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    The Week in Asia

    Published On: 4 June 2021

    Asia House Advisory takes a look at the top developments in Asia this week affecting trade, investment and public policy.

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    FRIDAY 4 JUNE 2021

    People’s Bank of China increases statutory reserves in bid to strengthen liquidity management

    On Monday, China’s central bank announced that it will increase the FX reserve requirement ratio for domestic financial institutions from five to seven per cent, effective from June 15. According to the People’s Bank of China, this was ‘in order to strengthen foreign exchange liquidity management’. The increase constitutes the most significant increase by China in statutory reserve requirements since the 2008 global financial crisis.

    CPTPP members agree to UK accession talks

    The UK’s proposed accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) came a step closer this week, when all 11 member nations agreed to accession negotiations. The UK formally applied to join the trading bloc in February as part of its post-Brexit strategy to deepen trade relations with markets across the Asia-Pacific region. The UK’s entry to the CPTPP would remove existing tariffs on 95 per cent of goods with members. Talks are scheduled to commence over the coming weeks.

    India’s economy expands by 1.6 per cent in first quarter of 2021

    Recently released data from India’s Statistics Ministry shows that the country’s economy expanded by 1.6 per cent in the first quarter of 2021 when compared with the same period in 2020. The data indicates that growth was driven by the manufacturing sector, domestic demand, and state spending. India continues to struggle to control the COVID-19 crisis, with daily case numbers at around 200,000. Economic growth could be at risk given uncertainty around the length of the second wave. A number of global credit rating agencies, including Moody’s Investor Service, have lowered their growth forecasts given these risks.

    New foreign ownership laws come into effect in the UAE

    On June 1, new laws came into effect allowing foreign investors to hold a 100 per cent stake in companies throughout the UAE (except for strategic sectors such as oil, gas, and defence). Previously, full foreign ownership was only permitted within the UAE’s freezones and select sectors. Otherwise, foreign investors could only own a maximum 49 per cent stake in a business, with the majority stake being held by a local Emirati partner. The liberalisation is designed to encourage inward investment into the UAE as the country recovers from the COVID-19 crisis, Dubai Media Office stated that since the announcement, 59 foreign investors had taken steps to utilise the new law. HE Mansoor Abulhoul, UAE Ambassador to the UK, will discuss this and other recent initiatives to attract foreign investment into the UAE when he briefs Asia House Corporate Members on 10 June. Find out more

    Israeli opposition parties broker coalition

    Israel’s longest-serving Prime Minister, Benjamin Netanyahu, could soon be out of power following an agreement between a several opposition parties. Following two months of negotiations after Israel’s inconclusive election on 23 March, Yair Lapid, from the centrist Yesh Atid party, has brokered an opposition coalition that includes unlikely partners, such as the pro-settlement and nationalist Yamina party, led by Naftali Bennett, and the Islamist Ra’am party. Under the agreement’s, Bennet would be Prime Minister until 2023, before handing over power to Lapid. The government-in-waiting must be approved by a majority in the Knesset with a vote is expected over the coming days. The opposition bloc holds a slender majority of 61 within the 120 Knesset members suggesting that Netanyahu remaining in power may depend on defections. A failure to form a new government will prompt Israel’s fifth election in just over two years.

    NEXT WEEK IN ASIA

    The heads of the G7 nations and EU representatives will meet between 11-13 June: The 47th Leaders summit is hosted by the UK; the agenda will likely address the pandemic, vaccine rollouts and climate change.

    An APEC meeting for Ministers Responsible for Trade (MRT) will take place on 5 June: It marks the first ministerial session and is set to focus on how trade can facilitate recovery from COVID-19; accelerated access to vaccines via improved trade procedures is a possible outcome of the talks.

    COVID-19: ASIA ROUND UP

    HONG KONG: Following a period of slowing vaccine uptake amid public hesitancy over safety, numbers of inoculations have surged over the past week after a group of property tycoons announced a lottery for residents aged 18 and over who had received both doses of their COVID-19 vaccine.

    INDIA: An anti-body treatment used for patients suffering mild to moderate symptoms of COVID-19 has been given emergency use approval; made by Eli Lilly and Company, the drug will be an additional resource for India as it continues to tackle the current wave of COVID-19 cases.

    AUSTRALIA: An Australian court has rejected a challenge to the federal government’s ban against its citizens leaving Australia; Victoria state announces a seven-day lockdown between 27 May and 3 June.

    THAILAND: The government has unveiled a stimulus package worth US$4.5 billion in a sign of bolstered efforts to address the economic impact of the COVID-19 pandemic; the Finance Ministry stated that the stimulus package would be aimed at providing relief for those worst affected by the pandemic, while also supporting domestic growth.

    These COVID-19 insights are taken from Asia House Advisory’s focused monitoring service, one of the ways in which Asia House is providing analysis on economic and public health policy measures taken by governments across Asia and the Middle East. Please contact advisory@asiahouse.co.uk for further details on this and our other advisory services.

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