WA accepts lower amount. The State will scrutinise your adherence to 163 requirements when you seek sponsorship for 892. Once the state has approved it is worth your while to seek approval for any variation during the conduct of the business proposal.

WA also accepts setting up of a Trading Company that involves export and import, yes import, of goods and services provided it creates employment and transfer of funds from overseas. Other states impose different requirements for setting up of trading companies.
For me NSW and Victoria are Taboo states and I keep away from them.

In your client’s case, he can propose to create employment, export for garment fashion design (concepts) as an Australian based service and have these fashion designs manufactured in China, India or Bangladesh, but the invoice is split between Australian Company and the overseas manufacturing company. Export of Australian consultation services, as in various garment and apparel design, by an Australian company to overseas consumers would be acceptable. Along the way you may also wish to export Australian materials and haberdashery for incorporation.

As you said, it is how the business plan is structured and negotiated with the respective State sponsoring body.

Do you still need the Victorian Biz contact numbers? They give guarantee of approval (refund of fees).

Hope this helps.


Robert K Chelliah
www.austmigration.com.au

[Sheelagh Blanckenberg]

Once again an excellent response Robert. Thank you.

NSW is a very tough state for gaining business skills sponsorship, so if your client is determined to start their business and settle there Amin you need to be very clear what the benefit will be to the state and then try and sell this idea to the relevant authorities. Robert's thoughts on the Australian value-add your client can implement in the proposed business model are sound - WA, SA and even QLD would likely review this favourably. VIC perhaps less so although a better likelihood than NSW.

Is the s/c 160 a possibility? Much easier path although there is an age restriction and the finanacial criteria are tougher.

[Migration Help]

Thanks to Robert K Chelliah for the following advice in this regard:

Structuring of the business plan is important. The aim of the Business Skills subclass 163 visa is prescribed in legislation and explained in the policy guidelines. The States, however, impose their own conditions for sponsorship approval. NSW and Victoria are very stringent and impose far more than what is required in the Migration legislations.

The concept that Australian companies can outsource manufacturing activities to overseas companies, preferable as value added items by incorporating relevant Australian Standards or Australian Designs or adding Australian Marketing activities, and generating income for Australian companies is acceptable to some states.

Some examples of benefit to Australia for manufacturing entities include:

1. A civil engineering company is proposing to incorporate a similar Engineering consultancy firm in WA. It will deliver some consultancy work from WA to its overseas clients and split the income generated between the existing overseas company and the newly established Australian Company through cross invoicing. The Australian entity will employ one Australian full time at minimal wage, will have an ABN number, and will achieve two of the three mandatory outcomes for 892 when the conversion takes place. The relevant state accepted this proposal as being one of benefit.

2. A white goods manufacturing company located overseas. The Australian company incorporates Australian Standards and ECC standards and outsourced the manufacturing to the Malaysian company. The white goods were exported all over the world including Australia, as “manufactured to Australian or ECC Standards”. This concept was accepted by the relevant state as being of benefit to Australia and the state. Incorporated Australian standards included compliance to power factor, harmonic distortion, safety standards etc. The company does not manufacture a single item in Australia, and yet it is deemed to be exporting Australian goods and earns foreign exchange. The company turnover now is in the Millions, up from the AUD 100,000 which was injected as part of the original business plan.


MH