The Philippines has a diversified economy with a dominant service sector, a solid industrial sector, and diminishing commodities exposure. It is also in the enviable position of combining high growth with current account surpluses (rapidly developing countries usually accumulate external deficits).

With a population of almost 100m people, demographic trends show that the Philippines will still retain a labour surplus decades from now, and wages should remain competitive. But restrictions on hiring foreign workers necessitate a factoring in of the cost of training on the job. Nationwide, there are major growth opportunities in support industries to the electronics sector, utilities (water supply, storm water and sewerage management systems), and in tourism. The Philippines has huge unrealised tourism potential; its own improved reputation (for political stability, security, etc.) will coincide with an increase in Chinese tourists.

However, the main limit to growth is the country’s poor and overburdened infrastructure (this is true of regional star Cebu as well). Manila airport ranks as one of the worst in the world, and the ports and the main roads are among the most congested. Companies that are interested in a long-term presence in the Philippines are advised to factor infrastructure upgrades into their plans; for instance, this year the government tendered the largest public-private partnership project, the south line of the North-South Railway project (both lines are scheduled to be operational by 2021). The government is preparing a tender for the modernisation of Manila airport, and authorities are building a new terminal at Clark International Airport north of Manila. Export

hurdles include high costs or delays caused by domestic transportation, as well as burdensome import procedures.

The influence of oligarchs or conglomerates prevents new businesses from entering the marketplace and thus constrains competition. The underlying oligarchic structure of Philippine society also limits the tax base severely.

Please click here to view the full report if you have a Country Insight Snapshot subscription.

Country Headlines

– Cambodia - 2016 growth to decelerate as external headwinds strengthen

– Indonesia - Investor sentiment undergoes an improvement

– Malaysia - Domestic and external headwinds weakens growth outlook

– Myanmar - Tension likely arise as quarter of population in poverty

– Singapore - Difficulties in manufacturing only a temporary headwind

– Thailand - Contractions in non-tourism sectors limit overall market potential

– Vietnam - Rising incomes ensure a burgeoning consumer market

Click here to check out more analysis on these countries or any of the 130 countries covered worldwide.

Asia’s Rising StarHindered by Infrastructure Woes

ASIA NEWSFLASH

December 2015

COUNTRY SPOTLIGHT PHILIPPINES

China’s Singles Day Breaks Records

If you think Black Friday is the world’s biggest shopping day, then you haven’t heard of Singles Day. The e-commerce event — a promotional sale cooked up in 2008 by Alibaba (China’s equivalent of Amazon) — occurred last week and

generated a whopping $14.3 billion in sales in one day.

Singles Day sales were up more than 50% in 2015 compared to 2014, when sales reached $9.3 billion. This year the 2014 figure was eclipsed before the middle of the day, according to the company.

Compare Singles Day numbers with total revenues for last year’s Black Friday ($1.51 billion), or Cyber Monday ($2.65 billion), and you can see that Singles Day is a retail force to be reckoned with.

The holiday falls on November 11, or 11-11 (the number eleven signifies two singles), and is a kind of anti-Valentine’s Day for single people. Alibaba took the somewhat obscure holiday, which began in the 1990s, and rather brilliantly turned it into an excuse to go shopping for oneself by slashing prices on a wide range of consumer items.

Of particular note for this year is that sales conducted through mobile devices accounted for nearly 70% of Singles Day transactions. This means that Alibaba’s focus on mobile is paying off. Nearly 90% of China’s 668 million Internet users — an online population that far outnumbers the entire US population — access the web through their smartphones, compared to 43% on laptops

and 68% on desktop PCs, according to the China Internet Network Information Center, a government agency.

What does Singles Day’s success mean for the economy? According to an account in US News & World Report, it’s a glaring indicator of how China, with its massive middle class (at 300 million and counting), is transitioning from a production-based to a consumer-driven economy. If nothing else, it exemplifies Chinese consumers’ astounding collective spending power.

By Amy Schein | Dun & Bradstreet Editor

FOLLOW THE PHILIPPINES SINGAPORE THAILAND

ASIA NEWSFLASH

MARKET INSIGHT

December 2015

Amy Schein is an Industry Specialist at First Research, where she covers various aspects of the media industry. She earned her BS and MA in media studies at the University of Texas at Austin. Follow Amy on Twitter.

