biz.hk Oct 2011

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Journal of The American Chamber of Commerce in Hong Kong

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October 2011

COVER SPONSOR

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October 2011 Vol 43 No 10

Contents

Richard R Vuylsteke

Editor-in-Chief Daniel Kwan

Assistant Editor

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COVER STORY

TRADE & INVESTMENT

IMMIGRATION POLICY

EMERGING MARKETS

The US is the only industrialized country that imposes income tax on citizens working and living permanently in foreign jurisdictions, despite being a policy that will undermine US competitiveness overseas and destroy American jobs at a time when the country needs them most

US Undersecretary of Commerce Francisco Sanchez leads a biotechnology trade mission to Mainland China and Hong Kong where he talks to business leaders about US trade policy

A recent US visa rule change has left many Americans worried about a much longer wait before they can relocate back home with their non-citizen family members

More than 200 executives from Asia, meeting in Phnom Penh for a two-day trade and investment conference, were impressed about the prospect of doing business in Cambodia

Publisher

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Kenny Lau

Advertising Sales Manager Regina Leung

biz.hk is a monthly magazine of news and views for management executives and members of the American Chamber of Commerce in Hong Kong.

Its contents are independent and do not necessarily reflect the views of officers, governors or members of the Chamber.

Advertising office 1904 Bank of America Tower, 12 Harcourt Rd, Central Hong Kong Tel: (852) 2530 6900 Fax: (852) 2537 1682 Email: amcham@amcham.org.hk Website: www.amcham.org.hk

AMCHAM NEWS AND VIEWS

TRADE & INVESTMENT

04 Chairman’s Memo Rob Chipman stresses the effect of US taxation on Americans working overseas, notes recent changes to US visa application, and highlights trade mission of Undersecretary of Commerce for International Trade

Speech of US Undersecretary of Commerce Francisco Sanchez at an AmCham luncheon as part of a US biotechnology trade mission to Mainland China and Hong Kong

07 New Business Contacts 29 executives joined AmCham’s business network last month

19 HKTDC’s Frederick Lam Awarded US Medal US Department of Commerce awards Hong Kong Trade Development Council Executive Director with “Peace through Commerce Medal”

41 Mark Your Calendar

20 Control Regime Not for Limiting Trade, Sanchez Says

COVER STORY

In an interview with Hong Kong-based media, US Commerce Undersecretary explains US policies on export control and foreign investment

Printed by Ease Max Ltd 2A Sum Lung Industrial Building, 11 Sun Yip St, Chai Wan, Hong Kong (Green Production Overseas Group)

08 A Tax System that Doesn’t Make Sense

Designed by Overa Creative Co Rm A, 12/F, Sun Fai Comm Bldg, 576 Reclamation St, Mongkok

12 Case Study: An American Working Overseas

©The American Chamber of Commerce in Hong Kong, 2011 Library of Congress: LC 98-645652

14 Under Secretary Highlights Importance of Jobs, Exports & Free Trade

Why would the US continue – and extend – a policy that will destroy American jobs at a time when the country needs them most?

A veteran expatriate shares his experience as an entrepreneur in Hong Kong and how US taxation undermines competitiveness of Americans abroad

IMMIGRATION POLICY 22 New Visa Rule Distresses US Expatriates A rule change is likely to substantially lengthen the amount of time that Americans living overseas must wait before bringing their non-citizen family members home

EMERGING MARKETS 26 Invest in Cambodia More than 200 executives from Asia meet in Phnom Penh for a tow-day trade and investment conference

CHAMBER NETWORKS 30 Networking Nights and Fun AmCham partners with Johnnie Walker to hose an exclusive party to celebrate the re-launch of the Blue Label bottle and hosts the October Networking Cocktail at the W Hotel in Kowloon

HUMAN CAPITAL 36 The Line Between Leaders and Followers Professor Barry Posner of Santa Clara University talks about the role of leadership in times of crisis and how leaders gain and lose credibility

38 Do More with Less A consultant, speaker, professor and advisor, David Goldsmith discusses the practical tools for leaders to be more effective

ENVIRONMENT 40 Roll-up Sleeves for Clean Beaches AmCham participates in month-long Hong Kong International Coastal Cleanup Challenge organized by Ecovision Asia

For comments, please send to biz.hk@amcham.org.hk Single copy price HK$50 Annual subscription HK$600/US$90

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COVER SPONSOR

Board of Governors Chairman Robert Chipman Vice Chairman James Sun Treasurer John Sigalos Executive Committee Frank Lavin, Anita Leung Belinda Lui, Charles Wellins Governors Sara Yang Bosco, Brian Brenner, Tom Burns, Janet De Silva, Rob Glucksman, Peter Levesque, Charles Ma, Toby Marion, Ross Matthews, Andrea Richey, Catherine Scown, Leland Sun, Colin Tam, Elizabeth L Thomson, Richard Weisman, Frank Wong, Shengman Zhang Ex-Officio Governor President

David L Cunningham Jr Richard R Vuylsteke

Chamber Committees AmCham Ball Apparel & Footwear Business Briefing China Business Communications & Marketing Corporate Responsibility

Kay Kutt Andre Leroy Don Meyer Wendy De Cruz

Energy Entrepreneurs/SME Environment Financial Services

Sean Purdie Donald Austin Bradley Punu Kuresh Sarjan Catherine Simmons Peter Johnston Hanif Kanji Ross Matthews

Food & Beverage Health & Wellness Hospitality & Tourism Human Capital

Susan Reingold Ed Ahnert

Noble Coker Peter Liu

Information Technology & Telecom Rex Engelking Intellectual Property Gabriela Kennedy Amy Lee Law Eric Szweda Pharmaceutical Stephen Leung Real Estate Brian Brenner Senior Financial Forum Alvin Miyasato Senior HR Forum MaryAnn Vale Sports & Entertainment Ray Roessel Taxation Evan Blanco Trade & Investment Patrick Wu Transportation & Logistics Brian Miller Women of Influence Jennifer Van Dale Lee Georgs Young Professionals Roger Ngo

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Rob Chipman Chairman

Chairman’s Memo

Dear Members,

It’s late October as I pen these lines and it’s interesting how much my attention has shifted from the indoors to the outdoors. For example, just this past Saturday I participated along with a number of our fellow AmCham members in Coastal Clean Up Challenge on Lamma Island. Brad Punu, Chairman of our Environment Committee did a great job in organizing this and I can tell you that Hung Sing Yeh is a pretty darn clean beach. It’s amazing how pretty the setting is, and all the nice little cafes and restaurants are out there for your enjoyment. I recommend you venture out to Hung Sing Yeh beach, enjoy yourself, and keep in mind the role that AmCham Environment Committee played in tending to this magical spot.

Those of you who know me will understand how “uppity” I get when the subject of expatriate taxation comes up. There are many aspects to this question and it’s vitally important that our members be informed and up to date on this issue. It is equally important for members to know what AmCham is doing, and what kind of advocacy position and actions we are conducting. To that end, we have excellent feature articles this month with interview with Evan Blanco, Chairman of our Taxation Committee on Section 911; and with Toby Marion, one of AmCham’s governors. I really encourage you to read these two articles, and to update yourself on the issues.

Early this month, Under Secretary of Commerce for International Trade Francisco Sanchez paid a visit to Hong Kong. Under Secretary Sanchez was heading up a delegation of US biotechnology companies who were in Hong Kong and Mainland China to meet with potential partners, explore investment opportunities, and get a better feeling as to what is on offer. The Under Secretary was the keynote speaker at an AmCham luncheon in which he honored another good friend of the Chamber – Fred Lam, Executive Director of the Hong Kong Trade Development Council.

We include an interview with the Under Secretary regarding the sometimes sticky issue of export controls, so I hope you’ll find this piece interesting.

The question of visas for those wishing to visit the US is always a hot topic around the Chamber. This month, Eugene Chow who is an acknowledged expert in the area, discusses the new US policy for non-American family members, and I think you’ll find this informative and useful as well.

AmCham president Richard Vulysteke and about a dozen of our members

participated in an international investment conference in Cambodia early this month. The venture marks the first of many others the Chamber plans to organize for our members to learn more about some of the emerging markets in the region.

I have recently attended two AmCham Networking Nights; the first themed around the introduction of Johnnie Walker Blue Label to Hong Kong. I didn’t realize I was a whiskey drinker until I tried Blue Label, but it was really quite special. The event was completely sold out, and I think everyone who attended had a wonderful time.

