China defense ministry acts as Japan buys its Diaoyu Islands

(Reuters) - Japan brushed off stern warnings by China on Tuesday and bought a group of islands that both sides claim in a growing dispute that threatens to deepen strains between Asia's two biggest economies.

A territorial dispute between China and Japan has intensified with Beijing sending patrol ships near disputed East China Sea islands in a show of anger over Tokyo's purchase of the largely barren outcroppings from their private owners.

The arrival on Tuesday of the two patrol ships of the China Marine Surveillance off the islands was meant to assert China's claims, said the Chinese government's official news agency, Xinhua.

The marine agency is a paramilitary force whose ships are often lightly armed, and Xinhua said it had drawn up a plan to safeguard China's sovereignty of the islands.



BEIJING, Sept. 11 (Xinhua) -- The armed forces of China are completely opposed to the Japanese government's move to "purchase" the Diaoyu Island and two of its adjacent islands, Chinese Defense Ministry Spokesman Geng Yansheng said Tuesday.

Xinhua said two marine surveillance ships had reached the waters near the islands to "assert the country's sovereignty" (AFP/JIJI PRESS/File, Jiji Press)

Geng issued a statement on the Japanese government's implementation of so-called "nationalization" of the Diaoyu Islands.

Despite strong opposition from the Chinese side, the Japanese government blatantly announced on Sept. 10 to "purchase" the Diaoyu Island and its affiliated Nan Xiaodao and Bei Xiaodao. This act is a severe infringment of Chinese territorial sovereignty, Geng said.

Geng said the Diaoyu Island and its affiliated islands are China's inherent territory. China has sufficient historical and jurisprudential evidence surrounding this.

Geng said the Japanese government's action and the so-called "island purchase" was totally illegal and invalid.

In the statement, Geng said since the start of the year, the Japanese government has endorsed right wing forces to clamor for the "island purchase" and even move in to "purchasing the islands" by itself. He said this severely harmed the general situation of the development in China-Japan relations.

Geng said in recent years, Japan has expanded armament under various excuses, frequently incurred tension in regional situations and repeatedly stirred up troubles on the issue of the Diaoyu islands. Such moves are worthy of high vigilance by its Asian neighbors and the international community.

"The Chinese government and armed forces stand firm and are unshakeable in its determination and will safeguard sovereignty over the nation's territories," Geng said.

"We are watching closely the evolution of the situation and reserve the right to take reciprocal measures," Geng said.

Related:

Japanese gov't signs purchase contract on Diaoyu Islands: media

TOKYO, Sept. 11 (Xinhua) -- The Japanese government has exchanged the official contract on the purchase of Diaoyu Islands with Kurihara family whom the Japanese side called "the private owner", NHK reported Tuesday morning.

Japanese Cabinet on Tuesday morning decided to disburse reserve funds to purchase part of China's Diaoyu Islands, before signing a sales contract with whom the Japanese side called "the private owner" of the islands scheduled later Tuesday, it said.  Full story

Two Chinese patrol ships reach waters around Diaoyu Islands

BEIJING, Sept. 11 (Xinhua) -- Two ships of the China Marine Surveillance (CMS) have reached the waters around the Diaoyu Islands Tuesday morning to assert the country's sovereignty.

The CMS has drafted an action plan for safeguarding the sovereignty and would take actions pending the development of the situation, the CMS sources said.  Full story

Hu states China's stance on Japan ties, Diaoyu Islands

VLADIVOSTOK, Russia, Sept. 9 (Xinhua) -- Chinese President Hu Jintao met with Japanese Prime Minister Yoshihiko Noda here on Sunday and made clear China's position on its relations with Japan and the Diaoyu Islands issue.

The two leaders met on the sidelines of the 20th informal economic leaders' meeting of the Asia-Pacific Economic Cooperation forum.  Full story

Top legislator reiterates China's stance on Diaoyu Islands

TEHRAN, Sept. 10 (Xinhua) -- China's top legislator Wu Bangguo said here Monday that Japan's decision to "buy" the Diaoyu Islands is illegal and invalid.

