Amb. Ted Osius
President & CEO
US-ASEAN Business Council
August was yet another busy month for the Council, and September shows no sign of letting up. We begin this month with missions to Cambodia, Malaysia and Brunei, and engagements with the leaders of Malaysia and the Philippines in New York during the U.N. General Assemby (UNGA). The Council’s SME program, the US-ASEAN Business Alliance for Competitive SMEs, has a number of coming events and opportunities to become involved in. In case you missed it, the Business Alliance launched a report entitled, “Beyond AEC 2015: Policy Recommendations for AEC 2015,” at the ASEAN-US Business Summit in Naypyitaw. You can download the report here.
The Council’s 30th Anniversary Gala Dinner is on October 2 in Washington, D.C. Confirmed speakers include ASEAN Secretary General Le Luong Minh and World Bank Managing Director Sri Mulyani Indrawati, among others. We hope to see you for this important and historic event.
Highlights
30th Anniversary Gala Dinner
On October 2, the Council will celebrate its 30th anniversary at a gala dinner in Washington, D.C. We will be joined by ASEAN Secretary-General Le Luong Minh, World Bank Managing Director Sri Mulyani Indrawati, the U.S. Ambassadors to Cambodia, Indonesia, Malaysia and Singapore, the ASEAN Ambassadors based in Washington D.C., and a number of senior U.S. and ASEAN government officials. For details on how to participate in the dinner, please contact Mads Stockwell at mstockwell@usasean.org.
UNGA
The Council will host a number of events in New York during UNGA week, including ones with President Aquino of the Philippines on September 23 and Prime Minister Najib of Malaysia on September 25. Additionally, there will be an event with Indonesia’s Investment Board (BKPM) on September 23, Myanmar’s Coordinating Economic Minister U Soe Thane and Energy Minister U Zayyar Aung on September 24, and an event with new Thai Deputy Prime Minister Tanasak on September 26. For details on how to sponsor or attend, please contact Carr Slayton at cslayton@usasean.org.
ASEAN Energy Ministers
The Council will lead its annual business mission to the ASEAN Energy Ministers Meeting in Vientiane, Laos September 22-September 24. The Council will meet with Energy Ministers from across ASEAN. Please click here if you are interested in finding out more about the mission or email Alex Stuart at astuart@usasean.org if you have questions.
ASEAN-BAC Survey
The ASEAN Business Advisory Council has asked Council members to complete the ASEAN Business Competitive Survey to be discussed during the ASEAN Business and Investment Summit in November. You can find out more information and fill out the survey here.
Membership
The Council is happy to report seven new members this month, making our total membership 143 companies. We pleased to welcome SunEdison, AbbVie, Harris Corporation, APR Energy, AstraZeneca, Cigna and PACCAR. Additionally, 3M has upgraded to Chairman's Council. Please find a description of the new members below.
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 United States, Europe and Asia. It is headquartered in St. Peters, Missouri.
AbbVie
AbbVie is a research-based biopharmaceutical company that develops and markets adult and pediatric pharmaceuticals. The company operates in Europe, Asia-Pacific, Latin America, North America and South America. It is headquartered in North Chicago, Illinois.
Harris Corporation
Harris Corporation is an international communications and information technology (IT) company offering communications products, systems and services for global markets, including RF communications, integrated network solutions and government communications systems. The company primarily operates in the United States, where it is headquartered in Melbourne, Florida.
APR Energy
APR Energy provides turnkey energy solutions that include mobilization of equipment to installation, operation and maintenance of the power plant. It offers power solutions that serve both utility and industrial customers in a range of applications, including supplemental base load capacity, disaster relief, seasonal peak shaving, backup for scheduled or unscheduled outages, industrial power, and grid stability and support. In addition, APR Energy also operates mobile power plants. It is headquartered in Jacksonville, Florida.
AstraZeneca
AstraZeneca is a global biopharmaceutical company engaged in developing, manufacturing and marketing prescription pharmaceuticals in several therapeutic areas. The company operates primarily in the Americas, Europe and Asia. It is headquartered in London, UK.
Cigna
CIGNA Corporation is a global health services organization engaged in providing medical, dental, disability, life and accident insurance and related products and services. CIGNA operates in the Americas, Europe, the Middle East and Asia Pacific. It is headquartered in Bloomfield, Connecticut.
PACCAR
PACCAR Inc. primarily designs, manufactures and distributes commercial trucks and related aftermarket parts. It also provides financing and leasing services to customers and dealers. The company primarily operates in the United States and Europe. It is headquartered in Bellevue, Washington.
