President's Newsletter - August 2014

Welcome to the August edition of the President’s Newsletter!

August is shaping up to be another busy month for the Council as it opened with the conclusion of the Council’s annual Myanmar Business Mission (July 30 – August 1).  On August 6 we led a Food and Agriculture mini-mission to the Philippines.  The Council’s annual Golf Tournament will take place today, and then we will wrap up the month with a SME Training Program in Yangon and the Council’s annual Business Mission to the ASEAN Economic Minister’s Meeting.

I had a chance to meet members and government leaders in Myanmar, Indonesia, Singapore and Thailand over the last several weeks. In Thailand, I learned that the new leaders plan to focus on infrastructure development in three areas: transportation, communications and energy.  Many in the capital of Bangkok are pleased with the new stability introduced by the National Council for Peace and Order (NCPO) as business and lives returned to normal after six months of uncertainty.   The new government has laid out a timeline that will introduce an interim government, a new constitution and ultimately a new election between now and 4th Quarter 2015 - 1st Quarter 2016.

Highlights

ASEAN Economic Ministers Meeting Mission and ASEAN-U.S. Business Summit
The Council will conduct its annual Business Mission to the ASEAN Economic Ministers Meeting in Naypyitaw August 27-29. Meetings include the Council’s participation in the AEM-USTR dialogue, the ASEAN-US Business Summit, and bilateral meetings with the ASEAN Trade Ministers. Members interested in participating should contact Anthony Nelson at anelson@usasean.org.

SME Program
The Council’s SME program will host its next event in Yangon on August 26th.  Members interested in participating should contact Anthony Nelson at anelson@usasean.org.

30th Anniversary Gala Dinner and U.S. Ambassadors’ Tour
On October 2, 2014 the Council will celebrate 30 years of elevating and improving the U.S.-ASEAN economic, trade and investment relationship and broadening U.S. support for Southeast Asia.  The dinner will coincide with the U.S. Ambassadors’ Tour (October 2-9) when we will be joined by the U.S. Ambassadors to Cambodia, Indonesia, Malaysia and Singapore (and possibly more). The dinner will bring together key leaders from the U.S. and ASEAN governments.  Please contact Mads Stockwell at mstockwell@usasean.org for additional information.

Human Capital and Skill Development in ASEAN for the 21st Century
On July 1/2 the Council held a second planning call to discuss a seminar on Human Capital and Skill Development in ASEAN for the 21st Century. The first of its kind, the seminar is scheduled to be held in Singapore later this year. Intel, HP and ETS will be session sponsors. If you are interested in sponsoring the seminar or if you have any questions, please contact Kim Yaeger at kyaeger@usasean.org and Daniel Henderson at dhenderson@usasean.org.

Privacy Mission
The Council together with the US-India Business Council is planning a privacy mission to India, Malaysia and Singapore to address recently enacted (Singapore and Malaysia) and recently drafted (India) privacy laws and regulations that will impact many of the Council’s members.  For additional information on the mission and the laws please contact Kim Yaeger at kyaeger@usasean.org.

Membership

The Council is happy to report five new members this month, making the total membership 139. We are pleased to welcome our newest Chairman’s Council members: AbbVie and SunEdison; and our newest Corporate members: Armstrong World Industries, Harris Corporation and Jones Day. Descriptions for all five companies have been provided below.

Abbvie
AbbVie is a research-based biopharmaceutical company that develops and markets adult and pediatric pharmaceuticals. The company's products are used to treat rheumatoid arthritis, psoriasis, HIV, cystic fibrosis complications, low testosterone, thyroid disease, Parkinson's disease, ulcerative colitis, and complications associated with chronic kidney disease, among other indications.The company operates in Europe, Asia-Pacific, Latin America, North America and South America. It is headquartered in North Chicago, Illinois, and employs around 21,500 people.

Armstrong World Industries, Inc.
Armstrong World Industries, Inc. is a producer of flooring products and ceiling systems primarily used in the construction and renovation of commercial, institutional and residential buildings. The company operates in the US, Europe and the Pacific Rim region. It is headquartered in Lancaster, Pennsylvania and employed about 8,500 people as on December 31, 2012.