Wu, chairman of the Standing Committee of the National People's Congress, briefed Iranian parliament speaker Ali Larijani on the latest development concerning the Diaoyu Islands.   Full story

"Absolutely no concession" on Diaoyu Islands, says Chinese premier

BEIJING, Sept. 10 (Xinhua) -- Premier Wen Jiabao said Monday the Diaoyu Islands are an inalienable part of China's territory and China will "absolutely make no concession" on issues concerning its sovereignty and territorial integrity.

Despite repeated solemn representations of China, the Japanese government announced Monday it would "purchase" part of China's Diaoyu Islands from "private Japanese owners" and bring the islands under "state control."   Full story

Full text of Statement of the Ministry of Foreign Affairs of the People's Republic of China

BEIJING, Sept. 10 (Xinhua) -- Following is the full text of the Statement of the Ministry of Foreign Affairs of the People's Republic of China issued on Monday.

Statement of the Ministry of Foreign Affairs of the People's Republic of China

10 September 2012

Regardless of repeated strong representations of the Chinese side, the Japanese government announced on 10 September 2012 the "purchase" of the Diaoyu Island and its affiliated Nan Xiaodao and Bei Xiaodao and the implementation of the so-called nationalization" of the islands. This constitutes a gross violation of China's sovereignty over its own territory and is highly offensive to the 1.3 billion Chinese people. It seriously tramples on historical facts and international jurisprudence. The Chinese government and people express firm opposition to and strong protest against the Japanese move.  Full story

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Japan's buying Diaoyu Islands provokes China to strike back 

Managing strata properties in Malaysia

I LIKE to highlight the rather difficult and controversial issue of the management (and maintenance) of stratified properties, particularly flats, apartments and condominiums, in the context of the proposed Strata Management Act, 2012 which is expected to be tabled during the upcoming session of Parliament.

The Building Management Association of Malaysia (BMAM) is the only multi-stakeholder organisation (established in 2009) representing the collective interests of chambers of commerce, developers, engineers, architects, shopping and high-rise complex managers, management corporations (MCs), joint management bodies (JMBs) and managing agents.

However, BMAM was not nvited to participate in the workshops and discussions held by the National Land Council and the Housing and Local Government Ministry when the draft Bill was deliberated, although the implementation of the Act will have consequences that will directly affect BMAM stakeholder-member organisations.

According to the information available to us, the Bill states that only licenced valuers who have been admitted as Property Managers pursuant to Section 21(1)(a) of the Valuers, Appraisers and Estate Agents Act, 1981 (VAEA Act) to manage and maintain stratified (or subdivided) buildings as managing agents.

No such restrictions exist in the current laws that regulate building management, namely the Strata Titles Act, 1985 (ST Act) and the Building and Common Property (Maintenance and Management) Act, 2007 (BCPMM Act).

Building management is a multi-disciplinary occupation and cannot be exclusive to the valuers alone.

The JMBs and MCs want to have the independence and opportunity to appoint any fit and proper person, or appropriate entity, as managing agent on a “willing seller-willing buyer” basis on mutually agreed terms and conditions.

The Bill, by restricting building management and maintenance to valuers, would create a monopoly, and is inconsistent with the spirit of the Competition Act, 2010, which clearly discourages the creation of monopolies.

Though building owners (JMBs and MCs) and Real Estate Investment Trusts (REITs) have been exempted from this ruling, most JMBs and MCs, led by volunteers, do not have the time, skill, expertise or experience to manage and maintain their buildings, and neither can they afford to appoint a registered property manager as a managing agent.

JMBs and MCs would be required to pay a management fee in compliance with their Fee Schedule, excluding other operating costs such as staff salaries, electricity, water, cleaning, security, etc.

