Laos: Korean businesses seek local franchise partners
Korean businesses are increasingly looking to launch their products in the Lao market through the franchise route. At least seven prominent Korean brands recently participated in the K-Franchise Business Meeting 2017 organised by the Korea Trade Investment Promotion Agency (KOTRA) in Vientiane, where they met with potential Laotian partners. The franchise brands represented at the event include Well-Being Pizza, Elli Cel, Didim (Mapo Seagull), Street Churros, Chicken Derby, Beaupeople and Y Entertainment.
With about 257 projects worth US$ 800 million, Korea is the sixth largest foreign investor in Laos. Bilateral trade between the two countries reached US$ 199 million in 2016. Laos’ exports to Korea were valued at US$22.9 million in 2015. The country’s main exports to Korea include potassium fertilizers, coffee, lead bullion and scrap, fabrics and ingredients for oriental traditional medicine. In 2015, Korea’s exports to Laos were valued at US$ 170 million. The main items of export from Korea to Laos include vehicles, trucks, automotive parts, construction equipment and electronics.
By Bradley Dunseith
Cambodia is strategically positioned within South East Asia. With a major port on the Gulf of Thailand, the country also shares land borders with Thailand, Laos and Vietnam.
In 2015, Cambodia exported US$16.1 billion worth of goods and imported US$15.3 billion. Cambodia’s top export destinations include the United States, the United Kingdom, Germany, Japan, and Vietnam. Cambodia’s top import sources include Thailand, China, Vietnam, Hong Kong, and Singapore. Furthermore, many goods traveling through South East Asia go through Cambodia to reach their final destination.
In this article we explain best practices for import into and exporting out of Cambodia, while highlighting the unique procedures required to ship imported goods through the country on transit clearance.
Myanmar: Trade in construction materials, hospital equipment and agricultural goods opened to foreign companies
Foreign companies will now be allowed to engage in both retail and wholesale trade in construction materials, hospital equipment, and agricultural goods such as seeds, fertilizers and pesticides. Previously, overseas firms were allowed to trade in these commodities only if they entered into a joint venture with a local company. The Myanmar ministry of commerce’s latest decision to open these sectors to foreign wholly foreign-owned enterprises (WFOEs) comes as part of its bid to make the domestic market more competitive.
According to the commerce ministry, there have been complaints from local traders about the presence of poor quality products smuggled from across the country’s land borders. The liberalization of trade in these sectors is expected to lead to the availability of better-quality equipment and materials in Myanmar. However, foreign companies have been urged to comply with prescribed health and safety codes and internationally accepted trade procedures. They will also be required to open bank accounts in Myanmar with foreign capital.
Malaysia: Capital market one of the most developed among emerging economies
According to a recently released McKinsey report, Malaysia’s capital market is one of the most developed among emerging economies. The country ranked fifth with a score of 3.25 out of 5 in the McKinsey Asian Capital Markets Development Index, behind Japan (4.0), Australia (3.95), South Korea (3.45) and Singapore (3.40). According to the report, Malaysia is outperforming other emerging economies in the development of its capital market.
Among the factors giving the country an edge are: issuers have access to sufficient debt and equity financing; there is predictable funding from foreign institutional investors; the real cost of equity and debt is quite competitive; and investors get a good mix of equity and debt investment opportunities.
By Bradley Dunseith
In April, 2017, the World Bank (WB) released their biannual East Asia and Pacific Economic Update, entitled, “Sustaining Resilience.” As the title suggests, the WB anticipates growth in East Asia and Pacific, including ASEAN states, to remain resilient despite risks from global and regional vulnerabilities. In this article, we go through “Sustaining Resilience” and summarize the WB’s forecast for developing ASEAN states generally as well as their country specific predictions for economic growth.
About the report
The WB predicts that large developing economies will continue to grow moderately while smaller regional economies will benefit from the rapid growth of their neighbors as well as high commodity prices. The WB marked that poverty has continued to decline in most countries and will continue to fall with sustained growth and rising labor incomes. However, the WB report noted that global policy uncertainties means that countries must address macroeconomic vulnerabilities so as to prepare for external shocks to the economy. External shocks – such as changes in US policy – disproportionately affect smaller countries; as such, the WB report strongly recommends small economics to improve the efficiency of their public spending in preparation of needed structural changes.
By: Dezan Shira & Associates
An Introduction to Doing Business in ASEAN 2017, the latest publication from Dezan Shira & Associates, is out now and available for complimentary download through the Asia Briefing Publication Store.
What happens in and around ASEAN is one of the key factors increasingly impacting upon China and India trade flows, as well as the rest of Asia. While the ASEAN trade bloc has been in existence since 1967, it has really shown its importance in trade and commercial business flows since the rise of China over the past three decades, and through its response to China’s changing domestic demographics. Those changes – an aging and increasingly consumer demanding China – have been skillfully adapted by ASEAN to place the future of global manufacturing, and where it takes place, firmly within its own orbit.
Simply put, free trade agreements that came into effect with China and India in 2010 changed the face of Asian trade and production, and are continuing to do so. For example, bilateral trade figures between China and ASEAN’s Big Five of Indonesia, Malaysia, Philippines, Singapore, and Thailand have multiplied by factors of 500 percent since the agreement was signed. With the smaller ASEAN nations of Cambodia, Laos, Myanmar and Vietnam coming into line with their own compliance of ASEAN customs duty reductions at the end of 2015, the entire bloc offers close to zero import-export tariffs for much of emerging Asia, including the giant markets of China and India, possessing some 500 million middle class consumers between them. ASEAN therefore represents a massive trade bloc possessing free trade agreements of global strategic importance. The question of accessing ASEAN for the benefit of North American, European and other global purchasing and manufacturing executives is a key function of this report.