Harris Corporation
Harris Corporation is an international communications and information technology (IT) company. It offers communications products, systems and services for global markets, including RF communications, integrated network solutions and government communications systems. The company primarily operates in the US, where it is headquartered in Melbourne, Florida and employed about 14,000 people as of June 28, 2013.

Jones Day
Jones Day is a privately-held law firm that offers legal services in transactional, litigation, regulatory, and tax matters. The company has over 2,400 lawyers. Jones Day operates in the Americas, Australia, the UAE, Europe and Asia. It is headquartered in Cleveland, Ohio.

SunEdison
SunEdison, Inc. is a manufacturer and seller of wafers and related intermediate products to the semiconductor and solar industries. The company provides semiconductor, solar technology and advanced technology solutions. The company primarily operates in the US, Europe and Asia. It is headquartered in St. Peters, Missouri and employed 6,300 people as on December 31, 2013.

Regional Highlights

ASEAN Energy Ministers
The ASEAN Energy Ministers Meeting will take place in Vientiane, Laos from September 22-26, 2014.  The Council will be leading a delegation to meet with Energy Ministers.  If you are interested in attending, or receiving more information please contact Alex Stuart at astuart@usasean.org.

APEC
The APEC Energy Ministers Meeting will be meeting in Beijing from September 2-3. NCAPEC is currently looking into the possibility of bilateral meetings with Energy Ministers on the sidelines of this meeting.  If you are interested in attending or additional information please contact Barbara Hazzard at bhazzard@ncapec.org.

Energy
The Senate Foreign Relations Committee approved an agreement on civilian nuclear cooperation between the U.S. and Vietnam, which allows U.S. companies into Vietnam's expanding market for nuclear power.  The U.S. and Vietnamese governments reached the agreement in October of 2013, and it was approved by President Barack Obama in February this year. It now has to be endorsed by the full Senate, but may be obstructed by lawmakers worried about the possibility of nuclear material being used for military purposes.

With Ambassador Carlos Pascual's departure from the U.S. State Department, Amos Hochstein, who has served as Pascual's Deputy Assistant Secretary for Energy Diplomacy since August 2011, will serve as the Acting Special Envoy and Coordinator for International Energy Affairs beginning August 1.  Acting Envoy Hochstein will ensure continuity of the on-going priorities of the Energy Resources Bureau and it is routine for someone to serve in an Acting capacity when there is a vacancy.  A decision on a permanent replacement or subsequent nomination will follow the normal process for personnel decisions, in consultation with the White House, which is on-going.

To read the Council’s latest Energy update, please click here.

Financial Services
A multiparty parliamentary commission in Indonesia is preparing a draft banking bill that would require foreign banks to sell down ownership stakes in local branches to a maximum 40 percent within a decade.  Banks would also be required to ring-fence capital within Indonesia within five years by becoming limited companies under Indonesia’s Perseroan Terbatas (PT) legal structure, ostensibly to protect Indonesia’s financial system from capital outflows during financial shocks.  The draft banking bill, which could be passed as early as September 30 but will more likely be submitted for passage under the Jokowi administration, also mandates the Financial Services Authority (OJK) to assess market access reciprocity in the headquarter countries of banks seeking to operate in Indonesia as a condition of those banks gaining access to the Indonesian market.  This measure stems from Indonesian banks’ belief that their entry into external markets such as Singapore is more difficult than that of foreign banks entering Indonesia.  The eventual passage of the bill would greatly limit international investment in the Indonesian banking sector just as Jakarta should be devising policy to create greater competition in its financial services sector.  Increased competition would strengthen local banks’ abilities to expand abroad within the ASEAN Banking Integration Framework, which is slated for implementation by 2020.  The bill’s mere consideration is creating investor uncertainty in Indonesian financial services policy and leading international banks to question how much more accommodating Joko Widodo, who has publicly called for banking consolidation aided by foreign capital, will be as president.  While Jakarta’s concerns on capital withdrawal from local branches of global banks during shocks is reasonable, cutting domestically operating banks off from global capital is counter to regional and global integration.  Moreover, this proposed policy demonstrates a lack of faith in global multilateral institutions to manage spikes in capital flows.  No matter how large the Indonesian market, a walled-off development policy will in the long-run fail to create competitiveness for domestic banks and their customers.

