Globalization, Erosion of Tax Base, and the Revenue Potential of Developing Asia's Foreign Exchange...

8/22/2019 Globalization, Erosion of Tax Base, and the Revenue Potential of Developing Asia's Foreign Exchange Reserve Buil

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Economics and REsEaRch dEpaRtmEnt

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Reveue pel

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Freg Exge ReerveBul-U

Donghyun Park

September 2008

RD WoRking PaPER SERiES no. 122


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ERD Wrin Paper N. 122

Globalization, Erosionof tax basE,andthE rEvEnuE PotEntialof dEvEloPinGasias forEiGn ExchanGE rEsErvE build-uP

donGhyun Park

sEPtEmbEr 2008

Donghyun Park is Senior Economist, Economics and Research Department, Asian Development Bank. An earlier version

of this paper was presented at the International Symposium on Tax Reform in Globalization Era: World Trend and

Japans Choice held 2223 February 2008 in Tokyo. The author wishes to thank the symposium participants for

many helpful comments, and Hitotsubashi University for organizing and sponsoring the symposium.


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Asian Deepment Ban6 ADB Aene, Mandan Cit

1550 Metr Mania, Piippineswww.adb.r/ecnmics

2008 b Asian Deepment BanSeptember 2008

ISSN 1655-5252

Te iews epressed in tis paperare tse te atr(s) and d nt

necessari reect te iews r picies te Asian Deepment Ban.


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FoREWoRD

Te ERD Wrin Paper Series is a rm r nin and recent cmpetedresearc and pic stdies ndertaen in te Asian Deepment Ban r nits bea. Te Series is a qic-disseminatin, inrma pbicatin meant tstimate discssin and eicit eedbac. Papers pbised nder tis Series

cd sbseqent be reised r pbicatin as artices in pressina jrnasr capters in bs.


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CoNtENts

Abstract ii

I. INTRoDuCTIoN 1

II.II. DEvEloPINg ASIAS TAx CoMPETITIvENESS, ovERAll FISCAl PoSITIoN,AND RElATIvE IMPoRTANCE oF NoNTAx REvENuES AS A SouRCE oFgovERNMENT REvENuES 3

A. Deepin Asias Ta CmpetitienessA. Deepin Asias Ta Cmpetitieness 3 B. Deepin Asias oera Fisca Psitin and ln-Term Fisca Needs 6 C. Reatie Imprtance Nnta Reenes 8

III.III. ARE DEvEloPINg ASIAS FoREIgN ExChANgE RESERvES ExCESSIvE? 9

Iv.Iv. hoW BIg ARE ThE FISCAl DIvIDENDS FRoM MANAgINg DEvEloPINg ASIASExCESS RESERvES MoRE ACTIvEly? 14

v.v. CoNCluDINg oBSERvATIoNS AND REMARkS 17

REFERENCES 18


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AbstRACt

A majr side eect baizatin is te ersin te ta base de tte rwin mbiit capita and te cnseqent internatina ta cmpetitinr capita. Te ptentia ss reenes is encrain deepin Asiasernments t r aternatie, nncnentina, nnta srces reene.

Te centra bjectie tis paper is t epre te etent t wic ne ptentiasrce nncnentina reenete reins sarin ecess rein ecanereserescan ep t cmpensate reina ernments r te ersin teir

ta bases. Te anasis indicates tat mre actie manaement ecess reseresan te ines prft-maimizin serein weat nds can indeed mae asinifcant cntribtin t te reins nncnentina fsca reenes.


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I. INtRoDuCtIoN

In bt deeped and deepin cntries, ta sstems sd be desined s as t fnancete reqired ee pbic spendin as efcient and eqitab as pssibe. Accrdin t Tanzi and

Zee (2000), ta pic pas a particar sensitie re in te ecnmies deepin cntriestat are we-interated int te wrd ecnm, sc as tse in deepin Asia. In tsecntries, te ta sstem sd raise en reene t fnance essentia ependitre wittresrtin t ecessie ernment brrwin, raise reenes in was tat minimize disincenties n

ecnmic actiit, and d s in was tat d nt deiate sbstantia rm internatina practice.Deepin cntries ace mc bier caenes tan deeped cntries in settin p eectieand efcient ta sstems. Tse caenes incde, bt are nt imited t, te strctre te

ecnm tat maes it difct t impse and cect certain taes, imited instittina capacit te ta atrities, scarcit and pr qait basic data, and a pitica enirnment tatdisars ratina ta pic. As a rest, ta pic in deepin cntries is ten te art tepssibe, rater tan te prsit te ptima (Tanzi and Zee 2000).

As difct as ie is r ta atrities in deepin cntries reatie t teir cnterpartsin deeped cntries, baizatin is main ie een mre difct. As pinted t b Aser andRajan (2003), ldin (2002), and Ai-yna (2001), baizatin is increasin te reatie inence

internatina actrs n ta pic, wic sed t be determined main b dmestic actrs.At te decine trade barriers and rwin crss-brder capita pses caenes r taatrities in bt deeped and deepin cntries, te caenes are mc mre prnncedr te atter, de t teir wea instittina capacit and traditina i dependence n rein

trade taes. Frtermre, ien te scpe, scae, and speed baizatin tat deepin Asiaas eperienced, te fsca pressres arisin rm baizatin are ie t be mre seere r terein tan r ter parts te deepin wrd.1 Fr eampe, imprt iberaizatin and redctin

rein trade taes is rcin deepin cntries t raise mre reenes rm dmestic taes.Frtermre, in te cntet capita inws, transer pricin and ter ta-aidin practices brein inestrs are emerin as new isses r instittina i-prepared ta atrities.

A majr ta pic caene acin a cntries in a wrd rwin capita mbiit iste isse internatina ta cmpetitin. Tecnica prress and te rema ecanecntrs ae ed t a sarp rwt in te crss-brder ws bt prti and rein directinestment (FDI). In particar, FDI is wide perceied as benefcia r ecnmic rwt, and

cntested intense b ernments. Amn deepin cntries, ta cmpetitin is an especia

reeant isse r deepin Asia in it te reins trac recrd in attractin capita inwsand sin tem t pwer its indstriaizatin and deepment. Indeed sme reina cntries sc

as Maasia and Sinapre ae been eceptina sccess in attractin FDI tr cnscisand actie ernment picies. In cnnectin wit ta cmpetitin, a e cncern r deepin

1 Trt tis paper, deepin Asia reers t te 44 deepin member cntries te Asian Deepment Ban

(see www.adb.r). Deepin Asia des nt incde Japan, Iran, and Midde Eastern cntries, bt incdes East Asia,Steast Asia, St Asia, rmer Siet repbics in Asia, and te isand-states te Pacifc.
http://www.adb.org/http://www.adb.org/


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2 September 2008

Globalization, eroSionof taxbaSe, andthe revenuepotentialof developinG aSiaSforeiGn exchanGe reServebuild-up

donGhyun park

cntries in Asia and esewere is tat ernments ma cncentrate t mc n cmpetin r

rein inestments ia a wide rane ta incenties. Din s ma ead t a seris neect mre ndamenta ta rerms sc as strentenin instittina capacit.

