Global

Details

  • Service: Tax
  • Type: Event
  • Date: 5/10/2013

Dynamic Asia Pacific 

Warrick Cleine:

The issue with the Asia Pacific region is that it’s incredibly diverse. So if you’re looking for commonalities of trains that can be quite challenging. You have countries like Australia, for example, who are probably taking their cue from the western world, certainly from Europe in relation to the tax morality debate. You have countries like Japan, possible resurgent Japan following their recent changes in government. Japan has huge fiscal challenges and on the other hand they have of course a very deep and a very strong economy. Then you have emerging Asia. If you look at the Asian region, for instance we have countries like Indonesia, like Vietnam, like Thailand and China – you cannot ignore China. And if you look at China from both an economic perspective and also from a tax reform and development perspective, it’s probably one of the great stories in the region in relation to new laws, new regulations, new practices from the tax authorities. This is driving totally different behavior.


Well I think everybody’s aware that Asia is in a state of change, that we’re seeing changes in government in a number of the important jurisdictions. We’re seeing changes in trade patterns and investment patterns across the region. So companies are increasingly knowing that they have to be aware of what’s going on, investing more significantly in just maintaining their knowledge base of what’s happening and ensuring that they’re maintaining relationships with the right people right across the region. So that would be a focus of companies.


I think there’s probably a difference between the way multinational companies, those that are used to operating across border, are dealing with the Asian challenge versus domestic companies. And the difference is often the matter of experience. It’s that multinational companies are familiar with pushing into new regions and familiar with doing new things and with managing relationships across many different jurisdictions.


It’s one of the great stories of the next century is really of course the rise of the Asian conglomerate, the Asian multinational. They are often coming out of home countries where they enjoy a very strong relationship with their government and that relationship can be founded on decades of experience. And when they go across border they’re often dealing with challenges that they simply don’t have to deal with at home. So whether you take a Japanese multinational, the rising Chinese multinationals or some of the world class companies that are coming out of Asia, out of Singapore, out of Malaysia, out of Thailand, that’s one of the things they have to deal with.


So if we look at the future we can probably discern a number of trends. One is globalization. So without a doubt, the trends which are prevalent in the West will ultimately be picked up in the East and vice versa. If we take the debate around tax morality, for example, it’s something which is already becoming very, very relevant in Australia. It’s a topic which is more challenging for Asian governments to relate to. A lot of Asian societies would regard the payment of tax as much of a moral obligation as a legal one. Already they’re probably looking at this debate and saying what are they talking about. But the driver behind the debate, which is really fiscal challenges from the government and ultimately the data position that a lot of these governments find themselves in is not foreign to parts of Asia. There are huge creative countries in Asia but equally there are governments in Asia that have very, very high levels of public debt. So some of these debates are definitely going to be picked up and are going to become relevant in Asia.

Warrick Cleine, KPMG’s Asia Pacific Regional Head of Tax & CEO of KPMG in Vietnam and Cambodia, gives an overview of how the Asia Pacific region is changing, as well as some of the future trends impacting those within the region and those investing in the region.

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