Regional Highlights
APEC
The APEC CEO Summit will be November 8-10 in Beijing, China. If you are interested in attending or receiving an invitation for a senior executive, please click here to read how to nominate a delegate.
ASEAN
ASEAN Committee Meeting
The ASEAN Committee will meet in Procter & Gamble’s Singapore offices at 9:00 a.m. Singapore time September 16. Those members unable to attend in person are encouraged to call in. During the meeting we will discuss outputs from the ASEAN Economic Ministers Meeting and the Council’s ongoing participation in the US-ASEAN Business Alliance for Competitive SMEs. Members can register here.
US-ASEAN Business Alliance for Competitive SMEs event on access to finance in Hanoi
The Business Alliance is holding a two-day conference entitled “SME Access to Finance: Moving Forward in Support of Women Entrepreneurs in the Less-developed ASEAN Countries” in Hanoi September 24 and 25. This event will launch a multi-year effort to improve access to finance for SMEs in the region, with a particular focus on those owned by women. Please click here for the latest agenda. Sponsorship opportunities are available for this event. Please contact Mario Masaya at mmasaya@usasean.org for further information.
ASEAN-BAC Survey
The ASEAN Business Advisory Council has asked Council members to complete the ASEAN Business Competitive Survey to be discussed during the ASEAN Business and Investment Summit in November. You can find out more information and fill out the survey here.
Energy
The Council will lead its annual business mission to the ASEAN Energy Ministers Meeting in Vientiane, Laos September 22-September 24. The Council will meet with Energy Ministers from across ASEAN. Please email Alex Stuart at astuart@usasean.org if you have questions.
The Indonesian Parliament (DPR) passed a new geothermal bill into law on August 26. The bill, which replaces Law 27//2003, will open up the door for geothermal development projects to expand. Prior to the passage of this bill, geothermal was legally classified as a “mining activity,” which provided a barrier to the expansion of geothermal-related development within Indonesia, particularly in protected forest and conservation areas. The exclusion from the mining category also allows the second phase of the construction of power plants to be expedited, resulting in the production of more geothermal energy. The Energy and Mineral Resources Minister, Jero Wacik, stated that the passage of this law would accelerate the growth of geothermal energy and ensure Indonesia’s energy independency.
Xunpeng Shi of the National University of Singapore authored an excellent paper for the 2014 Pacific Energy Summit which assesses competing outlooks for ASEAN's energy mix—highlighting the paradox of its fossil fuel-dominated outlook when contrasted with its aspirations to move toward a greener energy mix—and reviews regional energy security strategies using the SWOT analysis method to evaluate strengths, weaknesses, opportunities and threats. To read this paper please click here.
To read the latest Energy update please click here.
Financial Services
Information is continuing to emerge on the anticipated merger between CIMB Group, Malaysia Building Society (MBSB) and RHB Capital, which is expected to create the largest ASEAN bank outside of Singapore. The Association of Islamic Banking in Malaysia (AIBIM) has endorsed the merger of the three banks’ Islamic units, which will create one of the largest Islamic banks in the world. Malaysia has aggressively used liberalization, human capital development and mergers/acquisitions to develop a globally competitive Islamic financial services industry. The AIBIM said the “creation of the mega Islamic bank will make Islamic banking internationally more acceptable.” On August 13, outgoing CIMB CEO Datuk Seri Nazir Razak addressed concerns over the merger while speaking with media. The merger, announced in July, is scheduled to remain in negotiations until October. The biggest hurdle before a deal can be brought to shareholders is figuring out how the three banks can fit their businesses together.
For the latest Financial Services update, please click here.
Food & Agriculture
The US-ASEAN Business Council held its inaugural Food & Agriculture Mini Mission to the Philippines August 6. The mission was led by Food & Agriculture Committee Chair Ishteyaque Amjad, Director, Corporate Affairs Asia Pacific for Cargill. Delegates met with key officials from the Philippines Senate and House of Representatives, Department of Agriculture and newly formed Office of Presidential Assistant to Food Security and Agricultural Modernization. Some topics of discussion included priority agricultural bills such as Philippine Halal Act, Coco Levy Fund, Sugar Industries Fund Bill and Philippines Fisheries Code, trading of adulterated seeds, the development of corn and cocoa as Philippines’ champion crop, educating tobacco farmers on intercropping, appropriate use of neonicotinoids, and Executive Order No. 169 to combat the infestation of scale insects threatening the local coconut industry. Delegates also shared their support for the growth and development of the Philippines’ agricultural and food processing sector and reinforced the importance of new agro-innovation technologies to improve food security. To see photos from the mission, please click here.
