Restive regions may yet spell trouble for China's Gwadar plan


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sino-pak relations
The proposed $18 billion (Dh66bn) economic corridor linking Pakistan's Gwadar port on the Arabian Sea and Kashghar in China's northwestern Xinjiang province by road, rail and an energy pipeline, could be described as a "game changer" for the whole region.
The two countries recently inaugurated the China-Pakistan Economic Corridor Secretariat in Islamabad, where they also discussed laying an oil pipeline from Gwadar in southwestern Balochistan to western China. The proposed pipeline might eventually be connected with Iran.
The economic corridor will not only enhance trade between the GCC and south-west Asia, but will also enable China to secure energy routes through Gwadar, a strategic seaport located near the Strait of Hormuz, itself a gateway for a third of the world's traded oil.
Gwadar is important to China for both commercial and defence purposes. The port will ultimately give China an entry point into the Arabian Gulf with the aim of widening its geopolitical influence and military presence in the region.
From a geopolitical and strategic viewpoint, operational control of Gwadar port, which was developed by China, is a win-win for Beijing.
Its interests are served by the access the port gives the Chinese navy to the Indian Ocean's sea-lanes, as well as offering an alternate land-based route for crude imports. Gwadar may yet also turn into a transit terminal for Iranian and African crude oil imports for China.
However, China's presence in Gwadar raises concerns in both New Delhi and Washington.
The US sees the development of Gwadar port as part of China's strategy of building a "string of pearls" presence on the Indian Ocean. India fears the port will soon become the Chinese navy's key regional staging post.
The US has always viewed the growth of Sino-Pakistan strategic ties with suspicion. It has been unhappy over the rapidly growing power and influence of China in Asia. The US military presence in Afghanistan, Pakistan, Uzbekistan, Kyrgyzstan and Iraq is believed, in part, to be aimed at containing China in Central Asia.
China has expedited the Sino-Pakistan corridor project at a time when the US is set to withdraw its troops from Afghanistan. The port may effectively be used to cap US influence in the Arabian Sea.
After construction of the proposed rail, road and pipeline projects between China and Pakistan, Gwadar port will handle most of the oil imports to China.
China wants to secure energy supplies that can be shipped overland since the US navy currently exerts great control over the seas and could interrupt Chinese energy flows.
Competing for regional hegemony, China and India are already locked in an energy game.
India controls no choke point on the coastline of the subcontinent through which international shipping must pass, while Gwadar port would enable China to exert influence over the strategically important sea-lanes of the Gulf.
New Delhi feels that the port will have serious strategic implications for India. Besides Gwadar, China has also funded Hambantota port in Sri Lanka and Chittagong port in Bangladesh. What haunts India is the perception of its virtual encirclement by China.
Under the "string of pearls" strategy, China actually wants to set up outposts located along its energy lines across the globe to monitor and safeguard energy flows.
Beijing is likely to use Pakistan as a pipeline corridor, bringing oil and gas from the Middle East to China. China has also shown interest in joining the US$7.4 billion Iran-Pakistan gas pipeline, a project that faces stiff opposition from the US.
If China joins the project, the pipeline from Pakistan's south to the Khunjerab Pass, linking the two countries, would be raised until it crossed the pass at 15,000 feet, thereafter more than half of the length would be in descent.
For an ambitious China, getting operational control of a port near the Strait of Hormuz is nothing less than a strategic win.
However, the volatile regions surrounding the port and the province at the far end of the corridor may yet convert it into China's great strategic mistake.
Balochistan and Xinjiang are the largest, least developed and restive provinces in the two countries.
China wants to develop Gwadar as a gateway port for Xinjiang, which is also called Eastern Turkestan, where the East Turkestan Islamic Movement (ETIM), a militant Muslim separatist group, has been involved in many terror attacks on China.
Balochistan also faces a separatist insurgency. Seven security personnel were killed on July 27 in an act of terrorism in Gwadar.
The established connection between Pakistan-based terrorist groups with Muslim separatists in western China would continue to be a source of worry for Beijing. Last year, the ETIM leader Emeti Yakuf was killed in a US drone attack in Pakistan's northwestern tribal belt along Afghanistan border.
China's prospects for strategic access to Central Asia through the economic corridor are however muddied by the worsening security situation in Balochistan and Xinjiang.
The uncertain security situation may also discourage Beijing from importing Iranian gas through a proposed pipeline. If that was the case, the Gwadar port linking the two restive regions is likely to trade terror, instead of goods.
Syed Fazl-e-Haider is a development analyst in Pakistan. He is the author of several books, including The Economic Development of Balochistan

