May 21 – The Myanmar government has brought forward the date of permitting foreign banks access to the country by 12 months, Nay Aye, one of the two deputy governors at the country’s central bank said on Friday. Banks from the ASEAN region will be allowed to set up operational branches by 2014, while banks from other countries will be able to establish joint ventures within the same time-frame, he was reported as saying. The regulatory and procedural legislation and structure still has to be worked on, he said, however Myanmar has some catching up to do prior to the advent of the full 2015 ASEAN free trade integration of member states. ASEAN is a Southeast Asian trade bloc, which also includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Singapore, Thailand and Vietnam. The 2015 deadline fully liberalizes trade throughout the region. China and India also have their own double tax agreements with ASEAN and the bloc is expected to be China’s largest trade partner within the next two years.
Chris Devonshire-Ellis, principal of Dezan Shira & Associates, recently gave a well-received webinar on the subject on ASEAN nations, growth, the impact on China and India and opportunities for American and other businesses, including regional cost comparisons. It can be accessed here. Our recent commentary concerning ASEAN and the role it has to play as concerns the ability to access consumer markets in China and India can be read here.
International investors interested in the Asian market now need to fully understand the role ASEAN has to play in the region, as well as the benefits of setting up a holding company in ASEAN to take advantage of lower income tax and double tax agreement benefits for trade with China and India. Getting into markets such as Vietnam, Indonesia, Thailand and even Myanmar requires a full working understanding of how establishing a branch of an American or European company in ASEAN can assist with this. With Singapore already a world class financial and services hub and the de facto capital of ASEAN, using such entities to break into these markets is going to be the primary step for international businesses to take for Asian investments.
Hong Kong and Singapore Holding Companies
In this issue of China Briefing Magazine, we take a closer look at the benefits of both Hong Kong and Singapore holding companies, how to establish and maintain a company in each of these jurisdictions, and the relevant double tax agreements.