China
Australia–Timor-Leste relations are back on track
Author: Michael Leach, Swinburne University of Technology
Relations between Australia and Timor-Leste appear to be back on track following the March 2018 treaty which created permanent maritime boundaries between the two states for the first time. Australian Prime Minister Scott Morrison’s visit to Dili in late August 2019 saw notes exchanged marking the formal ratification by both parliaments. This signified the end of a key stumbling block that saw ministerial visits cease for nearly five years.
The treaty creates a median-line boundary in the former Timor Gap, placing all existing wells located in the former Joint Petroleum Development Area (JPDA) in Timor-Leste’s sovereign waters. The Timorese believe there is another AU$1.5 billion in oil reserves in the JPDA — more than is commonly assumed. But as these fields near the end of their lives, the greater game lies in the untapped Greater Sunrise field, worth US$40–50 billion. Timor-Leste also achieved a major increase in future royalties from this field, which straddles the side boundary — up from 50 per cent to 70 or 80 per cent, depending on whether the pipeline goes to Timor or Darwin, respectively.
The focus has shifted from the bilateral relationship to Timor-Leste’s negotiations with commercial partners over an ambitious plan to develop the Tasi Mane oil and gas megaproject on Timor’s south coast, rather than send it through existing pipelines to Darwin. Timor-Leste has acquired a 56 per cent stake in the joint venture, buying out Conoco and Shell shares earlier this year. Woodside remains a partner, but has indicated interest in co-funding only the ‘upstream’ or offshore elements of the project, and not the downstream processing onshore in Timor-Leste. The fact that the East Timorese government apparently passed up an opportunity to bid for Conoco’s existing LNG liquefaction plant in Darwin — recently sold to Santos for US$1.4 billion — suggests how strongly committed it is to the downstream processing vision.
While the Australian government is formally neutral on the question of Tasi Mane, the megaproject could yet bring challenges for the bilateral relationship. The East Timorese government estimates external financing will provide some 80 per cent of the estimated US$10.5–12 billion in required funding. Timor-Leste’s ambassador to Australia has already stated that if other funding partners cannot be found, working with Chinese companies is a strong possibility.
On the other hand, Timor-Leste’s foreign minister, Dionisio Babo-Soares, recently emphasised that discussions on the Tasi Mane project with potential partners in Australia, the United States, Europe and Asia are ongoing. The East Timorese government also rejected reports that China’s Exim Bank had agreed to finance the megaproject, though both countries acknowledge a willingness to cooperate to develop Timor-Leste’s petrochemical industry.
Clearly, the entry of China’s Belt and Road funding could complicate relations with Australia, reflecting similar dynamics across the Pacific. But East Timorese foreign policy has generally sought to balance its relationships with key regional powers — in part to prevent the dominant influence of any single nation. Recent developments should be viewed in this light.
Fears of China’s involvement exaggerate its current aid and investment footprint, and some risk losing perspective on the issue. China’s aid to Timor-Leste remains modest compared to aid from Australia, the European Union, Japan and even the former colonial power Portugal. Australia’s own scandals involving potential Chinese influence — including the controversial 99 year lease of the Darwin port — have not been lost on Timor-Leste’s leadership. China remains a rising player in the region, and its relations with small regional states are still evolving. Australian policy is playing catch up with these new realities.
Unlike Australia’s Pacific neighbours, Timor-Leste’s strategic vision for oil and gas means it is unlikely to attack Australia over its climate change inaction. The consistent line from Timor-Leste’s leaders is that they remain more interested in development outcomes than taking sides in power plays. But as with the Pacific nations, there is no doubt that China now provides leverage to smaller regional states. China could be a logical partner for downstream oil and gas processing if other parties are not willing to invest. This could easily see a resurgence in bilateral tensions in the future.
Despite the welcome reset in…
China
China Implements New Policies to Boost Foreign Investment in Science and Technology Companies
China’s Ministry of Commerce announced new policy measures on April 19, 2023, to encourage foreign investment in the technology sector. The measures include facilitating bond issuance, improving the investment environment, and simplifying procedures for foreign institutions to access the Chinese market.
On April 19, 2023, China’s Ministry of Commerce (MOFCOM) along with nine other departments announced a new set of policy measures (hereinafter, “new measures”) aimed at encouraging foreign investment in its technology sector.
Among the new measures, China intends to facilitate the issuance of RMB bonds by eligible overseas institutions and encourage both domestic and foreign-invested tech companies to raise funds through bond issuance.
In this article, we offer an overview of the new measures and their broader significance in fostering international investment and driving innovation-driven growth, underscoring China’s efforts to instill confidence among foreign investors.
The new measures contain a total of sixteen points aimed at facilitating foreign investment in China’s technology sector and improving the overall investment environment.
