ASEAN, South Korea agree to enhance strategic alliance

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Wrapping up two days of meetings, ASEAN and South Korean leaders on Friday (Dec 12) agreed to work together to develop a plan that can enhance their strategic alliance going forward.

South Korea and ASEAN have wrapped up their two-day meeting, agreeing to work together to develop a plan that can enhance their strategic alliance going forward. Such a plan would include increased trade between the two sides and better economic collaboration.

The meeting marked the 25th anniversary of bilateral dialogue between the two sides. On politics and security issues, leaders agreed to work together to promote peace on the Korean peninsula and the region by getting North Korea to give up its nuclear weapons.

South Korean President Park Geun-hye said: “(We) agreed to expand the scope to deal with human rights, democracy and another matters of basic freedom. We, the leaders, reaffirmed our commitment to prompt denuclearisation of North Korea and stressed the importance of creating conditions necessary for its complete, verifiable and irreversible denuclearisation.”

Which country she was referring to in her ambiguous comments about human rights remained unclear as reporters were not allowed to ask questions at the press conference. Apart from the security and political issues, all leaders also agreed that they should make more use of the free trade agreement that was signed between the two sides in 2006.

South Korea’s bilateral trade with ASEAN totalled US$135 billion in 2013. They are aiming to increase that to US$150 billion next year and to US$200 billion by 2020. Currently, ASEAN is South Korea’s second largest trading partner and the third largest investment partner.

South Korea is also looking to make changes to its visa requirements for ASEAN citizens by making it easier for tourists from both sides to travel to one anothers’ countries. Right now, the ASEAN region is the number one travel destination for South Korea tourists and there has been a steady increase in the number of visitors travelling between ASEAN and South Korea over the years, averaging more than five million every year.

President Park said: “Looking into the next 25 years together, the leaders adopted the joint statement on the future vision of ASEAN-ROK action with a view to making it more concrete to establish the 2016-2020 plan of action.” This is the second such meeting between the two sides. The last one was held five years ago.

A flurry of bilateral meetings took place during the two-day meeting between South Korea and all the 10 ASEAN leaders who were attending the special summit. South Korea is hoping that this event would allow it to play a greater role in the ASEAN Community when it is created in 2015.

 

 

 

Source : Channel News Asia | December 12, 2014

Thomas D’Innocenzi

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Foreign firms set for tougher tax scrutiny

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Government targets multinationals’ use of transfer-pricing arrangements

China will establish a comprehensive system to monitor foreign companies’ profitability to curb cross-border tax evasion, the State Administration of Taxation said.

The move is one of several steps against tax avoidance taken by the agency to protect the country’s interests as the world’s top destination for foreign direct investment.

The system will allow the agency to acquire profit information on foreign companies so that it can launch “targeted actions” and use information technology to prevent companies from shifting profits overseas, Zhang Zhiyong, deputy director of the SAT, said in an interview with domestic media, which was posted on the agency’s website.

The ongoing campaign against corporate tax dodging has rippled through the foreign business community in China, following the government’s move last week to levy $140 million in back taxes on United States-based Microsoft Corp. Microsoft has denied that it practiced tax avoidance.

Analysts said, however, that such actions will force foreign firms to be more prudent and serious about their tax structures and practices in China.

Last month in Brisbane, Australia, President Xi Jinping and other G20 leaders jointly called for greater efforts to prevent tax evasion and avoidance by improving international tax rules and tax information exchanges among governments.

Experts have estimated that tax evasion and avoidance by foreign companies have resulted in an annual reduction of at least 30 billion yuan ($4.9 billion) in tax revenues.

One common tactic used by companies to avoid tax is transfer pricing, through which a parent company sells its product or services to a subsidiary company overseas at a price below the production cost.

Such practices generate an apparent loss for the parent company, which has actually shifted its profits to a subsidiary in a lower-tax location.

Matthew Mui, a China tax partner at accounting firm PricewaterhouseCoopers LLP, said that the various tax standards and competitive tax policies among different countries have created the motivation and conditions for profit-shifting.

“Therefore, it is necessary to have relatively unified tax standards internationally with detailed and clarified regulations and to reduce the gray areas when it comes to implementation,” he said.

In August 2013, China joined a multilateral tax agreement, known as the Convention on Mutual Administrative Assistance in Tax Matters, proposed by the Organization for Economic Cooperation and Development in 1988.

