Dispatch (Asia edition)
| by Peta Tomlinson, Majella Gomes, Sonia Kolesnikov-Jessop 13 Jul 2007 Topic: News |
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Vice President Al Gore to address ACCA event in Hong Kong Vice President Al Gore, the world’s best known campaigner on environmental issues, is to speak at a major event organised by ACCA in Hong Kong in August. The 45th Vice President of the United States, whose documentary, An Inconvenient Truth, won an Oscar for Best Documentary Feature at this year’s Annual Academy Awards, will be speaking on the linkages between climate change, ethics and sustainability to an audience of leading businesspeople and politicians from Hong Kong SAR, Mainland China and across the Asia Pacific region. The exclusive event is taking place in Hong Kong’s Conrad Hotel on 9 August and is the highlight of a series of global events organised by ACCA throughout 2007 which focus on professionalism and ethics. Allen Blewitt, ACCA’s chief executive, said: ‘We are delighted that Vice President Gore has agreed to work with ACCA to highlight the importance of ethical and sustainable businesses at a time when serious business leaders are focusing on global issues like climate change. ACCA has been campaigning for over 15 years for organisations to measure and manage their activities, thereby ensuring more sustainable businesses. To have Vice President Gore, the world’s leading environmental champion, speaking at our event reinforces our commitment to this critical issue.’ GAAP requirement to be lifted for non-US companies The US Securities and Exchange Commission (SEC) has voted unanimously to propose permitting non-US companies to file their accounts according to International Financial Reporting Standards (IFRS) without the necessity of the accounts subsequently being reconciled to US GAAP. The proposal will now be open to public consultation for 75 days after which a further positive vote will be required before the rule can be made effective, in which case it is expected that the rule would be implemented with companies filing in accordance with full IFRS by 2009. The proposal may be regarded as perhaps the most significant step by the SEC in response to concern in the US that it remains an attractive jurisdiction for international companies to be listed, as corporates in an increasingly competitive global marketplace give careful consideration to the most beneficial exchanges on which to list. In the wake of the Sarbanes-Oxley Act, and with both the London and Hong Kong stock exchanges enjoying a boom period, the SEC must strike a balance between accessibility to international investment and ensuring the appropriate degree of protection for US investors. ACCA has welcomed the development and said that it will respond to the SEC within the consultation period. The International Accounting Standards Board (IASB) has also welcomed the decision. The SEC emphasised that the proposal applies only to those companies filing financial statements according to full IFRS. Sir David Tweedie, IASB’s chairman, said of the SEC decision: ‘The SEC’s proposal shows its recognition of the tangible benefits of a single set of financial reporting standards used in the world’s integrating capital markets, and the relevance of the continuing IASB-FASB convergence process to the economies of the US and the rest of the world. If approved, the rule will eventually reduce significantly the barriers to capital flows between countries using full IFRS and the United States. We appreciate the SEC’s continued support of our work. Our ultimate aim at the IASB is to have a single set of accounting standards used worldwide. The SEC’s proposal is an important step in achieving that goal, but much work remains to be done.’ The Singapore Exchange (SGX) is planning an overhaul of its listing rules. While the largest stocks will stay listed on its main board, the smaller growth stocks will be moved to a new sponsor-supervised board, yet to be named, that will replace the existing junior SESDAQ market. Currently, the line between the main board and SESDAQ is blurred. The main board lists some 250 companies with market caps below S$150m (US$97m), while SESDAQ lists a handful of fairly large-cap stocks, such as the S$2.9bn Gallant Venture and the S$720m AusGroup. Under the new rules, the initial public offering (IPO) market capitalisation for new listings on the smaller board would be restricted to a maximum of S$150m. The exchange, which is reviewing the minimum IPO size requirement, also proposes that companies listing on SESDAQ would no longer have to produce a full prospectus registered with the central bank, but would just provide an ‘offer document’. To maintain quality, SGX has proposed that companies which have lost money for three years running and have an average six-month market cap of below S$40m will be put on a watch-list. The new board will be supervised by approved sponsors – typically banks or professional financial advisers – regulated by the SGX. This will relieve the exchange of having to review all the IPOs for the new second board as it does now. SESDAQ companies will be given at least two years to engage sponsors and comply with the new rules. To ease the transition, SGX will waive listing fees for three years from the time SESDAQ companies adopt the new rules. The SGX anticipates the changes to take effect from around November. While US companies in Singapore are generally bullish about the country’s economic prospects over the next couple of years, they are also worried by rising office and housing costs as the property market takes off, a survey by the American Chamber of Commerce (AMCHAM) shows. According to the survey, about 61% of American businesses were dissatisfied with housing prices in Singapore, up significantly from 42% in 2006. Concerns about office lease costs also rose sharply to 45%, from 29% in 2006. Dom LaVigne, executive director of AMCHAM Singapore, noted that waiting lists at several international schools were also an increasing concern that ‘will have a direct impact on investment decisions which are being made in Singapore’. Still, the survey showed Singapore remains the most attractive destination for US firms in the ASEAN region, thanks mainly to the high standard of living, level of productivity and enforcement of intellectual property rights. Australia’s business elite have struck gold during the global resources boom. The latest Business Review Weekly (BRW) Rich 200 List shows Australia has nine new billionaires, totalling 30, compared to 21 last year. And the