Internatina ta cmpetitin r FDI istrates te act tat nder baizatin, sme

srces reenes, particar taes n i mbie actrs, are increasin cmin nderpressre. At etensie immiratin restrictins in deeped cntries render abr mcess internatina mbie tan capita, tis is becmin ess tre r sied abr. Te nderin

reasn is te rwin internatina cmpetitin r te imited ba spp sis, wic isbest eidenced b mre seectie deeped-cntr immiratin reimes tat ar sied wrerser nsied wrers. one pssibe pic respnse t te pressre n reenes rm reatiembie actrs sc as capita and sied abr is t sit te ta brden n reatie ess mbie

actrs sc as nsied abr. unrtnate, sc a rerientatin ta pic ma be piticadifct and, in an case, imited eectieness in raisin reenes. Fr ne, tain abr ratertan capita and nsied abr rater tan sied abr is ie t arse ppsitin n eqit

rnds in i neqa deepin cntries. Tain te east mbie actrs as amnts ttain tse east abe t pa taes, wic imits te amnt reenes tat can be cected.

Aizenman and Jinjara (2006) fnd sme empirica spprt r te ntin tat baizatin

erdes te ta bases deepin cntries. Teir centra ptesis is tat baizatin sitste ta base rm taes tat are reatie eas t cect, sc as taris, seinirae and fnanciarepressin, tward taes tat are mre difct t cect, sc as ae added ta (vAT) andincme taes.2 Te nderin intitin is tat baizatin is a prcess tat mes deepin

cntries tward ier ees trade and fnancia interatin as we as reater macrecnmicstabiit. Te impicit crar a reatie sit tward ard t cect taes, especia iente wea instittina capacit deepin-cntr ta atrities, is tat te tta ta base deepin cntries wi srin as a rest baizatin. Aizenman and Jinjara cnfrm teir

centra ptesis, tat te reene/rss dmestic prdct (gDP) rati eas t cect taese in deepin cntries between te ear 1980s and te ate 1990s, wereas te rati/gDPrati ard t cect taes rse. Mre reeant r tis papers prpses, te as fnd tat

at ier reenes rm ard t cect taes part set te wer reenes rm east cect taes, te net rest was a drp in tta ta reene/gDP rati de t te sma initiabase ard t cect taes in deepin cntries.

At ne sd nt eaerate te impact baizatin n te taatin capacit natina ernments, it is eqa imprtant t nte tat baizatin, wic increases te mbiit sme actrs and ence redces teir taabiit, wi neas sme pressre n ta reenes. 3

Aser (2005) ares tat a sinifcant means r ernments t ease tse fsca pressres is t

see ncnentina nnta srces reenes. Te centra bjectie tis paper is t atne ptentia srce ncnentina fsca resrce mbiizatin, rein ecane reseres. onesinifcant crrent macrecnmic trend in deepin Asia is te rapid bid-p rein ecane

reseres it as eperienced since te Asian crisis. Te isse ndamenta interest is te etentt wic tis trend can ep t pride te rein wit te fsca resrces it needs r its srt-term and n-term fsca needs.

2 Stdies epainin deepin cntries traditina reiance n eas-t-cect taes incde Cierman et a. (1992),

Aizenman and gidtti (1994), Emran and Stiitz (2005), and grdn and li (2005).3 Accrdin t hbsn (2003), neiter te capacit natina ernments t ta, nr te weare state in ric cntries,

is ie t witer awa as a cnseqence baizatin.


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erd WorkinGpaper SerieSno. 122

Te remainder tis paper is ranized as ws. Sectin II epres deepin Asias ta

cmpetitieness, era fsca sitatin, and trends in te reatie imprtance nnta reenesas a srce ernment reenes. Sectin III brie s at te basic acts abt te reinspst-crisis rein ecane reseres bid-p, and anazes te etent t wic te reins reseres

eceed te amnts reqired r traditina iqidit prpses. Sectin Iv discsses weter scecess reseres cnstitte a ree fsca asset at te dispsa te reins ernments. Sectinv prides sme qantitatie estimates te fsca diidend tat can be enerated in te rm inestment incme rm mre actie manaement ecess reseres. Sectin vI wraps p te

anasis wit te e messaes and brad temes emerin rm te anasis.

II. DEvEloPINg AsIAs tAx ComPEtItIvENEss, ovERAll FIsCAl PosItIoN,AND RElAtIvE ImPoRtANCE oF NoNtAx REvENuEs

As A souRCE oF govERNmENt REvENuEs

Bere dein int te centra isse fsca impicatins deepin Asias rein ecaneresere bid-p, it is wrtwie t tae a at te brader fsca andscape te rein. Mre

specifca, in tis sectin, te internatina cmpetitieness deepin Asias ta sstems,era fsca psitin and n-term fsca resrce reqirements, and trends in te sare nntareenes in tta ernment reenes are eamined. A brie eriew tese isses wi ep

t mre cear defne te cntet in wic t epre te ptentia cntribtins te reinssarin rein ecane reseres t te fsca resrces reina ernments. Fr eampe, aare bdet defcit indicates tat te ernment aces srt-term pressres t mbiize reenesin rder t redce te defcit.

