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Post Singapore and Hong Kong World's Fastest-Growing Tax Havens
Created by John Eipper on 04/24/13 1:52 AM

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Singapore and Hong Kong World's Fastest-Growing Tax Havens (Bienvenido Macario, USA, 04/24/13 1:52 am)

I can't help but see this story as a continuation of Eduardo Saverin's renouncement of US citizenship in favor of Singapore residency.

Come to think of it, the economies of Singapore like Hong Kong are dominated by ethnic Chinese. It's the same with the Philippines. So why do the world's wealth and OFW's have to go to Singapore and Hong Kong?

The only difference is that Singapore and Hong Kong were former British colonies while the Philippines is an abandoned US territory.

See below:

Wealth Flees Switzerland for Shelter in Singapore (and Hong Kong)

By Robert Frank, CNBC, Apr 22, 2013


Thanks in part to its generous tax regime, Singapore has been a millionaire haven for years. But a new report says the tiny island state may soon overtake Switzerland as the world's largest offshore wealth hub.

The report, by WealthInsight, a London-based research firm, says Singapore is the fastest growing wealth center in the world, with $550 billion in assets under management--up from $50 billion in 2000. About $450 billion of that is offshore.

Switzerland has $2.8 trillion in assets under management, with $2.1 trillion of that coming from offshore wealth. Switzerland accounts for 34 percent of the $8.15 trillion in total global wealth.

Yet the report said Singapore could overtake Switzerland in offshore assets under management by 2020. It said Swiss offshore assets could fall below $2 trillion by 2016, while Singapore's assets could more than quadruple by then.

The reason: Switzerland may be falling out of favor with the wealthy, while Singapore is attracting more of the new wealth from Asia. Recent offshore wealth scandals and prosecutions in the United States and Europe have pierced the veil of Switzerland's vaunted bank secrecy laws. Western countries are also tightening their tax codes and chasing tax shelters more aggressively.

"The Swiss wealth management model is under intense pressure," the report states. "Offshore centers have suffered significant reputational damage in the past four years and advanced economies are increasing their oversight of cross-border banking and tax havens."

While the West is cracking down on wealth in Switzerland, however, Singapore is opening its arms to all the new rich from Asia. Millionaires and billionaires in Asia, especially China, are pulling hundreds of billions of dollars out of their country to stash overseas.

Much of that is going to Singapore and Hong Kong. More than half of Singapore's offshore assets come from China, WealthInsight says.

"Rapid growth in Asian economies such as China, India, Indonesia and Malaysia will continue to see new investments in the years ahead," the report stated.

JE comments: It is interesting that unlike the Philippines, both Singapore and Hong Kong are mercantile city-states, as were Venice and Genoa during the Renaissance. Why is the city-state such an efficient vehicle for attracting other people's wealth?

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  • Former Colonies and "Abandoned Territories" (Francisco Ramirez, USA 04/24/13 3:34 PM)
    May I ask Bienvenido Macario what the logical basis is for distinguishing between a former colony and an abandoned territory?

    JE comments: In Bienvenido Macario's post of 24 April, he described Hong Kong and Singapore as former UK colonies, and the Philippines as an "abandoned US territory." Like Francisco Ramírez, I also find this distinction strange. Allow me to pose a wider question: has there ever been an instance in history when a nation "abandoned" a given territory--as opposed to selling, getting thrown out, or negotiating some sort of autonomy?


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    • Former Colonies and "Abandoned Territories" (John Heelan, UK 04/25/13 6:31 AM)
      When commenting Francisco Ramírez's post of 24 April, JE asked, "has there ever been an instance in history when a nation 'abandoned' a given territory--as opposed to selling, getting thrown out, or negotiating some sort of autonomy?"

      Yes--the Falklands/Malvinas inhabited and abandoned at various times in the 18th-19th centuries by the British (1774) and Spanish (1811). Both left plaques behind them claiming sovereignty.

      JE comments: What an irony. Even though they were abandoned, the Falklands/Malvinas are the only territory that two "Western" nations have fought a war over in modern (post-WWII) times.

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    • Philippines as "Abandoned Territory" (Bienvenido Macario, USA 04/25/13 7:17 AM)
      In response to Francisco Ramírez (24 April), to this day, Puerto Rico and Guam remain US territories with delegates to the Congress. The Philippines were abandoned in 1935 after the first attempt in 1932 was vetoed by then Pres. Hoover, a Republican. Democrats have always been sympathetic to the oligarchs of the Philippines, even to this day.

      The Commonwealth Act was to give the Philippines ten years of preparation for self-rule. But WWII broke out, and it should then have reverted back to being a US territory, or at least the ten-year period should have been extended. Again the oligarchs led by Manuel A. Roxas instead ordered a draft of a general amnesty, even as the list of suspected traitors and collaborators was being drawn up. As I have previously mentioned, Roxas was not included in the list of suspected traitors and therefore was not pardoned when he himself signed the amnesty on January 28, 1948.

      The 1946 Republic of the Philippines was a stillborn republic. It was dead at birth.