Then a few weeks later, AmCham had another Networking Night, this time at the W Hotel. The venue was the spectacular outdoor pool on the 76th floor and, once again, we had a wonderful turnout.

Finally, I’d like to leave you on high note. Professor Barry Posner of the HKUST reflects on 25 years of leadership lessons learned. I have heard professor Posner speak and he is tremendously experienced in the science of leadership. His views are well worth reading and applying to our own day-to-day business challenges.

Happy Halloween!

Rob Chipman Chairman

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MEMBERS DIRECTORY

New

Business Contacts

2010/2011

The following people are new AmCham members: American Express

www.amcham.org.hk

David Caton Regional Director, Account Development Global Commercial Card, Hong Kong, Taiwan & Thailand

Aon Hong Kong Limited Owen Belman CEO, Greater China

Bank of America NA Nancy Caroline Testa Senior Vice President - HR

Bloomberg LP www.amc ham .org .hk

Michael Dorsher Director

Carmel School Association Ltd Elsa High School

Over 500 pages in three major sections, including a complete guide to chamber services, corporate sponsors and AmCham Charitable Foundation. This directory lists nearly 1,900 members from over 700 companies and organizations.

ISBN 978-962-7422-03-7

LC 98-645651

Rachel Friedmann Principal of Carmel School Association and Head of Elsa High School

CB Richard Ellis Ltd Charles Kelly Associate Director

Debevoise & Plimpton LLP Andrew Ostrognai Partner Edward Dutton Partner Thomas Britt III Partner

Jones Lang LaSalle

RS Components Limited

Peter Trollope Director of Business Development John B Mortensen Regional Director

Brenda Hou Head of Strategy Planning - Asia Pacific

John Fargis Executive Vice President & General Manager, North East Asia

Lucinda Tippett Senior Manager, Corporate Affairs Leonie Valentine Chief of Staff Head of Corporate Communications

Kodak (Hong Kong) Ltd

University of California-Davis

Kaseya

Alice Tang HR Operations Manager

KPMG Wade Wagatsuma Partner

San Lee Events Executive

William J Clinton Foundation Florian Bennhold Electric Vehicle Coordinator

Marriott International, Inc Jim Pilarski Chief Human Resources Officer, AP & MEA

Mattel Asia Pacific Sourcing Ltd Andrew Gaynor Senior Director, Product Integrity Yam Chuen Yip VP, Product Intregrity, China Manufacturing

Medica Esthetica Tony Agra CEO

Novotel Century Hong Kong

DSGAsia Ltd

Jerome Stubert General Manager

Simon Ogus CEO

Peter F Drucker Academy

General Electric International, Inc

Stephen Lee President

Heather Wang Vice President, Human Resources

Prudential Assurance Co Ltd, The

HOK Int'l (Asia/Pacific) Ltd

Gautam Dev Senior Human Resources Manager, Strategic Resourcing and Talent Management Asia

Riccardo Mascia Managing Director

Telstra International Group

View our other members at:

http://www.amcham.org.hk/index.php/AmChamMembers.html

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COVER STORY

A Tax System that

Doesn’t Make Sense

By Daniel Kwan

“Last week Congress took decisive action to pass a trade package that approved trade agreements with Korea, Colombia, and Panama … Every $1 billion in new exports of American goods supports more than 6,000 additional jobs here at home; the same amount of services exports supports more than 4,500 US jobs. These agreements reaffirm US leadership in global trade.” – Written testimony by US Treasury Secretary Timothy Geithner before the Senate Small Business and Entrepreneurship Committee

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n a recent AmCham Taxation Committee meeting, a participant waved the summary notes of the tax proposal by President Barack Obama on September 19 to reduce exclusions for American taxpayers overseas and asked in a perplex manner: “What’s the rationale behind all these?”

No doubt that he was confused, and he should be confused. Most people who have lived abroad can testify that free trade is good for jobs. So why would the US continue – and extend – a policy that will destroy American jobs at a time when the country needs them most?

One-of-a-kind At present, the US is the only industrialized country that taxes their citizens abroad even if they live permanently in a foreign jurisdiction. Almost every other country in the world, by contrast, taxes nationals only for income earned inside its borders – the commonsense principle of “territorial taxation.”

The Obama proposal, which recommends scaling back a wide range of tax benefits for high-income individuals, also includes cutbacks on exclusions currently allowed under US Internal Revenue Code Section 911. Section 911, enacted decades ago,

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provides a tax subsidy for US citizens working abroad and for employers who send employees to work overseas.

Just to illustrate, the latest proposal would – in the case of an individual with income subject to a top individual income tax rate of 39.6 percent in 2013 – effectively add back up to 11.6 percent of a portion of the income excluded under Section 911.

The history of the current Section 911 goes way back to 1962 when John F. Kennedy was president.

There have been many attempts in the past to revise – or even to repeal – Section 911. The latest one was the Bipartisan Tax Fairness and Simplification Act of 2010 introduced by Senators Ron Wyden and Judd Gregg.

Section 911 has undergone many revisions and the most significant one took effect in May 2006 when the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA) was signed into law. The TIPRA revisions essentially mean higher personal income taxes for US expatriates and also higher cost for US companies which send their employees abroad.

In theory, TIPRA hits US citizens hardest where housing costs are high and local taxes are relatively low (see box on page 9) because taxpayers can claim foreign tax credits against their US income tax on income not excluded under Section 911. For example, US citizens in high-tax countries like Australia would fare

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much better than their compatriots in low-tax jurisdictions such as Singapore and Hong Kong.

“It’s exactly right to say that Hong Kong is the type of place that is absolutely most disadvantaged, and that’s because Hong Kong has relatively low income tax as the government raises revenue through land premium and land premium is then reflected in very high rent,” says Evan Blanco, Principal of International and M&A Tax of Deloitte Touche Tohmatsu and Chairman of the Taxation Committee of AmCham.

Wrong message The irony is that while the Obama administration steps up its efforts to promote exports (see story on page 14), its tax policy for US citizens working and living abroad seems to have sent a totally different message. As nations look increasingly to emerging markets – China and India for example – for export opportunities, American businesses and entrepreneurs face more disincentives to send their teams abroad to sell and do business.

Despite all the bad news about its economic troubles, the US today is still by far the world’s largest national economy, with a GDP of more than US$14 trillion. However, the US also has the smallest

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Pain in Europe

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ccording to Andy Sundberg of the Overseas American Academy, Americans who live in high-tax countries don’t always receive the tax credits they’ve wanted.

“Part of the problem is that the way the law is written in terms of giving credits for foreign taxes that are paid. It sounds like it’s open and generous. In actual fact, it isn’t because unless the foreign tax system is pretty much identical with the way the United States taxes you, you just don’t get any credits.”

“For example, in Switzerland, we have the Wealth Tax. So part of the tax they collect is based on the total amount of wealth that you have. The US doesn’t recognize that. They will only give you credits to the extent that a foreign government uses pretty much the same tax system that the US does.”

“The second dimension is that in many countries in Europe you have a value-added tax. For example, the French value-added-tax per capita in the country is greater than the amount they raised from income tax.

But the US says the value-added tax is not a creditable tax against US tax.”

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Evan Blanco

percentage of its population living abroad of any of the member countries of the OECD. As of 1 April 2010, the US population has reached 309 million but there are only about 6.3 million Americans abroad, according to US State Department.

For comparison, United Nations figures in 2005 show that within the OECD, there were more than 3 million British expatriates living abroad and the United Kingdom’s population in 2001 was just under 59 million. In other words, there were roughly twice as many British living and working overseas compared with Americans.

Blanco says the “absence” of Americans means opportunities lost for US exporters and businesses.

“Americans overseas buy American because that’s something that they know. In addition, when they buy, they develop a market for local people to buy too,” Blanco says. “So if Americans aren’t around to push it, then you would lose those exports.”

“I think that the administration is making it much more difficult and costly on that perspective,” he adds.

Nightmarish experience Blanco further points out that in addition to the tax issue, a lot of new requirements such as those related to bank account information imposed by the administration are fuelling growing frustration of Americans living and working abroad (see story on page 22).

“Some of these proposals such as the Foreign Account Tax Compliance Act (FATCA) don’t increase the taxes per se but they increase the administrative difficulties for Americans working in Asia,” he says.

“To give you an idea – my Hong Kong tax return of the same amount of income is four pages long, but my US tax return is 60 pages long,” he says. “This discourages people from wanting to work overseas.”