rich are getting richer. In what BRW describes as ‘a beautiful set of numbers’, the total wealth of individual Rich List members has increased by 26.7% to A$128.6bn, with the average net worth being A$608m. Media magnate James Packer remains Australia’s richest person, with a fortune of A$7.25bn. But a global thirst for minerals, driven principally by China, is pushing mining further up the list. Mining heiress Gina Reinhart is Australia’s wealthiest woman, with a fortune of A$4bn. As owner of some of Australia’s most valuable iron ore tenements – some of which are yet to be tapped – she is tipped to take over the Rich List top spot. BRW’s tales of ‘miners making millions’ continues. Property developer-turned-mining-entrepreneur Clive Palmer became a billionaire debutante after a productive year in which he sold part of his iron ore resources to a Chinese company for US$415m, BRW reports. Nigel Satterley is a Western Australia property developer whose fortune soared to A$420m after the resources boom saw Perth property prices double over three years. Former geologist John Borshoff took a punt on mining uranium. Prices skyrocketed as fears of global warming put nuclear power on the agenda, and from humble beginnings he is now reportedly worth A$205m. But the most successful businesspeople are good at spotting trends, and BRW notes that many on this year’s list have been selling off assets – valued at more than A$15bn – this past year. Different reasons are cited, one of which is that Australia’s decade of prosperity may be nearing its end. In June, National broadcaster ABC (Australian Broadcasting Commission) reported minerals exports as ‘collapsing’. Citing a Centre for Economic Development Study, ABC says that, despite the resources boom, mineral exports are growing at a much slower rate than manufacturing exports. It is also true that port congestion hampers Australia’s ability to ship its resources fast enough. Queues are becoming a familiar sight off major coal ports in Queensland and New South Wales, fuelling speculation that delays may drive some of the world’s biggest buyers to look elsewhere for their energy needs. It did not make waves quite as high as the Maxis privatisation announcement, but the news that Permodalan Nasional Bhd (PNB), a government-linked investment institution, was taking property development company Island & Peninsular Bhd (I&P) private – which actually came before the Maxis deal was announced – did raise some eyebrows. Later in the week, PNB upped the stakes by announcing it was also going to take another developer in its stable, Petaling Garden Bhd, private. PNB and the shareholders under its wing have a combined 48.8% stake in Petaling Garden. In I&P, their stake is 66.05%. The Malaysian market was rocked even further by news that another two listed companies, UAC Bhd and Nexnews Bhd, would also be going private. While market watchers and analysts all agreed that the market would miss the excitement of royal blue chips like Maxis, I&P and Nexnews, they had diverging opinions on the reasons for these buy backs. In the case of Maxis, major shareholder T Ananda Krishnan cited supreme control and self-determination as elements underpinning the move, but for I&P and Nexnews explanations were sketchy. This has led to speculation, in the case of Nexnews at least, that the voluntary general offer is tied to the market pricing of its stock and yields. Nexnews stock had been trading lower than at the start of the year, despite a rise of 11% in the four months prior to the announcement. The lower prices may have offered an opportunity to shareholders to buy back at an affordable rate, take the company private, then get larger pieces of the pie once the company started improving its performance. The Hong Kong SAR has widened its double tax treaty network by implementing a new agreement with its biggest trading partner, the Chinese mainland. Double treaties serve to minimise ‘double dipping’ by inland revenue departments in countries where cross-border business is conducted, and to combat tax evasion. The Government’s line is that the agreement is another plus for the SAR’s already favourable tax regime, further boosting its international competitiveness. In the case of laissez-faire Hong Kong, though, tax is only payable on income sourced within its own boundaries – making it tax-friendly for those companies based in Hong Kong, but deriving much of their profit from the Chinese mainland. In this city, the greater implication is the sharing of information the Double Tax Agreement (DTA) involves. Now, Beijing has the right to ask for disclosure from Hong Kong’s Inland Revenue Department and, in theory, apply taxes on income derived from China. Will the prospect of having to reconcile accounts in two jurisdictions, and possibly face two tax audits, deter cross-border business? Philip Hung, tax director at PwC in Hong Kong, agrees that, in theory, the burden is there. But since requests for information under the DTA must be lodged in Beijing, and much of China’s foreign-invested companies are located in the far south Pearl River Delta (PRD), the process would not be easy. In other words, it is unlikely to happen unless there appeared to be a big enough reason. For the thousands of Hong Kong-based SMEs with production bases in the PRD, the more pressing question is whether China’s recent tax reforms will be the final straw that results in their withdrawal from the mainland. For years, mainland manufacturing has been cheaper, but the holiday is nearly over as tax exemptions for many foreign-invested companies will gradually be removed from January 2008. Then, when their new tax rate becomes higher than Hong Kong’s, Hung says SMEs may consider moving back across the border where the infrastructure and services are better, and rule of law reigns. Already, according to the Hong Kong Small and Medium Enterprises and Labor Co-operation Association, China’s changing business environment, increasing taxes and a labour shortage have caused more than 2,600 Hong Kong SMEs to withdraw from the PRD. A shift back won’t be cost effective for everyone, Hung points out, and Hong Kong’s rents are still ‘sky high’ by comparison. But it will be interesting to see if history reveals a retreat of the enterprises which, three decades ago, joined a mass exodus across the border to the promised land of the then newly opened China. in brief... Morgan Stanley moves on Asia
Hong Kong buoyant
You first, says China
More pay tax
Golden years shine
Yuan moves offshore
Kazakhstan venture
Singapore’s new air terminal | |