Amb. Ted Osius
President & CEO
US-ASEAN Business Council
Welcome to the June President’s Newsletter!
I have just finished traveling on the 2014 CEO Business Mission to Hanoi and Manila, led by Council Chairman Evan Greenberg. We were especially pleased this year to be accompanied by U.S. Secretary of Commerce Penny Pritzker. Following the mission, some of the members of our delegation and I accompanied Secretary Pritzker to Myanmar.
The Council received some sad news last month. For those of you who may not be aware, longtime Council Executive Committee Member Laura Hudson passed away on May 11. Laura played a huge role in the evolution and success of the US-ASEAN Business Council. Until her retirement from Chevron earlier this year, she was the Chair of our Thailand and Myanmar Committees. She also was the long-time Chair of our Energy Committee and the original chair of our APEC Committee. Also, as Khun Praab Pianskool, our senior representative in Thailand, reminded me, Laura was responsible for opening our Thai office and his hiring eight years ago. Laura sat on the Council’s Executive Committee for almost two decades and was also the Secretary and then Chair of the Council’s 501(c)3 Board (the US-ASEAN Business Council Institute). She joined us for numerous business missions and really helped build many of the programs which we take for granted today, including being perhaps the most influential person in Washington on the U.S. re-engagement with Myanmar, a subject she focused on almost single-handedly for many years. To read Laura’s obituary, please click here.
Highlights
CEO Mission
The Council’s CEO Mission recently concluded. To check the latest media coverage, please visit the “Council in the News” section of the website.
In support of the CEO Mission, Council Chairman Evan Greenberg and Commerce Secretary Pritzker co-authored an op-ed in support of U.S. Trade with Asia. To read Chairman Greenberg and Secretary Pritzker’s op-ed, please click here.
ASEAN Ambassadors’ Tour
The Council successfully completed its annual ASEAN Ambassadors’ Tour May 5-9. The delegation consisted of Ambassadors from Brunei Darussalam, Laos, Malaysia, Myanmar, the Philippines, Singapore and Thailand, as well as the Deputy Chief of Mission from Vietnam and Minster Counselor for Political Affairs from the Embassy of Indonesia, and the group visited Memphis and Chicago this year. During the tour, the Ambassadors engaged with government officials, local business leaders and academics on the opportunities ASEAN holds for Tennessee and Illinois and discussed ways to continue to grow trade with the region. Overall the tour served to promote greater awareness of the political and economic significance of America’s relationship with ASEAN. The tour this year was further supported by the launch of the ASEAN Matters for America initiative, which was highlighted and shared throughout the program. Please click here to view the ASEAN Matters for America website.
Thailand
According to interim Prime Minister General Prayuth Chan-ocha, an interim government is being formed in Thailand to administer the state budget for the next fiscal year, but elections are at least 15 months away. On May 30, NPCO declared a roadmap to propel the country towards democracy in three stages. In the first stage, expected to take two or three months, the focus would be on ensuring security and reconciliation. In the second stage, expected to take about a year, legal experts will draft a temporary constitution. A national assembly will be established which will choose a prime minister. In the third stage, the country will move towards full democracy with an election. Fuller coverage can be found below. To view the Council’s latest Thailand analysis, please click here.
UPCOMING EVENTS
10th Anniversary Celebration of the U.S.-Singapore FTA with PM Lee
The Council and the U.S. Chamber of Commerce will co-host a celebration of the accomplishments of the U.S.-Singapore FTA, attended by Prime Minister Lee Hsien Loong. For more information or to sponsor, please contact Daniel Henderson at dhenderson@usasean.org.
Welcome Lunch for Ambassador Awang
On June 12, the Council will host a welcome luncheon for Malaysian Ambassador to the United States H.E. Awang Adek bin Hussin. The luncheon will be a chance to introduce Ambassador Awang to the Council’s Malaysia Committee and its activities. If you are interested in sponsoring or attending the luncheon, please click here. If you have any questions, please contact Colette Morgan at cmorgan@usasean.org.