We will soon see the mushrooming of more urban stratified slums and ghettos, thereby defeating the objectives of the Government’s squatter resettlement programmes and public housing projects.

The fiduciary responsibilities of the MCs and JMBs have been clearly stated in the ST Act and the BCPMM Act on the management of the Building Maintenance Fund and the Sinking Fund.

The managing agent appointed by the JMB or MC to manage and maintain the subject properties is only required to perform these functions for and on behalf of the JMB or MC. A registered property manager is therefore not required.

The MCs and JMBs only need building and facilities management for their common properties.

Since common properties and facilities cannot be sold, and most residential building owners do not lease their common properties to third parties as they would need them for their own use.

Many non-valuer managing agents have several years of experience in building and facilities management.

They have also been admitted as members and registered building managers by BMAM upon satisfying the required admission criteria.

They are qualified and skilled in building management, operations and facilities maintenance, and have also subscribed to a professional building management liability insurance policy entered into between a local insurance company and BMAM.

Any attempt by the ST Act to split managing agents as valuers and non-valuers will be detrimental to the growth and development of the building management industry in Malaysia.

It will result in the loss of valuable management talent in the industry. It will also have serious social implications on the upward career mobility of qualified and experienced local building managers, many of whom are bumiputras.

The Commissioner of Buildings (COB) should be the sole regulatory body to
supervise and oversee the management and maintenance of stratified buildings in Malaysia.

The involvement of third parties, who have no ownership interests in the properties, will not only erode the COB’s authority but may also result in unnecessary layering, additional costs (with no proportionate increase in service quality), corruption, rent seeking and abuse of power.

PROF S. VENKATESWARAN
Secretary-general
Building Management Association of Malaysia

Time to reform Malaysia's tax system?

Comprehensive review timely as Malaysia is driving its transformation programme

RECENT developments in parts of Europe have sparked a debate in the eurozone on austerity and growth. Those who argue for austerity or “fiscal prudence” claim that debt management is key to restoring investor confidence and, therefore, long-term prosperity.

Borrowing more is not an acceptable response to a crisis caused by over-borrowing and over-spending. In contrast, those who prefer greater stimulus claim that, without further investment, growth will simply not return, and without some Government stimulus, no economy can pull itself out of recession to achieve long-term stability and growth.

Whilst there is no clear “right” answer, there is one aspect of Government policy that is absolutely central to this taxation. Governments must ensure a balanced system of taxation that provides the right incentives to business and citizens, while enabling the Government to meet its debt and spending obligations. Getting this balance right can drive increased confidence among the investor community and stimulate economic activity, international competitiveness and long-term growth.

A new approach

In the past, many countries have relied on the support of international bodies and other inter-governmental assistance to begin the process of tax reform in respect of designing the tax system itself and in improving the ability to collect taxes. In the post “credit-crunch” world, it has become apparent that the operational ability to increase tax revenues is somewhat limited. A new hands-on approach is required to assist the public sector, generating increased tax revenues and driving corporate activity without raising taxes or damaging international competitiveness.

Malaysia has never had a comprehensive review of its tax system

 

Like any business, a Government has costs and it has revenues. A framework is required to help Governments optimise their tax revenue and balancing this need with the creation of the right incentives for citizens and businesses to stimulate the economy. To achieve this, our experience in working with Governments is typically structured around three core work streams:

● Tax reform design - Modeling the economy and designing a new system of taxation appropriate for the jurisdiction, with the emphasis on simplicity, fairness, participation and economic stimulus;

● Tax compliance - Building the taxpayer base to ensure all taxpayers have paid the correct amount of tax under the law and will continue to do so and;

● Tax operational improvements - underpinning both streams, identifying and delivering detailed operational improvements, ensuring transparency of data and processes within the tax administration, across Government departments and with taxpayers.

Malaysia has never had a comprehensive review of its tax system. The setting up of a Tax Review Panel a few years ago basically focussed on the proposed Goods & Services Tax and has done some good work in this area but the focus on income taxes was limited and too restrictive. A comprehensive review is now timely given that Malaysia is aggressively driving its transformation programme towards achieving developed nation status by 2020.

