A Change of Guard

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Saturday 13 September 2008

KEY REFORMS IN EAST ASIA AND THE PACIFIC

CAMBODIA (global ranking 135) introduced a new secured transactions law that made it the world's top reformer in getting credit in 2007-08. The new law allows movable property to be used as collateral. And an online unified collateral registry is now in operation. In addition, Cambodia adopted the 2007 Bankruptcy Law, its first ever regulating the bankruptcy of private enterprises. The law introduces a reorganisation procedure to restructure insolvent companies.

- CHINA (83) made getting credit easier by expanding the range of assets that can be used as collateral through a new property law in October 2007. Accounts receivable and a combination of assets can now be used to secure a loan. On other fronts:

Beijing tightened rules on enforcement of judgments, making it harder for debtors to prevent enforcement.

FIt eased the tax burden on businesses by reducing the corporate income tax rate from 33.3% to 25% and unifying accounting methods for tax deductions.

FA new labour contract law has had a mixed impact. The new law empowers workers and recognises their right to paid annual leave. But it also makes firing workers harder through priority rules for redundancy dismissals and increasing dismissal costs. Flexibility of working hours was also reduced.

- HONG KONG (4) granted trustees more power in bankruptcy proceedings, expected to make liquidation procedures more efficient. Under 'Be the Smart Regulator', a broad initiative to improve business licensing, the government reduced the time to deal with construction permits by 36 days and eliminated eight procedures related to inspections and pre-approvals.

- INDONESIA (129) made getting credit easier by guaranteeing the right of borrowers to inspect their credit data at the Bank of Indonesia, helping to improve the quality and accuracy of the information financial institutions use in assessing the risk profiles of borrowers. Indonesia made business startup faster but also almost doubled the minimum capital requirement.

- MALAYSIA (20) abolished the real property gains tax and reduced the corporate income tax rate to 26%. A further reduction to 25% is planned for next year. The reform also introduced a single-tier tax system, in which profits are taxed only after dividends are exempted. Amendments to the Companies Act simplified business registration and reduced the time required by introducing online filing of registration documents.

- THE PHILIPPINES (140) upgraded the risk management and electronic data interchange system for customs, reducing the time to import by a day.

- SINGAPORE (1) sped the process for dealing with construction permits, reducing the time from 102 days to 38. Almost 99% of applications are now submitted electronically through the Construction and Real Estate Network (Corenet). Singapore also simplified the online process for business startup, cutting a procedure and reducing the time required by a day.

- TAIWAN (61) amended its civil code to make secured lending more flexible. Since September 2007, parties to a mortgage or pledge agreement have been allowed to set the loan amount as a maximum line of credit.

- VIETNAM (92) has upgraded its public credit registry, which now keeps information on record longer, providing financial institutions with more data on the repayment history and debt capacity of prospective borrowers.

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