President’s Newsletter – December 2017

Dear Members,

Happy Holidays and my best wishes for a wonderful 2018.

We are wrapping up another great year for the Council, our members and staff.  As I hope you all were aware, 2017 was a significant year for ASEAN and US-ASEAN relations – marking the 50th and 40th anniversaries respectively.  The Council was involved in a number of events to mark these anniversaries, but we are most proud of our role in the launch of the Congressional Caucus on ASEAN as well as the third edition of ASEAN Matters.  We were also honored that our efforts over our 33 year history culminated in being recognized as the voice of the American private sector by President Trump and the Leaders of the ASEAN countries in the US-ASEAN Summit Leaders Statement, which can be found here.

In 2017, we stepped up our efforts to advocate for policies which we believe will help ASEAN continue to grow and benefit our members.  We continued to be seen by leadership of Southeast Asia as the go-to American business organization, and we were pleased to host multiple meetings with the leaders of many of the key economies in the region.  Our annual business missions visited all ten ASEAN countries.  Thanks to the strong leadership of our Chairman Keith Williams, the Council led a delegation to Thailand and Laos with U.S. Secretary of Commerce Wilbur Ross and met with the Prime Minister of Laos for the very first time.

Although the year is winding down, the Council has not slowed down.  In just the last several weeks, we hosted several important events across our offices in the U.S. and ASEAN, including:

• Meeting with Secretary of Transportation of the Philippines, Arthur Tugade, in Manila on November 20
• Roundtable for United States Ambassador to Myanmar, Scot Marciel, in Washington on November 30
• Board of Directors’ Dinner held in Singapore on November 30
• First attendance at the ASEAN Telecommunication Ministers Meeting in Siem Reap from November 30 – December 1
• Business Mission to Myanmar December 6 - 8
• Welcome luncheon for new Philippine Ambassador to the United States, H.E. Jose Manuel Romualdez, in Washington on December 11
• Roundtable with H.E. Nguyen Thien Nhan, Secretary of the Ho Chi Minh City Peoples Party, Politbureau Member and former Deputy Prime Minister in Washington on December 14
• Welcome Reception for United States Ambassador to Vietnam, Daniel Kritenbrink in Hanoi on December 18

Of particular note was our first attendance at the ASEAN Telecommunications Ministers meeting where the Council and our members were official delegates to the Ministerial.  Bilateral meetings were held with Ministers from Cambodia, Indonesia, Laos, the Philippines and Thailand.  In addition, the delegation met with Deputy Secretary General for the ASEAN Economic Community Lim Hong Hin.  As ASEAN will focus on innovation and resilience with a special focus on the digital economy during Singapore’s Chairmanship year in 2018, our engagement with the ASEAN Telecommunication Ministers could not have come at a better time.  The Council’s Board Dinner in Singapore on November 30th also focused on ASEAN and digital economy as we were joined by David Koh, the CEO of Singapore’s Cyber Security Agency as well as Robert YAP Min Choy, the Chairman of the ASEAN Business Advisory Council’s Digital Economy Committee and Douglas Foo, who along with Robert Yap makes up two of Singapore’s three members of the ASEAN Business Advisory Committee.

During our Business Mission to Myanmar we were able to continue to advance the Council’s five-year economic engagement with the government of Myanmar.  We were also able to better understand the issues around Rakhine State and hear directly from State Counsellor Daw Aung San Suu Kyi. 

As we prepare for 2018, we will be conducting our Indonesia, Philippines and Vietnam business missions in the latter half of the first quarter of the year.  A full calendar for the year should be available by January 10th. 

If you have not already, please take a moment to fill out our 2017 membership survey.  Your feedback is critical for us to deliver results for your company.  We are grateful for your time.  The survey can be found here.

Highlights

Advocacy

• The Council continued its advocacy efforts with the Government of the Philippines regarding the inclusion of new tax provisions, within a broad tax reform package likely to be signed into law this month, on sugar sweetened beverages.  The TRAIN Act contains a two-tiered tax on imported versus domestic origin sweeteners used to make beverages which is inconsistent with the Philippines WTO obligations and hurts domestic low-income consumers and SME’s. In addition to sending letters to a wide range of government officials and issuing a press statement highlighting our concerns, the Council had an Op-Ed published in the Philippine Star newspaper highlighting the consequences of the tax to Philippine’s FDI competitiveness.
• The Council is conducting advocacy efforts with the Government of Indonesia regarding the direction of its agricultural import policies on a growing range of commodities.  Last month the Council transmitted a letter to USTR noting a November decision by the WTO appellate body upholding a ruling that Indonesia’s import licensing restrictions for horticultural products and animals and animal products are inconsistent with Indonesia’s WTO commitments.  The Council has also developed a letter to the Government of Indonesia regarding an announced policy to impose restrictions on imports of soybeans as a policy tool to promote greater domestic agricultural self-sufficiency.  The letter notes our concerns about the negative implications of such a policy approach, for soybeans and other commodities, for attracting FDI and causing higher domestic prices for consumers.
• The Council is following changes to food regulations in Singapore as a potential future advocacy effort.  This month, we are gathering inputs from members on the proposed Amendments to the Food Regulations Regarding Labelling and Advertising for Infant Formula. The Competition Commission of Singapore (CCS) released its findings from a market inquiry into the supply of formula milk in the market. Based on the findings, CCS made recommendations to improve consumer awareness to counter the heavy marketing and "premiumization" messages. To support CCS' recommendation and as part of the "Whole of Government" effort to promote breastfeeding, Singapore will likely tighten the labelling and advertising requirements for infant formula.