The Council is considering organizing the next Food & Agriculture Mini Missions to Vietnam (late November/early December 2014) and to Thailand (second half of February 2015). Please provide your feedback/inputs on these coming missions to the Council’s Food & Agriculture Manager, Sunita Kapoor, at skapoor@usasean.org.
Health & Life Sciences
To support the Council’s 2014 Business Mission to the Philippines, scheduled for October 22-23, the HLS Committee is preparing an issues paper on healthcare in the Philippines that will be delivered to the Philippine government. This paper will feature key health-related issues in the Philippines and recommendations on focus areas for the Ministry of Health’s consideration. If you would like to provide input to this document, please contact Han Sufen at shan@usasean.org.
The Council is also planning an HLS Committee call on September 29 at 7:30 a.m. EDT / 7:30 p.m. Singapore time. Members from other committees are invited to participate as well. To register for conference call access, please click here.
Infrastructure
Indonesia’s outgoing Yudhoyono (SBY) administration has reiterated its commitment to start 15 large infrastructure projects prior to the government’s changing hands. Deputy Coordinating Minister Luky Eko Wuryanto of the Coordinating Ministry for Economic Affairs has stated that projects on two airports, railways and power plants are past “the point of no return,” and will now be started and then overseen as of October by the incoming Widodo administration. To make this effort official, the outgoing administration has released a Presidential Regulation on Accelerated Construction of Prioritized Infrastructure (No. 75 of 2014). The regulation establishes criteria that projects must meet to be deemed prioritized, including compatibility with the national development plan, strategic importance to the economy and necessity of government support for completion. Prioritized projects include railways, harbors, roads, bridges, water distribution networks and power generation and transmission facilities. The law mandates the formation of a committee to identify and list the top prioritized projects. That list is required to be made public by January 2015 at the latest.
Since the July election, President-elect Joko Widodo has stated publicly that he is considering mothballing the SBY administration’s Master Plan for the Acceleration and Expansion of Indonesian Economic Development (MP3EI Plan). This would presumably entail a wholesale change in approach to infrastructure development in Indonesia. In recent weeks Jokowi has remarked multiple times that maritime infrastructure to link the archipelago will be a priority for his administration. While such a plan is necessary, a focus on roads and railways is essential to achieve the government’s goals of expanding economic activity out of West Java in a balanced manner. Moving away from the MP3EI Plan may please some who have found it underperforming, but an alternative plan should be made public as soon as possible to direct infrastructure firms and investors.
To read the council’s latest Infrastructure update, please click here.
Cambodia
The Council’s Cambodia Business Mission successfully concluded on September 5. The delegation met with Prime Minister Hun Sen and other key officials. To see an op ed by U.S. Ambassador William Todd on his experiences with the mission, please click here.
With Cambodia’s opposition CNRP having ended its boycott of the National Assembly, attention is turning to a number of important items of legislation concerning the judicial system and telecommunications. King Norodom Sihamoni has signed into law three controversial items of legislation (the Law on the Supreme Council of the Magistracy, the Law on the Status of Judges and Prosecutors, and the Law on the Organization and Functioning of the Courts) according to recent copies of the Royal Book, which have been universally decried by civil society groups. In essence, these laws will give the Ministry of Justice control over the administration of courts, the Supreme Council of Magistracy and the promotions and disciplining of judges and prosecutors, effectively erasing the division between the judicial and executive branches of government, they argue. At the same time, the Ministry of Posts and Telecommunications (MPT) and private sector representatives have concluded a two-day consultation forum over a controversial draft telecommunications law. According to an unofficially translated version of the confidential document, the proposed law would grant the MPT the powers to indict telecom operators and everyday users of communications devices over breaches of the proposed laws. According to the draft, anyone found to have damaged telecom networks or infrastructure, or to have made threats, conspired to commit a crime or threatened public order via telecommunications devices, will also be in the MPT’s firing line. Telecom firms will face hefty consequences if found to have breached any of the laws set out, including selling services to customers without proper I.D., refusing to provide financial documents to the MPT or making telecom-network changes without government consent. Penalties, as stated by the MPT, range from US $2,400 to as much as US $1.2 million, carry between six months and 15 years in prison and, in severe cases, can lead to people being prohibited from living in Cambodia for up to 10 years.
