APAC Monthly Private Wealth Legal Developments – January 2021

Welcome to Herbert Smith Freehills' monthly private wealth industry updates in Asia.

Every month we survey ten Asian jurisdictions for legal developments concerning trust and estate planning which are of interest to the private wealth industry, and provide a succinct summary in a table format.  The jurisdictions covered in the update are Hong Kong, Singapore, China, Taiwan, Japan, India, Malaysia, Indonesia, Thailand and the Philippines. We hope that these updates will prove to be a useful resource to keep private clients, business people, and lawyers abreast of legal updates in the region.

Hong Kong

Private equity partners to pay zero tax on carried interest

The Hong Kong government has announced a 0 per cent tax rate for qualifying carried interest earned by private equity fund partners, with all eligible carried interest excluded from employment income for salary tax purposes. The amendment Bill will be released later this month with retrospective effect to 1 April 2020.

India

RBI introduces 'Legal Entity Identifier' for large value transactions in Centralised Payment Systems

The Reserve Bank of India (RBI) has decided to introduce the Legal Entity Identifier (LEI) system for all payment transactions of value Rs.50 crore and above undertaken by entities (non-individuals) using the Reserve Bank-run Centralised Payment Systems with effect from April 1.

LEI is a 20-digit number used to uniquely identify parties to financial transactions worldwide. It was conceived as a key measure to improve the quality and accuracy of financial data systems for better risk management post the global financial crisis.

Indonesia

Indonesia president says new sovereign fund targeting $20 billion within a few months

Indonesia’s soon-to-be launched sovereign wealth fund (SWF) is targeting $20 billion in investment in the next few months, according to President Joko Widodo, a larger sum than previously announced after positive responses from several firms.

Southeast Asia’s largest economy hopes to launch the SWF early this year to attract funds to help it rise out of its pandemic-induced recession as well as finance an ambitious infrastructure drive and a massive capital relocation project.

Unlike many SWFs set up by wealthy countries to save oil revenues or foreign exchange reserves, the Indonesian fund - like others in emerging markets - is designed to attract foreign firms as co-investors.

Finance Minister Sri Mulyani Indrawati previously said Jakarta would seed the SWF with $5 billion in cash and shares in state companies, with an aim to grow the fund to $15 billion by inviting foreign investors.

Thailand

Thai central bank to relax FX rules further to curb baht rise

Thailand’s central bank announced it plans to further relax rules on foreign exchange after easing regulations for non-resident firms, facilitating outflows of funds to contain the strong baht amid a fresh wave of coronavirus infections. The Bank of Thailand (BOT) will review and gradually announce changes to regulations, including for property purchases overseas.

The relaxation is part of the BOT’s effort to develop the country’s FX ecosystem through structural reform of the onshore foreign exchange market, aiming to increase the breadth and depth of the onshore foreign exchange market, as well as enhance market transparency and surveillance.

The contents of this document are for reference purposes only. Some of the information comes from public sources and this may not be comprehensive, accurate or up to date; where we have relied on third party information and sources, this has not been verified by us. The document does not constitute legal advice, and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action based on this publication, and any facts in this document should be checked for your specific circumstances at the time you wish to use or refer to them.