Both the Council’s Financial Services and Indonesia teams will be following this bill closely as it develops and as the Jokowi administration prepares to take office.

To read the Council’s latest Financial Services update, please click here.

Food & Agriculture
Under the Chairmanship of Bruce Blakeman, Vice President, Corporate Affairs-Asia Pacific for Cargill, the Food & Agriculture Committee is forming two subgroups-Biotechnology and Animal Health. The Biotechnology subgroup will be led by Andrew McConville, Head Corporate Affairs, Asia Pacific for Syngenta; objective of this subgroup is to bring a sharper focus to the broader Food & Agriculture Committee, platform for a stronger voice in the biotechnology space under the USABC banner. The Animal Health subgroup will be led by Somu Ambat, Director, Global Antibiotic Franchise APAC and LA Elanco (Eli Lilly’s Animal Health Division), this new subgroup will bring a sharper focus to issues member companies face in the animal nutrition and animal health space. Some potential priorities may include the use of antibiotics in food producing animals, use of technology in food producing animals to increase productivity, food safety and the harmonization of regulatory standards. There is also potential for a third subgroup focusing on Seafood & Aquaculture. Joining these new subgroups will provide companies with stellar opportunities to shape regional engagement. For more information, please contact Council’s Food & Agriculture Manager, Sunita Kapoor, at skapoor@usasean.org.

To read the Council’s latest Food & Agriculture update, please click here.

Health & Life Sciences
On July 11, the Health & Life Sciences (HLS) Committee held a Health Care Program Roundtable Discussion with Indonesian Vice Minister of Health Prof. Ali Ghufron in Jakarta, Indonesia. At this event, the Vice Minister announced that the Universal Healthcare Coverage has reached 121.9 million people exceeding the initial target of 121.6 million people. The Government of Indonesia will continue supporting FDI and welcoming new initiatives from foreign companies as they believe that the progress of Indonesia healthcare sector will only be possible to achieve through a collaborative effort. The meeting was also an opportunity for Council members to update the Vice Minister on their programs with ongoing or potential collaboration with Ministry of Health (MOH). As a follow up, the HLS Committee is seeking engagement with the Indonesian MOH during its next Business Mission to Indonesia, tentatively scheduled to take place in December.  In addition, the HLS Committee will work to prepare an issue paper on healthcare in Indonesia that will be delivered to the new Indonesian government.  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.

To prepare for the Council’s Business Mission to Myanmar on July 30 – 31, the HLS Committee developed an issue paper, which introduces the Committee, highlights significant partnership programs between HLS Committee members and the Government of Myanmar, and provides recommendation on some additional focus areas to the Ministry of Health to consider. Please click here to see the document.

To read the Council’s latest Health & Life Sciences update, please click here.

ICT
The Vietnamese Ministry of Information and Communications (MIC) has accelerated development of its IT Services Decree, recently submitting a draft to Vice Minister Hong. For the latest English translation of the draft IT Services Decree, please click here.  The Council and the Information Technology Industry Council (ITIC) are currently developing a letter in response to the draft. Please contact Shay Wester at swester@usasean.org to provide input to the letter to the MIC.  Click here for an update on the ICT Sector in Vietnam.

On July 16/17 the Council held its second conference call for the Emerging Digital Trends workstream of the Indonesia ICT Consultative Forum (IICF). The workstream discussed possible follow-up activities from the June 24 IICF meeting on cybersecurity and planning for the remainder of the year. The Incentivizing Localization and Regulatory Insights workstreams will be holding additional calls in August.  Click here for an update on previous IICF workstream calls.  The next IICF meeting will be held in Jakarta in September (a Save the Date will be sent to members when a date is secured).  For more information on the IICF please contact Kim Yaeger at kyaeger@usasean.org and Shay Wester at swester@usasean.org.

To read the Council’s latest ICT update, please click here.