The participation of China, the last G20 member to sign the agreement, meant that the world’s major countries could finally move toward the implementation of automatic tax information exchanges as a new global standard, analysts said.

Beijing will host the G20 summit in 2016 and collaboration on this issue will be on the agenda.

China has benefited from an improvement of its legal system since it introduced the Corporate Income Tax Law in 2008, a milestone for the development of anti-avoidance efforts in the country.

“China’s approach to tax avoidance has changed from being reactive to proactive, with a focus on changing taxpayer compliance and conducting risk assessment-based tax investigations,” said Yu Qisheng, a China tax partner at PwC.

The country’s tax revenues from anti-avoidance measures rose to 46.9 billion yuan in 2013 from only 460 million yuan in 2005, according to data from the SAT.

 

 

Source : Channel News Asia | December 3, 2014

Thomas D’Innocenzi

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China November trade surplus leaps 61.4% to record $54.47b

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The trade surplus beat August’s previous record of US$49.8 billion and was also better than the median forecast of US$45.1 billion in a survey of 16 economists by Dow Jones Newswires.

China’s trade surplus hit a record $54.47 billion in November, soaring 61.4 per cent on-year as imports to the world’s second-largest economy surprisingly fell, the government said Monday (Dec 8).

Exports grew at a slower 4.7 per cent year-on-year to US$211.66 billion in November, while imports dropped 6.7 per cent to US$157.19 billion, the General Administration of Customs said, highlighting continued weaknesses in the world’s number two economy.

The trade surplus beat August’s previous record of US$49.8 billion and was also better than the median forecast of US$45.1 billion in a survey of 16 economists by Dow Jones Newswires.

But export growth slowed from the 11.6 per cent year-on-year expansion in October, while the unexpected contraction in imports compared with growth of 4.6 per cent that month. Analysts had expected exports to grow 8.0 per cent and imports to expand 3.9 per cent.

The latest trade figures come as China is assailed by weakness in industrial and financial sectors, prompting the country’s central bank last month to cut benchmark interest rates for the first time in more than two years. China’s gross domestic product (GDP) grew an annual 7.3 per cent in the third quarter, the slowest since the height of the global financial crisis in early 2009.

 

 

Source : Channel News Asia | December 8, 2014

Thomas D’Innocenzi

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Vietnam’s 2014 GDP growth seen above 5.8 percent

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Vietnam’s economy is expected to grow faster than its 5.8 percent target this year, accelerating from last year thanks to steady growth in exports, the government said on Tuesday.
Growth this year could be more than 5.9 percent, while inflation could stay below 3 percent, Prime Minister Nguyen Tan Dung told the annual Vietnam Business Forum, revising his estimate from “above 5.8 percent” mentioned earlier in a government statement.
Stable growth is crucial to the export-driven economy as the government is in final talks on multiple trade deals and has been pushing for reforms to erase bad debt and remove hurdles that have been curbing expansion.
“Vietnam has grown to achieve quite comprehensive results in various areas, including in the economy, society and politics, but the achievements are yet to match with potential and have not reached our own requirements,” Dung said.
Beijing’s decision to move an oil rig into waters claimed by Hanoi in May had hurt the country’s economic performance, he said. Earlier, economists said the conflict could erode the country’s growth by 1 percent due to strained political and trade ties with China.
Vietnam’s economy grew 5.42 percent in 2013, quickening from 5.25 percent in 2012. The government has targeted growth of 6.2 percent in 2015.
A free trade agreement with the European Union, with which Vietnam shared 24.2 billion euro ($30.16 billion) in trade last year, may be signed in early 2015, Dung said.
He said a trade deal with South Korea, Vietnam’s top foreign investor, will be signed in coming days, and that Vietnam will also aim to sign a trade agreement with Russia, Belarus and Kazakhstan in early 2015.
Vietnam also has been in talks with 11 other fellow countries in the U.S.-led Trans-Pacific Partnership that will form a huge free-trade bloc from Chile to Japan and is expected to elevate the competitiveness of the Southeast Asian country over China.
Vietnam’s government has projected exports in 2015 to rise 10 percent, near this year’s growth projected at 12 percent.
Economic growth is also being driven by bank credit, and banks have been stepping up clearing bad debts in order to bring toxic loans to 3.7-4.2 percent of the total loans by the end of 2014, from 17 percent in September 2012.
Loans by banks in Vietnam are expected to rise 13 percent this year, in line with an annual target of between 12-14 percent, the statement quoted central bank governor Nguyen Van Binh as saying at a cabinet meeting on Monday.
“Vietnam has seriously acknowledged that there are many limits, we have to do more and more aggressively and effectively to grow fast and stable,” Dung said.
Source : Thanh Nien Daily | December 2, 2014
Thomas D’Innocenzi
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Singapore 3rd most popular destination in Asia Pacific for retailers

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Few barriers to entry and strong supply chains in Singapore are factors that attract international retailers, according to a report by JLL.