WORLD’S BIGGEST SHOPPING DAYS

Black Friday 2014$1.5 billion

Cyber Monday 2014$2.7 billion

Singles Day 2014$9.3 billion

Singles Day 2015$14.3 billion

ASIA NEWSFLASH

FOLLOW THE PHILIPPINES SINGAPORE THAILAND

ASIA PERSPECTIVES

Twelve countries, including the world’s largest and third-largest economies, the US and Japan, have signed the Trans-Pacific Partnership (TPP) trade deal, creating a new trade block that comprises 40% of the world’s GDP. It is the biggest

trade agreement in history, and it will significantly alter the trade terms of the countries involved.

For Japan, the largest Asian economy in TPP, the agreement is a first in many respects. The country has never had a bilateral trade agreement with the US, and it has previously imposed a blanket exemption on its heavily protected agricultural sector from any trade negotiations. Other Asian countries in the TPP are Brunei, Malaysia, Singapore, and Vietnam.

The main Japanese beneficiaries include car companies and car parts producers, as Japan has won a gradual elimination of US tariffs on these goods. Japan’s domestic agricultural sector will be negatively affected, as prohibitive tariffs on imported beef and pork will be slashed. Import quotas for rice will be relaxed. The government will implement support measures to help farmers adjust to the changes, as well as continue to buy up rice to support domestic prices.

On the other hand, local food companies, retailers, and restaurants will benefit from lower input costs and gain from TPP. Domestic consumers will benefit from lower food prices. Japanese companies involved in distribution, warehouse operators, and trading houses are also expected to benefit from increased trading volumes.

In Malaysia, the sectors that are expected to benefit from TPP are some of the country’s major exports: electronics, chemical products, palm oil, and rubber. But the business environment will also be affected by the higher environmental and labor standards included in the accord than are currently prevalent in the country; the latter is an issue for Vietnam as well.

Already, many of the Asian countries that have not signed the agreement are reportedly considering joining TPP, as the US is the main export market for many of them. This is especially true of low-wage emerging economies that rely on basic manufactured exports — such as Bangladesh and Cambodia, both with large textile and garment sectors. They are now facing the prospect of competing with Vietnamese garment exporters to the US on unequal terms. Even China is supposedly considering TPP membership. Whether China would be admitted, however, will have more to do with geopolitics than economic considerations.

The deal will also cause ripples in areas that at first glance do not appear related. For instance, member states will have less freedom to engage in currency manipulation. In recent months there has been a palpable unease among policy makers worldwide about the effects of competitive devaluations.

What Does the Trans-Pacific Partnership Mean for Asia?By Oana Aristide | Dun & Bradstreet Editor

Oana Aristide is a Senior Economist for Dun & Bradstreet. Based in the UK, she covers Scandinavian countries as well as Romania, Japan, Malaysia and the Philippines. She has a background in central banking.

December 2015

ASIA NEWSFLASH

December 2015

Japan, where a weak yen is crucial to the central bank’s objective of reflating the economy, will find it difficult to expand its monetary stimulus program and push inflation upwards if this also results in a depreciated yen. Japan’s closer economic ties with the US complicate that course of action.

AND THE BIGGEST WINNER IS . . .

Meanwhile, there is near-universal agreement that the biggest winner of the agreement is Vietnam. Some estimates put the gains from TPP at 11% of GDP by 2025, as companies are expected to relocate there from other Asian countries. The sectors that are expected to benefit the most are the garment and fishing industries, as import taxes for those products will be eliminated in the US.

The extent of Vietnam’s gains, however, depends critically on how many other low-cost economies will join TPP. On the other hand, the country’s local pharmaceutical companies will suffer, as foreign companies will now have free access to the Vietnamese market, and better-enforced patent rules (another consequence of TPP) will favor them as well.

PREPARE FOR A LEVEL PLAYING FIELD

The agreement still has to be ratified by each country’s parliament, and while this is expected to happen eventually, TPP is not likely to produce changes for at least a year. This gives lead time for local businesses to raise their profile in the international level and prepare for a level playing field, where global standards or compliances on business verification and transparency are often insisted upon.

Dun & Bradstreet provides the universal DUNS® business registration number and ‘ global seal of trust’ for businesses, recommended or required by the US government, European Union, United Nations, ISO standards, almost all Fortune 500 companies, and various local and international business associations.