Membership
The Council is pleased to welcome its newest member, the Gap, Inc., which joined May 1 as a Chairman’s Council member.
The Gap is a specialty retailer offering apparel, accessories and personal care products for men, women, children and babies under the Gap, Old Navy, Banana Republic, Piperlime, Athleta and Intermix brand names. The company operates in North America, Europe and Asia. It is headquartered in San Francisco, California and employs about 136,000 people as of February 2, 2013.
Regional Issues
Customs and Trade Facilitation
The Council’s annual business mission to the ASEAN Customs Directors-General Meeting took place in Da Lat, Vietnam, from June 3-4. The delegation focused its discussions with regional customs officials on two overarching themes: best practices and case studies in customs modernization, and collaboration between ASEAN customs departments and the private sector to support implementation of ASEAN’s 2015 customs commitments. The centerpiece of the mission was the delegation’s June 4 consultation with the 10 ASEAN Customs Directors-General during which the delegation expressed support for both national and ASEAN single window implementation, progress on implementing the WTO Agreement on Trade Facilitation, and protecting intellectual property through customs modernization. In addition to this consultation, the delegation held bilateral meetings with Customs Directors-General from several ASEAN countries as well as the ASEAN Secretariat. To read the Press Release from the Customs Mission, please click here.
Energy
On May 6, Vietnam and the United States officially signed a bilateral agreement on using nuclear energy for peaceful purposes. U.S. President Obama has submitted the civilian nuclear pact to the Congress for review. The pact will be implemented if Congress does not act to block it within 90 days of continuous legislative session. The 30-year bilateral agreement would enhance cooperation between Vietnam and its U.S. partners in research, training, development and application of nuclear energy. The U.S. Nuclear Energy Institute has said the pact could result in $10 to $20 billion in new U.S. exports to Vietnam and create more than 50,000 jobs in the United States. The US-ASEAN Business Council encourages Congress to support the nuclear energy cooperation agreement with Vietnam which was submitted to Congress today. Vietnam would become the first country in ASEAN to operate a nuclear power plant. To read the Council’s press release please click here.
Frequent power outages and rising demand for electricity have raised concerns about whether the limited power generation of the Philippines will stunt future economic growth and investment. The large economic growth over the last few years has triggered a large surge in power consumption, which has outpaced the growth in generating capacity 3 to 1 over the last decade. In a joint statement, business groups and investors urged President Aquino to work to achieve power supply security and competitive power rates to allow the country to realize inclusive growth and industrialization, and continue to attract foreign investment. In response to the joint call from the business community, the Department of Energy (DOE) said the country is seeking to implement both the Philippine Energy Plan (PEP) and a long-term energy reform agenda to alleviate future energy concerns. The long-term agenda seeks to ensure energy security through the development of indigenous energies such as renewable energy and hydrocarbon fuels, oil, gas and coal; achieve optimal energy pricing in electricity and oil; and develop a sustainable energy system.
Financial Services
On June 3, Lee Boon Ngiap, Chairman of the ASEAN Capital Markets Forum (ACMF) and Assistant Managing Director of the Capital Markets Group at the Monetary Authority of Singapore, joined Financial Services Committee members for a one-hour conference call. Topics discussed included the ACMF's priorities for 2014/15, views of US-ABC members on the ASEAN regional capital markets development agenda, progress on the Collective Investment Scheme, the ASEAN Exchanges Initiative, high-frequency trading in ASEAN and regional derivatives markets. The Council also viewed the call as an opportunity to position interested members of the Financial Services Committee to engage the ACMF at their annual meeting on October 10-11 in Kuala Lumpur. A biography for Chairman Lee can be found here and more information on the ASEAN Capital Markets Forum can be found here.
