Category Archives: RSM Regions

EBA celebrates manufacturing in Europe

This is the first in a series of articles leading up to the European Business Awards Gala Event on 27 May 2014. RSM is the lead sponsor of the European Business Awards, click here for more information on the programme.


This year’s European Business Awards will not only be a celebration of success, but also of variety, as the National Champions and Ruban d’Honneur recipient list is composed of 130 companies from over 20 different sectors across the business spectrum. Upon viewing the list of hopefuls there are a number of sectors which stand out: there are 17 technology companies, ten software firms and ten businesses in the environmental sector. However, by far the most prominent sector across Europe is manufacturing, with 23 businesses making it to the final.

This ties in with the Industrial Structure Report, released by the European Commission in February this year, which highlighted the significance of the manufacturing sector within the European Union. The report noted that manufacturing has a hugely important role in both the recovery and the growth of economies across Europe. Nevertheless, after analysing the performance of EU industrial and service sectors, it concluded:

“Manufacturing sectors have been hit more severely by the crisis than services: manufacturing, as a proportion of economic output, has declined significantly.”

The manufacturing sector is currently going through a very difficult period and the European Business Awards gives us the opportunity to celebrate the manufacturing companies that have bucked the trend of decline across the continent.

Conversely, the same EU report praised the growth of pharmaceuticals within the manufacturing sector, saying:

“The pharmaceuticals sector has experienced sustained growth since the start of the financial crisis.”

In fact, the pharmaceuticals sector is the only EU manufacturing sector that has increased its share of output since 2000. With regards to the European Business Awards, only five of the aforementioned 23 manufacturing companies are pharmaceutical, highlighting the range of businesses that exist in the competition, even within each sector.

With six manufacturing companies from the UK and Greece alone, some countries are pushing the sector forwards more than others. We can use the European Business Awards to share best practises and learn from those who have accomplished great things in trying times. The gala ceremony in Athens at the end of May will not only be a celebration of success and variety, but it will also highlight and recognise those who have experienced growth in difficult circumstances.

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Filed under Economy, Europe, European Business Awards

Business confidence in the Middle East and Africa trailing Europe

Can there be anywhere in the world less confident about its business prospects than Europe right now? Most people would answer that question with an emphatic ‘no’. But, during our recent annual conference in London, we polled the 280 delegates – from all corners of the globe – and got some contrary and interesting views.

36% of RSM members in Europe categorised business confidence in their respective countries as ‘good’ or ‘very good’. Surprisingly, both Africa and the Middle East scored lower than Europe on business confidence, despite many countries in those regions experiencing relatively high levels of economic growth. Just 25% and 22% of accounting professionals respectively in those regions rated business confidence as ‘good’ or ‘very good’.

Needless to say, business confidence is absolutely critical. If businesses do not feel optimistic, they will be reluctant to invest. As we all know, increased capital spending by private businesses will be needed to kick-start growth, but many organisations across Europe are still in cost-cutting mode.

Contrast this with Africa, where many economies are growing strongly. Confidence is relative of course, so it’s entirely possible to be less bullish despite a more favourable economic reality. The fortunes of African economies are closely tied to demand from the U.S., Europe and China, but with demand muted, and commodity prices falling, many African economies are facing growing headwinds.

Within Europe the picture is polarised. Whilst 62% of delegates from RSM Germany rated confidence as ‘good’ or ‘very good’, business confidence from UK delegates is significantly below the European average, with only the Spanish more pessimistic about their economic prospects among major European economies. Just 9% of RSM delegates from the UK ranked business confidence as either ‘good’ or ‘very good’, whereas RSM members from Spain are the most pessimistic among the five major European economies, with none rating business confidence as ‘good’ or ‘very good’.

70% of RSM members in the Americas and 66% in Asia/Asia Pacific rated business confidence as ‘good’ or ‘very good’. It’s a little surprising to see confidence in the Americas higher than Asia, but then Americans are known for their optimism, and with the prospect of energy self-sufficiency in the U.S. a growing possibility, there is good reason for feeling positive. Energy is one of the largest input costs for manufacturing businesses, so the shale gas boom could provide a much-needed competitive boost to U.S. industry.

Looking forward to 2013, 42% of RSM members in Europe think business confidence will decline over the next 12 months. Only African RSM members are less optimistic: just 25% thought confidence would improve, compared to 36% of Europeans.