      JE comments: Is granting self-rule the same thing as supporting the "[local] oligarchs"? Bienvenido Macario's interpretation is unorthodox, but it could be seen this way. This narrative was repeated in perhaps the majority of post-colonial societies, in Africa, Asia, and elsewhere.

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      • Philippines as "Abandoned Territory" (Francisco Ramirez, USA 04/25/13 1:01 PM)
        In response to Bienvenido Macario (25 April), one could indeed argue that the ten-year period after the end of the Commonwealth could have been extended. But there is no evidence that the majority of the Filipino people favored the extension. A similar argument could be made as regards other colonies that became independent after WW II. But again there is no evidence that the colonizing powers ignored the will of the people or their elected representatives in giving up their colonies. There were nationalist movements in these colonies. These movements sought national independence. Just because Bienvenido wishes the Philippines were still a US territory is insufficient warrant for the term "abandonment."

        I agree with him that oligarchs have ruled the Philippines since its birth. This is a serious problem. I also agree with him that in general the Church has played a negative role, despite a positive role in legitimating the anti-Marcos "People Power" Movement. Neither of these facts remotely justifies putting the Philippines in the same category as North Korea. That is sheer hyperbole.

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        • Philippines as "Abandoned Territory" in the 1930s (Bienvenido Macario, USA 04/30/13 4:45 AM)
          Francisco Ramírez wrote on 25 April:

          "There is no evidence that the [US] ignored the will of the [Filipino] people or their elected representatives in giving up their colonies. There were nationalist movements in these colonies.

          "These movements sought national independence. Just because Bienvenido wishes the Philippines were still a US territory is insufficient warrant for the term 'abandonment.'"

          I'd like to begin with an excerpt from Chapter 35, "Franklin D. Roosevelt and the Shadow of War, 1933-1941," from the AP US History textbook:

          "The American people were not so much giving freedom to the Philippines as they were freeing themselves from the Philippines--they proposed to leave the Philippines to their fate."

          This is a realistic and honest assessment of what Tydings-McDuffie Act of 1934 was all about--the official abandonment of the Philippine territory.

          The Philippine Independence Act of 1934, the official name of Tydings-McDuffie Act, was another step toward isolationism sweeping America as the threat of war in Europe was growing.

          From the paranoid and unrealistic protectionist foreign policy of 1920s, the US started to clamp down on immigration when over 530,000 immigrants came to the US from Southern and Eastern Europe. These European and other immigrants probably knew the Treaty of Versailles would give Europe 20 years of peace before another war would break out. In the usual knee-jerk reaction still seen today, Congress enacted the Emergency Quota Act of 1921. This quota-based restriction was further reduced from 3% to 2% when the Immigration Act of 1924 was passed to replace the Quota Act of 1921.

          Exempt were the Canadians and even Latin Americans. The Filipinos were not affected by immigration laws, since the Philippines was not yet abandoned.

          While raising tariffs on European goods, the US demanded payment of the $10 billion from its allies who in turn passed it on the vanquished Germans, forcing the inflation of the Deutsche Mark.

          If there is any early indication that America's degenerative foreign policy from protectionism to isolationism would later lead to the abandonment of the Philippines, it was the Washington Naval Treaty of 1922 in which Britain, Japan and the US were prohibited from the construction of any fortifications or new naval bases in the Pacific.

          The crash of 1929 and succeeding the bank run of 1930 pushed the American economy to the Great Depression, which in turn further strengthen and justified isolationism.

          As 60,000 Filipinos relocated to the mainland in 1931, the idea of giving independence and freedom to the Filipinos was revived. Sen. Huey Long of Louisiana, a Democrat and staunch FDR supporter, made absurd and exaggerated claims that some Americans were starving and were resorting to cannibalism while "Wall St. Imperialists as gods of greed continue to cling onto the (Philippine) islands."

          When American adventurism at the turn of the century vaulted the country into a world power, they did not have any idea of the responsibilities and implied duties a world power or lone superpower entails.

          It seems US foreign policy reflects the immaturity and impulsive of American leadership when it comes to foreign relations, as shown by the Cold War, Korean War and Vietnam War.

          With American foreign policy, one thing remained constant. Adventurism in the White House would take the country to exotic places and situations around the world, and when the going got tough, the ball along with our allies got dropped. Such was the case of Vietnam, when Nixon signed the 1973 Paris Peace Treaty ending America's direct involvement in Vietnam and called it "Peace with honor."

          On April 30, 1975 South Vietnam fell. The American image overseas suffered terribly. One Pakistani diplomat was quoted as saying: "It's bad to be on America's side. Often is good to be neutral and sometimes it's good to be against America."

          JE comments: One man's self-determination is another man's abandonment, but Sen. Long's hyperbolic rhetoric seemed to be representative of the times. After 1918, and especially post-1945, traditional empires were no longer acceptable.

          Is Bienvenido Macario condemning US overseas adventurism per se, or this country's tendency to "cut and run" (Vietnam, Iraq [?], Afghanistan [?]) when the adventures prove too costly?

