Articles by Ying Staton on the GC Blog and GC analysis
ASIA: Global Counsel Head of Asia, Ying Staton, and Senior Associate, Brigitta Kinadi, sit down in GC's Singapore office to discuss recent economic developments in China and the implications of the two sessions.
Recent years have seen important global shifts in both the policy frameworks for screening inward foreign investment and the way in which they are applied. These shifts come against a backdrop of protectionist political rhetoric and anxieties about the impact of foreign direct investment (FDI) in traditionally open economies. The new landscape is exemplified by the position in the US, from the increase in the volume and intensity of CFIUS reviews (leading to the collapse of deals such as Ant/MoneyGram and Canyon Bridge/Lattice Semiconductor), to the current proposals for expansion of the CFIUS mandate. It also extends to Europe, with increased intervention in France and Germany, the European Commission planning EU legislation on inward investment screening for the first time, and the UK government proposing extensive changes to its powers of national security review. Against the backdrop of these larger changes are many smaller shifts in the political mood around FDI across the OECD.
Last week Dyson announced the opening of a new £330 million R&D centre in Singapore. The focus of the centre, home to Dyson’s new Global Technology Centre of Excellence, is on commercialising Dyson’s technology for global markets, including, for example, for use in smart homes. Dyson has grand ambitions to expand beyond household devices into technologies that will shape the future Internet of Things: artificial intelligence, robotics and vision systems.
At the end of November, the Chinese government indicated that it intended to exert greater scrutiny over Chinese outbound investment. Draft policy papers released online outlined a new policy whereby government approval would be required for foreign acquisitions valued over US$10 billion, or US$1 billion if the target was considered to be outside of the acquirer’s core business. In addition, a moratorium would be imposed on state-owned companies acquiring real estate overseas beyond a value of US$1 billion. In addition, it was mooted that the State Administration of Foreign Exchange (SAFE) would lower the upper threshold for money transfers requiring approval from the current level of US$50 million to US$5 million.
In the months since Brexit there have been murmurings about whether, post-Brexit, Britain could adopt a ‘Singapore model’. A number of Brexiteers in the financial sector have suggested that Britain could become a “super-duper Singapore” through deregulation and focusing on new markets in Asia.
ASEAN policymakers have always watched their European counterparts closely – both for good and bad examples. The European Commission’s landmark decision last month instructing Ireland to claw back €13 billion of unpaid corporate tax from Apple is no exception.
The price of palm oil tumbled to a 6 year low in August, dragging with it shares in major palm oil producers and traders including Wilmar, Olam and Golden Agri Resources. Some analysts argue that palm oil is merely going through a standard commodity cycle, with a temporary glut causing a short-term fall in the price. However, two intrinsic problems with palm oil – its substitutability and difficulties with sustainability – are perennial headaches for the industry and becoming increasingly difficult for investors to ignore. Attempts by concerned governments to protect what may be a strategically important industry from this dynamic may yield short-term relief for the industry but exacerbate the problem in the long-run. This GCI explains why.
Last week marked one year since Joko Widodo took up office as President of Indonesia. Jokowi’s rise to power was swift and many doubted the ability of an outsider to effectively manage Indonesia’s acutely insider brand of politics; at the same time, he enjoyed an almost unprecedented popular mandate and support from the international community, and expectations when he assumed office were high. How many of these expectations – positive and negative – has Jokowi met? What does his first year in office tell us about the likely trajectory of Indonesia over the next four? This GCI offers an assessment.
The inauguration of Joko Widodo as President of Indonesia in October 2014 was a landmark event in Indonesian politics. The subsequent hundred days have fulfilled some of the huge expectations of Jokowi and frustrated others. The reasonable prediction that Jokowi would quickly find himself dealing with the messy compromises and obstacles of minority government have so far proven correct, although not in the way they were often made. Jokowi’s administration has set a number of big targets that as yet seem at odds with some fairly conservative instincts on trade and the economy. Jokowi’s first hundred days have defined some fairly fundamental challenges for his second.
Strikes by taxi drivers against disruptive taxi apps such as Uber have become a common occurrence around the world in recent months, including last week across a number of major cities in China. However in China, striking taxi drivers were not protesting against but for a freer market. Their main target was not Uber – as in other countries - but the government, which has for years managed the taxi market by capping fares at below market price and restricting licenses. Uber and other taxi apps have allowed market forces to flourish and to set a price that is in line with demand. In most markets, this is a problem for the taxi industry which has a vested interest in high prices. In China, it is a problem for the government, who see maintaining low prices as one of their main claims to legitimacy. The rise of taxi technology provides a valuable insight into the wider question of Chinese reforms and the route to a “mixed” economy proclaimed last year in the Chinese Communist Party’s 2013 Third Plenum vision for Chinese growth.
This week saw Joko Widodo officially confirmed as Indonesia’s next president. With his humble background and demeanour, popular appeal and reputation for probity, the coming to power of this political superstar has been hailed as a new dawn for the world’s third largest democracy. Yet when he is inaugurated in October, for a range of political and structural reasons Jokowi will be assuming the weakest presidency Indonesia has seen since independence. The consequences for politics and policy in Indonesia over the next 5 years are potentially far-reaching.
Late last month, Indonesian Trade minister Gita Wirjawan stood down to concentrate on his long-anticipated campaign for the Indonesian Presidency. Wirjawan has set the tone for Indonesian inward investment and trade policy for half a decade, and that tone has been a pragmatic mix of openness and intervention. Under Wirjawan, Jakarta has taken a series of measures designed in large part to force change in Indonesia’s trade profile – substituting a higher level of value-added production for a heavy dependence on raw commodity exports. Handicapped by a party ticket in free fall and in a potential contest with Indonesia’s rising political superstar Joko Widodo, Wirjawan is very unlikely to win the Indonesian Presidency. But his political and policy style is likely to outlast him.