A. Deepin Aia ta Cpeiiene

As nted earier, baizatin is increasin te crss-brder mbiit capita and sme teractrs prdctin. As a rest, ernments are irs cmpetin wit eac ter t attractand retain capita, wic is ita r eneratin ecnmic rwt and jbs. An intera cmpnent te intense internatina cmpetitin r capita is ta pic. In particar, ernments ae

been war abt raisin crprate incme ta rates and ae ten redced tem in rder t maeteir cntries mre attractie r rein and dmestic inestrs (see, r eampe, Deere andSrensen 2005). Wie crprate incme ta rate is n ne part te era ta brden, it is

i isibe and seres as a pwer sina abt te attitde te ernment tward bsinessand te priate sectr. oter tins bein eqa, cmpanies wi preer cntries tat impse aiter era ta brden tan tse tat impse a eaier brden. Te reatie attractieness deepin Asias ta reimes t cmpanies is interestin r te win reasn: a i era

ta brden sests strn cmpetitie pressre r ernments t redce crprate incme taand ter taes in te tre, wie a w brden impies wea cmpetitie pressres.

1. Jin sd he Wrd ban and PricewaerheCper

In a cmpreensie internatina cmparisn ta sstems entited Pain Taes 2008:Te gba Pictre, wic was jint carried t b te Wrd Ban and PricewaterseCpers

Section ii

developinG aSiaStax competitiveneSS, overall fiScal poSition, and relativeimportanceof nontaxrevenueS

aSa SourceofGovernmentrevenueS


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September 2008


donGhyun park

(2008),4 te rests a sre cndcted as part te Wrd Ban Din Bsiness reprt eamined

and cmpared ta reimes arnd te wrd. Te centra bjectie te std was t cmpare teease pain taes r bsinesses in 178 cntries. Te bacrnd sre ined cectininrmatin n te ta-reated actiities a standard mdest-sized cmpan in eac te 178

cntries, b reiewin fnancia statements and ist transactins. Te inrmatin was sed tcmpte tree ta-reated indicatrs: nmber ta paments, time spent n cmpin wit tabiatins, and ta cst. Te tree indicatrs were ten eqa weited t prdce a raninr eac cntr r te era ease pain taes.

Tabe 1 reprts te ranins seected deepin Asian ecnmies, as we as tse seected indstriaized cntries and nn-Asian deepin cntries. Te ranins indicate a reatdea etereneit acrss te rein in terms ta cmpetitieness. Ecnmies tat ae a

n traditin ibera ecnmic picies, sc as Sinapre and hn kn, Cina, scre ibt in ta rate and era ease pain taes. At te ter end, te tw iants te PepesRepbic Cina (PRC) and India, an wit te Piippines, scre pr in bt areas. Te

ter fe ecnmiesIndnesia; Repbic krea (encert krea); Maasia; Taipei,Cina;and Taiandare smewere in te midde between te iants and Sinapre and hn kn,Cina. Wit te eceptin Sinapre and hn kn, Cina, te reins ta enirnment is ntnticeab mre attractie r bsinesses tan tat ter reins. Tis sests tat te rein

wi nt be immne rm te enera ba trend ta cmpetitin r capita and wer taesn capita.

tablE 1EasEof PayinG taxEs, rankoutof 178 EconomiEs, 2007

EconomyovErall

rank

numbEroftaxPaymEnts

timEtocomPly

totaltaxratE

PRC 168 104 167 163India 165 162 105 159

krea 106 141 114 44Taipei,Cina 91 65 126 78Taiand 89 104 93 66Sinapre 2 5 3 14Maasia 56 104 54 54Indnesia 110 146 95 63hn kn, Cina 3 3 13 15Piippines 126 138 64 135Japan 105 29 131 133uS 76 21 122 102german 67 39 65 124Brazi 137 24 177 158Rssia 130 58 151 131Meic 135 74 155 127St Arica 61 24 131 62Tre 54 35 79 96

Srce: Wrd Ban and PricewaterseCpers (2008).

4 An earier editin te std, Paying Taxes: The Global Picture, was pbised in 2006 (Wrd Ban and

PricewaterseCpers 2006).


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2. Repr C. D. Hwe Inie

Te reprt b te C. D. hwe Institte (2006) entited Te 2006 Ta Cmpetitieness Reprt:Prpsas r Pr-grwt Ta Rerm as s at and cmpares ta rates n bsinesses arndte wrd.5 Te reprt is ess cmpreensie tan te Wrd BanPricewaterseCpers std

in tat it cses se n te ta cst rater tan te era ease pain taes. Frtermre,its cmpted ta rate is mre narrw defned and ecdes sme taes tat ad been incded inte Wrd BanPricewaterseCpers std. Fina, te C. D. hwe Institte reprt cers 81

cntries, wereas te Wrd BanPricewaterseCpers std cers a mc arer sampe 178 cntries. Neerteess, te tw stdies are ndamenta simiar in tat te see t cmparedierent cntries in terms te attractieness teir ta sstems t cmpanies, bsinessactiities, and inestment. It is as se t at anter cmparisn ta cmpetitieness

acrss cntries based n a dierent measre ta cmpetitieness.

T iit te act tat crprate incme ta is n ne cmpnent, abeit a sinifcantcmpnent, te ta rate frms acta ace, te C. D. hwe Institte distinises between

crprate incme ta rate and te eectie ta rate n capita. Te atter rate is defned as te

amnt crprate incme and ter capita-reated taes sc as saes ta n capita prcasespaid b a bsiness as a percentae preta prfts r marina inestment prjects.6 Tabe 2reprts bt ta rates r ecnmies in Tabe 1 r wic data are aaiabe. Fr sme ecnmies,

tere are are dierences between te tw ta rates, r eampe, te eectie ta rate n capitais amst twice te crprate incme ta rate in te PRC. Neerteess, brad speain, Tabe 2cnfrms te main impicatin Tabe 1, wic is tat te crprate ta brden in deepin Asia

is, b and are, cmparabe t ter parts te wrd, and ence te rein wi nt be immnerm internatina ta cmpetitin.

tablE 2EffEctivE tax ratEon caPitaland corPoratE incomE tax ratE, 2006 (PErcEnt)

Economy

EffEctivEtaxratEoncaPital

corPoratEincomEtaxratE

PRC 46.9 24India 30.2 33krea 31.5 27.5Taiand 19.1 30Sinapre 11.5 20Maasia 20.3 28Indnesia 28.7 30hn kn, Cina 6.1 17.5Japan 32.2 41.9uS 38 39.2german 38.1 38.4Brazi 38.8 34

Rssia 37.6 22Meic 13.8 30St Arica 15.3 29Tre 5.2 30

Srce: C. D. hwe Institte (2006).

5 An earier editin te std, The 2005 Tax Competitiveness Report: Unleashing the Canadian Tiger, was pbised in

2005 (C. D. hwe Institte 2005).6 Cen (2000) defnes te marina eectie ta rate n capita.