Intelligence

From November 12-14, U.S. President Donald Trump traveled to the Philippines as the last leg of a 12-day trip to five countries in Asia, which included state visits to Japan, South Korea, China, and Vietnam (both Hanoi and, before that, the Asia Pacific Economic Cooperation Leaders’ Meeting in Danang).  The purpose of his stopover in Manila was to attend the 5th U.S.-ASEAN Summit on November 13 and hold bilateral meetings with leaders from several ASEAN and East Asia Summit member companies.  The joint statement released by the White House and Malacañang Palace following the meeting between President Donald Trump and President Rodrigo Duterte emphasizes how the United States and the Philippines can expand cooperation and strengthen the bilateral alliance in the security and economic spheres.  President Trump’s trip to the Philippines also provided an opportunity for a more definitive reset of U.S.-Philippine relations after ties between the two countries reached a nadir in the final months of the administration of former President Barack Obama.  An Analytical Brief that goes into greater detail on President Trump's official visit to Manila can be found here.

Relationship Building

On December 11, the Council hosted the new Philippine Ambassador to the United States, H.E. Jose Manuel “Babe” Romualdez, for a welcome luncheon in his honor.  The event featured remarks by Mr. Vance Hum, CEO of I. M. Systems Group, Mr. Jon Huenemann, Vice President, U.S. and International Corporate Affairs at Philip Morris International, and Mr. Alexander Feldman, President & CEO of the US-ASEAN Business Council.  During his speech, Ambassador Romualdez emphasized that his aim was to strengthen U.S.-Philippine commercial relations and assure U.S. companies that the Philippines “is open for business.”

Council in the News

• As part of the Council's advocacy efforts in the Philippines on its proposed sugar-sweetened beverage (SSB) tax, the Council issued a public statement on the tax in coordination with the American Chamber of Commerce-Manila, the Beverage Industry Association of the Philippines, and the U.S. Chamber of Commerce.  A copy of that public statement can be found here. 
• Mr. Alexander Feldman, President & CEO of the US-ASEAN Business Council, and Mr. Ernest Z. Bower, Trustee of think tank Stratbase Albert del Rosario Institute and Southeast Asia Advisory Board of the Center for Strategic & International Studies (CSIS), authored a commentary piece on the implications of the SSB tax for FDI going into the Philippines.  A copy of that commentary can be found here.

Membership

We are pleased to welcome four new members to the Council as of January 1: APR Energy, Burson & Marsteller, Discovery Networks, and Nestle Purina Petcare.  Additionally, Amazon and Mattel have upgraded to Chairman’s Council as of January 1.

The Council will end 2017 with 156 members.  We are still on-boarding new members for 2018, and will provide an opening count of members in January.

Regional Highlights

APEC

Major Developments

Following the conclusion of the successful APEC Summit in Vietnam, APEC representatives recently convened a key planning meeting in Port Moresby, Papua New Guinea to develop next year’s policy priorities for member countries. APEC will be chaired by Papua New Guinea (PNG) in 2018 under the theme “Harnessing Inclusive Opportunities, Embracing the Digital Future,” with a focus on empowering workers and businesses in the region in an age of digital disruption. In remarks to APEC senior officials, PNG Minister for APEC Justin Tkachenko announced his plans to advance policy discussions on the digital economy through all of APEC’s key work programs, including issues of connectivity and long-term structural reforms. APEC senior officials are scheduled to meet in Port Moresby on February 24 to discuss plans for implementation and, ultimately, in March for the First APEC Senior Officials’ Meeting.

View the Council's latest APEC updates

ASEAN

Major Developments

• At the conclusion of the 31st ASEAN Summit on November 14, Philippines President Rodrigo Duterte handed a symbolic gavel to Singapore Prime Minister Lee Hsien Loong, signifying the handover in ASEAN Chairmanship. Singapore has outlined its ambitious priorities in some detail—with the tagline "Resilient and Innovative"—including a focus on digital economy development, particularly e-commerce and cybersecurity; strengthening ties with external partners; cross-border trade facilitation; and regional economic integration. 
• Also on November 14, Prime Minister Lee formally announced that Dato Paduka Lim Jock Hoi, who has served as Permanent Secretary of Brunei’s Ministry of Foreign Affairs and Trade since 2006, will serve as ASEAN’s new SecretaryGeneral. H.E. Lim Jock Hoi replaces H.E. Le Luong Minh after his successful five-year term. Dato Lim is a seasoned diplomat, Brunei’s chief negotiator at the TPP negotiations, and an APEC veteran. View his full bio here.
• Dr. Surin Pitsuwan, former SecretaryGeneral of ASEAN (2008-2012), accomplished statesman, humanitarian, and friend, passed away at the age of 68 on November 30 in Bangkok from a heart attack.  The Council and its members offer their sincere condolences to his family, friends, and the people of Thailand and ASEAN on this sad and unexpected occasion. Dr. Surin also served as Thailand’s Minister of Foreign Affairs and several other senior political roles, and was dedicated to strengthening and deepening the U.S.Thai relationship. Read the Council’s press release here.
• On November 30, the Council hosted a Board of Directors’ dinner in Singapore commemorating ASEAN’s 50th Anniversary and the 40th Anniversary of U.S.ASEAN relations. The event featured remarks from Jane Bocklage, Chargé d’ Affaires, U.S. Mission to ASEAN, and a panel discussion on digital economy development featuring Douglas Foo and Robert Yap of the ASEAN Business Advisory Council, and David Koh of Singapore’s Cybersecurity Agency. Chargé Bocklage’s remarks, commemorating the deep and enduring ties between ASEAN and the United States, are available here.

