February: Business Activity Rises.
February, 2010
Saint Petersburg, Hong Kong, … What’s next?
Despite the consequences of the global economic crisis, «Midland Consult» constantly expands its network of the offices and improves the services quality. During the year 2009 this international consulting company not only managed to stabilize the work of its offices, but also to open representations in Saint - Petersburg and Hong Kong. In January 2010 Natalia Varyonova, Russian-speaking manager has started to work at the Panama office of Midland. Now clients from the CIS countries addressing the Panama office of Midland, can get consultations in Russian. In March 2010, in Nicosia the International seminar for the Cyprian auditors, accountants and lawyers will be held. Representatives of "Midland" from Panama, Moscow and Hong Kong will tell the Cypriots about advantages and possibilities for the businessmen working with the international companies of these and other jurisdictions. The seminar will take place at Hilton hotel, Nicosia, on March, 17th from 9.00, followed by a cocktail party and a meeting of colleagues in the consulting business.
The President of Cyprus on Cyprian Shipping Chamber.
During 20 years since Cyprian Shipping Chamber was formed, a lot has been done for the development of this kind of international activity, - the Cyprian president D. Christophias told at a meeting in February. Besides economic effect, there is also a political one. Despite the global economic crisis a huge number of merchant ships were registered under the Cyprian flag, being one of the five world major fleets. New tax rules related to the new European Union requests, will promote further development and crisis overcoming in this area of economy, the president of Cyprus declared. Midland Consult participates in this kind of activity, excluding shipping. Company services include registration of a vessel under the flag of Cyprus, registration and cession of rights on vessels. A vessel registered under the flag of Cyprus, should belong to a Cyprus company. According to the marine law, a vessel can be registered under the flag of Cyprus under the following requirements: More than half of the shares of the vessel should belong to the Cyprian citizens or citizens of the EU countries who if needed can nominate an authorized representative in Cyprus. 100 % of shares of the vessel should belong to corporations abiding the legislation of Cyprus and have a registered office in its territory, or carry out its activity according to the legislation of other EU countries and have a registered office or major place of activity in the EU territory. Ship owners – not residents of Cyprus, wishing to register a vessel under the Cyprus flag, should found a Cyprian company which later will charter this vessel or will acquire it in its name. As a rule, it is a shipping company limited to shares which has an authorized capital stock at a rate of Euro €1,000, divided in 1000 shares, each share of €1. The annual payment depends on the tonnage and the age of the ship.
Republic of Cyprus – main investor to Krasnoyarsk region.
In 2009 Cyprus headed the list of foreign states making largest investments into the economy of Krasnoyarsk region. In January-September of the last year 240,6 million dollars were directed to the region from outside Russian Federation. Inland state share constituted 92,9 million dollars or 38,6 percent of the total amount. Direct investments of Cyprus to Krasnoyarsk region have constituted 68 million dollars. Second place for this region investments belongs to British Virgin Islands - 67,6 million dollars, third is Great Britain - 50 million dollars. For comparison, in 2008 Krasnoyarsk region received just 3,7 billion dollars of investments.
Singapore introduces OECD international standards in February.
On February, 9th Singapore introduced the international standards of tax information interchange pursuant to the Organization for Economic Complementation and Development decision. The introduction of new provisions will allow the internal revenue agency of Singapore to disclose the information on demand of their foreign colleagues, including bank secret which was absolutely inaccessible before. It concerns internal revenue services only of those countries with which Singapore has an Agreement for double taxation avoidance. Such Contracts are signed (but are not ratified) with Austria, Australia, Denmark, Mexico, Slovenia, Finland, the Netherlands, Great Britain, Bahrain, France, Georgia, Norway, Brunei, Malta and Qatar.
Russia takes the third place in Europe for its inflation rate.
The State committee of the financial monitoring published this message on the site of the Ukraine government. Despite 7 years of active work of the Ukrainian government and long-awaited acceptance of the new base law in past November, Ukraine is among 25 countries which have a big chance to appear outside civilized financial world & foot the bill of all the sanctions which will be applied by the world countries on fulfillment of FATF requirements », - the message tells. It is specified that in the end of January, 2010 a controlling group on the international cooperation from FATF will estimate the final statements of certain countries and will defy the list of highly-risk jurisdictions that will be filed for the approbation of the FATF plenary meeting to be held on February, 15-19th, 2010.
Hong Kong updates the companies act.
Following the results of the past year Russia has taken the third place in Europe for its rate of inflation, having dropped forward Ukraine and Belarus. Growth of consumer costs in Russian Federation has constituted in 2009 8,8 %, in Belarus – 10,1 %, and in Ukraine – 12,3 %.