Tax reform design

A tax system is at its best when it is at its simplest, levying the minimal number of taxes, thus making compliance easy for taxpayers and the tax authorities. Headline rates should be minimised, often in exchange for the removal of reliefs or deductions. In addition, it is essential to improve the quality of the taxpayer base. Finally, international trends are to shift the burden of taxation towards indirect taxes to ensure participation in the tax system, improve the reliability of collections and increase fairness.

An effective communications strategy is critical to the success of any tax reform project. To succeed, these projects require a proactive approach to ensure that stakeholders are aware of their progress.

Tax reform projects should have four key phases:

Understand - Work closely with the Government and external bodies to gather and verify data. Quickly establish a detailed understanding of the current tax system and understand the issues from a number of different perspectives. At the same time, model the economy and current tax collections, benchmarking them against other jurisdictions.

Model - Develop an outline model for the proposed tax system, meeting regularly with stakeholders to develop and test ideas and model alternative taxation methods. Produce a detailed proposal for the new tax system, including clear legislative and operational proposals, for political approval.

Implement - Bring the approved model to life. This can include taking a lead drafting new legislation and guidance. A highly operational approach, working to ensure systems, processes and controls are best-in-class and fit-for-purpose is essential at this stage.

Roll-out - Roll out the new system to the various groups of taxpayers and stakeholders and train the Tax Administration teams, including training on tax technical and operational / systems issues.

Tax compliance

In many developing economies, the incidence of tax evasion is certainly not small. Broadening the taxpayer base and ensuring current taxpayers are paying the correct amount of tax under the law helps keep taxes low. Economic and forensic analysis must be applied to identify areas of the economy requiring particular attention. A range of techniques is typically required to provide a complete picture of the tax-paying community.

To deliver real change for the tax administration, forming a single team to identify taxpayers, initiating assessments, managing taxpayer responses and building IT databases is key. Enhancements to processes and systems also drive improved service levels to taxpayers (whether this be speed or quality), which is vital to gain support for the tax system and for improving participation.

Tax operational improvements

Real operational improvements are essential to the successful delivery of any tax reform project. This may include improvements to existing IT systems to automate processes and controls and improve the way data is managed. This applies both to the tax administration's systems and the way it interacts with other Government departments. For example, the tax administration should automatically be informed whenever a new business registers with the Companies Commission.

On a practical basis, it is essential to ensure new tax documents and forms are produced where required, both in paper and electronic form. It makes sense to consider these as part of a wider programme of improving taxpayer interaction, for example, with the implementation of a new website or the ability to file tax returns online. Key to the success of any new document is simplicity both for the tax administration to review and process and for the taxpayer to understand.

Conclusion

The post credit-crunch world has generated a renewed focus on how a Government raises its revenue the right balance of fiscal prudence and stimulus is difficult to achieve. However, with a clear view on what taxes are levied, who pays them and how they are administrated, jurisdictions can drive real improvements in tax collections, real efficiency gains and, in doing so, drive the participation of the taxpaying community. This, in turn, can provide assurance for the investor community, enable the Government to meet its obligations and drive long-term growth for the wider economy, its businesses and citizens.

It is timely that Malaysia announces a comprehensive fiscal reform which is wide-based and wide-ranging and puts into place a long-term plan to mould a world class tax system that will be comparable to the leading developed nations in the world. It is time to let go of the ad-hoc approach of tinkering with the tax system let us get on with it!

By Dr Veerinderjeet Singh and Andrew Burman

● Dr Veerinderjeet is chairman of Taxand Malaysia and Andrew Burman is senior director at Alvarez and Marsal Taxand in the United Kingdom. Both entities are part of the Taxand Global Organisation. They can be contacted at vs@taxand.com.my and aburman@alvarezandmarsal.com respectively.