Paper lanterns are released at an Asean-Japan meeting in Tokyo on December 17. For many countries in the region, the priorities in 2024 will be stability and continuity. Reuters
Paper lanterns are released at an Asean-Japan meeting in Tokyo on December 17. For many countries in the region, the priorities in 2024 will be stability and continuity. Reuters
Paper lanterns are released at an Asean-Japan meeting in Tokyo on December 17. For many countries in the region, the priorities in 2024 will be stability and continuity. Reuters
Paper lanterns are released at an Asean-Japan meeting in Tokyo on December 17. For many countries in the region, the priorities in 2024 will be stability and continuity. Reuters


Next year, Asian nations must do much more to build trust


  • English
  • Arabic

December 28, 2023

In 2023 and going forward into 2024, East and South-East Asia appears to be divided largely between two groups of countries: the first placing the greatest emphasis on political stability and continuity, with some forging unlikely alliances at home to exclude more radical elements from government, and the second binding themselves closer to a US that, under its current administration, seems incapable by choice or temperament of not acting in an unnecessarily antagonistic manner towards China.

In the first group, Cambodia has thus far managed a smooth generational handover, since Hun Manet took over as prime minister in August from his father Hun Sen, who had held the office since 1985. Hun Manet’s military and university education in the US and UK may mislead some into believing that he is likely to be more liberal than his father. In fact, he will probably steer a very similar course – which has, in any case, generated impressive growth over the last quarter-century – but his years spent in the West may make him better placed to navigate relations with the EU and others critical of the country’s human rights record.

Singapore elected a new president, Tharman Shanmugaratnam, in September. As a former deputy prime minister in the ruling People’s Action Party (PAP) government, he is perhaps the most qualified person to hold the mainly ceremonial position, while the finance minister, Lawrence Wong, prepares to take over as prime minister from Lee Hsien Loong possibly towards the end of next year. As always, the PAP has been handling these transitions ultra-carefully, under the belief that it only has to make one mistake for it to lose a general election for the first time, with the risk that a less financially responsible administration would undermine the foundations of the city-state they spent decades creating.

Philippine soldiers look at coast guard vessels near Thitu Island in the South China Sea on December 1. AFP
Philippine soldiers look at coast guard vessels near Thitu Island in the South China Sea on December 1. AFP

In Malaysia, Prime Minister Anwar Ibrahim has maintained his unity government, which brought together ethnic Malay and Chinese parties who have spent the past 40 years as bitter enemies. If progress on his reform agenda has not been quite as swift as his supporters would have liked as a result, the government itself is an example of the country’s diversity and good intercommunal relations, while racial chauvinists have been kept out of power.

Thailand’s election led to the emergence of Pheu Thai’s Srettha Thavisin as prime minister in August – the first time the populist party, which is viewed as a vehicle for former leader Thaksin Shinawatra and his allies, joined forces with the military-backed conservative parties to form a government. This was a significant compromise, as the military-royalist establishment has thwarted Mr Thaksin and his successors several times, via coups and legal cases, despite their regularly winning elections. This accommodation – which I urged in these pages in May – came at the cost of the unexpected winner of the parliamentary elections, the Move Forward party. But the latter is too progressive and reformist for the establishment to accept. While Pheu Thai supporters may be disappointed, the current administration came to power legitimately, and it will be a benefit if it breaks the cycle of coups that has troubled Thailand for too long.

East and South-East Asia may welcome input from outsiders, but in 2024 and beyond the region has no need of backseat drivers

Indonesia’s presidential election, to be held this coming February, also looks in part to be an exercise in continuity and stability. Prabowo Subianto, who has been defence minister under President Joko Widodo since 2019, is the current frontrunner – and has chosen the President’s eldest son, Gibran Rakabuming Raka, as his vice presidential running mate. Even Australia, which may not be in Asia but is in the Asia-Pacific, has prioritised stable relations with Prime Minister Anthony Albanese’s successful four-day “rapprochement” tour of China in November.

By contrast, the US and three of its treaty allies – South Korea, Japan and the Philippines, and a de facto ally, Taiwan – are part of an atmosphere of insecurity in the region. The trilateral summits between the US, South Korea and Japan, including at Camp David in August, may not officially be aimed at containing China, but they have a strong security component that belies any denials.

Japan’s premier is so unpopular that a headline in Asia Times this week read “How much longer can Kishida last?”, South Korea’s President Yoon Suk Yeol’s approval ratings fell as low as 27 per cent earlier this year, and US President Joe Biden’s have also been falling. Leaders whose longevity is in doubt do not contribute to calm in the region by appearing to prepare for a – totally unnecessary – war with China that senior American figures have been predicting could happen as early as 2025.