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

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Global Fungi Facts

• Scientists estimate there could be as many as 3 million fungal species globally
• Only about 160,000 have been officially described leaving around 90% undiscovered
• Fungi account for roughly 90% of Earth's unknown biodiversity
• Forest fungi help tackle climate change, absorbing up to 36% of global fossil fuel emissions annually and storing around 5 billion tonnes of carbon in the planet's topsoil

TCL INFO

Teams:
Punjabi Legends 
Owners: Inzamam-ul-Haq and Intizar-ul-Haq; Key player: Misbah-ul-Haq
Pakhtoons Owners: Habib Khan and Tajuddin Khan; Key player: Shahid Afridi
Maratha Arabians Owners: Sohail Khan, Ali Tumbi, Parvez Khan; Key player: Virender Sehwag
Bangla Tigers Owners: Shirajuddin Alam, Yasin Choudhary, Neelesh Bhatnager, Anis and Rizwan Sajan; Key player: TBC
Colombo Lions Owners: Sri Lanka Cricket; Key player: TBC
Kerala Kings Owners: Hussain Adam Ali and Shafi Ul Mulk; Key player: Eoin Morgan

Venue Sharjah Cricket Stadium
Format 10 overs per side, matches last for 90 minutes
When December 14-17

Closing the loophole on sugary drinks

As The National reported last year, non-fizzy sugared drinks were not covered when the original tax was introduced in 2017. Sports drinks sold in supermarkets were found to contain, on average, 20 grams of sugar per 500ml bottle.

The non-fizzy drink AriZona Iced Tea contains 65 grams of sugar – about 16 teaspoons – per 680ml can. The average can costs about Dh6, which would rise to Dh9.

Drinks such as Starbucks Bottled Mocha Frappuccino contain 31g of sugar in 270ml, while Nescafe Mocha in a can contains 15.6g of sugar in a 240ml can.

Flavoured water, long-life fruit juice concentrates, pre-packaged sweetened coffee drinks fall under the ‘sweetened drink’ category
 

Not taxed:

Freshly squeezed fruit juices, ground coffee beans, tea leaves and pre-prepared flavoured milkshakes do not come under the ‘sweetened drink’ band.

Mobile phone packages comparison
Essentials

The flights

Etihad (etihad.ae) and flydubai (flydubai.com) fly direct to Baku three times a week from Dh1,250 return, including taxes. 
 

The stay

A seven-night “Fundamental Detox” programme at the Chenot Palace (chenotpalace.com/en) costs from €3,000 (Dh13,197) per person, including taxes, accommodation, 3 medical consultations, 2 nutritional consultations, a detox diet, a body composition analysis, a bio-energetic check-up, four Chenot bio-energetic treatments, six Chenot energetic massages, six hydro-aromatherapy treatments, six phyto-mud treatments, six hydro-jet treatments and access to the gym, indoor pool, sauna and steam room. Additional tests and treatments cost extra.

Profile of Tarabut Gateway

Founder: Abdulla Almoayed

Based: UAE

Founded: 2017

Number of employees: 35

Sector: FinTech

Raised: $13 million

Backers: Berlin-based venture capital company Target Global, Kingsway, CE Ventures, Entrée Capital, Zamil Investment Group, Global Ventures, Almoayed Technologies and Mad’a Investment.

Key facilities
  • Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
  • Premier League-standard football pitch
  • 400m Olympic running track
  • NBA-spec basketball court with auditorium
  • 600-seat auditorium
  • Spaces for historical and cultural exploration
  • An elevated football field that doubles as a helipad
  • Specialist robotics and science laboratories
  • AR and VR-enabled learning centres
  • Disruption Lab and Research Centre for developing entrepreneurial skills
Why it pays to compare

A comparison of sending Dh20,000 from the UAE using two different routes at the same time - the first direct from a UAE bank to a bank in Germany, and the second from the same UAE bank via an online platform to Germany - found key differences in cost and speed. The transfers were both initiated on January 30.

Route 1: bank transfer

The UAE bank charged Dh152.25 for the Dh20,000 transfer. On top of that, their exchange rate margin added a difference of around Dh415, compared with the mid-market rate.

Total cost: Dh567.25 - around 2.9 per cent of the total amount

Total received: €4,670.30 

Route 2: online platform

The UAE bank’s charge for sending Dh20,000 to a UK dirham-denominated account was Dh2.10. The exchange rate margin cost was Dh60, plus a Dh12 fee.

Total cost: Dh74.10, around 0.4 per cent of the transaction

Total received: €4,756

The UAE bank transfer was far quicker – around two to three working days, while the online platform took around four to five days, but was considerably cheaper. In the online platform transfer, the funds were also exposed to currency risk during the period it took for them to arrive.