RSM members have their fingers directly on the pulse of businesses in their respective countries, so this survey provides a fascinating overview of economic vitality. 2012 has been a tough year for the global economy, but there is reason to hope that the prognosis for 2013 will be a little better.

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Filed under Africa, Asia Pacific, Business confidence, Economy, Europe, General, Latin America, Middle East and North Africa, North America

One day. One focus. One RSM.

Getting the team together to share and celebrate growth and success is certainly difficult, especially when that team encompasses 32,500 people across 700 offices worldwide.

However, on 20 September 2012, we will see our network of staff across 90 countries celebrate our shared vision of “Connected for Success”.

RSM World Day, as we are calling it, is a celebration of our shared values as a global community – unified in putting clients first and in building close personal relationships and understanding, both with clients and between our colleagues across RSM.

Each member firm will celebrate in their own way, with events and activities to share knowledge and increase awareness of our strengths and successes as a global network of professionals. Indeed I have been thrilled to see such a wide variety of planned internal and external communications campaigns, including advertising in local and international media, social and charity as well as business events, competitions and direct marketing activity.

Since the “Connected for Success” campaign was launched in early 2012, RSM has recorded a 35% increase in the level of referred work between international offices. The statistics reveal a significant increase in the number of both new and existing clients choosing RSM to serve them across international markets, with that support provided across more than two geographic territories.

We know our brand promise has to deliver in real business terms, and to achieve this, every employee has to understand their fundamental role in the bigger picture. With this in mind, the aim of RSM World Day is to share knowledge and understanding of what has made, and is continuing to make us successful. And above all, to champion our belief and determination that it is through our close personal relationships that we will realise our collective global ambitions. “Connected for Success” – Globally – with our clients – with each other.

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Filed under People, RSM Regions

Africa marches forward: Could it be on the verge development breakthrough?

Following the incredible events of the Arab Spring, a wave of change continues to sweep through Africa. Reading this article in the Wall Street Journal I was reminded of how dynamic the socio-political situation is across this continent.

Africa is an important growth area for RSM and our clients globally.

As a network our strategy is to have a firm foundation in Africa’s key markets, continually building our network to provide our international clients with support for their businesses as they expand across Africa. At the same time, we are seeking to foster our African clients’ organic growth in Europe, China, India and the US.

The opportunity is immense. Africa has the youngest population in the world, with almost 200 million people aged between 15 and 24. According to the African Economic Outlook this number will double by 2045, putting huge demands on the economy to keep up and create jobs.

The good news is that African economies continue to grow across the continent, at 4.5% this year, with even higher rates predicted for next year.

The economic growth story is compelling. Seven of the top ten fastest growing economies in the world are in Africa, mainly those with a wealth of natural resources. It is widely expected that Nigeria will overtake South Africa as the leading African economy during the next 5-10 years.

African governments are also relaxing the restrictions on foreign investment to increase the development of infrastructure, education, telecommunications and the agricultural sector. Roads are being built, airports upgraded, hotels are springing up everywhere and internet connectivity is burgeoning. Mobile commerce is hastening the growth of SMEs as banking services become accessible to everyone with a mobile telephone. These improvements create wealth and benefits for entire populations.

This economic growth is underpinned by a decade of comparative peace and political stability. Democratic reforms have slowly but surely given groups who previously would have resorted to armed conflict political representation. There are still protests, unrest and instability, but the young population is organised and agitating for political liberalisation, competition, and electoral representation. This year alone will see 23 democratic, multi-party elections.

Africa is undergoing a truly remarkable transformation. If the right policies are put in place to capitalize on the continents abundant human capital and natural resources, Africa could be on the verge of a development breakthrough with all the ingredients for a future economic powerhouse. RSM will be there, building our presence, assisting businesses to invest and African businesses to expand. It’s going to be a fascinating and rewarding experience for everyone involved.

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Filed under Africa, In the news

China’s Carbon Trading Experiment is good news for the Cleantech industry (and the planet)

The recent report “China’s Carbon Emission Trading: an Experiment to Watch” by the Stockholm Environment Institute provides a positive analysis of China’s pilot for its national-level carbon trading programme.

The biggest carbon producer in the world is the US, followed by China. Getting both of these countries to embrace carbon trading is a tipping point, which will spur huge global investment in green and cleantech industries.