ASIA PERSPECTIVES

ACROSS THE PACIFIC: HOW ABOUT LATIN AMERICA?By Michelle Campbell | Dun & Bradstreet Editor

The TPP could provide the impetus for a new phase of growth in Latin America. It has the potential to facilitate improvements in troublesome supply-side issues that reduce efficiency and competitiveness while squeezing profitability and discouraging investment spending. Members have agreed to cooperate on matters of regulation and economic policy that are crucial for medium- and long-term growth.

Among the major regional issues the TPP is expected to tackle are labor market rigidities and environmental concerns that have dogged regional economies in the last few years. For example, Mexico has been implementing labor market reforms in the oil and gas and education sectors.

A more flexible, better-regulated labor market provides greater protection for companies and employees. This protection, in combination with access to fast-growing extraregional markets, will provide a major boost to the energy, telecommunications, aerospace, and manufacturing sectors, among others.

For Mexico, Peru, and Chile, accumulation of origin is seen as a major benefit of their inclusion in the agreement. This would mean that a product made in one member state and exported to a second will be treated as if it were produced in the latter. Many see this as necessary to be competitive with China, which is not a part of the TPP. The deal could encourage investment in smaller sectors and support economic diversification, which would provide additional buffers against commodity price volatility.

The TPP is expected to eventually open itself up to new members. Colombia, together with Chile, Mexico, and Peru, is part of the Pacific Alliance and is expected to be invited to join. Whether Brazil and Argentina, the other major regional economies, would be invited remains to be seen.

This version of the article first appeared in Business Insider.

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This month, ten member states of Southeast Asia will form the ASEAN Economic Community, one of the largest single market trade blocs in the world; and home to over 600 million people, the third largest after China and India. The impending Trans-Pacific Partnership (TPP) which represents nearly 40% of global GDP, will also be ensconced in this region. We take a close look at what businesses are saying about these changes.

As the ASEAN Business Outlook Survey has shown over the past several years, companies see the prospect of ASEAN’s economic integration as an opportunity. At the same time, the Trans-Pacific Partnership (TPP) and Regional Comprehensive Economic Partnership (RCEP) negotiations are prompting companies to develop regional strategies to adapt to increasing economic integration across the broader Asia-Pacific.

IMPORTANCE OF ASEAN INTEGRATION

The vast majority (75%) of executives surveyed across all 10 ASEAN countries believe that ASEAN integration is important in helping their companies do business in the region.

ASEAN ECONOMIC COMMUNITY

The ASEAN Economic Community (AEC) is the centerpiece of ASEAN’s aspirations for greater economic integration among the 10 member countries. The AEC envisions

How Does ASEAN Integration Impact My Business?How Does ASEAN Integration Impact My Business?

ASIA NEWSFLASH

SPECIAL REPORT

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75% 74% 72%84%

69%75% 77% 77%

67% 67%

94%

25% 26% 31% 28%16%

25% 23% 23%

6%

33% 33%

IS ASEAN INTEGRATION IMPORTANT TO HELPING YOUR COMPANY DO BUSINESS IN THE REGION?

SELECTED INSIGHTS FROM SURVEY RESPONDENTS

“An integrated ASEAN provides increased opportunities to our prospects to expand their market share.”

“It will help to simplify our import-export activities.”

“Enables efficient operations and potential for less bureaucracy”

“Opportunity for supply chain efficiencies”

This article is provided courtesy of The American Chamber of Commerce in Singapore and U.S. Chamber of Commerce, and reproduced with permission.

December 2015

the following key characteristics: 1) a single market and production base, 2) a highly competitive economic region, 3) a region of equitable economic development, and 4) a region fully integrated into the global economy. In order to achieve these goals, ASEAN has developed an Economic Blueprint which outlines a wide-ranging series of goals for economic integration, including reduction and elimination of barriers to trade in goods, services, and investment, all of which are intended to develop the region as a single market and production base.

Just over half (51%) of respondents indicate that their companies have an ASEAN regional strategy based on the goals of the ASEAN Economic Blueprint. Of the respondents who did not, many commented that they are still developing their strategy, that they only focus on a single country in ASEAN, or that they are unsure about the timeline and feasibility of ASEAN’s Economic Blueprint.

Looking beyond 2015, executives cite non-tariff barriers to trade (66%) and transparency (65%) as priority areas of work to enhance regional economic integration. Respondents also strongly emphasize the need for good governance. Those in the manufacturing sector broadly are most concerned with non-tariff barriers to trade, while executives representing the information technology, consumer goods, and electronics industries are most concerned with intellectual property rights.