Infrastructure
The Council’s Infrastructure Committee had an active July with three key activities. On July 2 in Singapore the committee held an Infrastructure Financing Senior Executives Roundtable with Export-Import Bank of the United States Chairman and President Fred P. Hochberg.  President Hochberg discussed Ex-Im’s role in accelerating the U.S. support for infrastructure development in ASEAN and variables for successful Private-Public Partnerships (PPPs).  Later in the month in Washington the committee hosted a roundtable titled “The U.S. Government’s Experiences with Public-Private Partnerships as Models for ASEAN Infrastructure Development.”  Infrastructure Committee members, U.S. Government agencies and ASEAN economic attachés shared knowledge on the present and future use of the PPP model in U.S. infrastructure development and the proliferation of the PPP model in ASEAN.  Lastly, on July 25 KPMG’s Singapore office hosted an Infrastructure Committee Meet & Greet Session as a platform for committee members to network, discuss 2014 programs and opportunities to accelerate infrastructure development in ASEAN. Guest speaker Dr. Fraser Thompson, Senior Fellow at McKinsey Global Institute provided key findings on infrastructure requirements in ASEAN and garnered feedback from committee members.

For more information, please contact the Council’s Infrastructure team, Sunita Kapoor at skapoor@usasean.org and John Corrigan at jcorrigan@usasean.org.

Brunei
President Obama announced his intent to nominate Craig Allen as Ambassador to Brunei Darussalam.  Click here for Craig Allen’s biography and the White House announcement.

The 2014 Business Mission to Brunei will be held on Thursday, September 11 in Bandar Seri Begawan. Meetings are planned with Ambassador Craig Allen, Minister of Foreign Affairs and Trade II Pehin Lim Jock Seng, Minister of Finance II Abdul Rahman bin Ibrahim, Minister of Energy Pehin Yasmin Umar, Minister of Health Pehin Dato Haji Adanan, Chairman Dato Ali of the Brunei Economic Development Board (BEDB), Managing Director Dato Mohd Rosli Sabtu of Authoriti Monetari Brunei Darulssalam (AMBD) and Acting Managing Director Junaidi Haji Masri of the Brunei Investment Agency.

To read the Council’s latest Brunei update, please click here.

Cambodia
On July 22, the opposition Cambodian National Rescue Party (CNRP) agreed to end its yearlong boycott of the National Assembly.  In return for the CNRP assuming its 55 seats in the assembly, the ruling Cambodian People’s Party (CPP) agreed to reconstitute the National Electoral Commission (NEC).  The NEC has been an issue of contention since the July 2013 election in which there were widespread reports of vote rigging. Under the deal, the CNRP would gain four of nine seats on the election commission, a license for its own television channel and numerous assembly posts such as a deputy house speaker position.

Almost as soon as principles had been agreed upon and endorsed by King Norodom Sihamoni, disagreement began over the exact date that the CNRP would have its swearing in ceremony. This was followed by horse-trading over the pace at which the bi-partisan working groups - assigned to amending the rules of parliament, the election law and the constitution - were making progress.

Nevertheless the agreement has been well received by the business community.  Over the course of the last year, it has been business as usual for most sectors of the economy.  While further disagreements between CNRP and CPP are envisioned, the fact that they will be contained within the parameters of the parliament builds a sense of forthcoming political stability.  The garment sector, which makes up 70 percent of Cambodia’s exports and employs approximately 600,000 people, stands to benefit most.  The CNRP has actively courted the unions and workers over the last year, particularly on the issue of a minimum wage.  Although the issue has not been resolved, the possibility of strikes has been reduced.

The Council’s 2014 Cambodia Business Mission will take place on Thursday, September 04 – Friday, September 05.  This will be an excellent opportunity to engage with members of the new Cabinet and discuss their plans for the future.  As in previous years, the Council’s Cambodia Committee intends to also meet with the U.S. Embassy, AmCham and country representatives of the International Financial Institutions. For more information, contact Daniel Henderson at dhenderson@usasean.org.

To read the Council’s latest Cambodia update, please click here.

