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We update you on the most essential news from Asia in tech, media, and business—the things you need to know that you probably haven’t heard in Western media.
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US Reverses Policy on International Student Visas 🔀
The US government has now revoked an order that would have forced international students to leave the country if their school hosted only virtual classes because of the coronavirus. The order was initially announced last week on July 6, so the reversal announced earlier this week has come very quickly. The new law would have affected over one million international students currently studying in the US.
Harvard and MIT were joined by several other universities in filing a lawsuit in Boston federal court seeking to prevent US Immigration and Customs Enforcement (ICE) from enforcing the law and they have now come to a settlement. The lawsuit also received widespread support from many major US tech companies.
For many international students, you really can’t imagine the level of psychological relief they must feel after a two-week emotional rollercoaster. While many students and universities might now worry less about ICE, there are still many open questions around the logistics, costs, and implications of universities going completely virtual for the upcoming semester.
Indonesia Introduces New Tax for Tech Companies 💰
Indonesia has just announced a new 10% value-added tax (VAT) on sales by tech firms like Amazon, Netflix, Google, and Spotify. With the coronavirus having an impact on government revenue, Indonesia is expected to triple its 2020 budget deficit. Many people are pointing to the government’s financial situation as motivating this tax on the highest earning foreign tech companies. The new VAT rule applies to any foreign company selling digital products in Indonesia above a certain revenue threshold or with a certain number of active users in the country.
Out of South East Asia, Indonesia has usually been the most attractive country for Western tech companies. Indonesia has a population of 260 million and the most mature startup ecosystem apart from Singapore. If the pandemic causes governments in South East Asia to increase taxes on foreign businesses, the cost of doing business will increase for Western companies. While Indonesia is such a big and important market that this likely won’t change the plans of foreign firms, a 10% sales tax in other smaller countries in SEA might cause western companies to consider alternatives.
E-Commerce in India Reaches Pre-Covid Levels 🛒
In April, only essential goods in India were allowed to be sold online, and there was an 80-90% fall in overall online retail. However, the most recent data indicate that now Indian consumers are buying online at volumes even higher than pre-Covid levels. Daily shipment volumes are back to 3 million per day and e-commerce companies like Amazon India and Flipkart are seeing ~120% growth. Amazon has reported a 50% increase in new sellers since Covid began and almost all online retailers are hiring new staff to keep up with increased consumer demand.
This new data from India is similar to data in China, where new online sales records are being broken in a post-Covid world. The e-commerce data we’re seeing across many Asian countries also indicates a decrease in customer acquisition costs, increase in overall online penetration, and more online shopping from older age groups. It often sounds obvious, but the vast majority of shopping still occurs offline. Even in China, the world’s largest e-commerce market, online shopping made up only 20% of total retail in 2019. With Covid, that percentage of online retail in every Asian country will dramatically increase.
Update #28 - International Students, Indonesia Taxes, and Indian E-Commerce