View the Council's latest ASEAN updates

TPP

Major Developments

On the sidelines of the 2017 APEC Summit, the 11 nations participating in the TPP-11 talks announced that a framework for bringing the agreement into force had been reached.  The framework notes the following: the agreement’s new name is the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP); approximately 80%-85% of the text in the original TPP agreement is the same as the CPTPP; reaching consensuses on four issues of interest to Brunei, Canada, Malaysia, and Vietnam remain to be negotiated before the CPTPP can be signed; and the new going into force provisions of the CPTPP stipulate the agreement will begin immediately once the sixth of the eleven members ratify the agreement. 

Advocacy

If the CPTPP agreement goes into force in 2018, the Council will include advocating its full implementation of market access commitments and regulatory reforms as agenda items in the 2018 work plans of the Brunei, Malaysia, Singapore and Vietnam committees.

View the Council's latest TPP updates

Industry Highlights

Customs

Major Developments

• On January 1, 2018, Singapore, Indonesia, Malaysia, and Vietnam will begin granting ASEAN Trade in Goods Agreement (ATIGA) tariff rates to imported goods based on e-ATIGA Form D’s certification of origin. This marks the beginning of the live operation of the ASEAN Single Window (ASW) after pilot testing in 2016. Although only four AMS are currently part of the system, more will join as they complete their single windows and ratify the Protocol on the Legal Framework to Implement the ASEAN Single Window (which entered force on August 1). Following the launch of e-ATIGA Form D, other customs documents will gradually be added to the system. Testing will begin on the exchange of the ASEAN Customs Declaration Document (ACDD) in January 2018 and ASEAN is also exploring adding other documents, including phyto-sanitary certificates, shipping manifests, and other cargo documents. Successful implementation of the ASW across the region will be critical to ASEAN’s ongoing work to reduce non-tariff barriers in the region.

• At the ongoing fourth Ordinary Session of the National Assembly’s Eighth Legislature in Vientiane on October 30, the Laotian government approved a new draft law on trade remedies, the Law on Protection of Impacts from Goods Import. According to Minister of Industry and Commerce Khemmany Pholnsena, who presented the draft, the law will fulfill Laos’ obligation to the WTO to bring its remedies laws into compliance within five years of joining the organization. The government expects to complete the law before February 2018.

• As part of their effort to overhaul the country’s tax system, the Vietnamese Ministry of Finance (MOF) recently submitted to the Government of Vietnam (GOV) a new Draft Proposal to amend the Law on Tax Management (English | Vietnamese). The Draft Proposal includes a new provision on e-commerce activities (Article 28.1), specifically with regards to tax collection on cross-border transactions. These revisions are meant to help local tax authorities control revenue made by foreign service providers in Vietnam and provide a legal framework for tax collection on commercial digital transactions. However, they also appear burdensome to comply with. The Proposal does not detail a comprehensive solution on cross-border taxation but requests better coordination from other relevant ministries to support the MOF in this effort. The proposed changes to the Law can be seen in this outline in English and Vietnamese. The Draft revised Law on Tax Management will take around one year to make it to the National Assembly (NA) and is expected to be voted in late 2018 or early 2019.

• On December 1, the Director General of the Thai Revenue Department, Prasong Poontaneat, said that the draft e-commerce tax bill would be enacted next year. The bill would apply a withholding tax to any online transactions and advertising sales that take place in Thailand regardless of the e-commerce operator’s location. However, the tax will not be added onto an operator’s taxable income calculation. The bill would also take away the Revenue Department’s VAT exemption for online shopping on goods worth less than 1,500 baht that are purchased from vendors outside of Thailand. The Council participated in the first public consultation period in July, offering feedback on the initial outlines of the proposal (our comments can be found here). The second public consultation period is expected to be held in January. More details on the second consultation will be circulated when it is announced.iew the Council's latest Customs updates

Defense & Security

Major Developments

• On December 13, the United States and Singapore concluded the sixth iteration of a key integrated, live-firing exercise known as the XFS17. The exercise saw the largest participation of troops and assets used among a series of regular exercises between the United States and Singapore – it hosted about 750 personnel involved from the Singapore Air Force (SAF) and the Singapore Army, the deployment of assets such as the F-15SG and F-16C/D multi-role fighter aircraft, AH-64D Apache and CH-47 Chinook helicopters, Heron 1 Unmanned Aerial Vehicles (UAVs), and the High Mobility Artillery Rocket System (HIMARS). According to Singapore’s defense ministry, the XFS 17 is intended to enhance the ability of the Singapore Air force to repel air and land attacks through an integrated response mechanism that entails the following three steps approach: “1) “Out-Sense” – using sensors like UAVs, Strike ObserveRs Mission (STORM) teams, and Commando detachments, which support target acquisition for laser-guided precision munitions and multi-role fighter aircraft; 2) “Out-Smart”: using the information from SAF sensors on enemy targets that are transmitted back to the Command Post to maintain awareness of the battlefield and make quick and informed decisions; 3) “Out-Shoot”: employing a full range of assets and weapons to destroy enemy forces, such as tanks, multiple launch rocket systems, and missiles and bombs from fighter jets and helicopters.” The United States has long been a key partner of the Singaporean military, providing key technological and training support that ranges from air and maritime security to counterterrorism and humanitarian aid and disaster relief. The continued strengthening of military-to-military cooperation was a key talking point in Singapore Prime Minister’s engagement with U.S. President Donald Trump in October and remains a priority topic of discussion for when President Trump visits Singapore next year when it claims chairmanship of ASEAN.