Indonesia
On August 22, the Indonesian Constitutional Court dismissed Prabowo Subianto’s challenge of the July 22 Presidential election results. Prabowo had alleged “massive and systemic” fraud during the election, but based on evidence presented during the public court proceedings, the nine Constitutional Court judges dismissed the case. This final (and binding) verdict provides legal closure and paves the way for President-elect Joko Widodo to be inaugurated as President of Indonesia on October 20. Jokowi’s team has now begun working with outgoing President Yudhoyono’s administration on the transition of power ahead of his inauguration. Jokowi announced a transition team to draft a list of key initiatives for his administration that could be started as soon as he takes office. The head of the transition team is Rini Soemarno Soewandi, and her four deputies are Anies Baswedan, Andi Widjajanto, Hasto Kristiyanto and Akbar Faizal. Soewandi was Minister of Trade under President Megawati from 2001 to 2004 and has strong political experience. Some experts, however, characterize her economic tendencies as protectionist. The team’s top priorities include extending universal healthcare, improving the Indonesian education system and increasing the efficacy of Jokowi’s cabinet. Jokowi is the first Indonesian president to make his advisory team public, demonstrating his support for transparent government.
The World Bank has released its July Indonesia Economic Quarterly (IEQ) which projects economic growth in 2014 to be 5.2 percent, slightly lower than the 5.3 percent forecasted in the March 2014 IEQ. It also states that lower government consumption, slower credit growth and continued weakness in commodity-related income growth will likely constrain GDP growth in the second half of 2014. To achieve goals of boosting growth above 6 percent and reducing inequality, the report calls for structural reforms such as reducing fuel subsidies and increasing investment in infrastructure. To read the July IEQ please click here.
To read the latest Indonesia update please click here.
Malaysia
The Council’s annual business mission to Malaysia was conducted September 8-10. During the mission, the Council delegates focused on the following themes: Malaysia’s Chairmanship of ASEAN in 2015, human capital development, cross board data flows and the Trans-Pacific Partnership. For more information about the mission and the discussions held, please contact Colette Morgan at cmorgan@usasean.org.
On August 17, Malaysian Health Minister Datuk Seri Dr. S. Subramaniam attracted attention at an APEC health meeting in Beijing when he said the government is drafting a new health transformation agenda which aims to create a mixed source of healthcare financing that would merge the country’s public and private healthcare delivery services. The Health Ministry would devolve its responsibility for healthcare delivery to this new system to create a more competitive and integrated environment, he said. Malaysia currently utilizes a two-tiered healthcare system where a universal healthcare scheme runs alongside a private one. The public system has historically been plagued by shortages of skilled doctors and bed space, but Malaysia’s health outcomes are generally comparable to those of developed countries.
On August 8, Malaysia’s strategic investment fund, Khazanah Nasional, announced plans to buy Malaysia Airlines’ (MAS) outstanding shares and effectively nationalize Malaysia’s flagship carrier. Khazanah currently owns 69.37 percent of the airline and will soon buy out the remaining shares at 27 sen for a total cost of US $435 million. After three years of losses and two restructuring attempts over the past 12 years, Khazanah believes that complete ownership will give it space to restructure the company and provide the capital that will be necessary to keep the airline in operation until it can be returned to profitability.
To read the Council’s latest Malaysia update, please click here.
Myanmar
The Council is a co-sponsor of the Myanmar Investment and Tourism Forum in New York on September 24. The event will include participation from Myanmar’s Coordinating Economic Minister in the President’s office U Soe Thein and Minister of Energy U Zayar Aung, as well as numerous others. You can view the website here. There is no charge for Council members who wish to participate. Members interested in participating should contact Anthony Nelson at anelson@usasean.org.
OPIC is now open for business in Myanmar. There has been no public announcement as of yet, but OPIC has updated the countries where it does business (please click here for the countries in which OPIC operates). The Council will provide further information when available.
To read the Council’s latest Myanmar update, please click here.
Philippines
Legislators and the Aquino administration have put “Cha-Cha” in full swing. The expected amendments to the restrictive economic provisions in the Constitution would ensure that the Philippines’ economic potential can be fully unlocked while not undoing other positive governance changes that have been implemented under President Aquino’s tenure. The timeline for completion of these revisions is currently unknown, but supporters are hopeful that a final version of the provisions will be ready for Presidential approval by the end of the year. A focal point of this debate has been to keep politics out of the equation and focus only on the economic provisions – skeptics want to ensure the updated provisions do not allow for changes in term limits for politicians. Speaker Belmonte is seeking to leave the provisions as is and merely inserting “unless provided by law,” which will allow the legislature to debate certain circumstances while leaving the Constitution otherwise intact.
Following a surprise public political blunder in which he made mention of being amenable to constitutional amendments that would allow him to run for reelection, President Aquino has since made it clear that he will not be running for a second term, and has relented to his opposition of the Anti-Dynasty bill making its way through the Congress of the Philippines. His comments on the danger of political dynasties to government were in stark contrast to his reluctance in January this year to certify the bill as urgent. While the bill could be perceived to be a direct threat to families with numerous members active in politics, the support of Speaker Belmonte has caused it to pick up momentum in the House.