          A final question: were Filipinos granted full immigration rights to the US prior to 1946?

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  • City-States and Wealth Accumulation (David Duggan, USA 04/25/13 4:07 AM)
    In response to JE's question about city-states (24 April), where else was the wealth going to go? Land-based wealth (grain, fruits, serfs) was inherently unstable, as anyone with more knights or vassals could take it over. Perhaps one corollary of the attraction of wealth was city-states' bellicosity, which until the late Renaissance saw them all battling each other for control of the Mediterranean trade and coastal towns (e.g., Pisa v. Genoa for control of Liguria). Pope Pius V brought some order to this chaos with the Holy League uniting Venice, Naples, Genoa and Spain against a common enemy in the Ottomans at the naval battle of Lepanto. To this should be added that mercantile states had relatively well-developed legal systems, which tended to protect creditors while not abusing debtors (viz. the legal issues in Shakespeare's Merchant of Venice), for instance by jailing them as was common in England at the time.

    JE comments: City-states had to embrace trade, manufacturing, and banking, as they had no space available to pursue the pre-modern, land-based notion of wealth. Genoa and Venice invented stock shares, insurance contracts, and double-entry bookkeeping--everything you'd recognize in the modern financial services industry.

    I hope our colleague in Savona (next to Genoa), Eugenio Battaglia, will comment.

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    • Italian City-States (Eugenio Battaglia, Italy 04/26/13 2:22 AM)
      It seems to me that the important points have been said in the post of David Duggan (25 April) and in John Eipper's comments. I just would like to suggest that of the five maritime Italian Republics, Venice and Ragusa in the Adriatic, and Genoa, Pisa and Amalfi in the Ligurian Tyrrhenian seas, only Amalfi and Ragusa can be considered true city-states.

      Amalfi, being the first of them to develop, was also the first one to disappear.  It did not have the ability to conquer anything, even if for a short while it competed with Pisa for influence in the Tyrrhenian, particularly for Corsica and Sardinia. Amalfi was conquered by the Normans in 1131 and sacked by Pisans in 1135 and 1137.

      Ragusa specifically chose to be a real city-state dedicated only to sea commerce; I wrote recently about Ragusa in a post on the Italians of the Eastern Adriatic.

      Pisa tried to master the Tyrrhenian sea, dominating both Corsica and Sardinia, but it was defeated by Genoa. Genoa therefore could dominate all the Ligurian land and had a free hand in the Eastern Mediterranean, but she tried also to found colonies in the Eastern Mediterranean from Jaffa, to Pera and Galata at Costantinople to Greek Islands including Chio, Cyprus and Caffa in Gazaria of the Crimean Peninsula. Unfortunately for Genoa, Venice, as well as Turks and Mongols, conquered most of said colonies.

      Venice had a great dominion in mainland Italy, including part of Lombardy from the river Adda, the proper Venetian Region, Friuli and most of Istria plus all of the Dalmatian Islands and mainland Dalmatia.  While exploiting the Fourth Crusade, Venice achieved dominion over most of the East Mediterranean, including all the Greek Islands, Cyprus, then Morea with colonies in Palestine, Black Sea and Azov Gulf. Venice lost its eastern territories to the Turks; the siege of Famagosta was terrible, lasting a year from August 1570 to August 1571.  An agreement was reached, by which the Venetians were promised their safety. They finally surrendered, and the Turks did not respect the agreement; the Venetian Leader Marcantonio Bragadin had his ears cut off and he was paraded around the town for days before he was skinned alive. His skin was carried off by a Venetian slave, and is now in Venice.

      Venice got its revenge at the battle of Lepanto, when the Turkish fleet was wiped out by the Christian navies.

      About commerce rules, I would say that everything has already been stated in the various "cartularium navis." The most important is the Genoese "Liber Gazarie"--various rules published from 1316 to 1344, but since the previous century there had been regulations "Statuto Tiepolo" (1233) and Statuto Zeno (1255) at Venice, "Tavola di Amalfi" and "Statutes of Marseille" 1253-55, Ordinance of Barcelona (1258), "Breve Curia Maris" of Pisa (1298), and the "Pera Statutes" (1304).

      About taxation on sea commerce, it is possible to refer to the Genoese "Gabella Marinarorum" of 1482-1491.

      In the "Liber Gazarie," besides commercial rules, there are technical rules including the free board marks. Also interesting are the parts about the free commerce on a free sea, and how to deal with the rules of the Papacy, which were against commerce with Muslim states, but only regarding the commerce of slaves, arms, wood, iron, and asphalt--basically only war-related stuff was prohibited. This book gives a good idea of the Genoese commerce from Persia all the way to the North Sea.

      JE comments:  Perhaps the most interesting aspect of this post from Eugenio Battaglia is the reminder that those trappings of modernity, regulations and bureaucracy, are nothing new.  Of course, my favorite participant in the battle of Lepanto is Miguel de Cervantes, who lost the use of his left arm during the fighting.  It now appears that "El Manco de Lepanto" was something of a plagiarist--I received a fascinating note on this from Luciano Dondero, which I'll post later today.

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