Andy Sundberg, a fellow of the Geneva-based Overseas American Academy, adds to that statement: “In the last 30 or so years, the US Congress has taken

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the tax code and basically turned it into a telephone book. Today, you have something like 71,000 pages in the US tax code and you are supposed to know every single items of that tax law.”

One such nightmarish experience was recently highlighted in a Financial Times report. An American woman who lives in Germany for more than 30 years was caught in the FATCA regulatory tangle although she didn’t owe any US tax. At the end, she gave up her US citizenship (see box below).

Robert Sears, a Director of the American Chamber of Commerce in the Philippines, is upset that the bureaucratic mess is hurting Americans abroad who simply have no idea about all these regulatory changes – and they are not tax dodgers.

“It’s become a bureaucratic paperwork nightmare.

The Internal Revenue Service or the US Treasury should go out worldwide and put notices in newspapers to tell Americans that ‘Hey, this is out there and if you don’t know about it, this is where you can find out more,’” Sears says.

What a mistake

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n American citizen who has lived in Germany for 32 years had no idea she had to file US taxes until 2009. She owed no US taxes. To correct the situation she filed back years and also filed the FBAR (Report of Foreign Bank and Financial Accounts) forms.

In late 2009 she learned of the IRS OVDP (Offshore Voluntary Disclosure Program) and read the very confusing FAQ 9 which said one should not submit a voluntary disclosure if one did not owe any tax but had merely not filled out the FBAR form.

Q10, on the other hand, explained that the type of filing she had done was “quiet disclosure” and threatened criminal prosecution for not turning it into a “noisy disclosure”.

She decided to err on the side of caution and entered the OVDP. “What a mistake that was, expecting fairness from the IRS! The IRS concluded that I did not owe any tax, but it nevertheless asked for the maximum non-willful penalty, which corresponded to eight months take-home pay." Her story was featured in a recent article in the Financial Times, “Tax Compliance Bill Drives Expat to Despair of US”; June 12, 2011. – Taken from a newsletter published by advocacy group, The American Citizens Abroad

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Voice not heard Given such strong frustration, it is remarkable that complaints by Americans abroad have achieved so little resonance on Capitol Hill. Over the years, organizations such as the Asia-Pacific Council of American Chamber of Commerce (APCAC) have lobbied tirelessly for changes to the US tax law so that the foreign-earned income of US citizens would not be taxed (AmCham Hong Kong, for example, raises the issue every year during its annual Washington Doorknock). Sears, who has taken part in many of such lobbying activities, says politicians are not willing to listen.

“You can write to your Senator or Congressman but the reason why that’s not effective is because we are not a unified voice,” Sears explains. “We are not a big constituency clamoring for change. We aren’t a strong enough voice and we’re far away.”

Since the effect of Section 911 varies across different jurisdictions, Sears says Americans who live in places like Australia probably don’t feel the same pinch as their compatriots in low-tax jurisdictions such as Hong Kong do. He stresses that although the “damage” is different, double-taxing Americans abroad undermines US national interest.

“It’s bigger than just a tax issue,” Sears points out.

“In this day and age when the US trade deficit is so large, citizens working and living abroad can help increase those exports and that’s good for the country.

We cannot continue with the deficits that we now have.”

Sundberg, who has spent decades lobbying Washington, laments the lack of representation of overseas Americans back home.

“We made efforts in the 1980s and early 1990s to get a delegate in the US Congress representing Americans overseas but we never got enough support to get that voted on,” Sundberg remembers. “Once I went to the President’s Export Council, when Jimmy Carter was president, and I got them to carry out a study looking at the implications for US trade and what we are doing in taxing Americans abroad.”

“They came back and strongly recommended getting rid of it, and said this was hurting the American economy. And then I got the Government Accountability Office (GAO) to carry out a similar study and they said the same thing. But the members of the Congress didn’t care,” he adds.

While lobbying by individual Americans isn’t effective, their multinational employers are not keen to take on issues like Section 911. Corporate bosses

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are aware of the need to make the full use of their lobbying dollars and focus resources on issues closely tied with their business instead of on individual complaints.

“They have internal issues that are more important for them than fighting for the few Americans they have in their organizations overseas. It is not necessarily good for the country in the long run and in terms of helping US exports, and that’s a very narrow vision,” Sears says.

Jobs go elsewhere Companies also prefer to hire non-Americans in filling their overseas assignments – given the extra costs involved such providing tax equalization benefits and following other compliance requirements. The result is that there are now fewer Americans living and working abroad.

Both Blanco and Sears say that would be bad for US employment at home too.

“What we are seeing now – and we’ve been seeing this for years – is even American companies and others are not hiring Americans because Americans have been priced out of the market,” Sears adds.

“They are hiring Asians, Aussies, Kiwis, and Brits for positions that they want to fill – actually all nationalities but Americans.”

“The multinationals say, ‘That’s OK, we’ll save the money by just bringing in somebody from Australia or the United Kingdom or locally from Hong Kong. They don’t necessarily need Americans, but it hurts American employment because the people who would have had a position out here will be working for a position in the US and it means that either they or somebody else will be out-of-work,” Blanco explains.

Dim light Looking ahead, Blanco and Sears say chances for quick changes are slim. Sears says organizations such as APCAC will need to continue hammering the Congress for some “common sense”.

“Hopefully the US Congress will someday wake up and realize that this is a bad policy and it’s time for a change. And why don’t they try it and see what’ll happen?” he asks.

There are moves underway to reform the US tax system, Blanco says. For example, the American Tax Fairness Act of 2011 was put forward by Republican Scott Garrett and Democrat Carolyn Maloney. The Act

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basically proposes to eliminate the limit on foreign earned income exclusion for overseas Americans – effectively ending double-taxation for Americans abroad.

Blanco says he is not optimistic that the Act will find much support in Washington now given the US’s poor economy and he doesn’t expect any major tax changes before the presidential election next year. However, he would not be surprised if Section 911 is eliminated.

“It is because right now the Government is looking for tax revenue anywhere they can find it and you’ve got a situation where frankly even the Republicans have said that they not going to accept any new taxes – but eliminating the [Section] 911 exclusion may be seemed by someone as eliminating a ‘loophole’,” he says.

According to him, there are proposals put forward to reform the tax system including calls to adopt the territorial system for US corporate taxes. That, Blanco

says, can provide the ammunition to push for changes of the individual tax code too.

“Arguably that you could say if they pass that law, why shouldn’t they also apply it to individuals and do away with taxing Americans who are working overseas, which is essentially exactly what the ‘American Tax Fairness Act’ is all about,” he suggests.

For Sears it is important for the US Congress to recognize the contribution made by Americans abroad.

“Most Americans living and working overseas are not multi-millionaires and they are just hard working people who are trying to make a living,” he says.

Sundberg is more optimistic. He believes changes will eventually come. “Yes, it’s going to go away someday; the only question is when. But what kind of disaster will be required before people will finally say, ‘Oh, maybe we’ve made a mistake?’”

“In this day and age when the US trade deficit is so large, citizens working and living abroad can help increase those exports and that’s good for the country. ”

Case Study:

An American Working Overseas

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veteran expatriate, Toby Marion, currently Director of Golden Gate Wine, shares his experience as an entrepreneur in the freest economy of the world and how US taxation undermines competitiveness of Americans working abroad.

biz.hk: How long have you worked outside of the United States?

Marion: I have been overseas for most of the past 40 years. I worked for Caltex Oil for 25 years; I then did consulting for five years. Of those five years, three years was with my own company, a joint venture with an English company, and two years was with Thomas Group, which is a NASDAQ-listed company.

I decided at that stage I either had to go back to the industry or to start another business. There were good opportunities in the industry and people were headhunting me. It would have been in senior marketing type roles with major MNCs, and I clearly would have been

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on an airplane or in a hotel for 300 days a year. The jobs being offered were China or Asia-wide roles for companies that had thousands of customers. But I wanted to stay in Hong Kong. biz.hk: What made you decide to become involved in the wine industry?

Marion: At that time, I just decided that wine would be fun. I had amateurishly collected wine for over 30 years; I had made wine in the early 1970s for fun. It is hospitality, tourism, cuisine, art, culture and history coming together. So, I did a feasibility study and a research in 2003/04, then hired a consultant and built Golden Gate

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Wine from ground up.

the

biz.hk: How would you describe the business environment for SMEs in Hong Kong?

