MNCs in the News-2016-01-08

China’s Ministry of Commerce (MOFCOM) reported China’s inward foreign direct investment (FDI) in 2015 hit record levels, with the total amount of inward FDI (IFDI) running USD $126 billion. For the first 11 months of 2015, China received USD $114 billion in non-financial investment, an increase of almost 8 percent year over year (YOY), and 24,000 foreign-funded enterprises were established. MOFCOM noted “an increasing amount of foreign capital flowed to the service sector and advanced manufacturing” and that IFDI was supported by the preferential policies of China’s free trade zones (“Foreign Investment in China Hits Record in 2015,” China.Org.cn, January 5, 2016, http://www.china.org.cn/business/2016-01/05/content_37463388.htm)

China’s State Administration of Industry and Commerce (SAIC) announced it is conducting an antitrust investigation of Microsoft. Concurrently, it said it had given Microsoft a number of data requests. In 2014, SAIC questioned Microsoft’s lawyer in China and SAIC officials “stormed 4 Microsoft offices in China…copying contracts and records, and downloading data form the company’s servers.” Microsoft has “promised to…fully cooperate with the SAIC’s investigation.” Some commentators feel this is another example of China using its “regulatory agencies and court system to penalize foreign companies” and help “homegrown alternatives.” Others expect China to levy a substantial antitrust fine on Microsoft (“China Makes New Inquiries into Microsoft Amid Antitrust Probe,” China Daily, January 5, 2016, http://www.chinadaily.com.cn/business/tech/2016-01/05/content_22941587.htm; Paul Mozur and Nick Wingfield, “Microsoft Faces New Scrutiny in China,” The New York Times, January 5, 2016, http://www.nytimes.com/2016/01/06/business/international/microsoft-china...)

Uber Technologies is “technically illegal in China” but not all local governments are firmly opposed to Uber’s operations/car hailing services in their localities. Thus, Uber is working in Shanghai, Nanjing, and other cities like Guangzhou to establish a bigger presence. To expand and strengthen its presence, it has built strategic alliances with various entities. For instance, it has a deal with Guangzhou Automobile Group relating to automobile sales and repairs, used-car sales, and auto loans and hopes the relationship will build up its ties with the Guangzhou government which backs Guangzhou Automobile Group. It also struck a partnership with BYD (Yu Nakamura, “US Company Revving Up Tie-Ups to Win Municipal Favors,” Nikkei Asian Review, January 5, 2016, http://asia.nikkei.com/Business/Companies/US-company-revving-up-tie-ups-...)

Previously, Myanmar’s state-owned Myanma Insurance had a monopoly on insurance within the country. In 2013, the military junta decided to allow private and foreign insurers into the market. However, they still were excluded from the automobile insurance market. Recently, in a first for a foreign company, Japan’s Sompo Japan Nipponkoa Insurance was given a license to sell car insurance (vehicle insurance, bodily injury, and properly damage liability coverage) in the Thilawa special economic zone, southeast of Yangon. Previously it had been selling fire insurance and other insurance within the zone (Motokazu Matsui, “Sompo Japan offers Car Insurance in Myanmar,” Nikkei Asian Review, January 6, 2016, http://asia.nikkei.com/Business/Companies/Sompo-Japan-offers-car-insuran...)

Korea’s Ministry of Land, Infrastructure, and Transport (MOLIT) reported that Korean construction firms concluded overseas construction deals worth USD $46.1 billion in 2015. While impressive, this constituted a 30.2 percent drop from the numbers witnessed in 2014. The biggest drop was experienced in contracts in the Middle East, “the biggest market for Korean builders,” where orders plummeted from USD $31.35 billion to $16.53 billion. There also were major percentage drops YOY in Africa, Europe, and Central America. Asia and North America were bright spots with contracts increasing 23.9 percent YOY and 20.1 percent YOY respectively (Jung Min-Hee, “Overseas Construction Orders Drop 30% to US$46.1 billion in 2015,” Business Korea, January 4, 2016, http://www.businesskorea.co.kr/english/news/industry/13458-sharp-decreas...)