Indonesia
On July 22, the Indonesian General Elections Commission (KPU) officially announced that Joko Widodo (“Jokowi “) had won the Presidential election with 53.15% of the vote compared to 46.85% won by Prabowo.  The official results are in line with the majority of “quick count” polls that declared a Jokowi lead, just hours after the polls closed on July 9.  To read the Council’s update on the election and quick counts please click here. Prabowo has mounted a challenge to the election result through the Constitutional Court alleging widespread election fraud and vote manipulation.  The Constitutional Court will have until August 22 to review the claim before making a decision. It is highly unlikely that the Constitutional Court will overturn the result of the election.  President-elect Jokowi will be sworn in on October 20. President-elect Jokowi will face a number of immediate challenges once he takes office including reducing the fuel subsidy and managing a current account deficit.  After the KPU announced the result of the election on July 22, the Indonesian rupiah (IDR) reached a two-month high.

On July 25 PT Freeport Indonesia (PT-FI) received approval from the Indonesian government to resume exports of copper concentrates, with distribution expected to restart by August 2014.  PT-FI and the Indonesian government have agreed to a Memorandum of Understanding (MoU), through which they will begin negotiations on an amended Contract of Work (COW).

To read the Council’s latest Indonesia update, please click here.

Malaysia
The Malaysia Committee is currently planning its annual Business Mission to Malaysia, to register please click here. The Mission will take place Monday, September 8 and Tuesday, September 9. The first pre-mission call was held on Monday, July 28; the Council will hold subsequent calls in August.  If you have any questions or concerns, please contact Colette Morgan (cmorgan@usasean.org).

The Council is hosting a roundtable discussion with Mr. P. Ravindran, Senior Director for the AEC Division of MITI on August 11 in Kuala Lumpur. Mr. Ravindran will brief the Council on the trade and investment related priorities that Malaysia is considering focusing on during its forthcoming Chairmanship of ASEAN in 2015. The discussion will be an opportunity for members to suggest areas where Malaysia’s leadership could be critical in realizing the goals of the ASEAN Economic Community (AEC).  To register for the roundtable discussion on the AEC with Mr. P Ravidran, please click here.

On Wednesday, July 17, a second Malaysia Airlines flight was lost, when it was downed in eastern Ukraine. The flight was carrying 295 people. It is believed that the aircraft was struck by a missile or shrapnel from a missile, as it came apart at altitude and was downed in a conflict zone in eastern Ukraine. Investigators are still trying to find the exact cause of the crash, but these efforts are being hampered by a lack of access to the crash site.

In other news, the Ministry of International Trade & Industry (MITI) published its 2013 report on July 11, which contains a comprehensive overview of last year’s industry and trade performance. According to the report, Malaysia’s economy is continuing its strong performance and is shifting towards higher value-added products and services.  The Ministry of International Trade & Industry Report 2013 and previous year’s reports can be found by clicking here.

CIMB, RHB Capital, and Malaysia Building Society announced on July 10 that they had received approval from regulators to begin merger talks that would form the largest bank in ASEAN after the three Singaporean majors.  The Malaysian Employees Provident Fund (EPF), which owns significant stakes in all three banks, is quoted as saying the talks are “very preliminary in nature,” however insiders have reported that Deutsche Bank, Credit Suisse, and JP Morgan have now reportedly been hired to advise the merger by the EPF, RHB Capital, and CIMB, respectively.  The merger will also create a massive Islamic bank, though Maybank could possibly remain larger.  Malaysia is aggressively positioning itself as the world’s hub of Islamic banking.  Fitch Ratings has urged caution, saying that the merger may weaken CIMB’s capital buffers and that rationalization of branches and staff could be politically unpalatable.

To read the Council’s latest Malaysia update, please click here.

Myanmar
The Council concluded its 2014 Business Mission to Myanmar on August 1.  The Mission met with President U Thein Sein, Speaker of the Lower House Thura U Shwe Mann, Daw Aung San Suu Kyi, and other key members of Myanmar’s government, as well as Ambassador Mitchell, UMFCCI, and representatives of civil society such as groups representing the 88 Generation leaders. President U Thein Sein asked for the Council’s help in supporting Myanmar’s Presidential Scholar program which will send deserving students to top Universities around the world.  President U Thein Sein was asking for the Council’s help in helping create opportunities for students from Myanmar in American Universities.  He was not asking for funding but guidance and support on issues around testing, admissions and ensuring students accepted to universities were able to attend as scheduled. For more information, please contact me at afeldman@usasean.org.