As informs Eurostat, average rate of inflation in the European Union countries during last year constituted 1,4 %.
In December of 2009 among these countries the greatest gain of consumer costs was marked in Belarus - 1,3 %, in Ukraine - 0,9 %, in Germany - 0,9 %. In these European countries reduction of prices was observed against previous month. Thus, in the Netherlands consumer costs for one month have decreased 0,7 %, in Latvia, Ireland, Slovenia and on Cyprus - 0,4-0,5 %. Following the results of last December consumer costs of the goods and services for one month have increased in Russia 0,4 % (averagely in the European Union countries it was 0,2 %).
Among the European countries the greatest gain of consumer prices for food compared to the previous month was observed in the Czech Republic (+1,7 %) and Bulgaria (+1,1 %). At the same time in a number of EU states in December 2009 there was noted a decrease in consumer prices for food. Mostly food prices lowered in Cyprus (-1,4 %), Malta (-1,2 %), in Austria, Greece, Denmark, Slovenia (-0,5-0,6 %). During 2009 in many states of the EU the downward trend of prices for food was traced. From the beginning of 2009 the prices for products on the average became more low in Ireland (-7,9 %), Latvia (-7,1 %), Estonia (-6,9 %), Slovakia (-5,6 %), Portugal (-5,3 %).
In Russia in December the price for food products has grown on 0,6 % (in the EU countries - on the average on 0,1 %), in the beginning of the year - on 4,9 % (in the EU countries - have decreased on 1,0 %).
According to the preliminary data, inflation in Russia following the results of the past year has constituted 8,8 %, In the middle of December Ministry of economic development and trade has essentially lowered the forecast of inflation in Russia for 2010ã. - to 6,5-7,5 %. The forecast of inflation for 2011 is about 6-7 %, for 2012 - to 5-6,5 %.
Greece seeks for someone to buy its debt outside Europe.
The government of Greece intends to find buyers of its sovereign debt among institutional investors outside the European Union., - declared the deputy Minister of Finance of the country Philippos Sakhinidis. “Till now the Greek state bonds were purchased basically by investors from the EU or those who are presented at the London stock exchange. Now we take the lead search of investors outside the EU», — he told. The day before the Prime Minister of Greece Georgios Papandreou disclaimed the information that the country carries on negotiations with China for sale of a part of the debts. Sakhinidis noticed that the Minister of Finance of Greece Georgios Papakonstantinou will depart to a trip to Asian countries for negotiations with potential investors in the Greek government stocks. Sakhinidis also underlined that the information on negotiations of Athens and Beijing concerning purchase of debts of 25 billion euro is not true. At the same time, for economic rescue of Greece, the European Union is ready to implement a number of measures and to render the essential help to this country. But Greece should be ready as these measures aimed to reduction of the budget gap, could turn out to be insufficient and the country should strengthen the anti-recessionary program. Such decision was made in February by the EU Ministers of Finance. Greek authorities have immediately presented such program. It provides improvement of tax collecting systems, expenditure cut at the expense, freezing of salaries in public sector, and also attraction of investments and realization of structural reforms. It only will become clear in the middle of March whether these measures will be sufficient, when program realization will be analyzed by the Euro group. Athens faces an uneasy problem –to lower deficiency of treasury on 4 % from present 12,7 % of gross domestic product this year . And in 2012 the indicator should not exceed 3 %.
In 2009 Russia lost more than billion rubles because of economic crimes.
In 2009 the damage from economic crimes in Russia has grown 7,5 times and has constituted more than one billion rubles. This number was announced at a meeting following the results of work of the Ministry of Internal Affairs for the last year. During the past year in the framework of suppression of economic crimes by law-enforcement bodies total property valued over 89 billion rubles was arrested.." In 2009 almost 9 thousand crimes related to the legalization of property and money sources, acquired by a criminal way were cleared.. Criminal cases for almost 7 thousand of such crimes are directed to court, and about 2 thousand persons are involved", — press-service of the Ministry of Internal Affairs informs. Most part of criminal cases is still detected in the financial-credit sphere and the consumer market. Last year investigating agencies were investigating 424 criminal cases of raiders, 216 of them only in Moscow. Over 39 thousand facts of assignment of budgetary funds or waste were cleared last year. The second prevailing kind of malfeasances — bribery. In 2009 1600 bribery cases were directed to the courts trials. In the autumn of 2009 Russia was recognized as the champion among 50 countries by the number of economic crimes. The most wide-spread kinds of such crimes in Russia are misappropriation of assets, and also bribery and other kinds of corruption. Russia in the rating of economic crimes is followed by Kenya (67 percent) and the Republic of South Africa (62 percent). The lowest level of economic criminality is established in Japan (9,6 percent), Hong Kong (13 percent) and the Netherlands (15 percent).