• On December 13, the Philippines’ Congress voted 240-27 in support of extending martial law on the southern island of Mindanao. The move extends martial law until December 31, 2018, making it the longest period of martial law since the 1970s. Islamic State-affiliated fighters occupied Marawi City for five months this year, until fighting ceased in October, after more than 1,000 people were dead. President Duterte has warned that the fighters were regrouping, thus the need for an extension of martial law. In response to questions as to whether Duterte would declare nationwide martial law, he responded, “It depends on the enemies of the state.” 

View the Council's latest Defense & Security updates

Energy

Major Developments

A doubling of the spot price of thermal coal since early 2016 is raising the risk that coal importing countries in ASEAN, most notably Vietnam and the Philippines, could see a significant increase in their current account deficits if they continue with plans to build out their coal-fired power generation capacity.  Facing a future in which coal remains readily available but at a higher price than anticipated, these countries are likely to feel increased fiscal pressure to accelerate the diversification of fuel sources for their national energy mixes.  Since the beginning of 2016, the price of Australian Newcastle coal, one of the main types of coal that ASEAN countries import, has increased from US$50 per metric ton to an average of US$100 per metric ton.  Earlier this year, Newcastle coal hit a high for 2017 of US$103.50 per metric ton, primarily due to demand in Asia.  More information on this trend and how it could affect Vietnam and the Philippines can be found here. 

Looking Ahead

 On January 16, 2018, the Energy Committee will hold its first quarterly call for 2018.  The call will be devoted to discussing the Energy Committee's upcoming programs and priorities for 2018.  If you have any questions or would like to suggest an item to be discussed on the call, please contact Riley Smith at rsmith@usasean.org.  You can register for the call here.

View the Council's latest Energy updates

Financial Services

Major Developments

• The ASEAN Capital Markets Forum held its inaugural ASEAN Capital Market Conference on November 8 in Kuala Lumpur hosting 300 participants. The Conference’s panel discussions covered topics central to growth and opportunities in the region, including infrastructure finance, green finance, corporate governance, and the effect of digitalization on markets. The main event was the announcement of the new ASEAN Green Bonds Standards (AGBS). ACMF members will now begin implementing the standards in their jurisdictions and the ACMF will keep the standards up to date through its new observer status at the International Capital Market Association. The Philippines also announced at the conference its intention to join the ASEAN Collective Investment Scheme as its fourth member. Meanwhile, the ACMF has been making progress in upgrading the CIS so more fund managers and products can participate. Another initiative is the development of a pathway to allow professionals licensed by an ACMF member to provide designated services in other members’ jurisdictions. Finally, the ACMF announced plans to update their ASEAN Corporate Governance Scorecard as part of their continuing effort to raise corporate governance standards and promote ASEAN as an asset class. The Conference’s press release can be found here.

• On November 21, the Monetary Authority of Singapore (MAS) released the second revision of its draft Payments Services Bill for public comment. The Bill would update Singaporean law to account for new developments in the payments industry that have blurred the lines between activities regulated under the Payment Systems (Oversight) Act of 2006 (Cap. 222A) and the Money-Changing and Remittance Businesses Act of 1979 (Cap. 187). The Bill’s regulatory streamlining and updates would also support the MAS industry transformation map’s goal of encouraging innovation and fintech development (additional coverage is in the November 15 Update at this link). The Bill would combine the PS(O)A and the MCRBA to establish a single payments regulation and license, expand regulations to cover new payments techniques like domestic money transfers and cryptocurrency, and adopt a more risk-weighted regulatory approach. The Consultation Paper and other documents can be found at this link. Public comments are due by January 8.

View the Council's latest Financial Services updates

Food & Agriculture

Major Developments

On November 24, the Royal Gazette published details of new members of the Thai cabinet following a reshuffle by Thailand’s Prime Minister Prayut Chan-o-cha. Grisada Boonrach, former Permanent Secretary for the Ministry of Interior, was officially appointed Minister of Agriculture and Cooperatives, replacing Gen. Chatchai Sarikulya who became Thailand’s new Deputy Prime Minister. Serving under Minister Boonrach are two newly appointed Deputy Agriculture Ministers: i) Luck Wajananawat, former president of the Bank for Agriculture and Agriculture Cooperatives, and ii) Wiwat Salyakamthorn, a renowned farm scholar who has championed a shift from conventional farming towards organic production. All three leaders have had extensive experience working in the rural areas and are expected to strengthen agricultural policies amid widespread fear of falling crop prices and food safety among Thai farmers. New Deputy Agricultural Minister, Mr Luck Wajananawat emphasized that government policy was clear in its intention to help farmers amid plunging farm prices, and listening to their plight is a priority, and this would be on the top of his list during discussions with the new Agriculture minister. New Commerce Minister Sontirat Sontijirawong also added that he plans to work more closely with the Agriculture Ministry, besides pursuing the economic policies initiated by the government's economic team led by Deputy Prime Minister Somkid Jatusripitak.