Section ii




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b. Deepin Aia oera Fica Piin and ln-ter Fica Need

Taatin is n ne a te eqatin in assessin te fsca pressre a ernment aces.Een i a ernment is ineectie at cectin reenes, it ma nt ace mc fsca pressrei it spends itte. Te era fsca defcit is a prett d indicatin te srt-term bdet

cnstraint tat a ernment aces, since brrwin reqirements and csts wi increase as tedefcit rises. Te bdet cnstraint is especia tit nder baizatin since internatina fnanciamarets wi impse ier ris premims and ter csts n ernments and cntries tat rn

are bdet defcits. A ier ernment bdet defcit impies strn pressre t cect mrereenes in rder t redce te defcit. on te ter and, a ernment enjin a eat fscapsitin aces mc ess pressre t cect mre reenes.

Tabe 3 reprts era ernment bdet baance as percentae gDP, an wit ttaernment ependitres as percentae gDP, r 10 deepin Asian ecnmies r 1990, 2000,and 2006. Fr te mst part, te cntries te rein enj a strn fsca psitin. Tabe 3cnfrms te cnentina wisdm tat fsca discipine and te ensin macrecnmic stabiit is

ne te reins main cmparatie adantaes reatie t ter parts te deepin wrd.

Een te ew reina eceptins were crnic fsca defcits ae been a srce macrecnmicinstabiit, sc as India and te Piippines, ae impred teir fsca perrmances in recentears are de t teir impred rwt perrmance. Te pbic debt-t-gDP prides a mre

accrate pictre te n-term fsca psitin and sstainabiit. Tabe 4 bew reprts te pbicdebt-t-gDP rati r te same ecnmies r 2005 and 2006, ecept hn kn, Cina; Sinapre;and Taipei,Cina, wic eectie d nt carr an pbic debt. Tabe 4 sws tat te fres are

enera we bew daners ees and decinin qite rapid r sme ecnmies. Te trendsin te pbic debt-t-gDP rati cnfrm te str td b trends in te ernment bdet baance,i.e., te rein is fsca in d eat.

tablE 3ovErall GovErnmEnt budGEtbalancEin sElEctEd asian EconomiEs

as PErcEntaGEof GdP, 1990, 2000, and 2006

Economy 1990 2000 200

PRC 2.8 (18.5) 2.8 (16.3) 0.7 (19.2)India 7.8 (18.5) 5.7 (15.5) 3.7 (14.1)

krea 0.6 (15.5) 1.1 (18.9) 0.4 (23.5)Taipei,Cina 1.8 (14.5) 4.6 (22.9) 0.3 (15.9)*Taiand 4.8 (13.9) 2.2 (17.3) 1.1 (16.4)Sinapre 10.8 (21.3) 10.0 (18.8) 7.0 (15.8)*

Maasia 2.9 (27.7) 5.5 (22.9) 3.3 (24.9)Indnesia 0.9 (19.6) 1.1 (15.8) 1.0 (20.1)

hn kn, Cina 0.7 (14.3) 0.6 (17.7) 3.7 (15.8)

Piippines 3.5 (20.4) 4.0 (19.3) 1.1 (17.3)* 2005 fres; 2006 fres are nt aaiabe.Nte: Nmbers inside parentesis sw tta ependitre/gDP rati.Srce: Asian Deepment Ban (2007).


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tablE 4Public dEbtasa PErcEntaGEof GdP in

sElEctEd asian EconomiEs, 2005 and 2006

Economy 200 200PRC 17.9 17.3India 83.9 82.2krea 36.4 32.3Taiand 47.4 42.3Maasia 62.5 56.5Indnesia 45.6 38.6Piippines 86.3 77.4

Nte: hn kn, Cina; Sinapre; and Taipei,Cina d nt carr sbstantia debt.Srce: Internatina Mnetar Fnd (aris ears).

Te precedin discssin sd nt ead s t inre te reins e n-term fscareqirements. T te cntrar, precise becase te era fsca sitatin is strn at te present,

reina picmaers ae te r tain a d at and start pannin r trefsca reqirements. In particar, tw e trends sd disabse reina picmaers rm ancmpacenc abt te need r adeqate fsca resrces in te n rn. First, deepin Asia inenera and East Asia in particar is eperiencin a secar demrapic transitin tward der

ppatins. Fain birtrates and risin ie epectanc, drien b ier iin standards, wisinifcant raise te sare te eder in te reins ppatin. Te ineitabe impicatin istat pensin and eat care ependitres wi rise sbstantia in te tre.7 Secnd, at

scia prtectin and scia insrance ae enera been w-pririt fsca areas in deepinAsia, te are bnd t rw, and ence tae p mre fsca reqirements in te n rn. Teimmediate catast tis cane is baizatin and te strctra canes it brins abt. Terewi be rwin cas r ernments t bid strner scia saet nets t minimize te ensin

discatins and insecrities.Impicit pensin debt is a d cncrete eampe te dantin n-rn fsca caenes

tat ie aead r te rein. Impicit pensin debt can be brad defned as te present ae

prmised pensin benefts. Tse prmises are nnded r partia nded in a majrit cntries since nds are nt set aside t cer pensin iabiities r are inadeqate t certem. Accrdin t hzmann et a. (2004) and Sin (2005), in 1999/2000 te impicit pensin

debts PRC, krea, and Piippines amnted t 141%, 57%, and 185% gDP, respectie. Inadditin t cmmn needs, eac cntr as its wn n-term fsca needs tat reqire ampefsca space in te n rn. Fr eampe, it is we nwn tat inadeqate psica inrastrctreis ne te main reasns w India cannt aciee een ier rwt rates tan te impressie

rates it as acieed. hweer, bidin, imprin and maintainin rads, raiwas, prts, tiities,

water aciities, and ter inrastrctre in India wi be an immense cst n-rn endear.Fr midde-incme cntries sc as Maasia and Taiand, a n-rn fsca pririt mst be timpre teir edcatina sstems t prdce en sied wrers t me p te ae cain

tward mre nwede-intensie indstries. In srt, te crrent fsca eat ntwitstandin, terein aces a wide rane n-rn deepment caenes tat wi reqire massie resrcest address eectie.