The number of living allowance recipients in Tallinn has trebled.
In January in Tallinn 3,6 million krones (230.770 Euros) of living allowance were paid that exceeds the January, 2009 level three times. – Tallin city hall informed early in February, noticing that in 2009 the allowance was received by 641 Tallinn families, and in January, 2010 – by 1.797 families. The number of the unemployed Talliners who receive benefits has increased 4,4 times as well. In January, 2009 in such families there were 257 children, and in January, 2010 - 729 that is also 3 times more. An Estonian deputy of Euro Parliament representing a centrist oppositional party declared in January that, claiming its main aim – to introduce Euro the government of Estonia forgets about such "trifles", as 130 thousand unemployed and 90 thousand people deprived of medical insurance. Estonia holds one of the last places in European Union for low social protection of the citizens.
Russia intends to harden the cooperation with Hong Kong.
Russia and Hong Kong face the necessity of strengthening bilateral cooperation not only in trade and economics, but also in humanitarian sphere. It was declared in February by the Minister of Finance of the Russian Federation Alexey Kudrin following the results of a meeting with a management of this special administrative area/SAA/China. The impulse, as he said, will be given by signing this year of a number of agreements on mutual cancellation of visa requirements. It is supposed that citizens of Russian Federation and permanent residents of SAA Hong Kong on a mutual basis will have an opportunity to make visa-free trips for the term up to 14 days." We also have discussed finalizing preparation of the agreement of double taxation avoidance ", -A.Kudrin noted. Besides he said that he considers perspective the use of national currencies in commercial deals between Russia and China. “I think, it is an interesting topic to be studied", - he told. At the same time the head of the Ministry of Finance explained that unlike yuan ruble is already a convertible currency." However after some time the Chinese currency will become convertible as well & very attractive taking into account the big share of the Peoples Republic of China in the world trade ", - A.Kudrin told. Such national currencies trade exchange experiments of Russia & China have been carried out since 2003 only in frontier zones. According to experts, it would be expedient to parties to expand this practice to minimize the consequences of the world financial crisis and to protect themselves from fluctuations of unstable American dollar. Still the idea is broken by currency exchange regulation of China. It is necessary to notice that with development of trade and economic ties with China, the Hong Kong representation of «Midland Consult » opens bank accounts, including, in the Chinese currency – yuans.
Russian economy starts repression.
The Russian economic climate was just one apple away from being recognized as repressive one.
Russia has taken 143rd place in the rating of economically free countries of the world under the version of American Heritage Foundation together with Wall Street Journal. Compared to the last year Russia raised three lines in the list, but has thus lost 0,5 points and having 50,3 points could hardly keep "mainly not free" countries statues as the countries having a rating less than 50 points, according to the research standards, are considered as "repressive". Among the most free countries of the former USSR in 2009 there was Estonia which has taken 16th place in the world. Georgia has improved its result lifting to the 26th place, Lithuania became 29th, Armenia – 38th, and Latvia has closed top-50. Belarus has taken 150th place, Ukraine-162nd, leaving behind only Turkmenistan. The leader of the rating is Hong Kong winning in a number of other researches as well. It gained 89,7 points. Singapore and Australia follow it. From G7 countries only Canada managed to get in the list of economically "free" countries, having gained more than 80 points.
The economy of Hong Kong will grow 4-5 % in 2010.
The Hong Kong University published its report in which it has corrected the forecast of economic growth rate of Hong Kong. So, it predicts 4-5 % GDP growth in 2010, in particular, growth in the first quarter will constitute 5 %.
Under the university’s forecast, growth of consumption by Hong Kong population in the first quarter of this year will constitute 4,2 %, the rate of unemployment will decrease to 5 %, the rate of inflation will constitute 0,7 %, and by the end of the year can reach 2 %.
At the same time, economists of Hong Kong still have not calculate how the introduction of new tax information exchange rules subject to the OECD standards requirements will influence the growth rates of the Hong Kong economy. The government of Hong Kong has passed this issue to be approved by the Legislative Council and the decision should be made in the nearest future.
Real estate in Panama is always profitable.
