25Oct

Key Outcomes of the 2016 BRICS Summit

The eighth annual BRICS summit was held from October 15 to 16 this year in Goa, India. BRICS, the acronym, refers to the formal grouping of five nations – Brazil, Russia, India, China, and South Africa; their annual conference is attended by the executive heads of these respective states. As a collective, BRICS brings together the five major emerging economies of the world, comprising 43 percent of the world’s population, contributing to 30 percent of the world GDP, and holding a 17 percent share in world trade.

While the BRICS have ordinarily focused on economic issues of mutual interest, their agenda has widened of late to encompass various topical global issues. This is why the 2016 summit was an unusually sensitive gathering for the international grouping, as matters related to border security and international terrorism some divided members, according to their respective national foreign policy interests. Nevertheless, the 2016 summit ended on an optimistic note with a call for stronger business, trade, and energy relationships.

Takeaways from the Eighth Summit

Agreement over the importance of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (Bimstec)

This bloc, comprising of seven countries from South Asia (India, Nepal, Bangladesh, Bhutan, and Sri Lanka) and two from Southeast Asia (Thailand and Myanmar) collectively holds great importance for the emerging powers in the BRICS collective. Currently, the rate of growth observed in the Bimstec region averages to about 6.5 percent and represents a booming consumer market, with tremendous scope for expanding trade and energy partnerships, building better business relations, and infrastructure investments and development.

Growing Trade Commitment

As stated by India’s Prime Minister Modi, intra-BRICS trade stood at US$ 250 billion in 2015. This accounts for barely 5 percent of the global trade. However, while a free trade pact among these countries is not a working consideration, a fresh boost comes from this year’s acceptance of a tax and custom cooperation framework to facilitate trade among members. Alluding to this positive development,  Modi called for the BRICS nations to target the doubling of the current trade volume to US$ 500 billion in the next five years. Finally, the first BRICS Trade Fair took place this year, shortly before the summit, in New Delhi. Along with the BRICS Business Council, the BRICS Trade Fair can work to strengthen mutual trade, enhance business opportunities, establish key investment linkages, and promote ease of commerce in the intra-BRICS region.

Nevertheless, the success of such trade aspirations will not be achieved without sufficient trade liberalization – a commitment that is losing appeal worldwide as populism and protectionism underline state policies.

General Cooperation with the New Development Bank (NDB)

The BRICS nations established the New Development Bank (NDB) in July 2014 with an initial authorized capital of US$ 100 billion and the bank was officially launched a year later. At this year’s BRICS summit, India signed an MoU on General Cooperation with New Development Bank (NDB) through the BRICS Interbank Cooperation Mechanism. (Five banks from the BRIC nations had established the BRICS Interbank Co-operation Mechanism to enhance trade and economic relations amongst the BRICS nations and enterprises.)

Moreover, the president of the development bank, KV Kamath, stated that the NDB would lend up to US$ 2.5 billion next year, including loans backing ‘green’ projects. The NDB has thus far approved US$ 900 million in loans to green projects in each of the BRICS states. A renminbi-dominated borrowing program has also begun.

India – Brazil Ties

A key development on the sidelines of this year’s BRICS summit has been greater business and economic engagement between India and Brazil, even as relationships with China and Russia entered more testy waters due to contradicting political interests. India and Brazil exchanged four memoranda of understanding (MoUs) last week, which included an Investment Cooperation and Facilitation Treaty; an MoU on Genetic Resources, Agriculture, Animal Husbandry, Natural Resources and Fisheries; an MoU on Pharmaceutical Products Regulation; and an MoU on Cattle Genomics and Assisted Reproductive Technologies.

At present, Brazil accounts for only 1.21 percent of India’s total trade at US$ 6.69 billion in 2015-2016. Hoping to accelerate this relationship, the Brazilian Ambassador to India, Tovara Da Silva Nunes, highlighted the important sectors that show scope for growth in their bilateral trade – medical equipment and medicines, aerospace, aeronautics, oil and natural gas, chemicals, fertilizers, and processed food. Additionally, market opportunities exist in the areas of food and drinks (coffee, tea, fruits, cocoa, and confectionary products), home and building (woods), machinery and equipment (vehicles and auto parts), and mineral products.

