By malminderjit singh

EMERGING markets, many in the Asia Pacific, received more capital than their developed world counterparts in 2011, and are likely to continue this momentum this year as they maintain a tax and fiscal regime favourable to investors, according to an Ernst & Young report.

The E&Y Asia-Pacific Tax Policy and Controversy Outlook 2012 released yesterday said improving fiscal positions were found in more economies in the region, as they moved away from tax cuts and spending regimes initiated in 2009 to cope with the global financial crisis.

"Roughly a third of the countries in Asia-Pacific are mature economies, a third have recently developed and a third are developing now. Their tax codes reflect this diversity by applying vastly different tax rates to personal income, business income, consumption and every other component of the tax base," said Alf Capito, E&Y Asia-Pacific tax policy leader.

The report said improved balance sheets show that Asia-Pacific economies have transitioned successfully from a period of fiscal stimulus to one featuring higher tax collections and modest spending. And since all economies in the region, with the exception of Japan, are not under the debt constraints of European nations, the wave of fiscal consolidation is moderate and voluntary, rather than severe and compelled.

The report said Singapore, Korea and Hong Kong are expected to run budget surpluses in 2012 and every other nation in the region, except Thailand, shows a trend towards lower projected deficits from 2011 to 2013.

This successful transition to fiscal consolidation is likely to build confidence in the Asia-Pacific economies, the report noted, as growth is projected to be strong in 2012, surpassing that of many emerging markets in the Americas and with tax policies in individual economies playing a significant role in the region's economic growth.

"From 2011 and extending to 2013, the Asia-Pacific economies are continuing along that growth path, and it appears the region as a whole has established a reliable growth rate of 5-6 per cent, outshining regional growth rates for Europe and, more modestly, the Americas," said Mr Capito.