In response to Netflix’s announcement at the Consumer Electronics Show in Las Vegas that it will enter Indonesia, among other countries, the Indonesian government has said it “‘must study further the implications of Netflix for the Indonesian public…if the disadvantages outweigh the advantages, then something must be done to fix that.’” There are some concerns among Indonesian authorities about the impact Netflix might have on the local entertainment industry and other online businesses in Indonesia. The Communications and Information Technology Ministry intends to coordinate with the Culture and Education Ministry to assess potential societal impacts (Dylan Amirio, “Govt to Assess Netflix’s Entry into RI,” The Jakarta Post, January 8, 2016, http://www.thejakartapost.com/news/2016/01/08/govt-assess-netflix-s-entr...)

Thailand and Singapore have concluded a new double taxation treaty that will have important implications for Thai companies investing in Singapore, a favored end and intermediate destination for Thai firms because of its favorable tax regulations/tax incentives, proximity, ease of doing business, the fact that Singapore’s tax treaties with other countries are often better than Thailand’s treaties with other countries, and the gains to be found in reducing costs and enhancing regulatory compliance. The new tax treaty will have implications for the treatment of, among other things, equipment leases, capital gains on real estate, and specifics kinds of time tests (“Reflections on the New Thailand-Singapore Double Tax Treaty,” Bangkok Post, January 5, 2016, http://www.bangkokpost.com/business/news/816340/reflections-on-the-new-t...)

Singaporean health care providers are expanding their presence in China to take advantage of the Chinese government’s changing attitude towards foreign investment in the sector, the government’s desire to expand the sector, an aging population, rising income levels, and surging government spending. Firms like Raffles Medical Group, Ramsay Health Care, and International Healthcare Berhad have partnered with local entities in Shanghai, Chengdu, and so on to build and/or operate hospital and dental facilities in China (“Healthcare Players Urged to Expand in China as Local Growth Slows,” Singapore Business Review, January 4, 2016, http://sbr.com.sg/healthcare/news/healthcare-players-urged-expand-in-chi...)

Vietnam’s General Statistics Office reported the country’s IFDI hit a record in 2015. It stated “there were over 2,000 FDI projects with a total capital of US$15.6 billion, along with another 814 projects expanding their investment to $7.2 billion by the end of 2015,” which represented an increase of 12.5 percent YOY. In 2015, South Korea was the biggest foreign investor, pouring in USD $2.67 billion. While there is a recognition foreign investment can help develop local supply chains, connect domestic firms to the outside world, and promote competitiveness, there also are worries about the heightened pressure on local firms (“Viet Nam Welcomes Record High FDI,” Viet Nam News, January 5, 2016, http://vietnamnews.vn/economy/280703/viet-nam-welcomes-record-high-fdi.html)

The State Bank of Viet Nam recently published a circular Circular 30/2015/TT-NHNN which states that “foreign credit institutions intending to contribute to establishing non-banking financial companies will be required to have a minimum US$10 billion of assets at the end of the previous year as of February 8.” Furthermore, these institutions “also have to operate profitably for three consecutive financial years prior to the year they file for licensing.” The Circular also identifies a number of capital, asset, and other requirements for domestic firms that intend to become “a founding member of a non-banking financial establishment” including financial leasing companies (“New Rules Laid out for Foreign Financiers,” Viet Nam News, January 5, 2016, http://vietnamnews.vn/economy/280702/new-rules-laid-out-for-foreign-fina...)

*The information compiled in the MNCs in the News digest is gathered from sources believed to be reliable, but the Wong MNC Center does not guarantee their accuracy. The content of the MNCs in the News digest does not necessarily represent the view of the Wong MNC Center, its Board of Directors, or its Advisory Board, but is intended for the non-commercial use of readers in order to foster debate and discussion and to facilitate and stimulate research.