• China is planning to seek full convertibility of its currency, and has made the commitment to open further its capital account during the course of this year. Also, insurance companies are to be allowed to invest overseas thanks to an easing of rules on outward FDI by local companies. China is also planning to liberalise its leasing industry, opening it to foreign investors. According to a new regulation for FDI in the leasing industry, which came into force on a trial basis on March 5, foreign investors will be allowed to deal with leasing and financial leasing as wholly foreign-owned companies.

 

  • Russia is likely to include new rules in the country’s updated law on natural resources, scheduled to be completed this year, that will not allow foreign companies to bid for licences in six major natural-resource projects unless they are majority Russian-owned. This law may be applied to other natural-resource projects in the future that are considered to be of strategic importance. Existing projects will not be affected by the new rules.

 

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  • Indonesia is planning to pass a new tax law in 2005 that will address the legal framework on business and personal taxation, as well as tax collection. The Ministry of Finance is also planning a new investment law that will reduce administrative barriers to doing business in the county.

 

  • India has liberalised FDI rules for participation in real estate and construction (commercial and residential). It has also reduced the minimum size of plots on which construction will be allowed by foreign firms.

 

  • Cambodia is set to resume awarding land concessions, despite the absence of an adequate legal framework, in its quest to attract FDI. The concessions had come to a halt last year because of reported violations.

 

  • The Philippines has upheld with finality the constitutionality of the Philippine Mining Act of 1995 (Republic Act 7942). This important development marks a reversal of an earlier ruling according to which foreign ownership under financial or technical assistance agreements and mineral processing permits was declared unconstitutional.

 

  • South Africa is planning to reduce the corporate tax rate from 30% to 29% in the 2006 fiscal year. The effective tax rate in the country, however, ranges between 13% and 16% and can be as low as 5% in some sectors.

 

  • The Solomon Islands has agreed to become a full member of the Multilateral Investment Guarantee Agency by ratifying the MIGA Convention. This move is expected to increase investor confidence, acting as a catalyst to attracting FDI.

 

  • Japan has postponed enforcing legislation to make takeovers and acquisitions in the country easier for foreign investors. Specifically, it has agreed not to enforce a change in its Commercial Code allowing foreign investors to use stock traded outside Japan to pay for takeovers in Japan until 2007.

 

  • The Gambia plans to enact legislation on competition policy in 2005, aimed at protecting consumer welfare and implementing fair trade practices. The law is expected to boost foreign investor confidence.

 

  • Turkey has overturned a law passed in 2003 facilitating foreign purchases of holiday properties along its Mediterranean coast. New regulations governing holiday property purchases by foreigners are expected to be drafted over the next three months. The new regulations will not apply to existing owners of holiday properties.

 

  • Germany is planning to reduce corporate taxation from 25% to 19%. This will lower the effective corporate tax rate to about 32% from 38%, a rate that includes local taxes and a surcharge for rebuilding eastern Germany.

 

  • Bolivia is debating a revised Energy Bill, which would tax foreign gas companies at a rate of 32% (in addition to a rate of 18% in royalty payments).

 

  • New bilateral investment treaties (BIT), double taxation-avoidance treaties (DTT) and free trade agreements (FTA) have been drawn up between:

     

    • Iran and Venezuela (FTA)
    • India and Slovenia (DTT)
    • Brazil and Venezuela (DTT)
    • Barbados and Botswana (BIT)
    • Guatemala has ratified the Central American Free Trade Agreement
    • India and Mercosur have signed an agreement to begin operation of the Preferential Trade Agreement

     

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