Thursday, April 17, 2014

Investment News and Commentary from Emerging Markets in Asia - China, India and ASEAN




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2point6billion.com discusses business and investment news rising from the geopolitical relations of China and India, and the interactions these two countries have with the rest of emerging Asia.



Politics

A Risk Unique to China

Op-ed Commentary: Dr. David A. Owen

Apr. 19 – Every investment opportunity carries certain risks. Properly assessing these risks, however, can be difficult. A unique risk for those interested in investing in China is its neighbor, North Korea. How does one assess the potential risk of a seemingly unstable neighbor as in the case of North Korea? More specifically, how much risk does Kim Jong Un’s recent castigations actually pose for those interested in investing in China and the stability in East Asia at large? The answers may not actually be that complex.

North Korea has maintained a hostile posture in East Asia since its formation. During this entire period North Korea has been antagonistic towards South Korea, a self-proclaimed enemy of Japan (arguably not without cause considering historical relations) and a thorn in China’s side since at least the moment North Korea transitioned from a communist regime to one with more dictatorial attributes. Even though Sino-North Korean relations are not as hostile as the former two, they are still quite constrained, characterized by North Korean dependence on China and Chinese tolerance of an undesirable border state. Continue reading

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China to India: New President, Old Policy

The five-point formula put forth by newly-elected Chinese President Xi Jinping to bolster bilateral relations with India signifies once again that Beijing is increasingly going for a semblance of stability in relations with its largest neighbour, without making any strategic concessions on contentious issues.

By Reshma Patil

Mar. 25 – China’s new leadership wants to improve economic relations and maintain the uneasy pre-2008 status quo on strategic disputes with India. This message came through in the first policy statement on India from China’s new President Xi Jinping.

Xi’s five-point foreign policy proposal on India is overall a friendly overture in familiar wording. It is not a new or innovative policy shift. The statement signifies once again that Beijing is increasingly going for a semblance of stability in relations with its largest neighbour, without making any strategic concessions on contentious issues. Continue reading

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China’s New Premier Promises to Reduce State’s Role

Chinese premier Li Keqiang speaks with Peter Bonfield, chief executive of BRE Group, a British consultancy and research company, in Watford, England, January 12, 2011 (Department for Business, Innovation and Skills)

By Nick Ottens

Mar. 19 – China’s new premier promised on Sunday to launch a “self imposed revolution” to relax the state’s heavy grip on the management of world’s second largest economy which should also reduce corruption on the part of public sector workers.

Speaking in Beijing, Li Keqiang admitted that the process will be difficult.

“Nowadays, stirring up vested interests is more difficult than stirring up one’s soul. But no matter how deep the water is, we must wade through because we don’t have other options. It’s our nation’s fate and future that are at stake.”

Li made few concrete commitments beyond reducing regulations by a third, echoing the words uttered by his predecessor, Wen Jiabao, who called for continued “reform and opening up” of the economy in his final policy address to the National People’s Congress on Tuesday. Continue reading

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India’s Rs. 17,200 Crore Question

Refuting all claims of a shrinking defence budget, the Indian Finance Minister announced a 5% increase in the defence budget for 2013-14. Coming at a time of increasing defence spending, and more recently, allegations of corruption during procurement, how can India put the new budget to effective use?

By Aakash Brahmachari

Mar. 5 – In an effort to dismiss any talk of compromising on defence, the Budget for 2013-2014 has increased India’s Defence Budget by 5% from last year to Rs. 2,03,672 crores ($42.5 billion). This includes Rs. 86, 741 crores ($16 billion) on arms acquisitions which is a hike of 9% over last year. Even as this will ensure India remains a leading arms importer, it will be a welcome relief if these purchases are not tainted by allegations of corruption.

Reports from the ‘Choppergate’ scandal indicate that middlemen were paid about Rs. 162 crores ($30million) to swing the decision in AgustaWestland’s favour.

