Efic’s August edition of World Risk Developments reviews opportunities and risks for Australian exporters arising from latest economic and geopolitical developments across the globe.
The new common goods and services tax (GST) set to be introduced in India will be a landmark achievement, and a necessary first step in transforming its 29 states and 1.3 billion people into an efficient single market. Efic Senior Economist Cassandra Winzenried says the new streamlined tax laws will incentivize industry and widen the tax base by making tax avoidance harder, “because of this, the nationwide GST is expected to add up to two percentage points to growth.”
New bankruptcy laws have also been passed, which should reduce the time taken to wind up insolvent companies and recover assets from the defaulter.
Currently India scores poorly on the World Banks’s measure for ease of paying taxes and winding up insolvent companies, but Winzenried says the Modi government reforms will stand the country in good stead to reach its goal of making it into the top 50 business-friendly countries, “this will in turn make it easier for Australian exporters and investors to do business in India.”
Anti-government groups are reportedly behind mass bombings in popular Thai tourist areas. This comes days after constitutional amendments which will increase the military government’s authoritarian rule. Winzenried comments, “growth in Thailand has seen some positive movement with an average of 2.8% over the last 18 months. This is an improvement from 0.8% in 2014.”
But with tourism accounting for 20 per cent of the country’s GDP, the fresh round of political violence could weigh heavily on business confidence and tourist arrivals, in turn affecting growth.
Foreign direct investment in Thailand has seen a significant fall in the last 18 months. “Political uncertainty is a key factor here, particularly with the emergence of other lower cost and more politically stable investment destinations arising, such as Vietnam,” says Winzenried.
Other topics canvassed in this month’s edition include:
- South Africa—local electoral results show a protest vote against incumbent government;
- PNG—ailing public finances and disgruntled landowners complicate outlook; and
- Myanmar—still waiting for the detail
Read the full August edition of Efic’s World Risk Developments here.
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