Chinese walker

Tin-mine pits are like enormous open wounds dominating the landscape of island Bangka, near Sumatra and only 40 minutes flight from the Indonesian capital, Jakarta. Even from the air it is obvious that the island is a textbook example of man-made environmental calamity. Only a few tiny pockets of natural forest remain, surrounded by rubber and palm-oil plantations.

The island of Bangka, home to around 650,000 people, is known for its white beaches. But most of these are now covered by garbage and exhibit the latest %26ldquo;cultural trend%26rdquo;: affluent young people and families bring their cars and scooters to the seafront and drive back and forth on the sand until late in the evening. Silence %26ndash; once the last attraction of the island %26ndash; is gone, replaced by the roar of engines. The beach, decorated by some fantastic rock structures, is now badly polluted.

Just a few miles across the sea from Bangka, a dilapidated hydrofoil (one of which recently sank) enters the magnificent Sungai Musi River, one of the mighty rivers of Sumatra Island. While I admire the surface of the river from the boat, a local student suggests I look between the trees separating the river bank and the interior: %26ldquo;Try to catch the moment %26ndash; the opening. You will see, there is nothing left of the forest.%26rdquo;

One hour later, this black smoke and pop-music belching craft docks at the port of the city of Palembang. With 1.5 million inhabitants, the city is the second largest in Sumatra and one of the most populous in Indonesia. It is one of the most appalling urban centres on the Asian continent, with hardly anything to offer except a handful of Dutch-era buildings and several picturesque traditional houses on stilts inhabited by the very poor. Although located some 80 kilometres from the coast, Palembang is a vast seaport with huge vessels docked at the banks and in the middle of the Musi River. The river and the streams that feed into her are not just polluted, they appear to be positively toxic.

Inflated carcasses of dogs and other animals are floating on the surface of the river, together with industrial waste, debris, bottles and simple household waste. Palembang is home to oil refineries as well as cement and fertiliser plants. It sits in the middle of two major areas of unbridled deforestation on the island of Sumatra. While Indonesia is often referred to as the %26ldquo;ground zero%26rdquo; of climate change, Palembang should be considered one of its most telling monuments.

Isna Wijayani Lexy is professor of journalism at the Faculty of Social and Political Science in Sumatra%26rsquo;s Baturaja University. Hers is one of the few outspoken voices in this part of the world: %26ldquo;Illegal loggers can usually count on backing from the police, military, local government officials and thugs,%26rdquo; she says. %26ldquo;Media only cover raids against the loggers, that is, if there are raids. Even then it is very rare that journalists cover them on their own as they are usually short of funds and can%26rsquo;t just go up or down the river as they please.

%26ldquo;On this, as well as many other topics, there is news hegemony and no diversity in content. The local journalists dare not take risks. Journalists in Palembang only look for easy news and if they have been %26lsquo;serviced%26rsquo; (bribed), bad or critical news will not be published. Money talks here, even when it comes to the news.%26rdquo;

There are plenty of alarming reports by local academics and international observers about the archipelago%26rsquo;s disappearing rainforests and unbearable pollution levels in all major Indonesian cities. But there are few sound analyses that link all the factors that make Indonesia, environmentally, one of the most battered nations on earth: corruption, governmental incompetence, the powerful position of armed forces and unbridled pursuit of profits utilising the easiest and often least-sustainable means.

Restraint was broken on January 29, 2010, when The Jakarta Globe reprinted an Agence France%26ndash;Presse report on an academic study into illegal logging in the forest bordering Malaysia on the island of Borneo, which began: %26ldquo;The Indonesian military is deeply involved in the trade in illegally felled timber that is destroying vast tracts of pristine forest and contributing to global warming, researchers said Friday.%26rdquo; But, given the combination of state controls and the silence of the media, the public remains largely uninformed about the environmental and social disasters that are devastating their country.

Despite pollution, the River Musi is still one of the mightiest waterways of south-east Asia. The misery along this waterway is on a par with some of the poorest parts of Africa. Tiny villages and towns along the shores are lost in time, often cut off from the rest of the country. Upang town is built on stilts. It is an expensive one-hour boat ride from Palembang at breakneck speed and survives by supplying riverboats with fuel and food. Upang sits at the heart of the Musi River%26rsquo;s illegal logging trade.