Our colleagues at the National Center for APEC (NCAPEC) have kindly provided a draft agenda for the Asia-Pacific Financial Forum (APFF) in Seattle on July 7, which NCAPEC is co-hosting with the APEC Business Advisory Council. The Financial Services Committee has advocated to ASEAN policy makers the role which several APFF-related work streams could play in supporting financial sector development in ASEAN. Council members who are considering or planning to attend can contact John Corrigan at jcorrigan@usasean.org or Shay Wester at swester@usasean.org for more information on Financial Services Committee engagement with stakeholders at the event. For specific questions regarding the draft agenda, please contact NCAPEC's Robert Fiddick at rfiddick@ncapec.org.
Food & Agriculture
On May 15, the US-ASEAN Business Council Food & Agriculture Committee participated in an Agricultural Attaché Roundtable hosted by the Vietnam Embassy and Counselor and Chief Economic Officer Le Chi Dung. Agricultural and economic officers from nine ASEAN embassies briefed members on country priorities. Committee Chair Bruce Blakeman of Cargill led a discussion on expanding Public-Private Engagement. During the discussion, a formal dialogue on seafood and Maximum Residue Limits (MRLs) was suggested. The Food & Agriculture Committee will be working on next steps for this dialogue. If you are interested in participating, please contact Kim Yaeger at kyaeger@usasean.org and Wanlapa “Fon” Komkai at fwanlapa@usasean.org. To read the latest Council update on Food & Agriculture, please click here.
Health and Life Sciences
The Health & Life Sciences Committee held a meeting in Jakarta on April 15 with Committee Chair Leslie Mancuso, President and CEO of Jhpiego. As a follow up, the Committee is seeking a meeting with Minister Nafsiah in June to provide the Indonesian Ministry of Health with an update on developments and activities of our companies. In addition, the Committee will work to prepare an issue paper on healthcare in Indonesia that will be delivered to the new Indonesian government following the coming elections. If you would like to be involved in developing this document, please contact Shay Wester at swester@usasean.org or Kim Yaeger at kyaeger@usasean.org.
On May 20, the Council hosted a meeting on healthcare transparency with Malaysian negotiators to the Trans-Pacific Partnership (TPP) during negotiations taking place in Singapore. The healthcare transparency annex proposed in TPP would not be applicable to Malaysia’s current healthcare system, but there are concerns regarding compliance with this provision if Malaysia restructures their healthcare system. The Council is working to organize a follow-up meeting in Kuala Lumpur in late June. If your company is interested to send a representative to this meeting, please contact Shay Wester at swester@usasean.org or Ezani Mansor at emansor@usasean.org.
To support the Council’s 2014 Business Mission to Myanmar, tentatively scheduled to take place in July, the HLS Committee will develop an issue paper focused on key health related messages in Myanmar. If you would like to provide input to the issue paper, please contact Shay Wester at swester@usasean.org or Kim Yaeger at kyaeger@usasean.org.
Infrastructure
On May 6, the US-ASEAN Business Council Infrastructure Committee published six key advocacy messages: Promoting Favorable Infrastructure Financing Environment, Sustainability in Development, Fair Government Procurement Practices, Use Life Cycle Cost Assessment, Establishing Good Practices in Used Equipment and Recognize Remanufactured Products. These messages will underlie and guide all programming and communications in 2014. On May 21, the Committee also disseminated a notional calendar of infrastructure events for 2014. The Committee will be liaising with key government stakeholders in priority countries to gather information on the top two or three Infrastructure projects with opportunities for private industry partnerships. Please provide your input on these programs to Sunita Kapoor at skapoor@usasean.org and John Corrigan at jcorrigan@usasean.org.