The Republic has been ranked as the third most popular destination in the Asia Pacific region for international retailers, behind Hong Kong and Shanghai, according to a new report by JLL on Wednesday (Dec 3).

The report noted that Singapore is often used as a hub for expansion into other Southeast Asian markets, and international retailers see the city-state as an important market for building brand awareness. Few barriers to entry and strong supply chains in Singapore are other factors that attract international retailers, it added.

Still, there are several hurdles for brands looking to enter the market. With low vacancy rates in prime locations, it is difficult for brands to secure an appropriate retail location, the report said, adding that this supply and demand disparity has led to rental price growth in prime locations over the past few years.

At the same time, landlords now have to give more thought to their tenant mix in order to attract customers, given the influx of new malls, decline in reported tourist arrivals and the rising impact of e-commerce, it said.

Said Mr Tom Hamilton, Director of Retail, JLL Singapore: “In 2015, we envisage a continued growth of international brands entering the Singapore market but with very specific emphasis placed on sourcing stores in the strongest strategic locations.”

A continued slow-down is expected in the take up of weaker locations, with many existing retailers reining in expansion strategies along with the potential consolidation of store numbers, he added.

 

Source : Channel News Asia | December 3, 2014

Thomas D’Innocenzi

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China to prevent intl firms from avoiding tax

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Chinese taxation authorities pledged to step up supervision of multinational companies on Monday in a campaign to crack down on tax avoidance.

Zhang Zhiyong, deputy director of the State Administration of Taxation, said China will comprehensively monitor the profit levels of foreign companies to make sure there is no “base erosion and profit shifting” (BEPS).

A company may erode a country’s tax base by using a number of schemes to shift profits across borders, taking advantage of tax rates that are lower than in the country where they earn the profits.

“China will coordinate with other countries to clamp down on BEPS plotting and cross-border tax avoidance,” said Zhang.

China is the world’s largest destination for foreign direct investment and faces the challenge of varied tax avoidance techniques.

Last month in Brisbane, Chinese President Xi Jinping and other G20 leaders promised further efforts to stop tax avoidance, including measures to modernize international tax rules, prevent cross-border tax evasion, and exchange information among member countries and with other countries.

Zhang said China will actively engage in global cooperation to fight BEPS activities and other tax avoidance schemes.

 

 

Source : China Daily | December 2, 2014

Thomas D’Innocenzi

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India’s development to drive opportunities for Singapore businesses

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Singapore can contribute to India’s goal to develop smart and sustainable cities, say Second Trade and Industry Minister S Iswaran.

With new Prime Minister Narendra Modi at the helm, India is entering a new phase of development, and this will drive opportunities for Singapore businesses, said Second Trade and Industry Minister S Iswaran at the Singapore-India Business Symposium on Friday (Nov 28).

The development priorities and agenda of the new Indian government present interesting possibilities for partnership with Singapore, said Mr Iswaran, highlighting that one area where Singapore can contribute is in India’s goal to develop smart and sustainable cities.

Where smart cities are concerned, he said Singapore’s Government agencies and private sector can make a meaningful contribution, given the country’s experience in development over the past five decades.

The minister said Singapore is “actively considering” how best to work with India’s central government on its smart cities initiative. Singapore itself has ambitions to become a Smart Nation with the use of technology to enhance living.

Mr Iswaran said the engagement with India in the smart cities sphere will enable Singapore businesses to participate in areas like township development, industrial parks and utilities. The scale of the need in these sectors present an excellent opportunity for Singapore firms to partner their Indian counterparts to work on projects, he added.

Next year marks the 50th year of Singapore and India’s diplomatic ties, and Mr Iswaran said Singapore looks forward to elevating the relationship to greater heights.

 

 

Source : Channel News Asia | November 28, 2014

Thomas D’Innocenzi

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