New Zealand has edged out Singapore to take top spot for ease of doing business in the World Bank’s latest rankings, but money-laundering experts warned the honor masked the darker side of the Pacific nation’s vulnerability as a channel for illegal funds.
In its annual Doing Business report released on Tuesday, the World Bank cited tax improvements as a key reason for moving New Zealand to top spot from its previous runner-up position.
The nation also topped the World Bank’s indicator on ease of company formation, a particularly worrisome aspect for anti-money laundering efforts and one that has raised some alarm bells given the use of shell companies to launder funds.
Companies registered in New Zealand were among a network of opaque firms that were used to dupe Chinese investors out of millions of US dollars in a pyramid scheme called “EuroFX” earlier this year.
New Zealand also came under fire this year when the Panama Papers showed the nation’s shell companies and trusts were touted as a secretive way to channel funds around the world, including for tax-avoidance purposes.
“You want a jurisdiction that has a clean reputation, but doesn’t ask many questions when you’re setting up a company there,” said Jason Sharman, an Australia-based money laundering expert and coauthor of the book Global Shell Games.
New Zealand Minister for Economic Development Steven Joyce said the government is aware of the risks and is taking steps, such as bringing anti-money laundering regulations in line with international standards.
The New Zealand Ministry of Justice is also “looking into” the feasibility of a registry that shows the beneficial owners behind companies.
“It’s all about the management of risks and we’ve taken a number of steps,” Joyce said in a telephone interview yesterday.
Others said the risks are not being managed well enough.
“Anyone who wants to … hide dirty money, just needs a local director, a physical address and NZ$45, and in a few minutes they’ve got just what they need to do it with,” said Ron Pol, the Wellington-based head of anti-money laundering firm AML Assurance.
The World Bank report tracks regulatory changes in 190 nations for businesses throughout their life cycle — from the ease of business start-up regulations and getting credit to property rights.
It said a record 137 economies undertook reforms to make it easier to start and operate businesses in the past year, with more than 75 percent of the changes occurring in developing nations.
The World Bank says better performance in the Doing Business rankings generally equates to lower levels of income inequality and reduced poverty.
An index launched a year ago to give investors greater exposure to China’s Internet giants is now the world’s worst-performing major technology gauge. The Hang Seng Tech Index has been on a roller-coaster ride in the past 12 months. The gauge, which marks its first anniversary on Tuesday, was up 59 percent at its February peak, but has since seen more than US$551 billion in market value wiped out amid Beijing’s clampdown on the sector. That has reduced its gain to nearly 6 percent, compared with more than 40 percent for the MSCI World Information Technology Index and the NASDAQ-100 Index. The
EDUCATION AS WELFARE: New regulations threaten to upend the lucrative private education sector that teaches the public school curriculum to paying families China unveiled a sweeping overhaul of its US$100 billion education tech sector, banning companies that teach the school curriculum from earning profit, raising capital or going public. Beijing on Saturday published an array of regulations that together threaten to overturn the sector and jeopardize billions of dollars in foreign investment. Companies that teach school subjects can no longer accept overseas investment, which could include capital from the offshore registered entities of Chinese firms, according to a notice released by the Chinese State Council. Those in violation of that rule must take steps to rectify the situation, the country’s most powerful administrative
Facebook Inc on Wednesday reported its profit doubled in the second quarter as digital advertising surged, but warned of cooler growth in the months ahead in an update that sent its shares sinking. Profit rose to US$10.4 billion on revenue of US$29 billion, a 56 percent increase from last year, mainly from an increase in ad revenue, Facebook said. The number of people using the social network monthly climbed to 2.9 billion, a year-on-year gain of 7 percent, while about 3.5 billion people used at least one of the company’s apps, including Instagram, WhatsApp and Messenger. “We had a strong quarter, as we
‘IN ITS INFANCY’: The company’s 12-inch fab in Arizona is to be its first major overseas chip manufacturing site, while the fab in Japan would be its second, if it is constructed Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is evaluating the feasibility of constructing a semiconductor fabrication plant in Germany as it continues to expand overseas, it said yesterday. A shareholder at the contract chipmaker’s annual general meeting in Hsinchu City yesterday asked about the possibility following media reports earlier this month that TSMC was approached by the German government about building a chip fab in the country, as Europe joins the US and China in establishing local chip supplies in a bid to avert future chip shortages. “About the German fab, we are seriously looking into it, but it is still in its