Two young girls, Linda and Yanti, are working in a local eatery. %26ldquo;Each household has people who work across the river on %26lsquo;cleared land%26rsquo;,%26rdquo; explains Linda. %26ldquo;People from the entire area are working on %26lsquo;cleared land%26rsquo;, many doing the %26lsquo;clearing%26rsquo; itself. There are no permits necessary and no taxes; nobody checks.%26rdquo;

The girls explain that their monthly income is 20,000 to 30,000 Indonesia rupiahs (US$2 to US$3). %26ldquo;My dream is to become rich,%26rdquo; says Yanti. %26ldquo;If I were rich, I would give alms (zakat) and then travel. I would go to Bandung and to Jakarta. I would visit the National Monument.%26rdquo; Neither girl has ever left Upang %26ndash; not even to visit Palembang, 25 miles up the river.

The girls have no knowledge about deforestation. They know it only as %26ldquo;clearing the land%26rdquo;, something good for planting rice and palm oil. They had no idea what global warming is either. We ask the same question of several people along the Musi River and always receive the same answer %26ndash; incomprehension and bewilderment on their faces. Rural Indonesia is extremely poor and underdeveloped and moral and ethical questions here are simply perceived as odd. Caring for the environment and the world are luxuries most impoverished Indonesians cannot afford while, for the rich rulers of this nation, they are simply not profitable enough.

As we sail across the river and slowly progress towards Palembang, the full horror of the deforestation suddenly emerges: hundreds of square miles of rainforest destroyed and replaced by tremendous bare plains; some areas still burning. There are bags with chemicals and bottles of spray scattered all over the earth. Even for those who are not experts on the environment, this could hardly appear to be anything other than unbridled, gross and brutal rape of nature.

At one of the epicentres of the disaster, Sawah Upang, we spot an old couple sitting in front of their house. They wave and happily explain their presence there: %26ldquo;We are from Palembang. Five years ago we bought the land here from other people from Upang. Now we have our rice fields here.%26rdquo; Deforestation? Global warming? They both smile, not comprehending.

On the way back to Palembang it begins to rain. Huge rusty cargo ships stand in the middle of the river like tremendous ghosts, while the factory chimneys regurgitate colourful smoke skyward, even in this heavy downpour. Streams bring brown and foamy liquid to the river. All around is misery, dirt and hopelessness %26ndash; so common in today%26rsquo;s Indonesia but here, somehow, brought to the extreme.

Indonesia achieved the world%26rsquo;s fastest rate of deforestation between 2000 and 2005, with an area the size of 300 football fields removed every hour, according to Greenpeace. The country has already lost over 70% of its intact ancient forests and half of what is left is threatened by commercial logging, forest fires and clearances for palm-oil plantations. And the greed seems to know no bounds.

No matter how pressing, the environmental issues cannot be separated from the general and continuous decay of the Indonesian state %26ndash; from its endemic corruption, impunity of armed forces, extreme breed of market fundamentalism and tendency to put faith above rational thinking.

Andre Vltchek is a novelist, journalist and filmmaker.

An earlier version of this article was published as: Andre Vltchek and Geoffrey Gunn, %26quot;In the Tropical Forests of Sumatra: Notes from Climate Change %26lsquo;Ground Zero,%26rsquo;%26rdquo; The Asia-Pacific Journal, 7-2-10, February 15, 2010. It is used here with permission.

Homepage image from Greenpeace

%26ldquo;Diplomatic disasters don%26rsquo;t come much bigger than this%26rdquo; was the verdict of one European-based newspaper on the outcome of the Copenhagen climate-change conference. What had been billed as the summit to save the planet became the summit which, just barely, scraped a deal that many felt did not go much beyond an agreement to keep talking %26ndash; a deal widely seen as being thrashed out in a single day between five major powers and then presented as a fait accompli to the rest of the world. The paradox is that it may be as good as could be reasonably hoped for. And it sets the stage for a very interesting 2010.

First, a word on the blame game. Most of the European media focussed on Chinese intransigence and agonised about the European Union%26rsquo;s apparent impotence. The US media likewise cast China as the bad guy but praised president Barack Obama as the saviour, extracting an important deal in the face of this. The Japanese media were a mix %26ndash; aghast at the dilemmas and their limited role, while most of the developing world attacked the industrialised countries for insufficient progress on money and almost no progress on emission cuts.

Personally, I prefer to focus on my home territory. The European Union acceded to an apparently obvious and widespread logic that the problem can%26rsquo;t be solved without the United States, the United States will never join the Kyoto Protocol and thus the world needs to abandon the current main instrument in favour of some new unified structure.