Challenges Ahead

Many challenges lie ahead for the BRICS. Each of these emerging economies are presently on divergent growth paths, which in turn translate into differing priorities and the lack of a unified agenda. Nevertheless, since these five countries cumulatively hold considerable weight in global economics and politics, their continuing engagement serves well for stable growth prospects in the regions they encompass. This is why overcoming individual ambitions is a prerequisite if the trends toward deepening through institutionalization (via the year-old New Development Bank and the proposed ratings agency) are to actually materialize. In that sense, it makes more sense for the BRICS quintet to subscribe to a well-defined economic scope to avoid getting caught in the quagmire of geopolitical rhetoric. Though such a mandate would be necessarily limited, seeking exclusively to promote investments and commercial collaboration, they would also invariably reflect the dynamism of these five powerful economies.

This article was first published October 2016.
Since its establishment in 1992, Dezan Shira & Associates has been guiding foreign clients through Asia’s complex regulatory environment and assisting them with all aspects of legal, accounting, tax, internal control, HR, payroll and audit matters. As a full-service consultancy with operational offices across China, Hong Kong, India and emerging ASEAN, we are your reliable partner for business expansion in this region and beyond.

For inquiries, please email us at .(JavaScript must be enabled to view this email address). Further information about our firm can be found at: www.dezshira.com

25Oct

Indian Government Set to Introduce Reforms to Labor Laws

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25Oct

Australia’s Services Exports to Gain from Upgraded Free Trade Agreement with Singapore

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25Oct

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25Oct

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18Oct

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18Oct

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18Oct

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18Oct

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10Oct

ASEAN Market Watch: Philippine Tourism, Indonesian Tax Amnesty, and Tax Rules in Thailand

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10Oct

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10Oct

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10Oct

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26Sep

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26Sep

Legal Alternatives: Arbitration in India

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26Sep

Gaining Direction: Navigating China’s Direct Sales Industry

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26Sep

The State of ASEAN M&As in 2016

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20Sep

China Implements New Unified Work Permit Pilot Scheme

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20Sep

City Spotlight: Investing in India’s Jaipur

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20Sep

Vietnam Releases Draft Safety Standards For Heavy Manufacturing

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20Sep

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13Sep

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13Sep

Vietnam to Introduce Environmental Incentives From September 23

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13Sep

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13Sep

China’s New Advertising Law: Key Considerations and Implications for Online Advertisers

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06Sep

City Spotlight: Investing in Hangzhou

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06Sep

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06Sep

Vietnam Announces 7.3 Percent Wage Hike for 2017

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06Sep

Malaysia Announces 70% Tax Exemption for Shipping Industry

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29Aug

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29Aug

Resolving Labor Conflicts: New Regulations on Wage Payment Methods in Shanghai

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29Aug

City Spotlight: Investing in India’s Lucknow

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29Aug

Vietnam Updates Fines for Investment Violations

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23Aug

Registered Capital, Company Loans, and the Timely Repatriation of Profits for WFOEs in China

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23Aug

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23Aug

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23Aug

Managing Vietnamese Labor Disputes

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23Aug

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15Aug

An Introduction to Overtime in Vietnam

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15Aug

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15Aug

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10Aug

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10Aug

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10Aug

ASEAN Regulatory Brief: Bankruptcy Laws in Singapore, Tax Data in Cambodia, and Money Laundering Leg

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09Aug

China’s Free Trade Zones Open Further to Foreign Investment

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02Aug

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02Aug

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02Aug

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26Jul

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26Jul

Understanding Vietnamese Mergers and Acquisitions

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26Jul

China Introduces Wide-Sweeping New Transfer Pricing Rules

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26Jul

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18Jul

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18Jul

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18Jul

Inflicting Loss on Investors through Cooked Books: Assessing Accounting Fraud in China

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18Jul

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11Jul

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11Jul

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11Jul

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11Jul

ASEAN Briefing The Guide to Corporate Establishment in Cambodia

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06Jul

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06Jul

Up in Smoke: Why China has Banned Foreign Investment in the Tobacco Industry

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06Jul

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27Jun

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27Jun

City Spotlight: Investment Opportunities in Da Nang

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27Jun

India-Australia Deal to Avoid Double Social Security Contribution

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27Jun

Missing the Mark: The Importance of Trademark Registration in China

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21Jun

Rooting Out Slave Labor: An Introduction to Sustainable Manufacturing in ASEAN

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21Jun

Laying Foundations for Growth: The Future of Vietnamese Infrastructure

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21Jun

India and U.S. Sign Agreement on Renewable Energy

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21Jun

China-Israel Relations: Why the Tech Industry is Key to Bilateral Trade and Investment

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13Jun

Indonesia Promotes ASEAN Minimum Wage

Indonesia has announced its intention to propose a regional minimum wage for ASEAN during a recent World Economic Forum event held on the first and second of June in Kuala Lumpur. During the event, Indonesian officials cited wage disparities between low cost production hubs such as Vietnam and those economies...