For years China has sat (as has the USA) on the side-lines of the global climate debate. Not for much longer.

According to the report, in announcing the formation of pilot carbon trading programmes China is demonstrating its commitment to a long-term strategy for carbon and energy “intensity” reduction. One of the biggest problems in trying to stem pollution is funding the replacement technologies. A national scheme will reduce the cost and increase the efficiency of efforts to reach carbon and energy intensity goals, with an end game to maintain energy security and reduce domestic vulnerability to the effects of global warming.

The future aim is that the creation of a functional national carbon market in China will – when linked with other major trading schemes such as in the EU – eventually lead to the creation of a global market and price for carbon. The US will have to follow suit and the influx of investment into cleantech will be transformational.

This pilot must succeed. There are always hurdles along the way, but as the report summarises, “China’s determination has served it remarkably well in many other ways in the past decades. That same ‘crossing the river by feeling the stones’ spirit could well enable China to build a unique innovative carbon market that effectively curbs its now soaring emissions.”

Ian Duffy, Head of RSM’s Cleantech and Renewable Energy Group added: “The Chinese initiative is very welcome and the pricing of carbon production worldwide is critical to creating and maintaining a permanent momentum away from fossil fuels and towards renewable and carbon neutral fuels. In the current economic climate, this move shows the importance and priority of shaping future energy generation and consumption.”

This will be fascinating to follow – we’ll be watching closely over the coming years.

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Filed under China, Cleantech, Environment

Austerity alone will not lead growth

European governments are facing a clamour of calls to ditch austerity measures and start spending.

The most rational of these calls are from those who wish to find a middle ground, understanding that is very hard to nurture economic growth without some form of stimulus.

It is very rare for an economy to simply change gear without a significant catalyst – be it the growth in a particular industry, political reform, or a significant innovation which a country is in a unique position to capitalise on. My own perspective is that, outside of pure chance, growth tends to follow intelligent strategic investment.

A fascinating comment piece in the Financial Times by Professors Marcus Miller and Robert Skidelsky of Warwick University questions the validity of austerity, and presents a very clear and concise case for the adoption of pragmatic growth measures as a solution to the current economic woes.

Devising ways to reduce debt without austerity is imperative. Assessing the current turmoil and drawing parallels with the 1930’s, they argue that sovereign debts must be managed in ways that do not destroy the economy or the political centre ground – as is the threat from a rigid austerity programme

According to Miller and Skidelsky, growth will only be achieved through increased project spending, restructuring of debts and shifting debt onto future generations. This basic foundation will create breathing space in which countries can climb out of the current morass.

I certainly appreciate that it is important that austerity measures be adopted at the early stages of a debt crisis – in the most recent crisis, it was important to show bond markets that tackling the debt mountain was a priority. With these initial measures in place (and as growth slides backwards and tax receipts fall), the question should be not if, but when, we begin adopting growth measures in earnest.

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Filed under Economy, Effective business, Europe

Resource rich Australia grapples with a two speed economy

Last month GE reported a 26% rise in revenue from Australia. The resource
rich nation exceeded China revenue by US$100 million, and the company
expects Australia will surpass China again in 2012. According to the Wall
Street Journal
GE expects that the price of minerals will remain strong and support Australia’s burgeoning mining sector.

For GE, this presents an immense growth opportunity fuelled by sales of
industrial equipment to nations that produce healthy amounts of oil, gas
and iron ore.

Alongside Australia, GE CEO Geoff Immelt pointed at Canada, Peru and
Mongolia as other targets for the firm. He noted that these nations are
more or less geographically equal in size to China, but are “not as hard”
to do business in. The challenge for these countries is to develop
economies which holistically benefit from a boom in one sector.

Much is being made of Australia’s “two speed economy”. Its fully-fledged
mining boom is pushing the resources sector far ahead of the rest of the
economy, which is flagging under the weight of an increased trade deficit.
The strong Australian dollar is the culprit for these woes.

Then again, ask any European finance minister to consider a job swap, and I
am sure you’ll get no complaints about taking on the role in Australia –
low unemployment, low inflation and low interest rates are not to be
scoffed at.

There is some heavy work going on in Australia to align the economy. Budget
cuts were unveiled last week and the Government announced they are aiming
at going from deficit to a surplus of AUS$1.5 billion for 2012-2012.