Divided into four main chapters, the new measures address key aspects including:
Firstly, China aims to expedite the approval process for QFII and RQFII, ensuring efficient access to the Chinese market. Moreover, the government promises to simplify procedures, facilitating operational activities and fund management for foreign institutions.
This article is republished from China Briefing. Read the rest of the original article.
China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at china@dezshira.com.
China
Q1 2024 Brief on Transfer Pricing in Asia
Indonesia’s Ministry of Finance released Regulation No. 172 of 2023 on transfer pricing, consolidating various guidelines. The Directorate General of Taxes focuses on compliance, expanded arm’s length principle, and substance checks. Singapore’s Budget 2024 addresses economic challenges, operational costs, and sustainability, implementing global tax reforms like the Income Inclusion Rule and Domestic Top-up Tax.
Indonesia’s Ministry of Finance (MoF) has released Regulation No. 172 of 2023 (“PMK-172”), which prevails as a unified transfer pricing guideline. PMK-172 consolidates various transfer pricing matters that were previously covered under separate regulations, including the application of the arm’s length principle, transfer pricing documentation requirements, transfer pricing adjustments, Mutual Agreement Procedure (“MAP”), and Advance Pricing Agreements (“APA”).
The Indonesian Directorate General of Taxes (DGT) has continued to focus on compliance with the ex-ante principle, the expanded scope of transactions subject to the arm’s length principle, and the reinforcement of substance checks as part of the preliminary stage, indicating the DGT’s expectation of meticulous and well-supported transfer pricing analyses conducted by taxpayers.
In conclusion, PMK-172 reflects the Indonesian government’s commitment to addressing some of the most controversial transfer pricing issues and promoting clarity and certainty. While it brings new opportunities, it also presents challenges. Taxpayers are strongly advised to evaluate the implications of these new guidelines on their businesses in Indonesia to navigate this transformative regulatory landscape successfully.
In a significant move to bolster economic resilience and sustainability, Singapore’s Deputy Prime Minister and Minister for Finance, Mr. Lawrence Wong, unveiled the ambitious Singapore Budget 2024 on February 16, 2024. Amidst global economic fluctuations and a pressing climate crisis, the Budget strategically addresses the dual challenges of rising operational costs and the imperative for sustainable development, marking a pivotal step towards fortifying Singapore’s position as a competitive and green economy.
In anticipation of global tax reforms, Singapore’s proactive steps to implement the Income Inclusion Rule (IIR) and Domestic Top-up Tax (DTT) under the BEPS 2.0 framework demonstrate a forward-looking approach to ensure tax compliance and fairness. These measures reaffirm Singapore’s commitment to international tax standards while safeguarding its economic interests.
Transfer pricing highlights from the Singapore Budget 2024 include:
This article is republished from China Briefing. Read the rest of the original article.
China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at china@dezshira.com.
China
New Report from Dezan Shira & Associates: China Takes the Lead in Emerging Asia Manufacturing Index 2024
China has been the world’s largest manufacturer for 14 years, producing one-third of global manufacturing output. In the Emerging Asia Manufacturing Index 2024, China ranks highest among eight emerging countries in the region. Challenges for these countries include global demand disparities affecting industrial output and export orders.
Known as the “World’s Factory”, China has held the title of the world’s largest manufacturer for 14 consecutive years, starting from 2010. Its factories churn out approximately one-third of the global manufacturing output, a testament to its industrial might and capacity.
China’s dominant role as the world’s sole manufacturing power is reaffirmed in Dezan Shira & Associates’ Emerging Asia Manufacturing Index 2024 report (“EAMI 2024”), in which China secures the top spot among eight emerging countries in the Asia-Pacific region. The other seven economies are India, Indonesia, Malaysia, the Philippines, Thailand, Vietnam, and Bangladesh.
The EAMI 2024 aims to assess the potential of these eight economies, navigate the risks, and pinpoint specific factors affecting the manufacturing landscape.
In this article, we delve into the key findings of the EAMI 2024 report and navigate China’s advantages and disadvantages in the manufacturing sector, placing them within the Asia-Pacific comparative context.
Emerging Asia countries face various challenges, especially in the current phase of increased volatility, uncertainty, complexity, and ambiguity (VUCA). One notable challenge is the impact of global demand disparities on the manufacturing sector, affecting industrial output and export orders.
This article is republished from China Briefing. Read the rest of the original article.
China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at china@dezshira.com.
- China Implements New Policies to Boost Foreign Investment in Science and Technology Companies
- Q1 2024 Brief on Transfer Pricing in Asia
- New Report from Dezan Shira & Associates: China Takes the Lead in Emerging Asia Manufacturing Index 2024
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