Marion: In some Toby Marion ways it is very free. It is simple to incorporate a company and you can do the accounting and legal work at relatively low costs. It is also a good place for contacting and meeting people. The law in Hong Kong is clear; banking is effective; logistics and insurance are well established.

The bad news is: That Hong Kong is named to be the freest economy in the world is a bit non-sensible.

Many would say that this town is completely locked up by monopoly interests, tycoons, property developers and so forth. Getting access to retail is hard here.

For example, larger players could buy most of their wine directly from wineries abroad and sell them at much higher margins, and they are more able to bargain with suppliers to get good deals. Getting access to retail is tough. In terms of hotels, restaurants and clubs, they are usually quite open and like to deal with people like us because we represent good customer service. We are much attuned to meet their needs. biz.hk: How does your business help create jobs in the US, given you import US wine exclusively?

Marion: It contributes to American jobs by creating new markets for suppliers in the US who are eager to export. So we help create jobs for people in the wineries, for people in the vineyards growing grapes, for people who pick up the wine from the warehouses, and for those in the logistics of it. We also use many different services supplied by US companies, and they mean jobs somewhere along the line. biz.hk: How do you as an American on the ground help other US businesses export?

Marion: I tend to be something of a magnet for some of those people, because our name is now known. An American who comes here but is not already established will often give me a call to discuss business prospects. biz.hk: How does the US Tax Code hurt Americans working overseas?

Marion: The issue of Section 911 of the US Tax Code does create problems for overseas Americans. One is that it’s just costly, and that has to do with the whole generic tax

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issue. The American tax code is dreadfully over complicated. In places like Japan where I worked 25 years ago, people take a few minutes to do your annual tax return on a one- or two-page form, and that’s the end of it.

What I have to do is to pay my accountant to do all of my filing for local tax, which involves personal and corporate, and the filing has to be mirrored and run through all the different rules for the purpose of US taxes. I often end up with a thick stack of paper. The net result costs me a lot of extra money that I would not otherwise have to spend.

There is often a question why Americans should have to pay US taxes when they are living overseas. The police, fire services and a host of public services provided to me here are provided by Hong Kong, paid for by Hong Kong taxes. biz.hk: What is the broader implication of the US tax issue?

Marion: There used to be a whole eco system around American businesses abroad. I will give you an example: I lived in the Arab Gulf in the 1970s when the region was filled with Americans, a phenomenon which created this eco system. We had in our company Americans working in technical fields as well as other sectors like insurance, banking and purchasing. They would buy from US sources all the beds and sheets, tables and chairs for the housing in the company village. These Americans would go on home leave and spend their money back in the US, buying things that they could take back to the Gulf. All of this has been disappearing continuously for the last 30 years.

Americans are effectively penalized for working abroad, and US companies are more reluctant to hire Americans because of the additional costs. When we don’t have so many Americans abroad, it hurts exports, it hurts profits, and it hurts corporate taxation that the US government could get from these economic activities. biz.hk: What would you tell US officials if you could talk to them?

Marion: I’d tell them the same thing I wrote to President [Barack] Obama about 10 months ago. And that is that it is not a “fat cat” issue. It is an issue of American competitiveness and US exports to the world. The best way for America to play its active role in the world is to encourage American companies to put Americans abroad. Unemployment goes down; exports go up; profits go up; American technology use improves; and many industries are given work.

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TRADE & INVESTMENT

US Undersecretary of Commerce Francisco Sanchez speaks before 300 guests and local business leaders at a recent AmCham luncheon.

Under Secretary Highlights Importance of Jobs, Exports and Free Trade

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bout 300 guests and local business leaders attended a luncheon event organized by AmCham for visiting US Under Secretary of Commerce Francisco Sánchez early this month.

Sánchez was in Hong Kong after leading a biotechnology trade mission to Mainland China. A total of 19 leading US companies joined the mission to China and 14 of them participated in trade talks held in Hong Kong. The Undersecretary described the talks in China and Hong Kong “very productive”

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and was optimistic that they would lead to business deals in the future.

While the group was in Beijing, they witnessed the signing of a US$2 million sales agreement for an American bio-tech company to sell its cervical cancer testing products in China. The deal was between the California-based DiaCarta and Kodia Biotechnology.

Kodia is a joint venture between DiaCarta and Kelong Medical Apparatus & Instruments in China’s Henan Province.

At the luncheon event, Sánchez presented the

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Peace through Cmmerce Medal to Hong Kong Trade Development Council (HKTDC) Executive Director Frederick Lam, who is the first recipient of the award this year. A total of eight of the medals will be handed out this year (see sidebar).

The Under Secretary took a number of questions from the audience at the end of his speech (full text of which follows; the sub-headlines are added by biz.hk) that covers a wide range of issues including the rise of protectionism in the US, visa difficulties faced by the business community, and the DOHA negotiations.

On the visa challenge, Sánchez assured the audience the US government welcomes foreign investment and is working hard to facilitate business travel to the US. “I am happy to report that the State Department is working very hard to improve the process in a number of countries particularly where we have a lot of business activities going on,” Sánchez says.

“It is a work in progress … We are not done and we are going to continue to focus on it,” he adds.

He told the audience that the Obama administration is fully aware of the risk of the rise of trade protectionism. “What I can tell you is that President [Barack] Obama knows that if we did that (move in the direction of protectionism) as a country, it would be a horrible mistake.”

While Sánchez underscored the importance of the free trade agreements the US recently signed with South Korea, Panama and Columbia, he was more cautious over the DOHA negotiations.

“To move forward with DOHA, we need to rethink what’s on the table and it needs to be more equitable for all parties concerned,” he says. “I hope that we can figure out a way to do that and whether it’s DOHA or anything else, we need to focus on the importance of a rule-based system – that’s our priority.”

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Speech by Under Secretary of Commerce Francisco Sánchez at the AmCham luncheon: I want to begin by saying, again, how great it is to be here. This is actually my second time in Hong Kong.

My first visit came after college in the early 1980’s, when I had the lucky opportunity to travel the world.

I always knew I would love it here, and that proved to be true. I have a lot of memories, including riding the Star Ferry.

But, what I remember most is the vitality and energy of the people. I saw up close how committed the people of Hong Kong were to family, community and tradition.

And, they are resilient. Even though the Hong Kong people often lacked resources, they never lacked imagination. It's incredible to see how far their imagination and hard work has taken this city. Earlier, I had the privilege of taking a helicopter tour.

I can see why Hong Kong is called “Asia's World City”. The skyline is a symbol of innovation and possibility. The development is astounding.

In fact, I was talking with Andrew Wylegala – ITA’s Senior Commercial Officer here. He was telling me that that Hong Kong is special because: “Where else can you have breakfast at the world's tallest hotel, then hop into a 30-cent seat on a 100-year old tram system, then exit at the trailhead of a stunning walk along a mountain that leads to a family-friendly beach?”

Not too many places, I would guess. But, as you know, no country, business or government can ever be content with progress. The world's economy is moving fast. Those that fail to keep sharpening their competitive edge will be left behind.

Top priority: job creation That's why, in this challenging economic time, it’s not enough to rebuild. We’ve also got to reinvent and rethink how we do business and where we do business.

President Obama has been doing just that since he entered office in 2009, shortly after the world was crippled by the financial crisis.

In response to the crisis, the President immediately took bold steps, including: • stabilizing the financial system • and keeping the American auto industry from going bankrupt The President’s actions stopped the free fall. As a result, we’ve come a long way. Roughly 2.6 million US

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contained to our shores. After all, 95 percent of the world’s customers live outside the United States.

Export means job growth

US Under Secretary of Commerce Francisco Sánchez

jobs have been created in the last year and a half. We're seeing a comeback in manufacturing and new strength in the clean energy sector. And, consumer spending is rising.

But, there is more work to do. That’s why job creation remains President Obama’s top priority.

Last month, The President sent to Congress “The American Jobs Act.” Independent economists say it would create 2 million jobs by investing in infrastructure and providing tax cuts to small businesses – among other measures.

Now, why am I telling a Hong Kong audience about the “American Jobs Act?” It's because strengthening the US economy is good for all our partners because our futures are closely linked.

As others have observed – that’s why a newspaper called USA Today dedicates so much coverage to the Asian Markets. It's because this area of the world impacts the United States and vice versa.

So, passage of the American Jobs Act would be a win for Americans, and all of our partners. That’s why, right now, the President is actively urging Congress to vote on components of the bill and put people back to work.