Almost half (48%) of respondents indicate that the completion of the AEC will create a greater ability to segment regional supply or value chains, while 25% see changes in regional procurement arrangements, and 19% see the opportunity to consolidate or centralize regional production post-AEC. Among respondents who selected other, the majority stated that they did not anticipate that the completion of the AEC would impact their operations.

Other than location, U.S. executives highlight the ability to move key personnel around the region as a potential benefit of the AEC. Respondents from the manufacturing sector expect a greater reduction in transaction costs than those in the services sector (59% vs. 40%). Respondents indicate that marketing strategies, streamlining/reorganization of basic business functions, and increased opportunities to export from ASEAN to third markets are all potential ways in which their companies will adapt to or benefit from the AEC.

ASIA NEWSFLASH

SPECIAL REPORT

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51%

49%55% 55%

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31%

57%

43%42%

58% 60%

40%

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22%

DOES YOUR COMPANY HAVE AN ASEAN REGIONAL STRATEGY BASED ON THE AEC’S GOALS?

FUTURE PRIORITY AREAS OF WORK TO ENHANCE REGIONAL ECONOMIC INTEGRATION

NON-TARIFF BARRIERS TO TRADE

66%

RESPONSIVE REGULATORY REGIMES

43%

GOOD GOVERNANCE

56%

INTELLECTUAL PROPERTY RIGHTS

38%

DATA FLOWS/E-COMMERCE

22%

TRANSPARENCY

65%

STANDARDS OF CONFORMANCE

41%

LABOR MOBILITY

48%

COMPETITION POLICY

24%

DISPUTE SETTLEMENT

22%

HOW WILL THE COMPLETION OF THE AEC AFFECT THE LOCATION OF YOUR OPERATIONS? (SELECT AS MANY AS APPROPRIATE.)

GREATER ABILITY TO SEGMENT REGIONAL SUPPLY OR VALUE CHAINS

48%

CHANGES IN REGIONAL PROCUREMENT ARRANGEMENTS

25%

OTHER

30%

CONSOLIDATION OR CENTRALIZATION OF REGIONAL PRODUCTION

19%

RE-LOCATION OF BACK OFFICE OPERATIONS OR OTHER NON-CORE FUNCTIONS

14%

This article is provided courtesy of The American Chamber of Commerce in Singapore and U.S. Chamber of Commerce, and reproduced with permission.

December 2015

REGIONAL FREE TRADE AGREEMENTS

Business executives in ASEAN consider each of the four regional agreements listed below to be important to their companies’ investment plans in the region. The largest percentage of respondents considers the Framework Agreement on Services to be important (70%), while 58% consider the Trade in Goods Agreement to be important.

THE REGIONAL COMPREHENSIVE ECONOMIC PARTNERSHIP (RCEP)

The Regional Comprehensive Economic Partnership (RCEP) aims to consolidate the various “ASEAN +” agreements listed above into one broader regional free trade network.

Very few respondents in the region believe that RCEP will hinder their companies’ regional trade and investment as the overwhelming majority (98%) of respondents report that RCEP will either help or have a neutral effect on their companies’ operations in the region.

The majority (53%) of respondents are not sure about RCEP’s impact on their companies’ future investments in the region. 29% believe that RCEP will not impact the location of future investments, while 17% believe that it will.

SPECIAL REPORT

ASIA NEWSFLASH

IMPORTANCE OF ASEAN REGIONAL AGREEMENTS

COMPREHENSIVE INVESTMENT AGREEMENT

63% 31% 6%

TRADE IN GOODS AGREEMENT

11%31%58%

FRAMEWORK AGREEMENT ON SERVICES

70% 23% 7%

TRADE FACILITATION WORK PROGRAM ANDSTRATEGIC PLAN OF CUSTOMS DEVELOPMENT

10%24%66%

Important Neutral Unimportant

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70%71%

24%

53%

46%

75%

22%

62%

38% 32%

66%75%

25%33%

60%

44%

56%

DO YOU THINK RCEP WILL HELP, HAVE A NEUTRAL EFFECT ON, OR HINDER YOUR COMPANY’S REGIONAL TRADE AND INVESTMENT?

Help Neutral Effect Hinder

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WILL RCEP IMPACT WHERE YOUR COMPANY PLANS FUTURE INVESTMENTS IN THE REGION?

Yes No Not Sure

SELECTED INSIGHTS FROM SURVEY RESPONDENTS

“It [RCEP] could streamline production here for use in both regional and global markets.”