Advocacy

In line with the Government of Indonesia’s announcement last November on agricultural self-sufficiency, the Ministry of Agriculture (MOA) of Indonesia is focused on self-sufficiency around soybeans. Their efforts to promote a draft regulation that would aim to limit import licenses, constrain imports to a few domestic companies such as BULOG, increase duties on imports of soybeans and rigorously execute GMO policies. MOA has expressed the objective of increasing domestic soybean production from the current 400-500K MMT production to about 2.5 million MMT on an annual basis. In terms of the policy making process, MoA has provided a draft regulation which covers these areas to the Coordinating Minister for Economic Affairs for their review. The Council has developed a letter addressed to Indonesian President Jokowi, highlighting the potential costs and consequences of using import restrictions as a tool to increase domestic supply; by noting the connections between the ability to import/export to foreign direct investment; and technology transfer for key farm inputs which could provide farmers with significant yield and income opportunities. The Council’s Food & Agriculture Committee will also work towards gaining access to a dialogue with the Government of Indonesia in 2018, providing opportunities for members to provide concrete examples of how they can be a resource to GOI.

View the Council's latest Food & Agriculture updates

Health & Life Sciences

Major Developments

In early November, the Singapore Parliament passed amendments to the Sale of Food Act (more details here), which allows the Agri-Food and Veterinary Authority (AVA) to specify what can or must be contained in food labels, tightening regulations on labelling and advertising of food, including infant formula milk. The AVA is now gathering feedback for its proposal to ban health and certain nutrition claims, as well as images that idealize formula over breast milk on formula labels. It is also seeking to mandate the inclusion of a statement on the importance of breastfeeding. These rules would only apply to stage one and two formulas for infants up to 12 months old, as children over a year old do not require formula. These measures are meant to help improve public education, encourage breastfeeding, and encourage greater price competition.

Advocacy

In late November, the Council organized a roundtable with members on pharmaceutical pricing policies across ASEAN. The group addressed Malaysia, Philippines and Thailand as urgent priorities and stressed the need for sustained engagement with aligned advocacy messages even in one-on-one meetings with countries. The Council has noted that there is a possibility of raising pricing policy to the ASEAN level due to commonalities among the different companies and issued faced. Furthermore, the Council acknowledges that engagement must be complementary with what countries are already doing and is interesting in refraining from adopting a pricing approach in favor of framing its engagement as creating a path towards production, distribution and technology transfer. The full notes from the roundtable can be found here.

Looking Ahead

Please save the date for the Health & Life Sciences Industry Mission to the Philippines on January 30-31. Official invitation and registration details to follow. Please contact Hai Pham at hpham@usasean.org and Ying Hui Tng at yhtng@usasean.org with any questions or to express interest.

View the Council's latest Health & Life Sciences updates

ICT

Major Developments

• On November 3, Malaysia’s Digital Free Trade Zone (DFTZ) went live. The regional logistics hub will facilitate cross-border trade for over 1,900 export ready Malaysian SMEs. For further details, see our recent Analytical Brief here.
• On November 3, Singapore’s Infocomm Media Development Agency (IMDA) launched a new plan charting the growth strategy of the infocomm media (ICM) industry (found here). This plan is the 13th Industry Transformation Map (ITM) to be released as part of the broader Industry Transformation Program, which seeks to restructure a wide range of economic sectors. For more information, see our recent ICT Update here.
• On November 17, Chairman of Indonesia’s Financial Services Authority (OJK), Wimboh Santoso stated that OJK will set up a FinTech center aimed improving the supervision of the FinTech industry in Indonesia. For more information, see our recent ICT Update here.
• On December 5, the Philippines joined the APEC Cross Border Privacy Enforcement Agreement (CPEA), the government backstop enforcement network developed for the Cross-Border Privacy Rules (CBPR). For more details, see our recent ICT Update here.

Advocacy

• On November 29 to December 1, the Council held its inaugural Business Mission to the 17th ASEAN Telecommunications and Information Technology Senior Officials and Ministers’ Meeting (TELSOM and TELMIN respectively). For more information, see our press release on the Mission here. For follow ups to the Mission, please contact Mario Masaya at mmasaya@usasean.org or Ella Duangkaew at eduangkaew@usasean.org.
• On November 10, the Council submitted a letter to Bank Negara Malaysia (BNM) on its new Exposure Draft on Outsourcing. The Exposure Draft is available here while the Council's comments can be found here. For any questions, please contact Kim Yaeger at kyaeger@usasean.org or Ian Saccomanno at isaccomanno@usasean.org.
• As of January 1, 2018, the Council will assume operations of the US ICT Council for Myanmar, an existing association of eight U.S. technology companies. The ICT Council, which is currently seeking to identify a full-time Executive Director, will conduct advocacy, organize workshops, and generally support member companies in building a forward-looking ICT regulatory environment in Myanmar. Please contact Matt Solomon at msolomon@uasean.org with any questions

Looking Ahead

• The Laos Ministry of Posts and Telecommunications, Lao National Chamber of Commerce and Industry (LNCCI), Lao ICT Commerce Association and US Embassy alumni are seeking private sector sponsorship of the first Laos Digital Economy Forum. The one-day forum will be held on either January 26 or 27 and will facilitate discussions with government policymakers on creating the right policy environment for fostering the growth of the digital economy. For more information, or if interested in sponsoring, please contact Ella Duangkaew at eduangkaew@usasean.org.

View the Council's latest ICT updates

Infrastructure

Major Developments

The much-hyped development of Thailand’s Eastern Economic Corridor (EEC), which has been identified by the government as a cornerstone of its mega-infrastructure development plan, is set to kick off in earnest in 2018. On November 22, the EEC Committee, chaired by Prime Minister Prayut Chan-o-cha, approved a development schedule. Among the projects set to commence next year include a high-speed rail network connecting Bangkok and Rayong, an aircraft repair and maintenance facility at U-tapao Airport, and port expansions at Laem Chabang and Map Ta Phut. The projects are estimated to be worth a combined USD$22.8 billion.