An Introduction to Doing Business in ASEAN introduces the fundamentals of investing in the 10-nation ASEAN bloc, concentrating on economics, trade, corporate establishment and taxation. We also include the latest development news in our “Important Updates” section for each country, with the intent to provide an executive assessment of the varying component parts of ASEAN, assessing each member state and providing the most up-to-date economic and demographic data on each. Additional research and commentary on ASEAN’s relationships with China, India and Australia is also provided.
- An introduction to ASEAN
- Country profiles
- Case studies: ASEAN as a platform for Asian growth
Our practice, Dezan Shira & Associates, has taken giant steps into the ASEAN market through the establishment of offices throughout the region, in addition to the creation of a unique alliance of firms. That, coupled with our existing long experience of handling foreign investment into China and India, puts us in a unique position of truly understanding how Asia works and how to maximize its free trade benefits.
Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email firstname.lastname@example.org or visit www.dezshira.com.
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Dezan Shira & Associates Brochure
Dezan Shira & Associates is a pan-Asia, multi-disciplinary professional services firm, providing legal, tax and operational advisory to international corporate investors. Operational throughout China, ASEAN and India, our mission is to guide foreign companies through Asia’s complex regulatory environment and assist them with all aspects of establishing, maintaining and growing their business operations in the region. This brochure provides an overview of the services and expertise Dezan Shira & Associates can provide.
An Introduction to Doing Business in ASEAN 2017
An Introduction to Doing Business in ASEAN 2017 introduces the fundamentals of investing in the 10-nation ASEAN bloc, concentrating on economics, trade, corporate establishment, and taxation. We also include the latest development news for each country, with the intent to provide an executive assessment of the varying component parts of ASEAN, assessing each member state and providing the most up-to-date economic and demographic data on each.
Human Resources in ASEAN
In this issue of ASEAN Briefing, we discuss the prevailing structure of ASEAN’s labor markets and outline key considerations regarding wages and compliance at all levels of the value chain. We highlight comparative sentiment on labor markets within the region, showcase differences in cost and compliance between markets, and provide insight on the state of statutory social insurance obligations throughout the bloc.
By: Dezan Shira & Associates
Editor: Harry Handley
Cambodia has achieved GDP growth averaging seven percent per year over the past decade. Despite this growth, it remains one of the poorest nations in ASEAN. However, the Cambodian government has been working closely with a number of bilateral and multilateral donors, including the Asian Development Bank (ADB) and the IMF, to improve conditions in the country. One key element of this is the business environment.
As ASEAN’s third smallest economy, Cambodia is often far from the first economy that springs to mind when thinking about foreign investment into Asia. Challenging conditions, including a weak rule of law and underdeveloped infrastructure, contribute to a global ranking of 131st in terms of ease of doing business in the World Bank’s Doing Business Guide. Despite this poor ranking, 69 percent of respondents in the American Chamber of Commerce’s ASEAN Outlook Survey 2017 believe that the Cambodian business environment is improving.
In order to thrive in this challenging environment, the current conditions, as well as future opportunities and threats in the market, must be understood.
Philippines: Regulation holds banks responsible for late tax payments
The Department of Finance (DOF) on February 15 announced a new rule under the Bureau of Revenue (BIR) which will penalize banks and not taxpayers for late or unremitted tax payments made through credit, debit or prepaid cards. The regulations amends the Revenue Regulation (RR) No. 3-2016 which made taxpayers liable if their authorized agent bank (AAB) failed to pay the BIR their tax payment on time.
The regulation is mainly to benefit self-employed and small business owners who line up for several hours at BIR to pay taxes. As per the new rules, taxes paid by cards will be deemed already paid on the date and time shown on the confirmation receipt issued by AAB. The AAB will then be liable for any delays in depositing to the BIR. The DOF is also pursuing other tax reforms such as lowering personal income tax while raising excise tax and reducing value added tax (VAT)
MSCI South East Asia Index Offerings renamed MSCI ASEAN Indexes
MSCI, a US-based provider of equity, fixed income, and hedge fund stock market indexes has renamed its MSCI South East Asia Indexes to MSCI ASEAN Indexes. In addition, MSCI also added new indexes to represent the developed, emerging, and frontier markets in the ASEAN region. While MSCI ASEAN represents all the markets, MSCI EM ASEAN focuses on emerging markets, and MSCI EFM ASEAN represents emerging and frontier markets. The MSCI AC ASEAN index covers large and mid-cap equities across Singapore and four emerging markets, namely, Indonesia, Malaysia, Philippines, and Thailand.
MSCI was granted the right to use the ASEAN designation for their index offering from the ASEAN Secretariat. The members of the ASEAN exchanges include seven exchanges across Singapore, Indonesia, Malaysia, Philippines, Thailand, and Vietnam. The rebranding of the indexes reflects the development of ASEAN members as a region of sustained growth and economic development. The change will offer global investors a deeper understanding of the various investment opportunities in the region and allows the member countries to promote their capital markets.
By Dezan Shira & Associates
Editor: Alexander Chipman Koty
Cambodia’s updated Law on Financial Management for 2017 reflects the government’s ongoing efforts to revamp the country’s tax system and bring more businesses operating in the informal sector into the formal tax regime by offering incentives for small taxpayers. The amended laws, which came into effect on January 1, offer lower tax rates for small and medium sized enterprises and tax exemptions for firms that uphold quality accounting. The new rules continue a tax reform initiative that began in 2013 to increase the government’s tax revenue collection capabilities and better regulate Cambodia’s significant informal economy. Successful implementation will better equip foreign investors to compete with domestic firms in the informal sector that are able to offer lower rates for their services by avoiding tax obligations.