This is worth about 4% of the Rs. 3,700 crores ($750 million) deal. A quick calculation reveals that if the rate of commission remains constant, middlemen stand to make Rs. 215 crores ($40 million) for every Rs. 5, 375 crores ($1 billion) worth of Indian arms acquisitions. In other words, though the new budget worth Rs. 86, 741 crores may be spread across different deals, it can still potentially net middlemen a commission of Rs. 3,440 crores ($640 million). In a nation of 1.2 billion citizens, that amounts to each citizen sharing a burden of about Rs. 20 ($0.5) for these commissions. Continue reading

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Chinese Troops Getting “Battle Ready” In Yunnan

Feb. 27 – The Chinese state news agency Xinhua has reported that Chinese troops have been undergoing intensive training near Yunnan’s border with Myanmar as fighting intensifies between Myanmar’s Government forces and the Kachin separatists. Some military shells have already landed in West Yunnan, leading China to step up its surveillance of the deteriorating situation.

Burmese civilians in the region have apparently been seeking shelter from family and friends in Yunnan to escape the fighting.

Peace talks have been held both in Chiang Mai in Thailand and in China’s border city of Ruili, however no progress appears to have been made by either side.

Training by Chinese troops has been stepped up following Chinese New Year with forces being urged to be “battle ready” and prepared for “real combat”, according to Xinhua. Continue reading

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India-Chile: Transcending Geography

Indian Foreign Minister Salman Khurshid’s February 5 visit to Chile and Argentina is emblematic of the new era in Indo-Latin America relations. What does this increased engagement mean for India and Chile, two rapidly growing economies of the Global South?

By Ambassador Jorge Heine

Feb. 21 – The on-going visit of Indian Foreign Minister Salman Kurshid to Chile and Argentina from February 5-8 is a welcome development. Though India is cutting a higher profile in world affairs, the visits of its various foreign ministers to Latin America and the Caribbean (LAC) have been few and far between. This is the first visit by an Indian foreign minister to Chile. Such exchanges at the highest levels, be it between heads of government or senior Cabinet ministers, give bilateral relationships the much-needed momentum to move forward. This is especially true for India and Latin America, which have much to offer to each other, but where links between its political elites have been scarce.

There is no country in the world farther away from India than Chile. Yet, what we have seen over the past decade is proof that, though we may not be living at the end of history, we are at the end of geography as we know it.

Globalization has facilitated much of this change, and India and Chile have certainly made the most of it as part of the Global South. Continue reading

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Indigenising Defence

No country has become powerful by being dependent on foreign defence supplies. It is now increasingly imperative for India to indigenise production through private sector involvement with the aim of eventually developing the ecosystem of a defence industry.

By Aakash Brahmachari

Feb. 18 – The unfolding scandal in the Indian Air Force’s acquisition of 12 helicopters from AgustaWestland has exposed yet again, the need for India to reduce the import quotient of its defence equipment purchases. It’s time to accelerate indigenisation through the participation of India’s private sector, simplify rules and specifications, and streamline the acquisition process.

As India seeks to replace its aging defence system, it has become the world’s largest armaments customer – and is expected to spend more than $80 billion between 2011 and 2015. India’s own public sector, which has so far been entrusted with localizing development, is notorious for cost overruns and long delays. For instance, the Light Combat Aircraft (LCA), India’s indigenous attempt to replace its dated MiG-21 fighters, was an early ambitious attempt. However, it first flew in 2001 and was scheduled to be inducted into the Indian Air Force in 2012 – four decades after the program was started. The ‘Arjun,’ India’s Main Battle Tank, was judged to be too expensive and inadequate for the Army’s requirements – hundreds of T-90S tanks were purchased from Russia instead. Now we are dependent on the French for fighters and missiles; the Russians for naval ships and aircraft; the Italians for helicopters; the Israelis for drones and missiles; the Americans for transport aircraft. Continue reading

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For the latest political news and analysis from South East Asia, visit 2point6billion.com. Stories are contributed by the foreign direct investment experts at Dezan Shira & Associates, who have offices in China, India and Vietnam.



Dezan Shira & Associates provide a range of services for companies looking to undertake foreign direct investment into Asia, These include corporate establishment, accounting, tax, payroll, audit and due diligence. To learn more about the firm, please contact one of our specialists at china@dezshira.com, download our corporate brochure or visit at us www.dezshira.com


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