Looking Ahead

The Council is considering organizing a Business Mission to the Meeting of ASEAN Tourism Ministers Meeting (M-ATM) taking place on January 22-26 in Chiang Mai, Thailand. This mission would be the Council’s first engagement with the ASEAN Tourism Ministers, and will be an opportunity to discuss the relationship between infrastructure development and tourism. The Council would propose a formal dialogue session with the group of ministers and organize bilateral meetings with priority countries. The ASEAN Tourism Forum will take place alongside the M-ATM. For a background on the M-ATM please read this note here. Please contact Ying Hui Tng (yhtng@usasean.org) to express interest in participation. 

View the Council's latest Infrastructure updates

Country Highlights

Brunei

Major Developments

• Effective November 30, Sultan Hassanal Bolkiah replaced Dr Awang Haji Zulkarnain bin Haji Hanafi and appointed Dr Haji Md Isham bin Jaafar as the country’s Minister of Health. Dato Dr Isham was previously the Executive Director of Jerudong Park Medical Centre. The replacement was a surprise move as a reshuffle was not expected until 2020 following five years of service term. Dato Dr. Zul, his Permanent Secretary, and his two Deputy Permanent Secretaries were all removed from their posts with immediate effect. The official announcement came without any official clarifying explanation.
• On November 23, the Prime Minister of Malaysia, Najib Razak, and the Sultan of Brunei, Hassanal Bolkiah, entered into a Unitization Framework Agreement to develop several oil and gas fields including the Kinabalu West NAG, Maharajalela North; Gumusut/Kakap; and Geronggong/Jagus-East. Following this agreement, the division of revenue is agreed to be decided by mid-2018. Brunei and Malaysia also agreed to simplify the land immigration process to improve connectivity and facilitate seamless travel between the two countries through the use of only one stamp for entering and exiting each country; as an example, currently visitors from Brunei need eight passport stamps to go to Kota Kinabalu in Sabah through check points at Kuala Lurah, Tedungan, Pandaruan, Ujong Jalan, Labu, Mengkalap, Merapok and Sindumin, and vice versa. On innovative technology, Brunei aims to attract data centers and become a hub in the Southeast Asia region due to its geographical position and political stability. This is also part of Brunei’s strategy to leverage on the controversial trend of some of its ASEAN neighbors requiring foreign players to establish local data centers to access domestic markets. Malaysia is also equally trying to promote investment in the data center development space, hoping to meet the growing demand in the region and to enable companies to run workloads in the country. Alibaba Cloud, the cloud computing arm of Alibaba Group as an example has opened a data center in Malaysia claiming that Malaysia’s attractive cost-effective operation as well as its strategic location is ideal for Alibaba’s Southeast Asian coverage.

View the Council's latest Brunei updates

Cambodia

Major Developments

On November 16, the Supreme Court of Cambodia dissolved the Cambodian National Rescue Party (CNRP). The ruling also bars 118 members of the opposition party from politics for five years and strips the defunct party of its elected seats, including commune chiefs and national legislators. The dissolution of the CNRP appears to clear a path for an easy CPP victory in the upcoming July 2018 election. For more information see our recent Update here. On December 12, the European Union announced that it would not offer any financial assistance to Cambodia’s National Election Committee, citing the election’s illegitimacy. According to the EU statement explaining the decision, “An electoral process from which the main opposition party has been arbitrarily excluded cannot be seen as legitimate.”

View the Council's latest Cambodia updates

Indonesia

Major Developments

• The Ministry of Industry is in the process of providing tax incentives to boost the industry in Indonesia, leveraging on low labor costs and its large population. The manufacturing sector’s contribution has declined in the past years despite being one of the biggest contributors to Indonesia’s economic growth according to the Central Statistics Agency. Within the manufacturing sector, the major contributors include oil & gas; food & beverages; metal, computer, electronics; transportation equipment and chemicals. Minister of Industry Airlangga Hartarto stated that the government is working on potentially offering a/an: 200percent tax allowance to worker-training program investments; 300-percent tax incentive to innovative product investments; and incentive to the export-oriented, labor-intensive industries.
• The Ministry of Trade amended Regulation No. 81 of 2017, allowing holders of General Importer Identification Numbers (APIU) to import specified products via Bitung Seaport. These products include food and beverages, traditional medicines, health supplements, cosmetics and household first-aid kits, apparel, footwear, electronic devices and toys which were previously only permitted via certain ports. Bitung as a new import entry gateway is expected to ease the burden on Tanjung Priok Port in Jakarta, Indonesia’s biggest port by volume thereby reducing the dwelling time. The Priok Port handles the majority of Indonesia’s transshipment cargo traffic with an annual capacity of approximately 7 million twenty-foot equivalent units (TEUs); a two-phase extension port is currently under construction and when fully operational in 2024, is expected to be able to handle 19.5 million TEUs annually.

Advocacy

On December 7, the Ministry of Trade held a public discussion to evaluate Regulation No. 82/M-DAG/PER/12/2012 regarding the Provisions on the Import of Cellphones, Handhelds and Tablet Computers. The Council facilitated member inputs and submitted feedback on the effectiveness of the current inspections procedure to MOT on December 15.

Looking Ahead

Please save the date for the 2018 Indonesia Business Mission from February 27 – March 1. This is an excellent opportunity to reinforce the U.S. private sector’s commitment following a series of positive commitments by the Trump and Jokowi administrations to strengthen the economic ties between the two nations. Invitation and more details to follow.