The Council’s SME program will hold an event in Yangon August 26th.  For more information or to participate, please contact Anthony Nelson at anelson@usasean.org.

To read the Council’s latest Myanmar update, please click here.

Philippines
The Philippines experienced its strongest typhoon since Typhoon Yolanda struck last November. Typhoon Glenda made landfall on July 15 crossing several provinces south of Manila and out to the South China Sea.  Close to 100 people died, another 437 have been injured and over P7.5 billion worth of agriculture and infrastructure have been damaged.  Economists fear the typhoon could have an effect on the Philippines 3rd quarter economic performance with prolonged power outages in certain areas. The central bank of the Philippines has assured that inflation will not rise and the typhoon's impact will still be less compared to previous storms.

President Aquino delivered his fifth State of the Union Address (SONA) on July 28 in the face of both strong support and strong criticism.  The emotional speech covered key achievements made by his Administration over the years, including progress in improving the education sector and the commencement of several public infrastructure projects that were considered long overdue.  Critics felt the speech was a failure in that it did not provide concrete solutions to pressing problems faced by the public, specifically stating that it lacked direction in creating inclusive growth needed to bring Filipinos out of poverty. Fingers were also pointed at Aquino in reference to his controversial Disbursement Acceleration Program.

Two days after his SONA, President Aquino submitted the government’s proposed P2.606-trillion 2015 National Budget to Congress in fulfillment of the Administration’s commitment to further facilitate rapid, inclusive, and sustainable growth in the country  The Administration’s proposed expenditure program for 2015 is 15.1 percent higher from the current year’s P2.265-trillion budget.  Notable budget increases include: economic services – P700.2 billion, up from P593.1 billion; defense  – P115.5 billion up from P89.5 billion; and social services  – P967.9 billion up from P841.8 billion in 2014.

President Aquino has also signed five new bills into law including allowing the entry of foreign banks into the country. Under the old law, foreign banks could operate within the Philippine banking system only by acquiring, purchasing or owning up to 60 percent of the voting stock of an existing bank. According to Communications Secretary Herminio Coloma, by signing Republic Act No. 7721, or “An Act Liberalizing the Entry and Scope of Operations of Foreign Banks in the Philippines” into law, it will allow for greater financial integration in preparation for the ASEAN Economic Community in 2015 and raise the country's ability to compete regionally. The new law is also expected to increase foreign direct investments in labor-intensive sectors and technology transfer according to the Philippine central bank. In addition to allowing the entry of foreign banks, the other new laws include the requirement of graphic health warnings on tobacco products and the promotion of inclusive growth and jobs through micro, small, and medium enterprises.

To read the Council’s latest Philippines update, please click here.

Singapore
Singapore’s economy saw an unexpected contraction in the second quarter of this year, largely due to a tight labor market and offshoring by electronics firms. For the first decade of the century, Singapore’s growth was fueled by large influxes of immigrants. However, following the backlash from the 2011 elections, immigrant numbers were sharply reduced. As a result, many manufacturing firms are now finding it hard to recruit to meet the increased demand for their products. The Singapore government is pushing for a reduced reliance on the outsized manufacturing sector, and more growth in value-added sectors, including pharmaceuticals and biotechnology. In the long run, Singapore’s movement towards high value-added industries and higher productivity bodes well for the sustainability of its economic growth, but this restructuring will inevitably cause slower growth in the short to medium term.   Singapore’s Parliament also passed an anti-haze law aimed at fining those companies which had assets or operations in Singapore and were contributing to the regional haze problem.

To read the Council’s latest Singapore update, please click here.