“Besides China and India for low cost sourcing, the ASEAN countries are now looked upon as valuable sourcing partners. Borderless movement of goods

among these countries are thus crucial and maybe a competitive advantage.”

BESIDES LOCATION, WHAT OTHER WAYS DO YOU THINK THE AEC MIGHT AFFECT YOUR REGIONAL OPERATIONS? (SELECT AS MANY AS APPROPRIATE.)

ABILITY TO MOVE KEY PERSONNEL AROUND THE REGION

55%

REDUCTION IN TRANSACTION COSTS

46%

MARKETING STRATEGIES

50%

STREAMLINING OR RE-ORGANIZATION OF OTHER BASIC BUSINESS FUNCTIONS

33%

STANDARDIZATION OF PRODUCT LINES

19%

ATTRACTIVE OPPORTUNITIES FOR EXPORT FROM ASEAN TO THIRD MARKETS

32%

OTHER

12%

This article is provided courtesy of The American Chamber of Commerce in Singapore and U.S. Chamber of Commerce, and reproduced with permission.

December 2015

THE TRANS-PACIF IC PARTNERSHIP (TPP)

The Trans-Pacific Partnership (TPP) aims to lay the foundation for a modern, high-standard free trade area of the Asia-Pacific region. Four ASEAN countries (Brunei, Malaysia, Singapore, and Vietnam) are among the twelve partners negotiating the agreement.

The TPP seeks to set high standards for rules in many new areas that have not been fully addressed in previous agreements, including intellectual property (IP) protection and enforcement, competition with state-owned enterprises, regulatory coherence, trade facilitation and supply chains, cross-border data flows, and enforceable investment rules.

56% of respondents from the ASEAN TPP members believe that the TPP will help regional trade and investment. In contrast, only 36% of respondents from the non-member TPP nations (Cambodia, Indonesia, Laos, Myanmar, the Philippines, and Thailand) believe the agreement will help. Interestingly, more than half of the respondents based in Myanmar, a non-member of the TPP agreement, believe the agreement will have a positive impact on their company’s trade and investment.

Companies across the region have mixed views on whether the TPP will impact future investment planning. 33% of respondents think that the Trans-Pacific Partnership will impact the location of their companies’ future investments in the region. Respondents from the four participating ASEAN countries were more certain that the TPP will impact

their planning, with 41% responding “Yes,” compared to only 24% of respondents from the other six ASEAN countries. Vietnam-based respondents are particularly confident (61%) that the TPP will affect the location of future investments.

This survey report was compiled and published by The American Chamber of Commerce in Singapore and the U.S. Chamber of Commerce, and reproduced in the Dun & Bradstreet Asia Newsflash as part of a two-part series. For more information, please visit www.amcham.org.sg/aseanoutlook.

Next month we will look at how executives view their business expansion prospects in ASEAN, satisfaction with the local business environment, and the general perception of locals towards foreign businesses.

SPECIAL REPORT

ASIA NEWSFLASH

This article is provided courtesy of The American Chamber of Commerce in Singapore and U.S. Chamber of Commerce, and reproduced with permission.

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DO YOU THINK THE WILL HELP, HAVE A NEUTRAL EFFECT ON, OR HINDER YOUR COMPANY’S REGIONAL TRADE AND INVESTMENT?

Help Neutral Effect Hinder

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WILL THE TPP IMPACT WHERE COMPANY PLANS FUTURE INVESTMENTS IN THE REGION?

Yes No Not Sure

SELECTED INSIGHTS FROM SURVEY RESPONDENTS

“This is a game changer. It will make it so much easier to help U.S. companies outsource”

“Will help grow companies’ interest in the region and help them see the Indo- Asia Pacific market in a more

holistic way.”

“Greater mobility of goods and services between U.S., Mexico, and ASEAN”

December 2015

To view the reports, please contact your local D&B office

D&B’s U.S. Economic Health Tracker Reveals Continued Challenges for Small Businesses Balanced by Positive Job Growth

– Dun & Bradstreet’s Small Business Health Index surged 1.5 points during the latest reporting period and by 8.45% on a year over year basis, with most sectors except manufacturing recording an upturn. The Services sector, specifically Business Services has broken out of its recent sluggish trend and shows significant improvement this reporting period. Notable improvements were also seen in the consumer-driven Retail and Housing sectors.