Indonesia
The Presidential election in Indonesia on July 9 will consist of two tickets: Prabowo-Rajasa and Jokowi-Jusuf Kalla (JK). Golkar's Aburizal Bakrie has decided not to run and has thrown his support behind the Prabowo-Rajasa ticket. The Prabowo-Rajasa ticket has the backing of Gerindra and the Islamic parties: PPP, PAN, and PKS. Prabowo's running mate, Hatta Rajasa, is the Chairman of PAN. Bakrie's support for the Prabowo ticket will likely split the Golkar vote given his low electability and the popularity of former Golkar Chairman (and former Vice President) Jusuf Kalla who is contesting the race on the opposing ticket. The Jokowi-JK ticket coalition is made up of the PDI-P, NasDem and the PKB. General Wiranto's Hanura party has pledged support for the Jokowi ticket, and former deputy chairman and head of MNC group, Harry Tanoesoedibjo, has announced his support for the Prabowo ticket. President Yudhoyono's party, PD, has so far not chosen a side and will likely remain neutral. Polls have consistently placed Jokowi ahead of Prabowo making him the candidate to beat, though the race for the presidency has just begun. To read the Council’s comparative analysis of the two tickets, please click here.
The 38th Indonesia Petroleum Association Convention and Exhibition was held in Jakarta May 21-23, and was opened by Vice President Boediono. With five months left in the current administration, the Vice President promised to improve the country’s oil and gas industry by seeking ways to simplify regulations. Boediono said that regulatory challenges in the oil and gas sector were the by-products of democratization and decentralization. According to Energy and Mineral Resources Minister Jero Wacik, the ministry’s priority is to reduce the number of different permits required for oil and gas companies to conduct their activities from 286 to just 69 permits. Oil and gas companies operating in Indonesia face numerous risks and uncertainties in exploration and production. The government has promised to give the sector more attention in order to boost investment in exploration and maintain its ability to meet energy demand in the coming years.
Laos
Lao Defense Minister and Deputy PM Douangchay Phichit was killed in a plane crash on May 17 along with other senior officials including the Lao minister of public security, the secretariat of the Lao People's Revolutionary Party's central committee, the chairman of the propaganda training committee and the mayor of Vientiane. The officials are believed to have been travelling to an official ceremony in Xiangkhouang from Vientiane. In the wake of such a tragedy, the Lao Ministry of Public Security has announced the appointment of Brigadier General Somkeo Silavong as acting minister of public security. Brigadier General Somkeo formerly held the position of deputy minister of public security. For the Council’s latest update on Laos, please click here.
Malaysia
On June 12, the Council will host a welcome luncheon for H.E. Ambassador Awang Adek bin Hussin. The luncheon will be a chance to introduce Ambassador Awang to the Council’s Malaysia Committee and its activities. If you are interested in sponsoring or attending the luncheon, please click here. If you have any questions, please contact Colette Morgan at cmorgan@usasean.org.
Malaysia ranked 12th in world competitiveness, up three spots from last year in the latest World Competitiveness Yearbook for 2014 released by the Swiss-based Institute for Management Development. International Trade and Industry Minister (MITI) Datuk Seri Mustapa Mohamed credited Malaysia's best performance in the last four years to measures undertaken by the Government Transformation Program and the Economic Transformation Program. To view the Council’s latest Malaysia update, please click here.
Myanmar
Myanmar has re-organized the Myanmar Investment Commission (MIC) in order to increase its ability to deal with increasing numbers of investment applications. The changes will increase the number of members of the commission from 11 to 13. Minister of Energy U Zayar Aung will now serve as the commission’s chairman, replacing Finance Minister U Win Shein, while Hotels and Tourism Minster U Htay Aung will serve as Vice-Chairman. The MIC was originally headed by Minister in the President’s Office U Soe Thane. Like other components of Myanmar’s financial infrastructure, MIC has had to transition in a very short period of time from a pre-modern bureaucracy known for delays and obstructions to a modern office capable of handling a comparative flood of investment applications after the 2012 foreign investment law gave it broad powers over leasing and regulation. In the first four months of this year alone, MIC has approved 60 foreign investment project applications worth more than $2.21 billion. To view the latest Myanmar update, please click here.
Philippines
The United States said it has removed the Philippines from its piracy watch list after two decades following significant reforms put in place by Manila, raising prospects for increased trade and investment between the two allies. The announcement, posted on the website of the Office of the U.S. Trade Representative on April 28, came during President Obama’s visit to Manila.
