Singapore Companies Act and Limited Liability Partnerships (LLP) Act: Significant Recent Developments

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By Dezan Shira & Associates

Singapore’s parliament on March 10, 2017 passed significant amendments to its Companies Act and Limited Liability Partnerships (LLP) Act. Among the key changes are measures aimed at making ownership and control of business entities more transparent in the city-state and reduce opportunities for the misuse of corporate entities for illicit purposes. The measures are also aimed at bringing Singapore in line with international good practices, and uphold the city-state’s sound reputation as a globally trusted financial hub. Among other significant changes introduced by the amended acts are (a) increased record keeping requirements and (b) introduction of an inward re-domiciliation regime allowing foreign corporate entities to transfer their corporate registration to Singapore.

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ASEAN Market Watch: Philippines FDI Surge, Malaysia Construction Sector, and Laos Tourism Industry

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The Philippines: Fresh FDI surge registered

According to figures released by the Philippines’ central bank, Bangko Sentral ng Pilipinas, the country registered US$685 million in fresh Foreign Direct Investment (FDI) in January, a 13.2% increase from US$605 million registered over the same period in the previous year. The foreign capital received in January is also the highest monthly FDI inflow since a US$744 million FDI inflow in November 2016. The central bank has stated that the fresh FDI surge comes as investors remain optimistic on the growth potential of the country’s economy, which is backed by strong macroeconomic fundamentals.    

The Philippines economy, with an upwardly adjusted 6.9% growth rate, was one of the fastest growing markets in Asia in 2016. Industry watchers and economists have credited the country’s growth successes to large foreign currency reserves and a sound banking system. According to the central bank, the top sources of FDI at the beginning of the year were Germany, Singapore, Hong Kong, the United States, and Japan. Among the largest recipients of foreign capital are electricity, gas, steam and air conditioning supply; construction; wholesale and retail trade; administrative and support service; and financial and insurance services sectors. The central bank expects FDI to reach at least US$7 billion by the end of this year.

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Business Process Outsourcing in The Philippines

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Op/ed by Bob Shead

The Philippines Department of Trade and Industry (DTI) defines BPO as the “delegation of service-type business processed to a third-party service provider.”  The industry is generally divided into the following sectors:  Contact centers, back office services, data transcription, animation, software development, engineering development and game development.

BPO in the Philippines is becoming a key developing industry, primarily due to the relatively low cost of living, and a workforce which composed mainly of young and educated Filipinos with good spoken English language skills.  The majority of international research and data companies have placed the Philippines as the no 1 trending country as the top outsourcing destination.  In 2015, the Philippines replaced Mumbai as the 2nd ranking BPO destination and will in all likelihood continue to maintain a high position in the Top 10 worldwide outsourcing destinations (dominated mostly by Indian cities) in 2017.

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Labuan: Offshore Opportunities in Malaysia

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By Bradley Dunseith

Labuan is an offshore, Malaysian island, which has the benefit of low tax regimes while still retaining the protection of Malaysia’s laws and regulations. This means Labuan entities benefit from nearly all the Double Taxation Agreements (DTAs) Malaysia has signed with over 70 countries while profiting from tax exemptions under the Labuan International Banking and Financial Center (IBFC).

Considered the ‘pearl of Borneo,’ Labuan is located off the coast of the eastern Malaysian state of Sabah and borders Brunei by sea. The territory is strategically located in close geographical proximity to financial capitals like Hong Kong, Jakarta, Kuala Lumpur, and Singapore. Labuan is technically comprised of seven islands – Labuan Island proper and six smaller satellite islands – and enjoys tropical weather. Labuan offers multiple ferry connections to mainland Malaysia and Brunei; its airport is served by two daily flights to Malaysia’s capital Kuala Lumpur and one daily flight to Kota Kinabalu, the Sabah state capital. The island has a deep sea port and is planning to further develop its airport. 

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ASEAN Regulatory Brief: Singapore-Ghana DTA, Philippines Tax Amnesty, and ASEAN Banking Sector Integration

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Singapore – Ghana sign Double Taxation Avoidance Agreement

Singapore and Ghana have signed a Double Taxation Avoidance Agreement (DTA) on March 31, 2017. The agreement aims to reduce double taxation and tax disputes by clarifying the taxation rights on all types of income flows arising from cross-border business between the two countries. The DTA aims to reduce trade and investment barriers and increase trade flows between the two countries.