There are, of course, a couple of issues GE and other companies in a
similar position need to be mindful of.

The incoming Minerals Resource Rent Tax (MMRT) is a tax levied on 30% of
the “super profits” from the mining of iron ore and coal in Australia. The
tax kicks in at profits of $75 million and while 320 companies could
potentially be affected, it will certainly raise the cost of doing business
with these firms. The Government expects the tax will raise around AU

Furthermore, the labour market is very tight and companies looking to work
within the sector will be competing for experienced staff. This will cause
further wage inflation and a tighter market than already exists.

The challenges and problems are there, but in looking at the global
economy, I would rather be a finance minister wrestling with sustainability
issues rather than existential issues. A two speed economy is certainly
preferential when your only other option is a one speed economy heading

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Filed under Australia, Economy, RSM Regions, Tax

Guest post: Financial Transaction Tax: Learning crucial lessons from Sweden’s misadventure…

For many years Europe has struggled to introduce financial transaction tax (also known as FTT and Tobin tax). In 1984 when Sweden first installed FTT, it set off a chain reaction of events which effectively strangled its domestic financial markets until the tax was eliminated, six damaging years later.

The introduction of an FTT has recently been added to Hungary’s policy makers’ agenda. Zsolt Kalocsai, the Managing Partner of RSM DTM Hungary, RSM’s Hungarian member firm, believes that we should look at the case of when Sweden brought in an FTT back in the 1980’s…

The key development was in 1986 when Sweden erroneously doubled the tax, driving 60 percent of the turnover of its 11 most actively traded shares to move to London. By the 1990′s 50 percent of the Swedish stock exchange’s former turnover was traded in London, and most dramatic of all – futures trading fell by 95% and bond trading fell by 85%.

Key elements:
1. Foreign investors reacted to the tax by moving their trading offshore

2. Domestic investors reacted by reducing the number of their equity trades

3. Tax revenues from FTT were almost entirely absorbed by the drastic reduction of the personal income tax on the capital gain of transactions

4. Markets hated the FTT – The Stockholm stock exchange dropped by almost 5.5 percent and later, in response to the news of the increase of tax, shares fell a further 1 percent.

5. FTTs are not guaranteed to earn – the actual revenue from FTT for government securities in Sweden was a dismal 4 percent of the predicted tax revenue.

Sweden’s misadventure teaches us that the introduction of an FTT can clearly have dramatic implications for financial markets, with the potential to do long term damage.

These are important lessons and highly relevant today. The risks of the FTT are clear. But would these risks be mitigated by the introduction of regional or global FTTs? Probably yes, but the likelihood of such happening is remote.

If applied to Europe, transactions would (by their nature) move to the American continent or to Asian financial markets immediately.

So it is no coincidence that many EU member states are clearly against the introduction of FTT including the United Kingdom, Italy and, no surprise, Sweden.

Introducing an FTT is not a simple decision for policymakers as the historical evidence points to the risks almost certainly outweighing the benefits.

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Filed under Europe, Tax, Technical News

Guest post: Indian government reforms will lead to sustainable growth…

India continues to make great strides as an economy. Policy decisions made by the Government will increasingly reverberate around the world.

I am delighted to share with you the first post from Suresh Surana, founder of RSM Astute Consulting Group in India. Dr Surana is a leading commentator in India, and I hope to include more of his insights in the blog over the coming years…

India has successfully moved from a position of developing economy to emerging economy on the world map. This is a responsible position, considering the rise and fall of India’s growth rate has an impact on global growth and confidence. The same is also carefully observed by India’s trade partners and policy makers around the globe.

India’s growth through to 2013 is projected to be around 7.5%. This medium-term growth outlook is positive due to a young population and corresponding low dependency ratio, healthy savings and investment rates, and increasing integration into the global economy.

There have been some questions about the sustainability of this growth, which is certainly increasing the need for a solid programme of structural economic and fiscal reforms. Reforms will also go some way to repair investor confidence which has been ebbing away of recent owing to perceived wide spread corruption, increase in cost of finance and, of course, a historical lack of progress on economic reforms.