Thailand
Recent numbers seem to indicate that the economy has improved from the Q1 2014 measurement. From April through June, GDP grew 1% and both the Private Investment and Private Consumption Indices have shown a slight uptick in activity since the military intervened.  Recent Deloitte analysis identified that the National Council for Peace and Order's (NCPO) economic policies could be beneficial for the economy, boosting domestic consumption and investment for the latter half of 2014. One research agency expects economic growth at 3.3-4.7% for the latter half of 2014 and many public and private agencies have revised their full year GDP estimates, which now indicate 1.5-3% growth. Consumer and investor confidence have increased, meaning durable goods and tourism businesses are more likely to recover in the near future.

The NCPO announced the interim Constitution that will organize the upcoming efforts to establish an interim government, draft a permanent constitution, and set up the planned October 2015 elections although, after my meetings in Bangkok, it now appears that the timing of this election could slip to the first quarter of 2016. NCPO Chief, General Prayuth Chan-ocha obtained King Bhumibol Adulyadej’s endorsement on the document. The 48 article document indicates the NCPO will choose a 220 member legislature, the National Legislative Assembly (NLA), which will function as both the House of Representatives and Senate. This legislature will appoint a Prime Minister and a 35 minister cabinet. The charter also establishes a NCPO-appointed National Reform Council (NRC), which will suggest reforms to the NLA, and a Constitutional Drafting Committee (CDC) that is required to draft a new, permanent constitution after 120 days. A notable stipulation is that all persons who have held a position in a political party within the past three years are barred from participating in the NLA, NRC, or CDC. Meanwhile, the constitution indicates that the NCPO will maintain broad powers to implement reforms and take action “to protect threats to national security and the economy”. The charter also validates all NCPO acts, from the May 22 leadership accession to the present.  Critics of the constitution state the Constitution does not move towards the restoration of democracy in Thailand and ensures military control of most of Thailand’s political and social activities.   A copy of the interim constitution (in Thai) is available here.

On July 29, the NCPO leaders approved a $75 billion master plan to upgrade the country's transport infrastructure over the next eight years.  The infrastructure budget was the biggest approved since the military takeover on May 22.   The master plan stands to help bolster domestic consumption and investment to shore up the economy.  The infrastructure plan includes the expansion of dual-track rail lines to boost the efficiency of logistics in the run-down rail sector and the funds will also go toward extending elevated train lines in Bangkok and the metropolitan area, as well as increasing the capacity of airports and sea ports.   In my July meeting with Air Chief Marshal Prajin,Juntong he stated that the Thai government would continue to focus on infrastructure around three main areas: transportation (air, sea and rail), energy (adding  clean coal to the mix) and communications (upgrading the wired and wireless broadband network).

To read the Council’s latest Thailand update, please click here.

Vietnam
On July 22, the civilian nuclear cooperation agreement between the U.S. and Vietnam was approved by the Senate Foreign Relations Committee. U.S. firms now are allowed to participate in Vietnam’s expanding nuclear power market. This agreement will generate economic gains for both Vietnamese and U.S. firms, yet American lawmakers and nonproliferation activists have doubt about the lack of restrictions on Vietnam's enrichment of uranium and reprocess of plutonium which can be used for the development of nuclear weapons.  A nonbinding memorandum was signed by Vietnam to demonstrate that it does not intend to seek that capability.

For many years, Vietnam has been straining under U.S. regulations on imported fish. With President Obama’s eagerness to conclude the Trans-Pacific Partnership (TPP), a new chapter in the ‘catfish wars’ has begun. The Vietnam Association of Seafood Exporters and Producers has hired as their attorney James Bacchus, a former congressman and ex-chairman of the WTO appellate body. In addition, nine other countries have weighed in on Vietnam’s side, labeling the catfish regulations a form of “U.S. protectionism” that could threaten the success of the TPP.  Similarly, Vietnam is making progress on Free Trade Agreement talks with the European Union, with the next round of negotiations to take place before the end of September.

US Ambassador David Shear has left Vietnam to take up his posting as Assistant Secretary of Defense for Asia in early September.  We look forward to working with Assistant Secretary Shear in his new role.   We also look forward to welcoming incoming U.S. Ambassador-nominee to Vietnam, Ted Osius, upon his confirmation by the Senate.

To read the Council’s latest Vietnam update, please click here.