The agreement stipulates that withholding taxes on dividends, interest, and royalties will not exceed seven percent, while withholding taxes on services will be capped at 10 percent. All rates will come into effect on or after January 1, following the year when the DTA comes into force. The DTA will come into force after its ratifications by the two countries.

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The Philippines’ Economic and Political Relations With China

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Op-ed by Bob Shead

The focus of this article is a very complicated but important regional issue in ASEAN – the current state of the economic, trade and political relations between the Philippines and the Peoples Republic of China.  The election of Philippine President Rodrigo Duterte in 2016 has in fact changed the strategy and effects of this relationship.  Last year, this relationship was described by the Huffington Post, as the most toxic in Asia, when Duterte’s predecessor, President Aquino was in charge.   However, since President Duterte took office last year, he has extended a hand of economic and political cooperation to China, and his official visit to Beijing last October, was an economically productive visit as it was formative in securing investment and credit line pledges that amounted to approximately US$ 24 billion in business and trade deals for the Philippines. 

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ASEAN Market Watch: Indonesia Automotive Market, Malaysia-India Trade, and ASEAN Manufacturing Sector

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Indonesia: Largest car market in ASEAN

In 2016, 3.16 million cars were sold in the ASEAN region, according to the latest data from ASEAN Automotive Federation. Around 1.06 million cars, 33 percent of the total car sales, were sold in Indonesia. Thailand follows at second place with 768,788 cars. However, Thailand leads in terms of car production among the ASEAN countries. The country produced 1.94 million vehicles, accounting for almost 50 percent of total ASEAN manufacturing. Indonesia produced 1.17 million cars in 2016.

Industry experts believe Indonesia’s dependency on foreign investment for the automobile sector and the lack of components manufacturing industry will impede its manufacturing capabilities in comparison to Thailand’s current manufacturing capacity. Unlike manufacturing, car sales will continue to see a growth in Indonesia due to a growing economy and increase in purchasing power. Malaysia, Philippines, and Vietnam follow Indonesia and Thailand in terms of car sales.

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Podcast: Talking ASEAN Episode 1 – FDI Opportunities in ASEAN, a Look Ahead for 2017

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In the first-ever episode of the Talking ASEAN podcast series, Dezan Shira & Associates’ Dustin Daugherty and Max Brown provide a country-by-country prediction for ASEAN’s foreign investment future. As part of this, the recent progress and prospects for each economy are evaluated in a regional context. 

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ASEAN Regulatory Brief: Malaysia-EU Trade, Myanmar Insurance Sector, and Indonesia Tax Compliance

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Malaysia – EU trade to grow by 20-30 percent

Malaysian and EU authorities expect the proposed Malaysia-European Union (EU) Free Trade Agreement (FTA) will increase trade volumes from 10 percent to 20-30 percent. The growth is based on EU’s existing FTA with South Korea, which grew by 35 percent in the last five years. Both South Korea and Malaysia have similar EU trade volumes. Both parties are pushing to implement the agreement by the end of 2017. The countries met at the ASEAN Regional Seminar on Transit and Transshipment along with eight ASEAN member states.

Malaysia’s trade with EU has moved away from being a participant country to sharing best practices, especially in the area of export control after they implemented the Strategic Trade Act (STA) 2010. The act is an export control law that encourages exports of strategic items. Both parties also focused on trade laws, transit and transshipment regulations, regional cooperation, and challenges in building strategic trade controls. EU is Malaysia’s third largest trading partner, with the last  three years witnessing a positive trade balance and a growing number of EU companies investing in Malaysia.

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Singapore’s FDI Outlook for 2017: Recent Trends and Key Industries

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By: Koushan Das

Singapore offers investors an attractive and stable macroeconomic environment. Rapid industrialization, coupled with pro-FDI policies, has transformed the city-state into a highly attractive location for foreign capital. According to 2016 UN World Investment Report, Singapore FDI inflows stood at US$65 billion in 2015, while FDI in 2016 dropped to US$50 billion. The manufacturing and services sectors are the major contributors to the economy and account for almost 80 to 85 percent of the GDP.

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