View the Council's latest Indonesia updates

Laos

Major Developments

• On November 13, Prime Minister Thongloun Sisoulith attended the 31st ASEAN Summit in Manila, Philippines. In his address to the ASEAN leaders, the Prime Minister praised ASEAN for its achievements over the last 50 years, particularly how ASEAN has strengthened its role, promoted access to credit for SMEs, and narrowed the development gap, according to the Lao News Agency. The Prime Minister also commended ASEAN in its efforts to improve connectivity, particularly through the implementation of the 3rd Initiative for ASEAN Integration and the ASEAN Connectivity Blueprint 2025. In addition to the ASEAN Summit, the Prime Minister also attended a number of meetings between ASEAN and its dialogue partners, and several bilateral meetings. His commitment to attending these meetings demonstrates Laos’ dedication to building ASEAN’s presence in the world and playing an active role in ASEAN’s interactions with its dialogue partners. For further details on this, see our recent Laos Update here.

Looking Ahead

• The Laos Ministry of Posts and Telecommunications, Lao National Chamber of Commerce and Industry (LNCCI), Lao ICT Commerce Association and US Embassy alumni are seeking private sector sponsorship of the first Laos Digital Economy Forum. The one-day forum will be held on either January 26 or 27 and will facilitate discussions with government policymakers on creating the right policy environment for fostering the growth of the digital economy. For more information, or if interested in sponsoring, please contact Ella Duangkaew at eduangkaew@usasean.org.

View the Council's latest Laos updates

Malaysia

Major Developments

• The United Malays National Organisation (UMNO) held its annual general assembly from December 5-9 with a strong focus on winning the 14th General Election to be held in 2018. Key themes at the assembly included building party unity, emphasizing moderation, appreciating diversity, and the need to curb the rising cost of living. Prime Minister Najib Razak strongly urged delegates to be loyal to the party and that any doubt or criticism of his and UMNO’s leadership should be left in the past. Najib also stated that plans for Malaysia’s future, following upon the Vision 2020 plan, will pick up steam next year and that he will strive for Malaysia to break into the top 10 in the World Economic Forum’s report on global competitiveness, from its current position of 18. The date for the general election has not yet been set by the Prime Minister, which has to be called before June 24 and held before August 24 under the constitution. However, many observers speculate the general election will be after the Chinese New Year in February and before the Muslim fasting month of Ramadan starts in May.
• Malaysia’s Digital Free Trade Zone (DFTZ) went live on November 3, 2017 signifying another milestone in the country’s e-Commerce and digital economy efforts. The regional logistic hub which aims to boost e-Commerce for Malaysian Small and Medium Enterprises (SMEs) was co-launched by Malaysia’s Prime Minister Najib Razak and Alibaba’s founder Jack Ma at the Kuala Lumpur International Aiport (KLIA) Aeropolis. The DFTZ is designed to facilitate cross-border trade for over 1,900 export-ready Malaysian SMEs to the international market. The DFTZ will provide both physical and virtual zones services consisting of three components which are the e-Fulfilment Hub and Satellite Services Hub for the physical zone and an e-Services Platform under the virtual zone.  The e-Fulfilment Hub will provide comprehensive facilities such as logistics, warehousing and custom clearance while the e-Services Platform will provide end-to-end cross border trade support to SMEs through a single platform access for online global market sales and trade facilitation.

View the Council's latest Malaysia updates

Myanmar

Major Developments

On December 8, Myanmar President U Htin Kyaw signed into legislation a new Companies Law, after having passed both Houses of the Hluttaw a week prior. To access the latest draft of the Myanmar Companies Law, please click here. The law will not take effect until its implementing rules, bylaws, and a company registry are established, which according to the Directorate of Investment and Companies Administration (DICA), is expected to take place in August 2018. A key provision of this law that is of great significance to foreign investors, is that it allows foreign firms to own up to a 35 percent stake in local companies. Foreign ownership of a local firm that exceeds 35 percent will be regarded as a foreign company, and as such subjected to different tax codes, tariff measures, and a list of prohibited industry sectors. Additionally, the new law will streamline the company registration process by introducing an online registration system, which is aimed at bypassing corruption and bureaucratic inefficiency. The new law, upon implementation, will also be a game changer for the Yangon Stock Exchange, which currently seems stagnant in its operations since stock ownership is limited to locals only. Trading with foreign firms will boost its momentum, increase company listings, and provide Myanmar companies with much needed financial liquidity. It is important for foreign investors to note, however, that challenges remain in that despite following every provision stipulated in the new Myanmar Investment Law, and despite approval to conduct business from the Myanmar Investment Commission, various Union Ministries governing their individual sectors, and the State and Regional Governments of the investment location, will have a say in whether or not foreign investors will be allowed in a particular sector or project. 