But, that’s not all we are doing. The Administration realizes that our job-creating efforts shouldn’t be

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Export growth means job growth, and that’s why President Obama has made the NEI a centerpiece of his jobs agenda. NEI is the first government-wide export promotion strategy with focused attention from the President and his Cabinet – and we’ve had tremendous results.

In 2010, national exports grew nearly 17 percent, reached the second-highest annual total on record and contributed to nearly half of all US economic growth. It also supported 9.2 million jobs.

And, this year, we’re keeping the momentum going. US goods and services exports in the first eight months of 2011 are up nearly 16 percent compared to last year. Our commercial partnerships with the rest of the world have been a key to our economic recovery.

Certainly, Hong Kong has played a central role in this effort. Last year, US merchandise exports to Hong Kong totaled nearly US$27 billion. That's a huge number. And, behind the statistics are real people and businesses doing great things.

Success stories Consider Fueltech – a company located in Illinois that has been awarded 9 contracts here worth over $27 million US dollars. Or the sun care company from Florida that cracked 10 new markets in the last two years, all from their Hong Kong regional office.

Successes like this are happening every day. And, remarkably, there is potential to do even more.

That's due, in large part, to the Hong Kong government's free trade principles, rule of law and commitment to transparency. Couple that with the efficiency of your infrastructure and the energy of your people and it's clear – Hong Kong is a place we want to do business.

It serves us well. And, we also want you to do well.

That’s why we are so glad that the benefits of our commercial relationship are flowing both ways. In 2009, US direct investments in Hong Kong totaled more than US$50 billion, making the United States one of the largest foreign investors in Hong Kong.

And with projects like Google's US$100 million data centre, and Hong Kong Disneyland's expansion set to open soon, that footprint will only grow.

I want to emphasize that we don’t view Hong

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Kong, and Macau for that matter, as just a key to China. We also view it as a key to America's future.

And, we want to be a part of your future.

Biotech mission That’s why I’m here.

I’m proud to be leading a US trade delegation of 14 American biotech companies. As many of you know, biotech is one of the most promising growth sectors. It has the unique potential to benefit both the economic health and public health of our countries.

And, with our ageing populations, there is clearly a need. The companies with me today can help fill that need. They are at the cutting-edge of development.

They have new ideas. They have creative products.

They have a lot to offer.

And, Hong Kong is a natural market for them.

Hong Kong has a large number of qualified biotech firms. And, it's emerging as a leading center for bio-medical clinical trials.

Excellent business infrastructure, regulatory linkages into the mainland and a growing venture capital community, all make Hong Kong a promising market and platform for US firms.

Yesterday, our delegates held roughly 60 one-onone meetings with prospective distributors, public and private buying agents and other potential business partners. You have a great market here. The US companies present today have great products.

Let’s link them. Let’s match the supply with the demand. Together, by building each other's biotech industries, we can achieve a double bottom line: Benefits for both the health and wealth of our peoples.

I urge you all to get to know one another. Let’s do business; that’s our motto – not only here in Hong Kong – but all across the Asia-Pacific region.

Free trade agreements And lately, there’s been a lot of good news. Last week, the United States Congress approved three trade agreements – including one with South Korea.

It goes without saying: this is a big deal. In fact, it's the most significant trade agreement for the United States in more than 16 years. Korea is our seventh largest trading partner. We want to build on this success when the agreement is entered into force.

For the United States, this agreement will: • support tens of thousands of American jobs; • eliminate Korean tariffs on 95 percent of US exports of industrial and consumer goods within five years;

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•and immediately eliminate Korean tariffs on over two-thirds of US agricultural exports.

I’m so glad that [South Korean] President Lee Myung-bak was in America last week to help celebrate this milestone.

In fact, I don’t know how many of you saw this, but he and President Obama visited an auto plant in Detroit.

And, President Lee pledged to the workers that the agreement will not take away any of their jobs.

Rather, it will create more jobs for them and their families.

So, it's clear – for both countries – this represents a great opportunity to increase trade, support job creation, bolster our economies and strengthen a vital strategic alliance in the Asia-Pacific region.

Looking ahead, The United States wants to continue to strengthen our economic partnerships with the region. I want to highlight two of our big initiatives.

First, as most of you know, the United States is hosting APEC in 2011. We consider this an honor and a privilege. And, we are working diligently to make positive things happen.

Throughout the year, we've been guided by three major themes: • One, to strengthen regional economic integration and expand trade, supporting jobs and growth for all parties; • Two, to promote clean and renewable energy technologies, which have the potential to produce extraordinary growth; • And three, to advance and expand regulatory cooperation.

In the regional context, we want to strengthen the industries of the future.

APEC and TPP And, we want to empower entrepreneurs – especially small and medium-sized business owners – with the tools and support to succeed throughout the APEC region.

In May in Big Sky, Montana, I chaired the APEC SME Ministerial Meeting.

In this meeting, we endorsed further APEC actions to address the top nine trade barriers – including: • corruption • lack of financing • complex customs procedures around the Asia-Pacific region

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seeking to conclude an ambitious, 21st century Asia-Pacific trade agreement that reflects US priorities and values.

Working with our partners, we intend to craft a high-standard agreement that addresses new and emerging trade issues and challenges.

We see the TPP as the most credible pathway to Asia-Pacific regional economic integration.

We are pleased with the progress in the TPP negotiations to date.

We have already completed a number of rounds of negotiations this year.

With all the TPP partners committed to concluding the negotiations as quickly as possible, we are optimistic we'll be able to make some announcements in Honolulu when the APEC leaders meet in November.

Stay tuned.

We are also involved in other initiatives. But I want to leave time for some Q&A. So, I’ll just close with a few of the key messages I want to leave you with.

Hong Kong’s role Under Secretary Sanchez meets VIP guests before the luncheon

At the end of our APEC host year, we will be ready to announce concrete progress on these barriers.

This includes: • the conclusion of agreed APEC-wide business ethics principles for various industry sectors • better avenues for small and mid-sized firms around the region to take advantage of international opportunities These efforts will pay significant dividends in the long-run. We plan to conclude the year on a high-note.

In Honolulu, the APEC 2011 USA Host Committee will hold a CEO summit that will assemble roughly 1500 senior executives – from the Asia-Pacific region – to address the obstacles and opportunities presented by the global economy.

And, President Obama will host an APEC Economic Leaders Meeting that will provide our leaders with an opportunity to discuss expanding free trade on a regional basis. So, we’re committed to making our APEC host year a productive period for all parties.

Another top-line item on the trade policy agenda is the Trans-Pacific Partnership. TPP negotiators are

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First, we commend your government and business community.

Hong Kong has become a global beacon for: • the benefits of free and fair trade • for rule of law • for intellectual property protection • for dynamic, private-sector driven development It's an example that others should follow. We applaud your efforts and value the bonds of trust we share.

Second, we value Hong Kong as a partner. We appreciate the role that it has played in our economic growth.

Finally – even though we've had great success together – we have the potential to do much more. One example is the biotech sector. We want to work with you to achieve this promise.

In this 21st century global economy, it makes both business sense and common sense to work in partnership.

And, this work must be guided by mutual interests and values.

As I said earlier, my first visit to Hong Kong was roughly 30 years ago; so much progress has happened since then.

And, I look forward to working in partnership with all of you to ensure that the next 30 years brings us closer to the goal of opportunity and prosperity for all.

Once again, thank you to the AmCham of Hong Kong – and all of today's organizers – for hosting me.

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HKTDC’s Frederick Lam Awarded US “Peace through Commerce Medal”

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S Under Secretary of Commerce for International Trade Francisco Sánchez has awarded the Peace through Commerce Medal to Hong Kong Trade Development Council (HKTDC) Executive Director Frederick Lam, recognizing his effort in spearheading the Pacific Bridge Initiative (PBI), a bilateral agreement between the United States and Hong Kong to boost US exports to and through Hong Kong.

“Let me start by saying how struck I am that today’s lunch brings together leaders – not just from Hong Kong's business community – but also from the American chambers in Macau and Guangdong,” says Sánchez. “It’s precisely this city’s unique capacity to link people and commerce that led Fred Lam to envision the Pacific Bridge Initiative.

“The PBI, as we call it, is a novel framework designed to promote President Obama’s National Export Initiative, which strives to double US exports by the end of 2014.”

