China & Hong Kong
By Dezan Shira & Associates
US president-elect Donald Trump’s opposition to the Trans-Pacific Partnership (TPP) is well-known and the future of the trade deal is now on tenterhooks. For the supporters of the TPP, Trump’s victory has meant that their worst fears are now going to unfold. Opponents of the trade deal are rejoicing at their expectation that Trump will now move quickly to fulfill one of his most controversial campaign promises – to abandon the TPP. Any prospects of the US renegotiating the TPP are not only bleak but also impractical – the trade deal was seven years in the making, meticulously negotiated and involved compromises from several countries on both sides of the Pacific.
Implications for ASEAN
So now if the US does ultimately withdraw from the TPP, what implications will this have for free trade in the ASEAN region? Before analyzing this, it should be kept in mind that TPP’s potential failure is unlikely to have any significant immediate economic impact on the region. It was not a trade deal in force, but only offered prospects of newer free trade rules coming into effect in the near future. Instead of being a step backwards, it is more a lack of further progress as far as development of free trade in the region is concerned.
By: Dezan Shira & Associates
Editor: Maxfield Brown
In its most recent investment report for 2016, ASEAN has focused heavily upon the intertwined issues of mergers and acquisitions (M&A). The report sheds light on the use of these tools by international investors as well as states within the bloc, providing insight on sentiment of varying parties. For those seeking to enter the region for the first time, understanding these trends is sure to provide important insight in the formation of effective entry and expansion strategy.
Mergers & Acquisitions
While foreign direct investment is often directed towards establishing new operations within a given country, M&As involve the purchase of or integration with a local company. This can present a number of benefits to investors stemming from the preexisting structure, connections, and reputation of the local company’s business. With a preexisting workforce, facilities, and supply chain, the M&A process allows companies to tap into market opportunities in real time. This can prove to be a important tool for those seeking to enter the market before their competition or gain access to sectors with limited access to investment.
By: Marquise Clarke
International arbitration centers have become the preferred location for the resolution of corporate disputes in ASEAN. The use of these centers is preferred due to their affordability, speed, privacy, and neutrality. As investors ramp up investment in ASEAN or enter the region for the first time, understanding where international arbitration is available and how to access it can provide significant protection from regulatory uncertainty.
In recent years there has been substantial economic growth and development among emerging markets within the ASEAN region. Within most jurisdictions, the increase in development, along with transnational transactions creates a high chance that commercial disputes will increase, in terms of both quantity and complexity. Any foreign investor thinking about investing in the ASEAN region should therefore carefully think about what options are open to them if commercial disputes do occur.
By Alexander Chipman Koty
Singapore has overtaken Hong Kong as the top financial hub in Asia, according to Z/Yen Group’s Global Financial Centers Index (GFCI). Hong Kong slipped to fourth place overall, while Singapore now only trails London and New York globally. Although the two financial centers are essentially neck and neck – Singapore scoring 755 points out of 1000 and Hong Kong 752 – the shift is indicative of a wider trend of optimism towards Singapore and uncertainty facing Hong Kong.
Indonesia: Foreign Ownership Laws in Power, E-commerce Other Sectors Relaxed
Franky Sibarani, head of Indonesia’s Investment Coordinating Board (BKPM), said on February 3 that the country will relax foreign ownership rules in three sectors. These sectors include power, e-commerce and retail. The new changes are a part of review by the BKPM on the “negative investment list”, which list a few sectors where Foreign Direct Investment (FDI) is restricted.
By: Mareike Entzian
Much like the European Union, the ASEAN Economic Community is founded on several unchanging pillars. The community is supposed to create a single market and production base, support one another in increasing competitiveness, close gaps of an economic nature and other disparities, and to further integrate with the global economy.
In a previous article , we laid out the relationship between ASEAN’s largest markets and Germany, and we will now explain what investors can do to act on this potential. In a survey conducted by Germany Trade and Invest, German firms operating within ASEAN indicate that they are excited by new opportunities presented by the AEC and are ready to seize them. However, unlike their invested counterparts, companies not yet operating in the region continue to register reservations about committing capital. This hesitance has led German firms to fall behind other competitors, such as Japan, who have been successfully leveraging tariff removals and other benfits of found within the region.
To understand the AEC, it is paramount to be aware of its geopolitical background as well its fundamental differences to the European Union. Once it is clear that, although on paper the AEC looks like the European Union, it remains a long way from the EU’s level of integration, it becomes clear what investors can do to operate successfully.
ASEAN and China have announced that they expect to complete their negotiations on an expanded free trade agreement (FTA) by November of this year. The announcement was made on August 23 during the 47th Association of Southeast Asian Nations Economic Ministers’ Meeting. During the recent gathering, the economic ministers of the ASEAN nations met with China’s Minister of Commerce, Gao Hucheng.
We have just completed our nine part series on the cost of doing business in ASEAN compared with China. The nine country comparisons (see below for all links) detail cost of labor and taxes, together with bilateral trade profiles between China and Cambodia, Laos, Indonesia, Malaysia, Philippines, Thailand and Vietnam. Brunei was omitted from the series as it is of limited interest to foreign investors except in the oil and gas fields, while Singapore was compared directly to operational costs in Hong Kong.
By Chris Devonshire-Ellis
Partner, Dezan Shira & Associates
Part Nine in our series comparing ASEAN nation business costs with China
Vietnam is a country to look out for, especially when it comes to comparisons with China. Right on the border of China’s Guangxi and Yunnan Provinces, and with easy access to the manufacturing hubs of Guangdong Province and wealthy consumer markets of cities such as Hong Kong, Guangzhou and Shenzhen, this Asian Tiger will prove to be highly influential in determining how much of China’s traditional light manufacturing base remains in the south of the country.
By Chris Devonshire-Ellis
Partner, Dezan Shira & Associates
Part Eight in our series comparing ASEAN nation business costs with China
Thailand is an ASEAN Tiger, and one of the wealthiest countries in South-East Asia. With a population of some 67 million and GDP of USD387 billion, the country also has one of the highest per capita incomes in Asia at USD14,390 per annum. At this moment the country is ruled by the military who have ensured recent upheavals remain in the past and that the country retains its inherent sense of calm. Although such situations worry Western markets, Thailand is in fact no stranger to coups, there having been eleven in the past eighty years. None of this seemingly volatile behavior, either historically or currently has ever impacted in a major way on the countries ability to deliver.