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13Jun

China’s New NGO Law and its Impact on FDI into the Higher Education Industry

China’s recently released law to regulate the activities of foreign non-governmental organizations (NGOs) has raised fresh doubts regarding foreign investment into China’s higher education industry. Set to come into effect in January next year, the law contains provisions that will further regulate education institutions with operations in the...

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13Jun

Employing Women in the Indian Workplace

The female workforce in India remains much smaller compared to the opposite gender. Some estimates reveal that while 80 percent of men are in jobs or are looking for employment, only 32 percent of women remain in the workforce. Some of this can be attributed to cultural attitudes and social norms. Despite...

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13Jun

An Introduction to Rules of Origin for Vietnamese Exports

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07Jun

Layoff Violations Under Vietnam’s Updated Criminal Code

Recently implemented, an updated version of Vietnamese criminal code raises penalties for illegal termination of employees. Effective from July 01 2016, Code No. 100/2015/QH13 lays out punishments, including serious fines and even jail time, for those found to be terminating or coercing the termination of employees illegally. In order to reduce exposure...

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07Jun

Accessing China’s Third Party Mobile Payments Market: A Comparison of WeChat and Alipay

The Chinese Central Bank has announced significant regulatory change to the operation of online payments, widely affecting service providers and their millions of users in China. From July 1, 2016, third party online payment service providers must ensure that all user accounts bear the real name of the account holder. In addition,...

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07Jun

Two Years into the Modi Government – How are Things Shaping Up for India?

The National Democratic Alliance (NDA) government led by Prime Minister Narendra Modi marked its two year anniversary on May 26 of this year. Given its overwhelming mandate in the 2014 general elections, the Modi government has been held to a high standard. A bounty of electoral promises has also resulted in big...

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07Jun

Setting Sail in the Sea of Java: An Introduction to Indonesian Aquaculture

As the world’s largest archipelago, Indonesia is among the most important producers of aquaculture globally. In 2001, Indonesia ranked fourth in aquaculture output and has since increased its fishery exports to US $4 billion in 2015. Though Indonesia’s aquaculture industry has begun to make strides, it is still far from realizing...

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23May

Dissecting the India-Mauritius Amended Tax Treaty

India’s Central Board of Direct Taxes (CBDT) issued a press release on May 10, notifying of a new Protocol amending the 33-year-old India Mauritius Double Taxation Avoidance Agreement (DTAA). The Indian government is now starting talks with Singapore to introduce similar amendments in its DTAA with the nation. The two...

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23May

Mass Fish Deaths and the Future of Environmental Regulation in Vietnam

Environmental laws are on the agenda after public criticism has put the government on the back foot for failing to protect the environment from industrial pollution. Rare protests have demanded more environmental accountability on business activities and the government has suggested there may be retroactive regulatory measures taken. The recent...

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23May

Internet Censorship and China’s New Online Publication Law

China’s new Online Publishing Service Administrative Rules became effective on March 10, 2016. The law, which aims to “regulate the criteria of and promote the healthy development of internet publishing services”, has already curbed the online activity of several Western MNCs – including Apple’s iTunes and Disney’s DisneyLife – but what...

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23May

Rodrigo Duterte’s Economic Vision: The Punisher’s Plans for the Philippines

As Philippine president-elect Rodrigo Duterte prepares to take office on June 30, investors and business people both at home and abroad are wary of how the audacious politician will impact the country’s booming economy. Under President Aquino, the Philippines enacted several liberal macroeconomic reforms and experienced an average GDP growth...

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16May

Labor Mobility in ASEAN: Current Commitments and Future Limitations

With the establishment of the ASEAN Economic Community (AEC) at the end of 2015, ASEAN achieved a significant milestone in the region’s growing political, economic, and cultural integration. As set out in 2007’s ASEAN Economic Blueprint, the AEC seeks to “transform ASEAN into a region with free movement of goods,...