– We estimate 184,000 new non-farm jobs were added to U.S. payrolls in October 2015. We expect to see continuing gains in Retail and Construction, while Manufacturing registers some losses. The Business Services sector continues to expand and lead employment gains.

– Diminishing financial risks continued to be recorded among all active and open U.S. businesses in October as the Overall Business Health Index recorded strong sequential gains, rising 0.9% from the prior month. The index now sits at the highest level since the inception of the index in December 2010.

Click here to read the report.

WALL ST

FOLLOW THE PHILIPPINES SINGAPORE THAILAND

ASIA NEWSFLASH

CIPS RISK INDEX BY DUN & BRADSTREETQUARTERLY REPORT Q3 2015

The CIPS Risk Index is a composite indicator of pressures acting upon supply chains globally. The Index analyses the socio-economic, physical trade and business continuity factors contributing to supply chain risk across the world, weighting each score according to that country’s contribution to global exports.

The Index is composed of multiple unique assessments undertaken by Dun & Bradstreet’s team of over 40 in-house economists, data analysts and contributors working in-field across the world in partnership with the Chartered Institute of Procurement and Supply (CIPS). In all, 132 countries (comprising 90+% of global economic activity) are assessed across nine categories, on a monthly basis. The individual country scores are then aggregated to calculate a global supply risk score.

CIPS is the leading international body representing purchasing and supply management professionals. It has a global community of 115,000 in 150 different countries, including senior business people, high-ranking civil servants and leading academics.

December 2015

The Business Information You Need That We Have

ASIA NEWSFLASH

DATA SHOWCASE THAILAND

BANGKOK

THAILAND

2.82% INFORMATION AND COMMUNICATION

2.65% ARTS, ENTERTAINMENT AND RECREATION

1.62% FINANCIAL AND INSURANCE ACTIVITIES

0.77% OTHER SERVICE ACTIVITIES0.63% AGRICULTURE, FORESTRY AND FISHING

0.59% EDUCATION0.52% MINING AND QUARRYING

0.41% HUMAN HEALTH AND SOCIAL WORK ACTIVITIES

0.36% ACTIVITIES NOT ADEQUATELY DEFINED

0.26% N/A0.25% ELECTRICITY, GAS, STEAM AND

AIR CONDITIONING SUPPLY

0.17% WATER SUPPLY; SEWERAGE,

WASTE MANAGEMENT AND

REMEDIATION ACTIVITIES

2.90% ACCOMMODATION AND

FOOD SERVICE ACTIVITIES

INDUSTRY DATAAVAILABLE IN %

SERVICE ACTIVITIES

19.46%

36.59%

WHOLESALE AND RETAIL TRADE; REPAIR OF MOTOR VEHICLES AND MOTORCYCLES

CONSTRUCTION

14.10%

MANUFACTURING

12.50%

7.28%

5.85%

4.22%REAL ESTATE ACTIVITIES

5.52%

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WE HAVE 100% OF THE ACTIVE UNIVERSE*TOTAL DUNS NUMBERED RECORDS

595,746ACCURACYCOMPANY NAME 90%ADDRESS 90%TELEPHONE 90%

* The known D&B universe of organizations that are active includes all registered organizations and entities, non-corporate businesses and commercial operations irrespective of its current trading status.

CHINA RELAXES ENTERTAINMENT AND MEDIA MARKET

There are signs of relaxation in the entertainment industry, which has in the past been marked by significant restriction and relatively closed to outside influence and investment. A draft was passed on October 30, which announced the cancellation of filmmaking licenses and general screenplay enquiries; banned advertisements during screenings; and banned entities without a film release permit to attend film festivals and exhibitions.

KEY LESSONS FROM WALMART INDIA’S BRIBERY SCANDAL

The Wall Street Journal recently reported that Walmart personnel paid bribes amounting to several million U.S. Dollars to support operations in India. The report stated that Walmart personnel made small payments between US$5 and US$200 to low-level government officials, in order to obtain real estate permits and facilitate the movement of goods through customs. This comes in the wake of the company’s aggressive Indian market expansion.

INVESTORS WANTED: VIETNAM’S AVIATION INDUSTRY

Vietnam announced that it is building a framework intended to grow the level of private investment into its aviation industry, particularly with public-private partnerships. The country, which is the third fastest growing aviation market in the world from 2001-2014 (with average growth rate of 14.5% in passenger traffic and 15.3% in freight) is hoping to jumpstart interest among private and foreign investors in the whole industry, including airport development.