Real estate purchase in Panama has various advantages. Among them - remoteness or affinity to the city, a favorable climate, various forms of payment and building types, pure environment. Property acquisition in Panama is accompanied by following moments. First, it is possible to obtain citizenship and the Panama passport automatically that ensures free entry to the majority of the countries of the world. Second, the loyal tax legislation: many buildings are released of tax on property for 20 years. Third, effectively functioning credit granting system. To receive a credit for a foreigner it is just easy as for a native person, one only needs to confirm the creditability status. Despite the financial crisis in the countries of Europe and the USA, Panama now remains one of the most perspective points for long term investments. . In 2006 the government of Panama declared extension of the Panama channel. Nowadays the work is in full swing. Today Panama has turned to be one of the most important financial and business centers. There is the greatest “duty-free” zone in the city of Colon. The quantity of tourists visiting Panama in 2009 has come near to 2 million. More than 6 billion dollars will be spent for the extension of the Panama channel that will make Panama especially attractive to investments. World financial and economic crisis practically has not affected Panama. Growth of the Panama economy does not cease that ensures Panamanians with jobs, especially in financial field, in construction & tourism.
The number of unprofitable banks in Russia has grown twice.
The quantity of the banks which have infringed the beneficence specifications, established for the banks – members of the Accounts Insurance System, has increased in the fourth quarter of last year compared to the third quarter almost twice — from 25 to 49. However, according to the moratorium, these banks kept the right to continue working in the framework of the system, the director of department of licensing of activity and financial improvement of credit bank organizations of Russia Michael Sukhov informed.« Faster such banks show fare balance work – faster & easier they can get away with the situation”, — Michael Sukhov underlined, reminding that in 1,5—2 years banks can have losses. Now banks, according to the amendments to the law of bank accounts of physical persons insurance of Russian Federation, valid from September, 28th, till December, 31st, 2010, cannot be excluded from the insurance scheme for infringement of obligatory specifications and quantity indicators of their financial soundness within six months or two quarters. However, it does not prevent the Central Bank to supervise these organizations. As Michael Sukhov told, it is “convenient” to monitor the reserves when the moratorium is still valid.
Another Baltic bank comes to Cyprus.
Latvian JSC LTB Bank obtained from the Central Bank of Cyprus a license for granting of banking services by means of a branch in Cyprus. The bank operates in Latvia since 1991 and on 100 % is financed by Russian MDM bank. According to the rules the Central Bank of Cyprus has a right to carry out statistical, financial and information control over a new bank. The opening of JSC LTB Bank branch and other financial structures in Cyprus certifies once more that Cyprus has become attractive for foreign financial organizations and as a result, becomes a solid European financial centre. Now in Cyprus operate 35 international financial institutions from 14 countries - Austria, Bulgaria, France, Greece, Great Britain, Ireland, Latvia, Lebanon, Ukraine, Romania, Russia, Tanzania and Jersey Island.
Nicaragua invites Russia to take part in channel construction connecting Pacific and Atlantic oceans.
The suggestion has been stated at a meeting of the deputy Minister of Transport of Russian Federation with the deputy Minister of Foreign Affairs of the Republic of Nicaragua. On expert appraisal, the project cost is evaluated in $18 billion.
60 % of the Ukraine economy are in the shadow.
The shadowing of The Ukraine economy in the conditions of the financial and economic crisis has become absolute and various experts & researchers evaluate it of 60 % of GDP that makes real threat to the state national security. Experts see shadowed turnover in 80% of total trade in the country. «We can assume the restructuring process of the shadow economy is finished. It became one of the integral parts of the state economy & serves to the interests of some influential structures & business circles», —some Ukrainian scientists mark.
The majority of experts consider that 25—50 % of the private enterprises turn-over are not reflected in accounting forms (shadow turn-over). The level of the shadow depends on the type of the company, “who is standing behind it”, etc. In the majority of small enterprises "shadow" can reach 80—90 %.
According to the independent experts, new country leaders will face the necessity of struggle against such most wide-spread kinds of shadow activity as: tax optimization, prostitution, drugs traffic, illegal migrants’ labor, gambling. Salaries «in envelopes» & illegal return of VAT tax are also included in shadow activity. Shadow turnover is also presented in such spheres as trade (80 %), construction (66 %), real estate (60 %), gambling (53 %), public catering (53 %), mass media (53 %), transport and carriages (46 %).
Latvia and Estonia lost more than 50 % of transit.
According to some Baltic analysts, the Baltic transport arteries and ports have reduced the transit goods traffic almost to a third. Latvia and Estonia lost more than half of goods in transit in favor of Russian ports, railways and pipelines, as up to 65 % of annual volume of transit in the Baltic countries is constituted of Russian foreign trade cargos. As a result of “returning” to Russian transportation network of its own cargos the country gained already more than $150 million.
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