Vice President of the Philippines Jejomar Binay visited Washington shortly after President Obama’s trip to the Philippines. At a breakfast roundtable hosted by US-ABC and the U.S. Chamber of Commerce, Vice President Binay indicated that he will run for President during the next round of Presidential elections in the Philippines to be held in 2016. To view the Council’s latest Philippines update, please click here.
Thailand
On May 7, the Constitutional Court ruled Prime Minister Yingluck and nine of her 35 cabinet members were to resign from their positions. Prime Minister Yingluck was found guilty on the charge of "abuse of power" when she reassigned officials in key posts in the National Security Council and National Police Force in 2011 without justifying reasons for the reassignments. One of the officials assigned to the key Police Force position was a family member, and the shuffle was deemed unjust and done for political benefit. The nine cabinet members sacked with the Prime Minister each played a role in the 2011 meeting when the shuffle took place. Ms. Yingluck’s party called the court's decision a “new form of coup d'état" and defended her actions.
Deputy Prime Minister and Minister of Commerce Niwatthamrong Bungsongphaisarn briefly assumed the role of caretaker Prime Minister until May 22 when Army chief General Prayuth Chan-ocha staged a coup after feuding political parties failed to reach a compromise to bring the country out of the months-long political crisis. Two days after the declaration of martial law that resulted in two rounds of meetings between the rival groups, Prayuth ordered the detention of more than 30 representatives attending the talks before seizing power.
According to coup leader General Prayuth Chan-ocha, an interim government is being formed to administer the state budget for the next fiscal year, but elections are at least 15 months away. On May 30, the National Council for Peace and Order (NCPO) declared a roadmap to propel the country toward democracy in three stages. In the first stage, expected to take two or three months, the focus would be on ensuring security and on reconciliation. In the second stage, expected to take about a year, legal experts will draft a temporary constitution. A national assembly will be set up and will choose a prime minister. In the third stage the country will move towards full democracy with an election.
On May 27, the NPCO appointed an advisory council, allocating four key affairs of state, namely security, finance and the economy, science and technology, and justice and legal affairs. The team of advisors includes a former defense minister, General Prawit Wongsuwan, and former army chief General Anupong Paochinda for security; Mr. Pridiyathorn Devakula, Dr. Somkid Jatusripitak and Narong-chai Akrasanee for economy and finance; Yongyuth Yuthavong for science and technology; and Wissanu Krea-ngam for justice and legal affairs.
On May 31, an economic crisis plan was outlined by Air Chief Marshal Prajin Juntong after a meeting with officials at economic ministries. The plan takes in longer-term measures such as the development of special economic zones on the borders with Myanmar, Laos and Malaysia, as well as the priorities to restore the confidence of investors and maintaining fiscal discipline. For the short-term plan, a price cap on fuel would remain in place for 30 days while wider restructuring of taxation is finalized. The plan also included a promise that spending would not exceed the limits to be laid out in a forthcoming budget.
The U.S. government has expressed its disappointment with the events and announced the suspension of various forms of military aid. To view the Council’s latest Thailand update, please click here.
Vietnam
The Vietnamese government is protesting that certain provisions in the U.S. 2014 Farm Bill will hurt Vietnamese catfish producers by creating a non-tariff trade barrier that will block their products from entry into the U.S. market. The provisions, backed by U.S. lawmakers representing southern states, stipulate that USDA must set up requirements for the monitoring of catfish farming processes. Catfish inspections are typically handled by the FDA, but the 2014 Farm Bill creates a costly inspection program under USDA’s purview for the monitoring of catfish farming processes. According to Vietnamese Trade Counselor to the United States Dao Tran Nhan, Vietnamese producers will not be able to meet the stringent USDA standards for at least five years. Last year, Vietnamese catfish exports to the United States exceeded $14 million. Whether Vietnam will retaliate by creating its own non-tariff trade barriers on U.S. exports like soybeans and beef, and what effect all of this will have on ongoing TPP negotiations, remains to be seen. To view the Council’s latest Vietnam update, please click here.