7 See, r eampe, heer (2003) and Car (2002).

Section ii




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C. Reaie Iprance f Nna Reene

Ta rerm is te main strateic respnse t te treat t ta reenes psed b te rwinmbiit and ence decinin taabiit capita and ter actrs. unrtnate, reene-increasinta rerm sc as imprin cmpiance tr strner enrcement is teretica appeain

bt administratie difct in te absence adeqate instittina capacit. Te same can besaid r te bradenin te ta base rm direct taes tward indirect taes. Raisin ta rates isincnsistent wit te i pririt ien t attractin inestment amn picmaers. Accrdin t

Aser (2005), een reatie sccess ta rerm can enerate between 1.5% and 2.5% gDP inadditina reene. Sc an increase is mc needed in te ace te ersin te ta base det baizatin bt nie t be sfcient t meet deepin Asias n-rn fsca caenes.

In iew te abe cnsideratins, Aser (2005) ares tat Asian ernments wi aet mae reater se nncnentina srces reene t meet teir fsca needs in te 21stcentr. Tese srces incde tiizin eistin state assets mre prdctie, creatin prpertrits and reatins, actins, and, emissins tradin, ees and ser cares, asset-reated taes,

treasr manaement, accessin fnancia and capita marets, and reenes rm i and minin

cncessins. It sd be nted tat man tese nncnentina reenes are nnta reenes.Te anasis sests tat tere is a cmpein ratinae beind a sit rm ta reenes t nntareenes in te cntet baizatin. Te ersin te ta base de t te rwin mbiit

actrs and te cnseqent difct cectin taes increases te reatie attractieness nnta reenes.

Tabe 5 bew eamines te sare nnta reenes in tta ernment reenes in seectedAsian ecnmies in 1990, 2000, and 2006. Tis sare is ineitab sbject t sme atiit de tte inerent atiit nnta reenes. Fr eampe, te amnt priatizatin reenes wi

jmp wen a are state-wned enterprise is sd. Neerteess, in enera, te reatie imprtance

nnta reenes seems t ae rwn er time acrss te rein. Frtermre, nnta reenesae becme sinifcant reene srces in a te cntries, een t teir reatie sare aries

a t acrss cntries. Nnta reenes are east imprtant in te PRC, were te accnted r10.2% tta reenes in 2006, at tis is sinifcant ier tan te sare 3.9% in

1990. Te sare nnta reenes is mc ier in ter cntries, especia Indnesia; Maasia;Sinapre; and Taipei,Cina, were te sare reaced 30% r ier in 2006. Te act tat nntareenes ae nw becme amiiar and we-estabised reene srces sd ie te reina

ernments a deree cmrt in seein new srces nnta reenes in respnse t teaderse impact baizatin n te ta base.

Anter wrdwide trend in ta pic is te sit rm direct ta t indirect ta. Deepin

Asia is n eceptin t tis trend, and ernments trt te rein are redcin teir reiancen crprate and persna incme taes wie increasin teir reiance n ds and serices ta(gST) and vAT. Wie te primar ratinae beind te ba and reina sit rm direct taes

t indirect taes is t encrae inestment and wr, te sit as reects internatina tacmpetitin r capita and, t a esser etent, sied abr. Fr eampe, te main strateic trst Sinapres recent ta rerm is t redce crprate and persna incme ta rates in rder tattract rein capita and taent, and cmpensatin r te reene sses b raisin gST rates.Wie incme taes ae a mre direct impact n cmpanies and indiidas tan gST and vAT, te

atter as add t te era ta brden te ace.


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erd WorkinGpaper SerieSno. 122 9

tablE 5PErcEntaGE sharEof nontax rEvEnuEsin total GovErnmEnt rEvEnuEs,

sElEctEd asian EconomiEs, 1990, 2000, and 2006

Economy 1990 2000 200PRC 3.9 6.1 10.2India 21.8 29 18.3krea 9.5 19.9 20.5

Taipei,Cina 19.7 24.3 31.8*Taiand 6.3 10.1 11.3*Sinapre 42.6 41.0 36.3*

Maasia 28 23.7 29.9Indnesia 5.3 43.5 35.7

hn kn, Cina 24.9 27.2 19.9Piippines 13.1 9.6 11.7

*2005 fres; 2006 fres are nt aaiabe.Ntes: Fr sme cntries, tta ernment reenes are te sm crrent reenes and capita receipts.Srce: Asian Deepment Ban (2007).

Terere, rm a brader perspectie, increasin te sare nnta reenes and crrespndinredcin te sare ta reenes ma be a mre eectie means creatin a mre cndcie ta

enirnment r wr and inestment. Frtermre, accrdin t cnentina wisdm, te sit rmdirect taes t indirect taes wrsens incme ineqait since te pr bear a disprprtinatei sare te brden indirect taes. A sit rm taes t nntaes can mitiate te need

t raise indirect taes t cmpensate r wer direct taes, and ts mitiate te aderse eqiteects. In tis paper, a pssibe srce nnta reenes r deepin Asia is epred, namete reins rein ecane reseres, wic as rwn rapid since te Asian crisis. Bt berediscssin te reene-iedin ptentia reseres, te acts teir pst-crisis bid-p are

anazed.

III. ARE DEvEloPINg AsIAs FoREIgN ExCHANgE REsERvEs ExCEssIvE?

Tis sectin brie s at te reins rein ecane resere accmatin r te perid19902006.8 Te e bacrnd acts abt te reins resere bid-p sets t te cntett epre te ptentia re reseres as a srce nnta reenes. In tis paper, rein

ecane reseres reer se t rein crrenc assets recrded n centra bans baance seets,and ecde d, Specia Drawin Rits, and Internatina Mnetar Fnd (IMF) resere psitins.Fire 1 sws tat deepin Asias tta rein ecane reseres rew rm $203 biin t

$2,295 biin in nmina terms, and rm $267 biin t $1,960 biin in rea terms between1990 and 2006. Fire 2 sws tat deepin Asias sare ba reseres rse rm 23.8%

t 44.0% drin te same time perid. In bt abste and reatie terms, te rein as beeneperiencin a remarab rapid bid-p reseres.

8 Par (2007) prides a cmpreensie eriew te cases and pic impicatins deepin Asias reinecane resere accmatin.

Section iii

aredevelopinG aSiaSforeiGn exchanGereServeSexceSSive?