Unfortunately, there was never any clear articulation of what this might be %26ndash; nothing about what the world (or the European Union) would get in return for abandoning the only existing legally binding structure. The United States did not move an inch from its position %26ndash; a bottom-up regime, defined by domestic, not international, law and made conditional on the Chinese offer. The resulting proposition was therefore to reduce the legal standing of commitments expected of industrialised countries while raising those placed on developing countries: a combination that is totally unacceptable to the developing world and understandably so.

The EU response to the US reiteration of its fundamentals (and the cacophony of condemnation from developing countries) was apparently to reach for the earplugs and hope that the summit itself would provide a magic answer. The world found itself staring at a chasm defined by the fact that most countries%26rsquo; vision of an adequate international regime is totally in conflict with what the United States or China will accept.

The United States at least displayed a clearer grasp of political reality and planned for it. The pity is that, having %26ldquo;plucked a phoenix from the ashes%26rdquo;, Obama almost shot it by prematurely proclaiming the success to the media. Heads of state do not like being told on the world%26rsquo;s media that they have reached a deal, particularly when they have spent the previous 24 hours wondering what on earth they came to Copenhagen for.

It took agile political footwork by a number of countries, and for United Nations secretary general Ban Ki-moon to draw upon the political capital he had built up over the year, to get about 180 countries to accept that a deal hammered out initially between five of them (albeit with a larger penumbra then engaged) should be officially recognised. The problem with the blame game, as a colleague drily observed, is that there are just too many targets to choose from.

Thus was born the Copenhagen Accord %26ndash; largely derided in Europe but praised by the US administration. People should pause for thought before they condemn a process that most declared to have as its number-one aim to get the United States %26ldquo;back on board%26rdquo;. Whatever Copenhagen has done to the process of negotiation (on which much will be written and debated), my own hunch is that history will judge the accord more kindly than did most of the media.

The accord itself contains just 12 paragraphs. In a nutshell, it recognises the scientific view that a rise in global temperature must be below two degrees Celsius and commits countries to %26ldquo;meet objectives consistent with the science and on the basis of equity%26rdquo;. It also includes reference to the need for peaking of global and national emissions. The requirement to have made official submissions by January 31, 2010, formally establishes countries%26rsquo; opening pitches on what they think this means for their emissions and policies up to 2020. We can be assured that the numbers do not meet the scientific needs. This in itself could set the stage for an interesting year of negotiations, as the accord implies a formal need to reconcile the two.

The longest paragraph spells out more fully the processes around developing-country contributions. This establishes a requirement to report emissions inventories and emissions-reduction actions every two years, and includes those that do not have international funding %26ndash; itself a formal burial of the antiquated idea that developing countries would not do anything without finance. Additionally, anyone with experience can read between the lines of struggle on %26ldquo;clearly defined guidelines that will ensure that national sovereignty is respected%26rdquo;. Internationally supported measures are further subject to direct monitoring, reporting and verification.

The text contains some useful steps forward on adaptation and forestry, although most of the important detail actually remained in the draft negotiating text. The deal received most plaudits for its progress on finance. However, this risks remaining the most vulnerable part. The US$30 billion (205 billion yuan) prompt-start package for 2010 to 2012 to help developing countries adapt to climate change has some political substance and commitment behind it but a huge amount still remains to be resolved.

For the much larger scale of longer-term finance, the deal defines expectations but fails to clarify who really accepts responsibility for providing the funding at the scale indicated, or almost anything about the actual status and governance of the much-vaunted %26ldquo;Green Fund%26rdquo;. Raising and managing US$100 billion (683 billion yuan) per year by 2020 is not for the faint-hearted. Explicit reference to %26ldquo;alternative sources of finance%26rdquo; provides probably the only way to bridge the gap between the collective goals and the political realities of squeezing more finance out of industrialised-country taxpayers. The panel established by the accord to study potential sources of revenue will indeed have to chart a course through %26ldquo;interesting times%26rdquo;.

This, coupled with the refusal to include the words %26ldquo;legally binding%26rdquo; or to set any official deadline for processes under the accord, other than a review of its implementation in 2015, are, of course, reasons for pessimism. They combine with the destructive campaign around the %26ldquo;Climategate%26rdquo; emails, a serious error uncovered in a text box of the 2007 report from the Intergovernmental Panel on Climate Change and the coldest northern winter for many years to create a potential %26ldquo;perfect storm%26rdquo; of scepticism and disillusion.

