China
Gauging Indonesia’s interests in the South China Sea
Authors: Aristyo Rizka Darmawan and Arie Afriansyah, University of Indonesia
In June, four years after the Hague’s 2016 South China Sea tribunal ruling, Indonesia put forward a formal diplomatic note to the UN. This was in response to Malaysia’s 2019 continental shelf submission that objected to China’s maritime claims in the South China Sea, including the area bounded by China’s nine-dash line. It said that ‘Indonesia is not bound by any claims made in contravention to international law’.
While this is not the first time Indonesia has objected to the nine-dash line, the diplomatic note demonstrates Indonesia’s shifting attitude towards the Hague ruling. In 2016, Indonesia neither positively acknowledged the ruling nor opposed its findings. Indonesia preferred a neutral stance. Indonesia is now choosing to candidly advance its interests. First, to show its objection to China’s nine-dash line claim. Second, to ensure that it does not acquiesce to any claim contrary to international law which may affect its interests.
Indeed, four years after the ruling, Indonesia’s disputes with China in the South China Sea are ongoing. But does the ruling hold any significance for Indonesia? The tribunal’s ruling does not have an immediate legal impact on Indonesia. Indonesia is not a claimant in the South China Sea. Further, the ruling is not binding — it theoretically only binds the Philippines and China as parties to the tribunal.
Indonesia’s interest in the South China Sea remains the same — it seeks to maintain peace and security in the South China Sea and the broader region. Indonesia still emphasises the need for peaceful dispute resolution based on international law. But the ruling has renewed Indonesia’s focus on securing its exclusive economic zone (EEZ). This has influenced its stronger response to Chinese fishing vessels operating in the North Natuna Sea. There is often tension over an overlapping area between Indonesia’s legitimate EEZ and China’s nine-dash line.
In 2016, Chinese fishing vessels entering Indonesia’s EEZ in the North Natuna Sea were confronted by the Indonesian Navy. In January this year, another incident arose when Chinese fishing vessels were escorted by China’s Coast Guard into the North Natuna Sea. On both occasions, Indonesia sent a diplomatic protest to Beijing and increased patrols in the North Natuna Sea to show a firm stance on its claims.
The Hague ruling in this regard benefits Indonesia because the tribunal stipulated that the nine-dash line is illegal under the UN Convention on the Law of the Sea (UNCLOS). It reaffirms Indonesia’s policy of territorial enforcement over its EEZ in every incident with China in the North Natuna Sea. Still, some analysts consider that Indonesia has demonstrated an underwhelming response to the tribunal’s award and findings. Indonesia could do more in responding to the tribunal award by pushing the ruling to be officially included in ASEAN-related or Indonesian foreign policy statements.
The Indonesian Ministry of Foreign Affairs has stated Indonesia’s position on the tribunal award in relatively neutral terms without directly referencing it. Indonesia calls on all parties to exercise restraint, refrain from escalatory activities and secure Southeast Asia from military activities that could threaten peace and stability. It notes that parties should respect international law — including UNCLOS. Indonesia calls on all parties to continue to uphold peace, to exhibit friendship and cooperation and to conduct their activities according to agreed-upon principles. It continues to push for a peaceful, free and neutral zone in Southeast Asia to further strengthen the ASEAN political and security community. And finally, Indonesia urges all claimants to continue peaceful negotiations on overlapping sovereignty claims in the South China Sea according to international law.
Given China’s escalatory actions towards other Southeast Asian nations in the South China Sea, Indonesia could have used the tribunal momentum to build a cooperative agenda with neighbouring states. For instance, China’s Coast Guard recently sunk a Vietnamese fishing vessels and Chinese oil drilling operations within the nine-dash line have been a source of friction between China and Malaysia.
Indonesia, Malaysia, and Vietnam share a common threat to their maritime security and object to the nine-dash line. This common ground should be leveraged by the three countries to build cooperation for sharing information on evolving security threats and…
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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