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FIGURE 1

NOMINAL AND REAL FOREIGN EXCHANGE RESERVES OF DEVELOPING ASIA,

19902006

2,500

2,000

1,500

1,000

500

01990 1992 1994 1996 1998 2000 2002 2004 2006

L

evelofreserves

(billion

US$)

Nominal Real

FIGURE 2SHARE OF DEVELOPING ASIA IN WORLD FOREIGN EXCHANGE RESERVES,

19902006 (PERCENT)

45

40

35

30

25

20

1990 1992 1994 1996 1998 2000 2002 2004 2006

Share


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Deepin Asias reseres cntined t rw strn in 2007, as is eident in Tabe 6. Te

tabe sws tat reins 12 arest resere ders are, in descendin rder: PRC; Taipei,Cina;krea; India; Sinapre; hn kn, Cina; Maasia; Taiand; Indnesia; Piippines; kazastan;and viet Nam. Te 12 ecnmies jint accnt r mre tan 98% te reins reseres and

iit te pan-reina natre deepin Asias resere bidp. Te reins reseres arepredminant centra ban reseres riinatin rm te centra bans prcase rein ecane,as ppsed t fsca reseres arisin rm fsca srps, ernment wnersip natra resrces,r ter ernment net incme.9

tablE 6dEvEloPinG asias forEiGn ExchanGE rEsErvEs ($ billion)

Economy

stockasofdEcEmbEr2007

stockasofdEcEmbEr 2006

PErcEntincrEasE

PRC 1,528.25 1,066.34 43.32

Taipei,Cina 270.31 265.14 1.95

India 264.73 170.19 55.5

krea 261.77 238.39 9.8

Sinapre 162.96 135.81 20.0

hn kn, Cina 152.70 133.17 14.7

Maasia 101.3 81.72 24.0

Taiand 85.24 65.15 30.8

Indnesia 54.56 40.70 34.1

Piippines 30.07 19.89 51.2

kazastan 19.25 17.75 8.5

viet Nam 17.16 13.38 28.3

Srce: Internatina Financia Statistics nine database, dwnaded 1 Febrar 2008.

Trnin nw t te etent t wic te reins reseres eceed adeqate ees, jst ascmmercia bans can arm its prfts b din ecessie cas reseres, cntries can arm teirweare b din ecessie rein ecane reseres. Centra bans tpica d rein ecanereseres r precatinar insrance prpses, t prtect te cntr rm sdden srtaes

internatina iqidit. hweer, tere is widespread cncern amn bt picmaers and teenera pbic tat te reins reseres nw eceed a pasibe estimates wat it needs rprecatinar iqidit prpses.

At te cncept ecess reseres is neiter precise nr we-defned, tere are sme we-nwn measres resere adeqac t ae te manitde deepin Asias ecess reseres,as tse discssed in Edisn (2003) and Erpean Centra Ban (2006). Empirica stdies fnd ne

re tmbte rati reseres t srt-term eterna debtt be a particar sinifcantdeterminant an ecnms nerabiit t fnancia crisis. Te we-nwn greenspan-gidtti

re stipates tat te critica ae tis rati is 1, i.e., a cntr wit reseres eqa t rmre tan a eterna debt ain witin 1 ear sd be abe t serice its immediate rein

9 hidenbrand (2007) intrdced te critica distinctin between fsca reseres, wic are ree fsca assets, and centra

ban reseres, wic are nt. Centra ban reseres ae cnterpart iabiities in te centra bans baance seet, inte rm eiter mne r bnds issed t prcase rein ecane.

Section iii



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ecane biatins een drin a crisis. Fire 5 reeas tat deepin Asia cmrtab passes

te greenspan-gidtti test resere adeqac, endin spprt t te ntin tat te reinsreseres nw sbstantia eceed its reqirements.

FIGURE 5

RATIO OF FOREIGN EXCHANGE RESERVES TO SHORT-TERM EXTERNAL DEBT IN

DEVELOPING ASIAS TOP 10 RESERVE HOLDERS, 19902006

20

15

10

5

01990 1992 1994 1996 1998 2000 2002 2004 2006

China, Peoples Rep. of

Indonesia

Philippines

Thailand

Hong Kong, China

Korea, Rep. of

Singapore

India

Malaysia

Taipei,China

Trnin t estimatin te manitde deepin Asias ecess reseres, tw ter we-nwn resere adeqac measres are sed ere, te reseresM2 rati, and te mnts imprtstat reseres can pa r. Te ier te M2 rati, te reater te deree t wic te riss

crisis-prin dmestic capita it are cered. Te critica aes sa rane rm 5% t20%. Fire 6 sws tat te reseresM2 rati is eiter abe r cse t te pper imit te

520% rane r Asias biest resere ders. Te intitin beind te imprt cer measre istat reseres ep t redce nerabiit t crrent accnt scs. Te critica ae is tpica

34 mnts. Fire 7 sws tat te nmber mnts tat imprts can cer is we abe 4 inte reins biest resere ders.


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FIGURE 6

RATIO OF FOREIGN EXCHANGE RESERVES TO M2 IN

DEVELOPING ASIAS TOP 10 RESERVE HOLDERS, 19902006

1.0

0.8

0.6

0.4

0.2

01990 1992 1994 1996 1998 2000 2002 2004 2006


Indonesia

Philippines

Thailand

Hong Kong, China

Korea, Rep. of

Singapore

India

Malaysia

Taipei,China

FIGURE 7IMPORTS COVERED BY FOREIGN EXCHANGE RESERVES IN DEVELOPING

ASIAS TOP 10 RESERVE HOLDERS, 19902006 (MONTHS)

20

16

12

8

4

019921990 1994 1996 1998 2000 2002 2004 2006


Indonesia

Philippines

Thailand

Hong Kong, China

Korea, Rep. of

Singapore

India

Malaysia

Taipei,China

Section iii



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Iv. HoW bIg ARE tHE FIsCAl DIvIDENDs FRom mANAgINg DEvEloPINg AsIAsExCEss REsERvEs moRE ACtIvEly?

Te inestment incme rm deepin Asias ecess reseres is a fsca resrce. Tis act iesampe jstifcatin r te ppar ntin tat cntinin t inest te reins ecess reseres in

sae and iqid bt w-iedin traditina resere assets sc as united States ernment secritiesis a cst waste aabe resrces. Sppse te centra ban earns a rate retrn 3% binestin a dar ecess reseres n traditina resere assets bt cd ae earned a rate retrn 10% b inestin it instead in ier-retrn assets. Ten te centra ban is incrrin a

ss 7% rene fsca diidend. Tis sests tat te frst-best se te reins ecessreseres is t inest tem abrad wit te bjectie maimizin ris-adjsted retrns. Scan actie, prft-riented resere manaement strate wi ep t maimize te fsca diidendaaiabe r te reins ernments.

