Commentary

Coface conducted a corporate credit risk management survey in China, in the fourth quarter of 2010. Over 1000 companies in mainland China participated in the survey. It reveals that great improvement in both credit sales and overdue payment among mainland China companies has been observed in industries such as building & construction, textile and clothing, automotive/transportation and household electric/electronics, which is largely due to the government’s stimulus package after over 1 year’s implementation. But this might not necessarily be good news for Singaporean companies intending to extend their businesses to mainland China. The survey also revealed enterprise’ concern on 2011 economic outlook. Thanks to the high cost of raw material, industries such as building and construction, textile and clothing might face difficulties in the coming year. In the meanwhile, on the threshold of a new Five-Year Plan, the Chinese government will implement a new stimulus package, subsequently lead to a shift of the preferential policies among different industries, making the investment landscape in China a different story. The 12th Five-Year Plan will be implemented in 2011. More than 4 trillion Yuan will be spent in the coming five-year period to provide financial support, including tax cuts and exemptions, to nine key industries - new energy, new materials, information technology, biology and new medicine, energy conservation and environmental protection, aerospace, marine, advanced manufacturing, and hi-tech services industries. The government aims to shift China from “the global factory” to “the global market”. Therefore, the new plan accents on creativity and advanced technology, to help Chinese companies depend less on foreign technology. Companies with a focus on advanced technology rather than the traditional outsourcing manufacturing model will enjoy more benefits from the new Five-Year Plan.

The proliferation of mobile devices and the growth in online tools and networks has been well documented, and the financial services industry has not been immune to this trend with an estimated 400 million people utilizing some form of mobile financial transaction within the next three years. Given this aggressive growth in digital financial services, l institutions that are embracing and shifting to digital channels for reasons of cost and better customer management must make security the centerpiece of any successful digital strategy.

Companies across Asia are seeing significant increases in the amount of cash they are holding.

According to a recent joint KPMG and Oracle survey of executives from financial institutions across the region, the recently proposed reforms Basel III are likely to have a significant impact on banks in Asia-Pacific. About three in four, or 76 percent of respondents said regulatory reforms would have an impact on their business. More than half said these regulatory reforms would likely mean changes to their banks' business models. Almost half or 48 percent expect their banks would need to raise additional capital.

Rebalancing growth

As part of the Australian Government’s review of the taxation treatment of collective investment vehicles, the Board of Taxation has issued a comprehensive discussion paper for comment on how to enhance the competitiveness of the tax regime for Australian investment funds.

Schroders and Legal & General Investment Management are actively involved with a number of brokers in developing a local confirmation-affirmation allocation capability over SWIFT

What a year 2010 has been, and for very different reasons for different parts of the global landscape.

In October 2010, KPMG wrote about the new agenda for Islamic finance institutions globally and three months on, we would like to examine how the industry has fared specifically on a number of areas that were discussed.

The Year of the Rabbit will be a year with quite a lot of attention on accounting standards, particularly financial instruments accounting.

Businesses’ “three lines of defense” may not be strong enough to withstand the next lapse of controls.

In the financial services industry, the business agenda has firmly moved from survival and cost containment to growth, as firms look to rebuild their earnings models.

The Chinese banking sector continues to flourish and the number of hedge fund investors is increasing rapidly in the country on the back of its strong economic growth.

Back in the 2005, the Singapore Companies Act was amended to allow companies to hold its own shares in treasury.

Since the global financial crisis, tax authorities globally have been carefully monitoring compliance risks from planning activities associated with the use of tax losses by banks.

Several foreign private equity investors set up their investment vehicles in China in the form of "foreign-invested partnerships".