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16May

China’s New NGO Law: Navigating the Restrictions and Application Procedures

A change of address for a business is sometimes a necessary step towards securing long-term gains. A company’s address is a core element of registered information (along with its business scope, registered capital, and company name, etc.), and making changes to this information can be a somewhat complex process....

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16May

FATCA Leads to Stricter Reporting and More Taxation for Non-U.S. Mutual Funds

In July we reported that India and the United States signed an agreement to implement the Foreign Account Tax Compliance Act (FATCA). The agreement is designed to increase transparency between the two nations on tax matters and took effect September 30, 2015.  We are now seeing the results of this agreement...

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16May

Managing Corporate Name Infringement in Vietnam

In the midst of attracting record investment from all corners of the globe, Vietnam has a nasty secret – intellectual property (IP). Not only does the nation rank 88th out of 140 economies in terms of IP protection, but policy instability is increasingly cited by investors as a concerning aspect of doing...

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09May

Vietnamese Growth Slows to 5.46% in Q1 2016

Following explosive growth in 2015, Vietnam’s Q1 economic data shows signs of cooling. Not only has growth slowed, but published figures fail meet the annual targets set out by authorities. Although garnering significant media attention and representing salient risks for particular industries, it is clear that not all sectors face...

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09May

Changing Registered Company Address in China: Effects of the New Integrated Business License

A change of address for a business is sometimes a necessary step towards securing long-term gains. A company’s address is a core element of registered information (along with its business scope, registered capital, and company name, etc.), and making changes to this information can be a somewhat complex process....

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09May

How to Establish a Startup in India

A host of incentives have been unveiled by the Bharatiya Janata Party (BJP) led National Democratic Alliance (NDA) government that seek to promote the growth of startups in India. Economic goals are at the core of the government’s reforms, which include ease of doing business, job creation, promotion of...

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09May

The State of ASEAN Aviation in 2016

As ASEAN pursues greater regional integration and the development of a single economic bloc, advancements in the region’s aviation industry are essential to boost economic connectivity and tourism. In addition to promoting free movement of labor, liberalization will open the industry to unfettered competition between airlines and allow for...

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04May

Understanding Financial Integration in ASEAN

Established in late 2015, the ASEAN Economic Community represents a significant achievement in a decade’s long process towards regional financial integration. Although far from complete, integration of finance throughout the region plays a key role in the financial sector’s continued development, facilitating greater access to insurance, capital markets, and...

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04May

How to Choose a Third-Party When Entering China’s e-Commerce Market

With e-commerce exploding across China, businesses from around the world are flocking to enter the fray. According to a study by Accenture and AliResearch, China is expected to become the largest cross border B2C market in the world by 2020, with over 200 million shoppers purchasing US$245 billion worth of imported...

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04May

City Spotlight: Pune, India

Pune is the second largest city in the state of Maharashtra after the capital, Mumbai. It is also the ninth most populous city in India. Home to several educational institutes and universities that contribute to a skilled labor force, it also has a strong industrial belt dominated by manufacturing (process...

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03May

The Guide to Drafting PPP Proposals and Feasibility Studies in Vietnam

On March 1, 2016, the Vietnamese ministry of Planning and Interior passed Circular 02/2016/TT-BKHDT regarding the preparation and appraisal of PPP project proposals and feasibility studies. Outlining specific requirements and methods of evaluation for both reports, Circular 02 is a welcome supplement to the Law on Bidding originally passed in 2013 as well as...

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26Apr

How IT is Changing Payroll Processing and HR Admin in China – New Issue of China Briefing Magazine

The latest issue of China Briefing Magazine, titled “How IT is Changing Payroll Processing and HR Admin in China“, is out now and available to subscribers as a complimentary download in the Asia Briefing Bookstore through the month of April. Contents Leveraging IT to Facilitate Efficient Payroll Processing Understanding IT...

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26Apr

Industry Spotlight: Vietnam’s Growing Appetite for Education

In 2016, prevailing societal values and strong economic tailwinds combine to create promising opportunities in Vietnam’s education sector. For those capable of navigating the bureaucratic hurdles of the Vietnamese Market, timing has never been better to establish operations. Historically, education has been championed as part of Vietnam’s Confucian value...

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26Apr

Singapore Overtakes Hong Kong as Asia’s Top Financial Hub

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 –...

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