Taiwan’s presidential election in January could raise the stakes over the issue of the island’s independence, opposed by China, which views it as a renegade province, but which is an aspiration many US politicians have been encouraging – not least Mr Biden, who has ended the policy of “strategic ambiguity” over whether the US would come to Taiwan’s defence if China attempted reunification by force. Not only has Mr Biden said they would, he also said last year that “Taiwan makes their own judgments about their independence”.

All the countries in the region need to do much more to build trust. The ongoing clashes between Chinese and Philippine vessels in a disputed area of the South China Sea is one reason why Beijing would earn plaudits if it pushed hard for the long-awaited Code of Conduct in the sea to be finalised, along with its partners in the 10-member Association of South-East Asian Nations (Asean). Equally, all the littoral states will have to recognise that they have competing claims that can only be resolved by imaginative compromise. Asean will also have to be ready to step in if the civil war in Myanmar ends in the collapse of the military junta.

The lesson from the first group of countries is that prioritising stability and continuity is key. The lesson for the second group of countries comes from the experience of Ukraine – that the US will say they’ll support you “as long as it takes”, but that may well turn into “as long as we can”. East and South-East Asia may welcome input from outsiders, but in 2024 and beyond the region has no need of backseat drivers. It must be allowed to decide its destinies itself.

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Marathon results

Men:

 1. Titus Ekiru(KEN) 2:06:13 

2. Alphonce Simbu(TAN) 2:07:50 

3. Reuben Kipyego(KEN) 2:08:25 

4. Abel Kirui(KEN) 2:08:46 

5. Felix Kemutai(KEN) 2:10:48  

Women:

1. Judith Korir(KEN) 2:22:30 

2. Eunice Chumba(BHR) 2:26:01 

3. Immaculate Chemutai(UGA) 2:28:30 

4. Abebech Bekele(ETH) 2:29:43 

5. Aleksandra Morozova(RUS) 2:33:01  

BUNDESLIGA FIXTURES

Friday (UAE kick-off times)

Cologne v Hoffenheim (11.30pm)

Saturday

Hertha Berlin v RB Leipzig (6.30pm)

Schalke v Fortuna Dusseldof (6.30pm)

Mainz v Union Berlin (6.30pm)

Paderborn v Augsburg (6.30pm)

Bayern Munich v Borussia Dortmund (9.30pm)

Sunday

Borussia Monchengladbach v Werder Bremen (4.30pm)

Wolfsburg v Bayer Leverkusen (6.30pm)

SC Freiburg v Eintracht Frankfurt (9on)

Ten tax points to be aware of in 2026

1. Domestic VAT refund amendments: request your refund within five years

If a business does not apply for the refund on time, they lose their credit.

2. E-invoicing in the UAE

Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption. 

3. More tax audits

Tax authorities are increasingly using data already available across multiple filings to identify audit risks. 

4. More beneficial VAT and excise tax penalty regime

Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.

5. Greater emphasis on statutory audit

There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.

6. Further transfer pricing enforcement

Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes. 

7. Limited time periods for audits

Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion. 

8. Pillar 2 implementation 

Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.

9. Reduced compliance obligations for imported goods and services

Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations. 

10. Substance and CbC reporting focus

Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity. 

Contributed by Thomas Vanhee and Hend Rashwan, Aurifer

if you go
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The 12 breakaway clubs

England

Arsenal, Chelsea, Liverpool, Manchester City, Manchester United, Tottenham Hotspur

Italy
AC Milan, Inter Milan, Juventus

Spain
Atletico Madrid, Barcelona, Real Madrid

Company Profile:

Name: The Protein Bakeshop

Date of start: 2013

Founders: Rashi Chowdhary and Saad Umerani

Based: Dubai

Size, number of employees: 12

Funding/investors:  $400,000 (2018) 

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Our family matters legal consultant

Name: Hassan Mohsen Elhais

Position: legal consultant with Al Rowaad Advocates and Legal Consultants.

MATCH INFO

What: 2006 World Cup quarter-final
When: July 1
Where: Gelsenkirchen Stadium, Gelsenkirchen, Germany

Result:
England 0 Portugal 0
(Portugal win 3-1 on penalties)

MATCH INFO

Uefa Champions League semi-finals, first leg
Liverpool v Roma

When: April 24, 10.45pm kick-off (UAE)
Where: Anfield, Liverpool
Live: BeIN Sports HD
Second leg: May 2, Stadio Olimpico, Rome

Updated: December 30, 2023, 5:43 PM