The PBI is the first-ever undertaking by a statutory body outside of the United States to support President Barack Obama’s National Export Initiative (NEI), which aims to double US exports over five years. The pact ultimately calls for the two governments to collaborate on trade shows and trade missions, conferences, business matchmaking, and media outreach.

The agreement, aiming to further strengthen economic ties between the US and Hong Kong, was signed by Lam and US Assistant Secretary for Trade Promotion Suresh Kumar in Hong Kong on November 15, 2010 at an AmCham luncheon. It has since elevated Hong Kong’s status as a regional commerce hub, as other regions including Singapore, Stockholm and Casablanca are considering adopting similar agreements.

Since the signing of the agreement in late 2010, the PBI has helped triple the number of export transactions done by new-to-market US firms.

“It’s because of this groundbreaking partnership, and his decades of service, that Fred has been selected as a recipient of the Peace through Commerce Medal,” says Sánchez, who was recently in Hong Kong at the helm of a 30-person delegation that aims to promote US goods, services, and technologies in the biotechnology sector.

“The PBI has been a win-win collabora collaboration. It's helped us exceed our NEI goals,” he adds. “And it's supported Hong Kong's efforts to be the pre-eminent commercial platform for this dynamic part of the world.”

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10 • 2011

“There’s an old saying that goes: ‘A wise man will make more opportunities than he finds,’” Sánchez says.

“Clearly, Fred is a wise man because he’s making opportunities, helping others to break new ground and reach new heights. And, make no mistake: These are pioneering efforts.”

“Because of its success, several other trade partners are in the process of adopting similar ‘Bridge Initiatives’ for their own regions,” he further points out, noting a similar agreement called Morocco Atlantic Bridge Initiative will be signed in a few weeks.

“Fred’s impact reaches as far as North Africa. For his work and more, Fred deserves a lot of praise and thanks.”

The Peace through Commerce Medal honors an individual, group, or organization for their achievement in significantly promoting and developing US exports. It dates back to the time when the first US Secretary of State Thomas Jefferson commissioned the medal in 1790.

Jefferson presented the award, formerly the Diplomatic Medal, as a gift to foreign diplomats who aided the Continental Congress during the American Revolution.

“Well today, the revolution isn’t happening on the battlefield; it’s happening in the global economy – in the way we work and do business,” says Sánchez. “And our international partnerships are more important than ever.

We wanted to recognize our partners abroad.”

The award marks the second time an HKTDC executive receives recognition with a medal from the US Department of Commerce. In 1988, US Secretary of Commerce C William Verity presented the “To Peace and Commerce” award to Lydia Dunn, then Chairwoman of HKTDC, in recognition of her exceptional efforts to foster American-Hong Kong trade.

“This is really a great honor. This honor is about much more than my personal effort or even the collective efforts at HKTDC. It really belongs to the business community of Hong Kong,” Lam says upon receiving the award. “The honor should belong to every single trader in Hong Kong as they are the true believers and practitionFrederick Lam ers of free trade.”

“I have no doubt that Hong Kong would be happy to continue to welcome and help US companies as well as any other overseas companies to more do more trade with Hong Kong, and through Hong Kong with the rest of Asia,” he adds. - Kenny Lau

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Control Regime Not for Limiting Trade, Says Sánchez

Out of frustration

By Daniel Kwan

T

he US welcomes foreign investment and the government will not use export control to limit trade with its trading partners, says Under Secretary of Commerce Francisco Sánchez.

On US-China trade relations, Sánchez stresses that what the US wants is a level playing field and the US supports China’s goal of promoting technology and innovation.

In a wide ranging interview with Hong Kong-based media, the Under Secretary who visited Hong Kong at the end of a Mainland China tour explains US policies from export control to foreign investment in the US. He also talks about the recent US Senate’s bill on China’s currency policy and competitiveness of US companies in the region.

According to Sánchez, exports control only affects a relatively small share of total trade and he has not received complaints from Chinese companies.

“I do not see [export control] as a major barrier and the fact is it probably affects less than 2 or 3 percent of our total trade,” he says. “I would rather focus on the 97 percent of trade that doesn’t get touched by export control so that we can increase trade between our two countries.”

“I always tell my Chinese counterparts that export control is not an economic issue for us. It’s a national security issue,” says Sánchez who has paid seven visits to China since he becomes Under Secretary.

Regime reform Nevertheless, he says one of US President Barack Obama’s priorities is to reform the current export control regime.

“Led by Secretary of State Hillary Clinton, and the Secretary of Commerce as well as the Secretary of Defense, there is an inter-agency effort underway and we’ll start seeing some of the fruits of that effort in early 2012,” Sánchez says.

The current system covers too many items – many of them are “inconsequential” products – and the processing of export license applications of these products ties up valuable staff time, he says. “Essentially,

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we are looking at streamlining the export control process … and part of that could be to make it easier for products to go into non-military use and into the market.”

He however hesitates to call the reform “relaxation” and emphasizes it is not targeting any particular countries.

“I wouldn’t consider ‘relaxation’ and the right word is ‘reform’. I say reform because we have to take a close look of what products really fall under what we would call ‘national security concerns’, and which ones have nothing that could suggest we would be at risk if we don’t include them in the list,” he says.

On the hot topic of China’s innovation drive, the Under Secretary says the US supports China’s goals.

“We don’t have any issues with China wanting to increase its innovation but we think that there are effective and less effective ways to encourage innovation,” Sánchez shares his views. “We would prefer either incentive-based or free market strategy to encourage innovation as opposed to forced transfer of technology.”

Changing perception He denies the US has set “barriers” on investment by Chinese companies and welcomes any Chinese companies to set up shops or make acquisitions in the US. “The Department of Commerce has initiated a program called ‘Select USA’, which is intended to facilitate foreign direct investment in our country,” he says. “We would be delighted to see more foreign direct investment from Mainland China.”

He acknowledges that there may be a per-conceived notion among Chinese investors that making investment in the US involves overcoming many challenges from seeking regulatory approval to navigating through a labyrinth of compliance rules. These could have a discouraging effect on potential investors.

“Chinese investment in the US is growing and it will continue to grow. If there is a perception that there are challenges, then we will need to change that. I hope my statement here will help to move us to that direction,” Sánchez adds.

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When asked about the recently passed bill by the US Senate on Chinese currency, the Under Secretary says it is an example of “frustration that China doesn’t always promote policies that create a level playing field.”

“But our response to any frustration that we might have over policies of China or of any other countries cannot play out in a way that is inconsistent with our own international obligations or obligations to the World Trade Organization,” he adds. “We have to be very careful and strike a balance to work with China and other countries and make sure that we are pushing together for a level playing field, and don’t let our frustration gets the best of us.”

“My hope is that we will continue to show leadership and focus on things that can help grow our economy and reduce unemployment like the passage of the three free trade agreements the Congress passed last week.”

Blocking and tackling Borrowing an analogy from American football, Sánchez describes the Department of Commerce’s day-to-day work as “blocking and tackling.” Last year

alone, the Department settled 82 cases of market access disputes brought to them by US companies.

“Last year, we resolved 82 market barrier issues from complaints that we received, not just from China but from all over the world. None of those merit front page stories but I can tell you that those 82 cases probably resulted in millions and millions of dollars of sales.”

“We are going to continue to do what I call ‘blocking and tackling’ – not the sexy part of American football which is when the quarterback throws the pass or the runner gets the football and runs. Blocking and tackling are the unsung heroes who come around and grab the runners and tackle them.”

Sánchez says the government has heard complaints from overseas American businesses about issues like taxes and is committed to help them to improve competitiveness.

“We’ve heard from the business community that there are challenges here. I am happy to report that the State Department is responding. In Mainland China, the upgraded [embassy] staff are looking for ways to process visas quicker,” he says.

“There are enough market barrier issues in the world that we don’t need to contribute to them with our own policies,” he adds.

IMMIGRATION POLICY

New Visa Rule

who happens to have the good luck to reside in Rome or Bangkok, or another jurisdiction that has an USCIS office?” Chow asks.

Chow says two of his clients – both American men married to Hong Kong wives – are seeking his help to study the new rule as they are hoping to kick-start the naturalization process for their wives and the I-130 petition is the first step.

“Of course they are feeling unhappy about the situation. But they are also powerless,” he says.

Distresses US Expatriates A new US visa rule, taking effect in August, is likely to substantially lengthen the amount of time that Americans living overseas must wait before bringing along their non-citizen spouses or children if they have to move home quickly. Helen Luk talks to expatriates and an immigration lawyer to understand what has been changed and how it may affect American families living overseas.