So what does all this imply? Well, no one knows. But the wider sweep of scepticism can be set against the remarkable fact that about 35,000 people cared enough to travel to Copenhagen and register the force of global civil concern about the future of the planet. On the science, the truth will ultimately win through, for most governments at least. The 35,000 will have forged connections and raised a voice that will not be lost on the accompanying 120 heads of state. The heads of state attendance was in itself testament to the extent of high-level concern. Copenhagen may have been the death of some hopes, but it was also the crucible of many new developments.

Michael Grubb is the editor-in-chief of Climate Policy, chair of research organisation Climate Strategies and senior research associate at the Faculty of Economics, Cambridge University.

An earlier version of this article was published as %26ldquo;Copenhagen: back to the future?%26rdquo;, Climate Policy 10.2 (2010) 127%26ndash;130, doi:10.3763/cpol.2010.ED83. It is used here with permission.

NEXT: responding to stark truths

Homepage image from The World Wants a Real Deal

he US dollar and the Japanese yen maintained a strong tone in the past fortnight as risk aversion flows continued to dominate trading in financial markets. Investor sentiment was hit by a slew of bad news, including weaker than expected reports and poor earnings at major global banks. In addition, the downgrades or potential downgrades to sovereign ratings of some of the euro zone and other economies, including Greece, Spain, Portugal, Ireland and New Zealand due to their deteriorating fiscal conditions also hurt confidence.
Read more…

Foreign nationals working in the PRC with a monthly employment income exceeding RMB4,000 (RMB800 for local Chinese employees) shall pay IIT at progressive rates. Employees from Hong Kong , Macau and Taiwan are also subject to the same tax rules as applied to foreign nationals. See table for the income tax rates and brackets.
Read more…

Fees under technology licensing agreements, intellectual property (IP) right licensing agreement received from a source in the PRC by non-resident foreign corporations or individuals shall be subject to a 10% withholding income tax, a 5% business tax, and a stamp tax of 0.03% on the gross amount. The resident payer has the legal obligation to withhold the tax and pay it over to the tax office. Residents of non-PRC tax treaty countries will be subject to a 20% withholding income tax.

ASSIGMENT OF IP RIGHTS

Non-resident foreign investor receiving income for the Assignment of IP rights in the PRC will be subject to the following type of taxes: -

Type of tax Rate

Read more…

Rental income from properties owned by non-resident foreign investors are subject to the following taxes: -

Type of tax Rate

Income tax 20% on rental income
Business tax 5% on rental income
City property tax 18% on rental income

Read more…

TAXATION ON REPRESNETATIVE OFFICES
A representative office (RO) achieves the purposes that a foreign investor could establish a PRC presence in a relatively short time period and that the foreign investor is not required to make any commitment to bring in capital either in cash or in kind. Furthermore, the fact that an RO’s approval certificate can be valid for a one-year period provides for an exit option for the foreign investor to test the water.

Read more…

Legal authority
The PRC Tax Levy and Administration Law and its Detailed Implementation Regulations
Tax registration
Every foreign investment enterprise (FIE) shall apply for a tax registration at both the national tax office and local tax office.
Types of tax registration:-

National income registration and local income tax registration. Both registrations are mandatory and the registration application must be submitted within 30 days of obtaining the business license from the local office of “State Administration of Industry and Commerce” at the city level or above;

Read more…

[1] The scope of the PRC Land Appreciation Tax includes the gains arising from the transfer of land use right and the buildings that are constructed on the land. Land appreciation tax is levied from 30% to 60% on gain on disposal of landed properties with reference to the percentage of appreciated value over the deductible amount. For completed properties, the deductible amount is the sum of purchased price and taxes paid. In the absence of tax invoice for the purchased properties, the land appreciation tax is imposed at 0.5% to 1% of the contract amount

Read more…

Bilateral credit
Under the PRC tax treaty, the corporate level income tax paid by the foreign investment enterprise are eligible for an indirect tax credit for foreign investors in their home jurisdictions.

Tax sparing credit
A Foreign Investment Enterprise who is a resident of a PRC treaty country is deemed to have paid the income tax under the indirect tax sparing credit provision in respect of any PRC tax concession and tax breaks being granted.
However, there is no tax sparing credit provision in the treaty concluded between the PRC and the USA.

Major PRC treaty countries by geographic area

Read more…