China
Authoritarianism amplified in the Mekong region
Author: Nguyen Khac Giang, Victoria University of Wellington
The Mekong region started 2021 with a blow as the Myanmar military overthrew the country’s democratically elected government. The coup, which ironically happened on the 10th anniversary of Myanmar’s democratisation, cast a grim outlook over the region’s political landscape in 2021, which was also marred by COVID-19 and the great power competition between the United States and China.
The return to military dictatorship in Myanmar is an extreme case, but not the sole incident that marked a sharp authoritarian turn in the region. Thailand, despite ostensibly returning to democracy after the 2019 election, maintains an entrenched authoritarian regime with the increasing use of repressive tactics against protesters and the opposition. Cambodia has also transitioned from competitive to hegemonic authoritarianism with Prime Minister Hun Sen — the longest serving ruler in the world — becoming a king-like leader who recently mandated his son to take over his position in the future.
The region’s two communist regimes, Vietnam and Laos, organised their quinquennial party congresses where the top leaders were selected in early 2021. The results were not encouraging for those who wanted to see greater political change. In Vietnam, the 77-year-old party apparatchik Nguyen Phu Trong broke the two-term limit to become the Communist Party of Vietnam’s general secretary for a third time in a row amid stalled reforms and increasing repression of civil society. Laos promoted the 75-year-old Thongloun Sisoulith to the country’s top post.
Political regression could not have come at a worse time as the region struggled to deal with COVID-19. After a relatively successful 2020, the region was struck hard by the Delta variant which led to millions of infections and over 75,000 deaths. While Cambodia, Thailand and Vietnam have fully inoculated at least 65 per cent of their population, Laos struggles to reach 50 per cent. Less than 25 per cent of Myanmar’s population have received two doses.
Lockdown and border closures have also devastated the region’s export-led, labour-intensive and service-oriented economies. Exports bounced back in 2021 due to governments being less willing to apply harsh measures, but this growth was based on the low point of 2020. GDP growth in Thailand and Vietnam, the two economic powerhouses of the Mekong region, is estimated at modest rates of 1 per cent and 2.58 per cent respectively. Home to a young population of 250 million, finding a swift recovery is the region’s most urgent policy target in 2022.
Economic vulnerability and authoritarian tendencies amplify the region’s dilemma in navigating intensifying US–China competition. China continues to be the region’s biggest economic partner, yet its growing political influence and aggression — both on economic and maritime fronts — cause real concerns for some Mekong leaders, who understand that the economic coercion campaign against Australia could be used whenever Beijing wants to ‘teach them a lesson’.
The United States remains the favourite partner. But despite Washington’s support for regional development, particularly its enormous vaccine donations, Mekong capitals question US commitment. Its lacklustre role on the Myanmar issue, the disquiet with Thailand over its eroding democratic situation and the recent arms embargo against Cambodia show anything but effective engagement.
Despite security concerns, Mekong countries need Beijing’s deep pockets to boost their underdeveloped infrastructure and revive their damaged economy. China has used economic leverage to gain influence in Cambodia, secure Laos’ economic overreliance and start rapprochement with Myanmar’s military junta. An overreliance on China in the region poses bleak prospects for democracy. There are already signs of regional regimes learning repressive tactics from China, from the application of cybersecurity laws to the harsh treatment of civil society.
With low vaccination rates — particularly in Laos and Myanmar — and overstretched public health systems, the region remains vulnerable to new variants of COVID-19.
The Myanmar crisis is the biggest security threat to the Mekong region, threatening its own residents as well as creating instability across its borders with the exodus of refugees and a booming drug trade. Geopolitical tensions might escalate and sow division among regional countries, particularly as Cambodia — Beijing’s ‘ironclad brother’ — takes over the…
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.
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- New Report from Dezan Shira & Associates: China Takes the Lead in Emerging Asia Manufacturing Index 2024
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