A rp state-wned fnancia instittins nwn as serein weat nds (SWF) ae an istr sin pbic wned rein ecane t prse cmmercia prfts.10 As sc, tepride a natra instittina mde r mre actie, prft-riented manaement deepin

Asias ecess reseres. Wie tere is n sine atritatie defnitin an SWF, SWFs sare twdefnin caracteristics: wnersip and cntr b te ernment, and prsit ris-adjstedretrns rater tan iqidit as te centra bjectie. Sme serein nds, mst ntab Sinapres

Temase hdins and gernment Sinapre Inestment Crpratin, ae been i sccessinestrs.11 Nt srprisin, new Asian SWFs sc as te krea Inestment Crpratin and teCina Inestment Crpratin are seein t repicate Sinapres sccess.

gien teir ac fnancia spisticatin, instittina capacit, and inestment eperience,it is i nreaistic r te Asian serein nds t taret rates retrn ie tat Temaser gernment Sinapre Inestment Crpratin in te srt rn. It is neerteess interestint et sme qantitatie idea wat Asian cntries can epect t ain b sitin tward mre

actie manaement teir ecess reseres. Smmers (2007) prides an eceent pint departre

r anazin tis isse in a simpe, straitrward, et intitie pasibe and appeain wa.Tabe 7 sws te annaized ris and retrn r tpes inestment prtis r n-term

istrica data.

Wat is mst reeant r tis anasis is te tpica centra ban prti and te tpicapensin prti. Centra bans traditina inest in srt-matrit, i-rade ernment

secrities and mne marets instrments, wereas pensin nds tend t inest in a diersifedprti stcs and bnds. Te specifc assmptins are tat centra ban prtis cnsists 03-ear, dar-denminated Treasries, wie pensin prtis cnsist 60% stcs and 40%bnds. Te aerae anna rea retrn n centra ban prtis is 0.98%; te aerae anna

rea retrn n pensin prti is 5.75%. At te annaized standard deiatin r pensinprti (12.45%) is mc ier tan r centra ban prti (1.24%,) Smmers (2007) sws

tat te prbabiit a neatie retrn as we as aerae rea ss in perids neatie rearetrn is ier r centra ban prtis.

10 Jnsn-Caari and Rieted (2007) pride an eceent eriew serein weat manaement. Te dest sereinweat nd, te kwait Inestment Atrit, was set p wa bac in 1953. Despite sc a n istr, te term

serein weat nd was cined n er recent, b Andrew Rzan in 2005 (see Rzan 2005a and 2005b).11 Fr eampe, te maret ae Temase rew n aerae b a remarabe 18% per ear n a cmpnded basis

between 1974 and 2006.


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tablE 7annualizEd risk/rEturnof invEstmEntPortfolios, 1926-2004 (PErcEnt)

invEstmEnt

Portfolio

avEraGEannualrEalrEturn

(GEomEtric)

annualizEdstandarddEviation

ofrEturn100% uS 1-mnt depsits 0.65 0.89Tpica centra ban prti 0.98 1.24Tpica pensin prti 5.75 12.45

100% uS stcs 7.11 19.37

Srce: Smmers (2007).

A mre actie inestment strate is anatica eqiaent t sitin rm a tpica centra

ban prti t a tpica pensin prti. Cncepta, serein nds and pensin nds areaie in tat te bt ae resrces aaiabe r te n rn, and can ts ard t tae an-rn inestment rizn. Tabe 8 prides sme qantitatie estimates tse benefts r te10 arest resere din cntries te rein r 2006. Ecess reseres are cmpted n te

basis te greenspan-gidtti re as te dierence between rein ecane reseres and srt-term eterna debt. Te ains rm mre actie resere manaement is cmpted as te prdct mtipin te ecess reseres b te dierence in rate retrn between pensin prti and

centra ban prti (i.e., 5.75% 0.98% = 4.77%). Te ains are as epressed as a percentae gDP t pt tem in better perspectie. Te abe nmbers indicate tat te fsca diidend rminestin ecess reseres mre actie is qite are. Fr eampe, in te case PRC, sitinrm a centra ban prti t a pensin prti wd ied a fsca diidend 1.63% gDP.

It sd as be remembered tat tis is nt a ne- winda ie priatizatin reenes, bt afsca diidend tat wd be aaiabe r te ernment eer ear.

tablE 8ExcEss rEsErvEsaandthE bEnEfitof invEstinG ExcEss rEsErvEs morE activEly

in dEvEloPinG asias toP 10 rEsErvE holdErs, 2006

ExcEssrEsErvEs(billionus$)

bEnEfitfrominvEstmEntofExcEssrEsErvEs

Economy inbillionus$ asPErcEntofGdP

PRC 898.94 42.88 1.63Taipei,Cina 190.90 9.11 2.56krea 124.75 5.95 0.67

India 161.49 7.70 0.86Sinapre 126.51 6.03 4.57hn kn, Cina 106.37 5.07 2.68Maasia 70.34 3.36 2.25Taiand 47.36 2.26 1.09

Indnesia 16.80 0.80 0.22Piippines 14.88 0.71 0.61

Section iv

hoWbiGarethe fiScal dividendSfrom manaGinGdevelopinG aSiaSexceSSreServeSmoreactively?

a Defned as te dierence between rein ecane reseres and srt-term eterna debt.


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Te abe cmptatina eercise is repeated r tw aternatie defnitins ecess reseres.

