From the Eureka Report:
Will China’s growth impact on your investment decisions?
I think China is an absolute powerhouse. The world has underestimated China for far too long even though there are all these platitudes now about how important China will be in the global economy. America has a serious problem because China will emerge as a global power. They have high educational standards and are hard-working people. Their biggest issues will be their inefficient use of resources and a big pollution problem. China is a well of opportunity for energy, which is what my speciality has been, and the energy sector up there has massive potential. I’ve got contacts working in China and I’m constantly monitoring its economic growth. The reason why I haven’t invested to date is that firstly, I don’t have enough money to play in the game up there and secondly, the risk of doing business up there is heightened by the lack of a proper legal system. I think this poor legal system has been their Achilles heel and has really impeded their growth. Compare that with the US, parts of Europe and Australia, which are very rules-based.
What about India?
I think India has huge potential but is a very different scenario to China. It has a very large middle class and an English legal system, which has served them well. It has the same type of potential and issues as China in relation to resources and pollution. I think the biggest problem with India (and this is also happening in Australia) is their huge paper-based bureaucracy.
Businesspeople and entrepreneurs just hate red tape with a passion and the bureaucrats want you to fill in forms all day.
What’s your view on alternative energy investments in Australia like wind farms and solar energy?
Alternative energy is quite limited in Australia because we don’t have the regulatory or economic climate to encourage investment in that direction. We have some of the cheapest electricity in the world down here and that gives no incentive to begin any large-scale alternative energy projects. My experience with the wind farms is a case in point. But on a global scale there are massive opportunities in the sector. I’ve been looking at solar energy and the feeling seems to be that it’s nearly there as an investment opportunity. There are lots of countries getting into alternative energy (including solar), like Brazil, parts of Europe, Germany and Holland. These will turn out to be great investments because people will start to deliberately buy their energy needs from alternative and green sources.