In preparation for the formation of the ASEAN Economic Community (AEC) next year, legislators are fast-tracking a national competition bill to be enacted by the end of next year. The bill would restrict unfair competition, break up monopolies and discourage undesirable trade practices. To do so, it will establish the Philippine Competition Commission, which would investigate companies accused of such actions. The AEC blueprint, which the Philippines adopted in 2007, encourages all ASEAN member states to introduce a competition policy by 2015. Also in anticipation of regional economic integration, both the Philippine government and the Philippine Medical Association called for legislators to amend labor laws on foreign employment.
Legislators are moving forward on the Freedom of Information Bill. The proposed bill aims to mandate the disclosure of public documents and also outlines the exceptions of public disclosure and the processes for accessing public documents. The current draft of the bill has passed the Senate and now sits in a technical working group in the House; it is expected to be sent to President Aquino to implement before his term ends. The House working group remains uncertain over what matters would be exempt from the disclosure requirement, including matters of national security and foreign affairs. Proponents support the bill in that it further institutionalizes reforms on good governance, transparency and accountability. The need for such a law seems even more important given the apprehension many people have over President Aquino's successor in 2016 and the continuity of positive reforms.
For the Council’s latest Philippines update, please click here.
Singapore
Singapore celebrated its 49th birthday on August 9 with gatherings all around the world, including Melbourne, Hong Kong, London, San Francisco and Washington D.C. The largest one was at home – on the floating platform in Marina Bay that was first used for the National Day Parade in 2007. There was widespread relief when Former Prime Minister Lee Kuan Yew – who has faced a number of health scares over the past few years – showed up for the Parade. In his National Day Message, Prime Minister Lee Hsien Loong emphasized the importance of every Singaporean chasing their dreams and being the best they could be. Prime Minister Lee also recognized the contributions of Singapore’s pioneer generation, and promised that going forward, the healthcare and Central Provident Fund (CPF) systems would be enhanced in order to strengthen Singapore’s social safety nets. To read the Council’s analytical update on the National Day Rally speech, please click here.
Thailand
On August 30, His Majesty the King signed a royal command to appoint the Cabinet of Prime Minister Prayuth Chan-ocha. There are 32 Ministers and Deputy Ministers for 34 posts in the Cabinet. Twenty of them are civilians and the rest military and police officials. There are four Deputy Prime Ministers, including M.R. Pridiyathorn Devakula, Yongyuth Yutthawong, General Thanasak Patimapakorn (also Minister of Foreign Affairs) and Wisanu Kruea-ngam. Upon the establishment of this newly appointed cabinet, the military will take a less prominent role in managing Thailand’s daily government affairs and will focus its operations on maintaining security, law and order and environment. However, as part of its security plan, the NCPO will not lift martial law quite yet and will revisit that decision at a later date.
For the Council’s latest Thailand update, please click here.
Vietnam
The first 10 days of September saw the 12 TPP countries’ chief negotiators meet in Hanoi to address outstanding issues including state-owned enterprises and intellectual property. Incremental progress was expected rather than substantial movement toward producing the rough TPP outline that President Obama recently indicated could be presented by November. Reports out of Hanoi indicate that progress was indeed incremental and that no date has yet been set for the next chief negotiators’ meeting, though remaining negotiating differences were further clarified during the talks. Likely holding negotiators in Hanoi back from making meaningful concessions were reports of meager progress during concurrent meetings in Tokyo between the United States and Japan on agricultural market access. At present, countries other than the United States and Japan have little incentive to present substantial concessions without learning the outline of the market access deal the two countries are said to have reached this past April in Tokyo. In Hanoi, the Vietnamese delegation sought generous carve-outs for the state-owned enterprises that feature largely in the Vietnamese economy but appeared to gain little ground. Vietnamese Chief Negotiator and Vice Minister of Industry and Trade Tran Quoc Khanh also sought revisions to the yarn-forward rule that would likely preclude Vietnam from exporting apparel to TPP countries at lower tariff rates if the country’s manufacturers continue to source textiles from non-TPP countries. Reports indicate that the United States made no change to its position on exceptions to the yarn-forward rule. Minister Khanh will join Vietnamese Deputy Prime Minister Vu Van Ninh on September 15 in Washington at roundtable discussion co-hosted by the Council and the U.S. Chamber of Commerce. The two Vietnamese officials will also visit with U.S. Trade Representative Michael Froman while in Washington. More information on the September 15 event can be found here.