There have been a number of small reforms in the area of infrastructure, such as the extension of the viability gap funding mechanism to support public-private partnerships, doubling of the amount to be raised through tax-free bonds and wider use of external commercial borrowings in sectors such as roads, power and civil aviation. Measures like allowing qualified foreign investors in the corporate bond market and allowance of venture capital fund investment to all sectors as opposed to restricting this to specified nine sectors as in the past will also have a positive impact on some companies.

There are some structural fiscal reforms planned in the Finance Budget 2012 worth noting:

- Direct Tax Code (DTC)
The DTC consolidates and integrates all direct tax laws and replaces both the Income-tax Act, 1961 and the Wealth-tax Act, 1957 by a single legislation. The Government seeks to provide a modern tax code in step with the needs of a fast growing economy. This would ensure ease of usage by simplification of language.

- Goods and Services Tax (GST)
India has a number of indirect taxes with multiple cascading effects; the GST is aimed at consolidating all indirect taxes for providing ease of performing business in India.

- Foreign Direct Investment norms
It is expected that the government will push its efforts to pursue opening up the multi-brand retail sector for foreign investors. Also, it envisages increasing foreign participation in the aviation and power industry.

- Thrust on infrastructure
The drive on improving infrastructure facilities in India has been further strengthened. The Budget spending for infrastructure is aimed at INR 600 billion for the twelfth five year plan beginning from 1st April 2012.

- Capital Market
Various steps are proposed to be taken for deepening the reforms in the Capital markets, by allowing foreign retail investors to access Indian Bond Market.

There is no doubt that over the long term the Indian economy will continue to grow. How it grows is very important as to be globally competitive, rather than just create a “large market”, India needs to develop into a world class economy. To deliver this the government will need to maintain a firm programme of structural reforms which can constantly adapt the economy to compete in the top tier.

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Filed under Economy, Guest Post, India, Tax

Guest post: Insights from an International Tax Advisor…

Our latest guest post is courtesy of Mario van den Broek, Partner,
International Tax Services at RSM Niehe Lancée Kooij in the Netherlands.
Mario is one of the most senior tax professionals in our industry, and I am
delighted to welcome him to the RSM World blog…

International tax structuring has undergone significant changes. Although
the principles have not really changed, the implementation of tax
structures indeed has. Whereas “ in the old days”, it was quite easy to put
together boxes to find the most efficient structure for our clients,
nowadays it is crucial to not only consider the substance of a structure
from a tax perspective but also whether or not it is still worth it to a
company to actually implement a supposedly efficient structure. In
addition, we regularly come across companies that are left with advice on a
structure, and even with the structure itself, but without any proper idea
of how the benefits of the structure should be achieved and maintained.

That makes the role of a tax advisor only a more interesting one. It is
important to stay on top of the most recent international tax developments,
but also it is important to be able to be a sparring partner to a global
operating company and form an opinion on different kinds of taxes
(corporate tax, wage taxes, VAT) and elements (transfer pricing). In
addition, it is crucial to act as a coordinator between the different
countries where a company has operations. Our global operating clients need
to focus on doing business but also have to realize that remaining in
compliance with local tax regulations is a crucial element of doing
business across borders. Of course, quite often, that is not the first
matter of attention.

I could talk for hours about the different international tax developments
and by referring to items such as treaty protection, beneficial ownership,
tax control framework, exit taxation, transfer pricing, VAT reclaims and
cross border mergers, I have already started to do that. But let me stop
there as I would like to point out a different element that is key in
building and implementing tax structures. Know what it is? Teamwork. And
not teamwork created by collecting names of colleagues in a nice directory,
no, I am talking about real team work which is established by meeting with
each other, talking to each other face to face and meeting clients

As part of my role as international tax adviser I spend a lot of time
working with my colleagues and although I try to stay up to speed with
technology by for instance using Dropbox to share documents with my foreign
colleagues on the new Ipad, or using Webex on my laptop to go through
presentations page by page, nothing beats face-to-face cooperation.

Therefore, it is very important to create space to develop this process. I
really make a point to travel, investing in time to both educate and learn
from my colleagues. Even though my base lies in the Netherlands, I work in
such a way with RSM partners all over the world. From New York to Sydney,
from Hong Kong to Denmark, our success and our ability to distinguish
ourselves from our competitors lies in the frequency of how often we meet
with each other and work with each other. It makes for a strong, people
focused network. That is what RSM is about.

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Filed under EU, Europe, Guest Post, People