Drop in the bucket

A

recent US visa rule change has left many American expatriates worried that they will have to wait significantly longer before they can relocate back home with their foreign spouses and children.

Before mid-August, if an American living overseas wanted to get a visa for his or her alien relative to return to the US, they could file the petition – known as Form I-130 – through US consulates, embassies, or the international offices of the US Citizenship and Immigration Services (USCIS).

In a move to cut costs, the Department of Homeland Security decided to centralize the filings. Beginning from August, overseas applicants living in countries without USCIS offices will have to mail their petitions to a central office in Chicago. The immigration agency says processing time is expected to take five months. Petitioners then have to apply to the US

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Eugene Chow

State Department for the actual visa.

“This change will reduce inefficiencies, improve the ability of USCIS to manage its workload, and reduce the burden on DOS (Department of State),” according to a document posted on the Federal Register’s website.

Major hassle One US immigration lawyer, however, decries the new practice as a “major hassle” for overseas American citizens who are on assignments and

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10 • 2011

simply want to bring their foreign national spouses back home.

Eugene Chow, principal of Hong Kong-based immigration consultancy Chow King & Associates, says in the past, the I-130 petitions were handled quickly and efficiently as there weren’t many cases filed out of Hong Kong. But now everyone around the world sends their application to Chicago and approved petitions have to go to the National Visa Center before being re-routed to Hong Kong.

“Instead of a two- to three-month turnaround time, it will likely take nine to 12 months,” Chow says. “The US government should be helping overseas US citizens return home with their foreign national spouses, not make them wait and endure a cumbersome and complicated process.”

“Why should a US citizen living in Hong Kong, for example, be treated different from a US citizen

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An American who lives in Kuala Lumpur with his Filipino wife and two children complains that little was done to alert US expatriates to the rule change, which was introduced after the State Department charged USCIS, for the first time, US$3 million last year for helping the agency process overseas I-130 petitions.

“I didn’t even find out about this change until we were actually in the States visiting family and my friend sent me an email saying this (I-130 petition) is going to change and it’s like two weeks before it takes effect,” says the expatriate, who works in the aviation industry and would only give his name as James. “I know these things are probably in the Federal Register for comment, but whoever looks at the Federal Register?”

James scoffs at the cost-saving measure as “a drop in the bucket when it comes to a trillion-dollar budget.” But amid all the uncertainties, he decided to file an I-130 petition for his wife this month.

He and his family relocated from Hong Kong to Kuala Lumpur two years ago and are contemplating a move back to the United States in the next few years to get their 13-year-old daughter acclimated to US high schools. The son is 10 and both children were born in the US, so only his wife requires a visa.

“We don’t know how long it will take or once you apply and get approval, how long before you have to use it [the visa],” he says. “I called the US embassy in

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Kuala Lumpur and they said they don’t have anybody who can answer those questions and they asked me to write an email, so I did that.”

Consistent outreach In a teleconference call with concerned expatriates a few days before the rule took effect, the USCIS said it had alerted more than 7,000 parties on its electronic mailing lists months ago and posted the change on its website in the Federal Register, according to a report by the New York Times. Edna Z. Ruano, a spokeswoman of the agency, insisted that “outreach on the issue has been consistent and transparent.” She estimates that about 10,000 applicants will be affected.

USCIS only has field offices in 25 countries with six of them in Asia, including Bangkok, Beijing, Guangzhou, Manila, New Delhi and Seoul. The agency says certain petitions, such as medical emergencies, threats to personal safety, some adoptions, and military personnel facing new deployments with little notice, may still be allowed to go through US consulates or embassies, but overall, few exceptions will be granted.

Statistics from the Federal Register show that in the last fiscal year, the State Department processed 9,497 relative petitions in countries with no USCIS field offices and 6,576 in countries where the agency is located. In comparison, USCIS field offices handled 8,135 cases.

James says he first filed an I-130 form for his wife back in 1997 when they moved from Malaysia back to the States for 18 months and it only took a couple of months. “The onus was actually on us to get the police report, which took the longest time,” he says.

Anything longer than a few months is a step backward from the past practice, James says, and he urges the US authorities to extend the visa’s validity so as to allow greater flexibility for families in

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planning their relocations.

“It’s really hard to plan your life a year ahead of time,” he says.

Difficult situation Another Hong Kong-based American expatriate, who works in the energy industry but declines to be named, calls the new system “scary.”

“Anything that requires eight to 12 months to process, versus the old one of three months, could be a real problem in scheduling schools, rental arrangements, and finances,” he says. “Even five months is ridiculous and adds great financial costs, emotional stress, and uncertainty to a very complex family move.”

He and his Asian wife have two girls, aged five and seven. Both were born in Hong Kong and attend international schools here but are US citizens. He is worried that he may lose his job and his family will get stuck in Hong Kong while awaiting the visa for his wife. The family plans to move back to New Hampshire in the long run.

“In this current economy, you don’t know what’s going to happen. I am not on an expatriate package and I am on local terms with a local company here,” he says.

“I just don’t see how I can live here without a job for eight months and maintain two households – one in the US and one here,” he adds. “My kids will be out of school and my wife will be stranded somewhere. So it’s a very, very difficult situation.”

James says the new rule will likely make companies think twice before relocating staff with foreign national spouses and children back to the US. “It may cause companies to be less flexible in how they assign people because if someone is already in Asia and they want to bring them back, they have to have this understanding that it could take up to a year to a year and a half,” he says.

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CHAMBER NETWORKS

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etworking has always been a key element of AmCham’s functions.

That’s why the Chamber organizes more than 400 events and committee activities a year. In the past two months, the Chamber hosted two evening events and both drew record numbers of attendance.

In September, AmCham partnered with Johnnie Walker to host an exclusive party to celebrate the re-launch of the well-known whisky maker’s Blue Label bottle. Complemented with lucky draws sponsored by Red Packet, The Porterhouse, and Venture Photography, the event was a huge success.

The September event was followed by the Monthly Networking Cocktail held at the W Hong Kong Hotel in Kowloon in October. The venue was 76th floor’s “top-of-the-world” WET Deck poolside of the hotel. It offered guests present sweeping views of the harbor and the breath-taking night scenes of West Kowloon.

Jointly hosted by the Real Estate Committee and Financial Services, the event attracted more than 200 guests. Red Packet, Santa Fe, The Porterhouse, Golden Gate Wine, and Smartpen Asia sponsored prizes for the lucky draws. Real Estate Committee Co-chair Alan Seigrist impromptu offered two bottles of Champagne as surprise prizes.

“It is our pleasure to work with AmCham. This event allowed us to showcase our new poolside bar WET DECK, the highest roof top bar in Hong Kong. It is the perfect place for drinks and dining as well as private parties and cocktail events,” says James Walkden, Director of Operations of W Hotel. “We are thrilled to have received great attendance and cool vibe on the night, and we do look forward to welcoming the members of the AmCham at the W again.”

Following their success, the Chamber will again host the networking cocktail in November in partnership with COACH at its flagship store in Central. The event promises to see another record turnout. See you there!

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Do you know…

I

n an interview, Jonathan Driver, Johnnie Walker’s Global Brand Ambassador, shares some of the secrets of success of the brand’s Blue Label with biz.hk:

biz.hk: What are some of the unique features of the Blue Label?

Driver: The Blue Label is our most premium label, the pinnacle of the range, and the unique qualities are identified through what we call “The 3Cs”, also known as the three pillars of rarity: First, rare casks. The casks are manually selected by the blending team, and some of the casks we use for Johnnie Walker Blue Label are from distilleries that no longer exist. There is a greater proportion of European, sherry, casks in the blend than many of the other variants. Among all the casks we have, only one out of the 10,000 casks will deliver the unique, 19th century style and character we want for Johnnie Walker Blue label.

The second “C” is rare craftsmanship. Jim Beveridge, our master blender of over 30 years of experience is part of an unbroken lineage of 190 years of the House of Johnnie Walker blending heritage (since 1830). Johnnie Walker Blue Label is blended in small batches of around 300 casks, and is created with a perfect combination of old whiskies (to give the incredible smoothness) and younger whiskies (to bring vibrancy) The third “C” refers to rare character: Today’s Johnnie Walker Blue Label pays tribute to the Old Highland Whisky created by Alexander Walker back in 1867, the first great blend from John Walker & Sons, this set the standard for all the blends that followed. The character: big, complex, powerful flavors which build and evolve with an incredible smooth and long finish. biz.hk: Any tips about appreciating the Blue Label?