PHILIPPINES BUILDS ANATIONAL E-PAYMENT SYSTEM

With the largest English speaking population in ASEAN and the eighth largest member base on Facebook, the Philippines boasts a substantial social media market. However, despite increased internet usage, it currently lacks a national e-payment platform which has stunted the country’s e-commerce market. The government hopes to migrate the primarily cash-based consumer base to an e-payment platform.

LOOKING FOR INCENTIVES ON RENEWABLE ENERGY?

Singapore, more than any other country in the ASEAN region depends on the import of fossil fuels for its energy needs. The smaller size of the city-state also means the country has less room available to install renewable technologies, and cannot build large solar farms like Thailand. Recognizing these limitations Singapore has created incentives for R&D in renewable energies that make use of the conditions specific to the country.

JAKARTA LAUNCHES ANOTHER TAX STIMULUS PACKAGE

On November 5th, Indonesia unveiled its sixth economic stimulus package since September, aimed at attracting FDI to the special economic zones (SEZ) to revitalize its under-performing economy. Investors can qualify for generous income tax discounts of ranging from 20% to 100% for up to 25 years. In order to qualify for a 15-year tax holiday investors would need to make an investment of IDR 500 billion; and at least IDR 1 billion for a 25-year tax holiday.

REGIONAL BRIEFING

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These articles first appeared in Asia Briefing, a subsidiary of Dezan Shira Group Ltd, and are licensed to post in Asia Newsflash.

December 2015

IS CHINA GETTING MORE DIFFICULT FOR FOREIGN COMPANIES?

Just how difficult is it for a foreign company to succeed in China? When I started in China in the mid-1990’s, failure hung over the foreign business community like a thick fog. Times have changed. In many ways, particularly administratively, China is easier. But we still see companies struggle. There have been fairly high profile failures in tech, retail, food, and finance, just to name a few industries that have been in the spotlight for the wrong reason.

HOW TO CALCULATE EXPATRIATE INCOME TAX IN INDIA

In India, an individual’s income is taxed at graduated rates, depending on his/her duration of stay in India and income level. Non-employment income is taxed at a variable rate according to income type. The Indian tax year runs from April 1 to March 31. In this article, we outline the rates and calculation methods for both income sources, and summarize common deductions and inclusions in income for expatriates working in India.

ASEAN FOREIGN INVESTMENT RESTRICTIONS: PART 2

The legal regime on foreign investment restrictions differs strongly among the ASEAN member states. Some nations, such as the Philippines or Indonesia, use the model of a Negative List that details which sectors are closed, and which ones have equity caps. China too, follows this model Vietnam for example is different in that it spreads restrictions over various legal instruments, and marks sectors where foreign investment is ‘conditional’.

IS ASEAN READY FOR THE AEC DEADLINE?

The ASEAN Economic Community (AEC) compliance deadline is due at the end of December this year. Although the ASEAN bloc has agreed tariff reductions and also signed off Free Trade Agreements with other countries – most notably the ASEAN-China, ASEAN-India and ASEAN’s agreement with Australia and New Zealand, four of the ASEAN countries have been given an extended period of time to come into trade reduction compliance and be fully integrated with the rest of the union.

The countries concerned – Cambodia, Laos, Myanmar and Vietnam have weaker economies than the big ASEAN hitters and have also been less sophisticated in their tax regimes. The issue for these four nations is to do with the movement away from their traditional fiscal tax collection based on raising revenues from duties on imported goods, to raising revenues based upon VAT. It is not an easy transition to make.

Firstly, the power base this gives the Customs and Excise regime – which are also responsible for border control – needs to be wrested away and placed back in the hands of the Central Government. Secondly, this is because such a regime traditionally protects local industry from cheap imports. This phenomenon is especially true in the AEC case, where many local industries are woefully inefficient; while the well-organized Chinese manufacturers are very close by and armed with a free trade agreement.

In addition to this, AEC compliance brings with it not just commitments to free trade, but the opening up of other industry sectors, such as banking, finance, medical care to ASEAN standards. The free movement of labour is also an issue. Nonetheless, the deadline is 31st December this year. What is likely to happen?

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ASIA NEWSFLASH

These articles first appeared in Asia Briefing, a subsidiary of Dezan Shira Group Ltd, and are licensed to post in Asia Newsflash.

REGIONAL BRIEFING

December 2015

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