SEZs in Thailand, Auto Components in India, and Pharmaceuticals in Vietnam – Asia Investment Brief

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Our weekly round up of other news affecting foreign investors throughout Asia:

ASEAN BRIEFING

Thailand’s Special Economic Zones – Opportunities for Investment

Likely to benefit further from Thailand’s continued economic growth are businesses that choose to locate in Special Economic Zones (SEZs) in Thai border provinces. Here, we analyze the opportunities and incentives on offer in these SEZs.

INDIA BRIEFING

Auto Components Manufacturing in India: Robust Investment Outlook, Growth Potential

India’s rapidly increasing domestic demand and proximity to key Asian markets has made it a strong auto components sourcing hub. In 2016-17, the annual turnover of the auto component industry in India crossed US$43 billion; it is expected to reach US$115 billion in 2020-21.

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How Beijing is Making Doing Business Easier

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By I-Ting Shelly Lin

Beijing-view

 

In March, the Beijing Municipal Administration of Industry and Commerce, the Tax Bureau, the Commission of Development and Reform, and other relevant bureaus issued a series of policies and measures designed to improve the ease of doing business in the capital city. Beijing businesses now enjoy simplified establishment procedures, reduced costs, and greater transparency on the government’s actions.

The reforms should be familiar to anyone who has read a World Bank Doing Business report: manual transactions are now online; procedures have been streamlines and shortened; costs have been reduced. Every little counts. The initiative will undoubtedly help businesspeople in the capital.

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China’s Auto Industry: Foreign Ownership Limits Scrapped

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By Alexander Chipman Koty

China-cars

 

China has announced that it will eliminate ownership limits on automotive enterprises by 2023, allowing foreign investors to establish wholly foreign-owned enterprises (WFOEs) in the industry.

According to the National Development and Reform Commission, ownership limits on new energy vehicles (NEVs) will be scrapped this year, commercial vehicles by 2020, and passenger vehicles by 2022. By 2023, all other ownership limits on autos will be eliminated.

China will also remove ownership limits in the shipbuilding and aircraft industries later this year.

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China’s Reduced VAT Rates

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By Alexander Chipman Koty

China recently lowered its value-added tax (VAT) rates, as part of an RMB 400 billion (US$64 billion) tax cut package.

The Ministry of Finance (MOF) and the State Administration of Taxation (SAT) recently released the Circular about Adjusting the Rates on Value-added Tax, which explain the details of the new VAT rates.

According to the circular, the tax cuts reduce the 17 percent VAT bracket to 16 percent, and the 11 percent VAT bracket to 10 percent. The six percent VAT bracket remains unchanged. The new VAT rates will go into effect on May 1, 2018.

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China to Establish Hainan Free Trade Zone

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By Alexander Chipman Koty

Hainan

 

Chinese President Xi Jinping has announced plans to transform the entire southern island province of Hainan into a free trade zone (FTZ).

According to a guidance issued by the Communist Party and the State Council, China aims to establish the Hainan FTZ by 2020 and build a Hainan free trade port by 2025. By 2035, Hainan’s free trade system should be completely developed.

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Philippines Under Duterte, China+1 Manufacturing in Vietnam – Asia Investment Brief

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Our weekly round up of other news affecting foreign investors throughout Asia:

ASEAN BRIEFING

Philippines Under Duterte: Opportunities and Risks

As the Philippines’ economy continues to experience robust growth, Grapevine Asia Partners assesses the opportunities and risks for foreign investors in the country under the administration of President Rodrigo Duterte.

INDIA BRIEFING

India-Vietnam: A Comprehensive Strategic Partnership Emerges

South Asia is currently witnessing a rapid growth spurt, with a resurgence in investor interest despite the occasional geopolitical foible. India and Vietnam hold key positions in this region – on both trade and commerce as well as understanding on political and security issues.

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Profit Repatriation from China

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By Dezan Shira & Associates

For foreign companies with subsidiaries in China, profit repatriation from their subsidiaries has always been an important and challenging issue. China maintains a strict system of foreign exchange controls, meaning funds flowing into and out of China are tightly regulated. It is important for foreign investors to incorporate a profit repatriation strategy into the set-up planning of a subsidiary in China to ensure its ability to access the profits earned and to achieve significant cost savings.

There are several ways to repatriate profit from China, the most obvious being for a company’s China-based entity to pay dividends directly to its foreign parent company. However, this is subject to certain prerequisites – only profits that have undergone annual audit can be repatriated using this channel, ensuring that the gross profit will be subject to 25 percent CIT. Dividends are subject to a further 10 percent withholding CIT when distributed to foreign investors.

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Severance Payments in China: How the Abolition of Circular No. 481 Impacts Employers

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By Hazel Wang
Editor: I-Ting Shelly Lin

On November 24, 2017, the Ministry of Human Resources and Social Security (MHRSS) invalidated a number of guidelines for employers in China.

Among them, the Measures on Severance Payment for Breaking or Terminating Labor Contracts (Lao Bu Fa [1994] No. 481) (referred to as “Circular No. 481”). Circular No. 481 had been in effect for over 20 years, serving human resource (HR) practitioners as the legal basis for severance payments and recuperation-period medical subsidies.

How did the abolition of Circular No. 481 impact employers?

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Dezan Shira & Associates

Meet the firm behind our content. Dezan Shira & Associates have been servicing foreign investors in China, India and the ASEAN region since 1992. Click here to visit their professional services website and discover how they can help your business succeed in Asia.

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