Driver: Jim Beveridge, our master blender recommends

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Johnnie Walker Blue Label to be appreciated in the follow way, which we call the “Perfect Serve”. It is important not to mix with water or ice, but sipping neat in combination with crisp, iced fresh water on the side.

First, take a sip of the iced water to cleanse the palate and hone the senses. Then, take a sip of Blue label and let it roll in the mouth before swallowing to reveal the full taste experience (which can last up to 40 – 60 seconds). You will first experience the smokiness, and then the rich sweet taste of dried fruit, and spices followed by a second wave of fresh fruit, leading to delicious vanilla flavors, sweet smoke and a peppery finish. Beautifully smooth but with layer after layer of complex flavors unfolding as you drink it. It lasts a long time. biz.hk: What are the key factors behind Johnnie Walker’s popularity in Hong Kong?

Driver: The brand name Johnnie Walker was first introduced to Hong Kong in the 1890s when the Walker family first started exporting their whiskies around the world and has since then been very successful in building a reputation amongst discerning whisky drinkers.

Quality of product has been a crucial factor. The market in Hong Kong is very competitive, consumers are exposed to a wide range of whisky, but we believe the quality of our products speaks for themselves, and our market share indicates that this is well received amongst our whisky drinkers. The various labels available in the Hong Kong market (Red Label, Black Label, Green Label, Gold Label Reserve and Blue Label) target various groups of consumers of different demographics.

In terms of promotions, Johnnie Walker has been working very closely with partners from different sectors, especially trade partners, which helps to develop the portfolio of Johnnie Walker in different outlets; sponsorship of concerts and movies have also developed the Johnnie Walker brand name among local consumers.

local market?

Driver: The whisky market in Hong Kong is developing at pace, particularly in terms of “depth” as consumers look for new and enhanced whisky drinking experiences which is why we place such an importance on education and mentorship.

Hong Kong is a key part of the global re-launch of Johnnie Walker Blue Label, the launch of the new design of the iconic bottle was celebrated around the world in July after which each market tailored a series of events like Hong Kong’s Blue Journey at The Space. biz.hk: What’s the concept behind the Blue Journey at The Space?

Driver: We want to have what our Master Blender Jim Beveridge describes as a “Whisky Conversation”. The Blue Journey at the Space is a space we created where our guests can leisurely enjoy a glass of Johnnie Walker Blue Label, at the same time get to know more about the incredible history and quality of the brand and the liquid.

Moreover, a series of photos and art pieces related to the brand’s history are on display for our guests to enjoy and a tutored tasting hosted by our brand ambassador to educate our guests about the best way to enjoy Johnnie Walker Blue Label was a pivotal part of the evening.

Jonathan Driver

biz.hk: How does Johnnie Walker adapt to changes in the

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Monthly Networking Cocktail

Exclusive Party

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ENVIRONMENT

Roll-up Sleeves for

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Clean Beaches

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2010. Last year, participants picked up a total of 36,126 kg of trash and covered nearly 150 km of Hong Kong’s shoreline.

The goal for 2011 is to surpass 10,000 volunteers to win the challenge in Asia and put Hong Kong on the global map for marine stewardship. The award ceremony will be held on November 2.

Lisa Christensen, director of the event, said although more volunteers have participated in recent years, more are still needed. Their ultimate goal however was to cancel the event – when the beaches are clean.

Ecovision Asia is an environmental events and education organization based in Hong Kong, dedicated to educational programs, public-awareness campaigns and events that support environmental responsibility and sustainable development. Ecovision’s HKICC is part of a global effort coordinated by Ocean Conservancy.

*Saori Dubourg, President, Asia Pacific, BASF *Umran Beba, President, Asia Pacific Region, PepsiCo Inc *Clare Allum, Asia Pacific Learning & Development Leader, Ernst & Young *Shanthi Flynn, VP-HR, Walmart Asia *Pooja Grover, Managing Director, Investment Banking Division, Goldman Sachs (Asia) LLC *Karen Koh, Founder & Principal, Intermedia *Shalini Mahtani, MBE, Founder & Advisor to the Board, Community Business *Kay McArdle, Board Chair, The Women's Foundation *Melissa Mowbray-d’Arbela, CEO, Filligent Limited *Susan Reingold, SVP, Corporate Development, Asia Pacific, Grey Group *Christine Sim, General Manager, Links Recruitment Singapore *Lizette Smook, Founder & CEO, InnovAsians Ltd. *Prof Agnes Tiwari, Head, School of Nursing, The University of Hong Kong *Caroline Wong, Executive Director, Corporate Communications, Morgan Stanley Join us for a special half-day conference and awards ceremony to recognize some of Hong Kong’s most outstanding women and their significant impact. This year’s conference is about the importance of connecting, collaborating and inspiring. It will highlight insights, strategies and advice from women who have successfully reached the pinnacle of their careers. The culmination of the conference will be the presentation of the eighth Women of Influence Awards.

Nov Tools to Build the US -

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Time: 8:20am – 2:15pm Conference & Awards Ceremony (Lunch included) Fee(s): Member Fee: HK$1,250 Non Member Fee: HK$1,450 Corporate Table Fee (10-12pax): HK$15,000 MEDIA WELCOME

Venue: The American Club 49/F Floors 48-49, Exchange Square Two Central, Hong Kong

China Economic Relationship

Derek Scissors, Ph D Research Fellow, Asian Studies Center The Heritage Foundation Dr Derek Scissors, Ph D focuses his studies on the economies of China and India as research fellow for economics in Heritage's Asian Studies Center. He also analyzes and comments on broader economic trends Asia as well as related challenges facing the United States.

Dr Scissors has testified before the US Senate on exchange rate disputes between America and China and to the US - China Economic and Security Commission on Chinese investment in the United States. His analysis and commentary have appeared in Foreign Affairs, National Review, The New York Times, The Wall Street Journal’s Asia edition and Indian news outlets such as The Hindu. Dr Scissors also is adjunct professor at George Washington University, where he teaches a course on the Chinese economy.

Nov AMCHAM HONG KONG GOLF OPEN

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Venue: Four Seasons Hotel Grand Ballroom, Level 2 8 Finance Street, Central

Discovery Bay Golf Club Valley Road Discovery Bay Lautau Island Format: Teams of four. First tee-off at 12:50pm onwards Charity: Part of the proceeds will go to the AmCham Charitable Foundation Prizes for players: Winner, First and Second Runner-ups of Stableford. Special awards for Closest to Pin, Longest Drive, and other fun prizes Package includes * Green fees * Shared buggy and locker * Halfway house expenses (snacks and drinks) * Standard drinks (wines not included), lunch buffet and BBQ dinner * Practice balls at driving range * Souvenir Pack (Metal Bag Tag, Yardage Book & DBGC Ball Marker)

Time: 8:00 - 9:30am (Continental breakfast included) Fee(s): Member Fee: HK$250 Non Member Fee: HK$350 Corporate Table Fee (10-12pax): HK$3,500

Venue: Discovery Bay Golf Club Valley Road Discovery Bay Lautau Island Time: 11:30am - 8:00pm Fee(s): Member Fee: HK$2,200 Non Member Fee: HK$2,400

Transportation to Discovery Bay at player’s own arrangement. A ferry schedule will be sent to the confirmed players. Complimentary Shuttles to the golf club will be waiting at the Discovery Bay Ferry Pier at the arrival of each ferry.

For information, see website: www.amcham.org.hk Tel: (852) 2530 6900

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Fax: (852) 2810 1289

Email: kalau@amcham.org.hk

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2011 November

rganized by Ecovision Asia, the month-long Hong Kong International Coastal Cleanup Challenge has just ended last month.

AmCham participated this year as a supporting organization and more than 20 members and their family members took part as volunteers to help clean the Hung Sing Yeh beach on Lamma Island.

Led by Environment Committee Chair Brad Punu, the group spent an October Saturday morning to clean the beach and its surrounding area. Although it was not peaked season, the members still collected dozens of bags of garbage.

This is the ninth year that Hong Kong has played a part in the campaign, with the number of participants increasing each year.

The HKICC has grown from a small grassroots event of just 45 volunteers in 2000 to over 8,690 participants in

AmCham/ SCMP Women of Influence Conference & Awards 2011 Connecting, Collaborating and Inspiring

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