First, in Tabe 10, ecess reseres is defned as te dierence between rein ecane reseresand 12.5% M2 r brad mne spp. As nted earier, te sested resere adeqac criticaae in terms te reseresM2 rati ranes rm 5% t 20%, ence, te intermediate ae

12.5% is taen. Secnd, in Tabe 11, ecess reseres is defned as te dierence between reinecane reseres and te ae 3.5 mnts wrt imprts. As nted earier, te sestedresere adeqac critica aes in terms te nmber mnts tat reseres can cer ranesrm 3 mnts t 4 mnts, s te intermediate ae 3.5 mnts is taen. Fr bt aternatiedefnitins ecess reseres, te fsca diidend rm mre actie resere manaement is qite

i. Fr eampe, in te case te PRC, in terms M2 and imprt cer defnitins, te annafsca diidend is 0.95% gDP and 1.48% gDP, respectie. It is wrt repeatin tat te fscadiidends are recrrent incmes rater tan ne- windas.

tablE 9ExcEss rEsErvEsaandthE bEnEfitof invEstinG ExcEss rEsErvEs morE activEly

in dEvEloPinG asias toP 10 rEsErvE holdErs, 2006



Economy inbillionus$ asPErcEntofGdP

Taipei,Cina 166.02 7.92 2.23krea 87.93 4.19 0.47

India 146.18 6.97 0.78Sinapre 115.17 5.49 4.16

hn kn, Cina 51.70 2.47 1.30Maasia 57.25 2.73 1.83

Taiand 42.63 2.03 0.99Indnesia 21.84 1.04 0.29Piippines 13.80 0.66 0.56

tablE 10ExcEss rEsErvEsandthE bEnEfitof invEstinG ExcEss rEsErvEs

morE activElyin dEvEloPinG asias toP 10 rEsErvE holdErs, 2006

Economy



inbillionus$ asPErcEntofGdP

PRC 817.62 39.00 1.48

Taipei,Cina 196.87 9.39 2.64krea 129.52 6.18 0.70

India 112.40 5.36 0.60Sinapre 50.66 2.42 1.83hn kn, Cina 25.77 1.23 0.65

Maasia 37.13 1.77 1.19Taiand 22.73 1.08 0.53

Indnesia 11.77 0.56 0.15Piippines 2.63 0.13 0.11

a Defned as te dierence between rein ecane reseres and 12.5% ofM2.

a Defned as te dierence between rein ecane reseres and ae 3.5 mnts wrt imprts.


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v. CoNCluDINg obsERvAtIoNs AND REmARks

A majr side eect baizatin is te ersin te ta base de t rwin actr mbiit.In particar, te cmbinatin tecnica prress and iberaizin ernment picies aseed a penmena rwt in crss-brder ws bt prti inestment and FDI. Te abiit

capita t recate rm jrisdictins wit i ta brdens t tse wit wer ta brdens imitste abiit ernments t impse taes. Nt n tat, since tere is widespread perceptin tatrein capita in enera and FDI in particar are imprtant srces jbs, tecnica prress,

and ecnmic rwt, ernments are irs cmpetin wit eac ter t wer crprateincme ta rates and pride a mre arabe ta enirnment r rein inestrs. Wie ears a race t te bttm and te witerin awa te natin-state are eaerated, baizatinas neerteess precipitated a wrdwide trend tward wer ta brdens n capita.

Te ersin te traditina ta base as a rest rwin actr mbiit nder baizatinis encrain ernments deepin Asia t see aternatie, nncnentina srces reenes. At mc te rein crrent seems t enj sperfcia fsca eat psitins,

te rein as a we aces dantin n-rn fsca caenes arisin rm demrapic transitin

and baizatin, in additin t cntr-specifc caenes. Tis maes it mre imperatie rreina ernments t secre aternatie, nncnentina reene srces. It is tre tat tarerm desined t impre tapaer cmpiance and ta base bradenin tr reater se

indirect taes are pssibe pic respnses t te ersin te traditina ta base. hweer,sc pic sits are administratie difct in it inadeqate instittina capacit in manreina cntries, wic is w nncnentina reenes are an especia attractie means

raisin reenes.

one ptentia srce nncnentina ernment reenes tat is receiin a t attentin and interest trt te rein is rein ecane reseres. A e macrecnmic

trend in te rein is a rapid bid-p rein ecane reseres, wic ae nw reaced eestat eceed a pasibe estimates wat is reqired r traditina iqidit prpses. Te bid-

p is are te cnseqence rein ecane maret interentins b te centra ban witinte cntet crrent accnt srps deried rm eprts manactred ds and serices.

Tere is a widespread and rwin perceptin tat te reins sarin reseres are smew a reefsca asset at te dispsa te reins ernments. Tis paper ts ies at te intersectin tw tpica isses acin Asian picmaersw t cmpensate r te ss reenes de

t rwin actr mbiit, and w t mae d se te reins rwin mntain ecessrein ecane reseres.

Te centra isse tat was addressed is te etent t wic resere manaement can in act

pride aabe fsca resrces r te ernment. Incme rm inestin Asias ecess reseresrepresents a ptentia aabe fsca diidend r te rein. Terere, instead passie inestinecess reseres in traditina resere assets, te reins ernments sd inest tem mre

actie wit te a maimizin ris-adjsted retrns. Simpe cacatins based n n-termistrica data n rates retrn sest tat te fsca diidend rm sc a sit can be qitesbstantia. hweer, te reaizatin te fsca diidend is neiter atmatic nr aranteed. Assc, te reins ernments wd d we t adpt a prdent radaist inestment apprac frst bidin p te reqired instittina capacit r prft-seein erseas inestment, incdin

ris manaement capacit, and startin t as prti rater tan direct inestrs. Wit tis caeat

Section v

concludinG obServationSand remarkS


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in mind, te ptentia fsca diidend rm manain deepin Asias ecess rein ecane

reseres mre actie wi be are en t be sinifcant ae t te reins ernmentsin teir qest r aternatie, nncnentina srces reene.

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Printed in the Philippines

abu e per

Donghyun Park notes that global tax competition is eroding the tax bases ofgovernments. In developing Asia, one potential source of nontax fiscal revenues isinvestment income from surplus foreign exchange reserves. The analysis finds thatmore active profit-seeking management of surplus reserves can indeed significantlyexpand the regions fiscal space.

Asian Development Bank6 ADB Avenue, Mandaluyong City1550 Metro Manila, Philippineswww.adb.org/economicsISSN: 1655-5252Publication Stock No. 090808

abu e a devele Bk

ADBs vision is an Asia and Pacific region free of poverty. Its mission is to help itsdeveloping member countries substantially reduce poverty and improve the qualityof life of their people. Despite the regions many successes, it remains home to twothirds of the worlds poor. Nearly 1.7 billion people in the region live on $2 or lessa day. ADB is committed to reducing poverty through inclusive economic growth,environmentally sustainable growth, and regional integration.

Based in Manila, ADB is owned by 67 members, including 48 from the region.Its main instruments for helping its developing member countries are policydialogue, loans, equity investments, guarantees, grants, and technical assistance.In 2007, it approved $10.1 billion of loans, $673 million of grant projects, andtechnical assistance amounting to $243 million.

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Globalization, Erosion of Tax Base, and the Revenue Potential of Developing Asia's Foreign Exchange...

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