Advocacy

• On December 6-8, the Council mounted its sixth annual Myanmar Business Mission to Yangon and Nay Pyi Taw. The delegation of 14 companies met with senior government officials, including State Counsellor Daw Aung San Suu Kyi, Minister of Planning and Finance U Kyaw Win, and Yangon Region Chief Minister U Phyo Min Thein, and held a roundtable with representatives of the local business community.
• As of January 1, 2018, the Council will assume operations of the US ICT Council for Myanmar, an existing association of eight U.S. technology companies. The ICT Council, which is currently seeking to identify a full-time Executive Director, will conduct advocacy, organize workshops, and generally support member companies in building a forward-looking ICT regulatory environment in Myanmar. Please contact Matt Solomon at msolomon@uasean.org with any questions

View the Council's latest Myanmar updates

Philippines

Major Developments

• On December 13, the Philippine House of Representatives and the Senate ratified the bicameral conference committee report for the Tax Reform for Acceleration and Inclusion (TRAIN) bill.  The bicameral conference committee report reconciles the differences between the two chambers’ versions of the first tax reform package, also called TRAIN.  Integral to ensuring that the administration of President Rodrigo Duterte has enough funds to implement its massive infrastructure development program, the TRAIN bill cuts income taxes but raises taxes on fuel, coal, cars, mining, sugar-sweetened beverages, and tobacco.  Once signed by Duterte, the TRAIN bill will come into effect on January 1, 2018.  More information on the TRAIN bill can be found here.
• On December 12, the Philippine House of Representatives and the Senate ratified the national budget for 2018.  Officially called the General Appropriations Act (GAA) for Fiscal Year 2018, the 2018 national budget amounts to P3.767 trillion (US$75 billion), a figure that surpasses the 2017 national budget – the highest budget to be passed by an administration at that time – by over 12%.  One of the most notable characteristics of the 2018 budget is that it removes roughly P1.4 billion (US$27.8 million) in funds that were originally intended for the anti-drug campaigns of the Department of the Interior and Local Government and the Philippine National Police.  Instead, P1.2 billion are allocated to the Philippine Drug Enforcement Agency, which has been in charge of the Duterte’s anti-drug campaign since early October.  President Duterte said that he plans to sign the 2018 budget into law on December 19.  More information on the 2018 national budget can be found here.
• On November 30, the Philippines was accepted into the APEC Cross Border Privacy Enforcement Arrangement (CPEA). The CPEA is the framework for regional cooperation in the enforcement of privacy laws. Any Privacy Enforcement Authority (PEA) in an APEC economy may participate. The CPEA aims to facilitate information sharing among PEAs, provide mechanism to promote effective cross-border cooperation between authorities in the enforcement of privacy law, and encourage information sharing and cooperation with PEAs outside of APEC. CPEA administrators confirmed the National Privacy Commission's (NPC) status as a PEA for the Philippines on December 5. NPC Commissioner Raymund E Liboro stated that entering the CPEA opens new doors and opportunities for the Philippines, and that the next step would be to formally join the APEC CBPR. The NPEA's acceptance makes it the eleventh PEA and the Philippines the ninth APEC economy in the CPEA.

Advocacy

• On December 11, the Council hosted the new Philippine Ambassador to the United States, H.E. Jose Manuel “Babe” Romualdez, for a welcome luncheon in his honor. The event featured remarks by Mr. Vance Hum, CEO of I. M. Systems Group; Mr. Jon Huenemann, Vice President, U.S. and International Corporate Affairs at Philip Morris International; and Mr. Alexander Feldman, President & CEO of the US-ASEAN Business Council. During his speech, Amb. Romualdez provided an update on the Philippine economy, highlighting continued strong GDP growth. He also provided an update on the first tax reform package as it was making its way through the bicameral conference committee process in the Philippine Congress, and encouraged U.S. companies to participate in the Philippine Government's infrastructure development program, including the rehabilitation of Marawi.
• As part of the Council's advocacy efforts in the Philippines on its proposed sugar-sweetened beverage (SSB) tax, the Council submitted a letter to Philippine Secretary of Finance Carlos Dominguez III expressing its concerns with the multi-tiered structure of the SSB tax in the Senate's version of the Tax Reform for Acceleration and Inclusion (TRAIN) act.  The Council also submitted letters to key members of the Philippine House of Representatives and the Senate.  A copy of the letter can be found here.   The Council also issued a public statement on the SSB tax, in coordination with the American Chamber of Commerce-Manila, the Beverage Industry Association of the Philippines, and the U.S. Chamber of Commerce.  A copy of that public statement can be found here.  Lastly, Mr. Alexander Feldman, President & CEO of the Council, and Mr. Ernest Z. Bower, Trustee of think tank Stratbase Albert del Rosario Institute and Southeast Asia Advisory Board of the Center for Strategic & International Studies (CSIS), authored a commentary piece on the implications of the SSB tax for FDI going into the Philippines.  A copy of that commentary can be found here. 

View the Council's latest Philippines updates

Singapore

Major Developments

On November 21, the Monetary Authority of Singapore (MAS) released the second revision of its draft payments services bill for public comment. The Bill would update Singaporean law to account for new developments in the payments industry that have introduced new payments models that are beyond the scope of current law or that have blurred the lines between activities regulated under the Payment Systems (Oversight) Act of 2006 (Cap. 222A) and the Money-Changing and Remittance Businesses Act of 1979 (Cap. 187). The Bill’s regulatory streamlining and updates would also support the MAS industry transformation map’s goal of encouraging innovation and fintech development.  Public comments are due by January 8. 

Advocacy

Following the closure of the public consultation period for the proposed Cybersecurity Bill, the Ministry of Communications and Information (MCI) and the Cyber Security Agency of Singapore (CSA) published on November 13 a report clarifying certain aspects of the bill and summarizing the intended revisions. Among other things, CSA has clarified that:

• "Computer systems in the supply chain supporting the operation of a Critical Information Infrastructure (CII) will not be designated as CIIs, therefore third-party vendors will not be considered as owners of CIIs";
• it will explore administrative arrangements to facilitate voluntary information sharing, but remained silent on whether such voluntary sharing will be protected; and
• the licensing regime will apply only to organizations (and not individuals), will be further simplified and will be brought into effect at a much later date after further consultation with stakeholders on the detailed requirements.

MCI and CSA stated that they will continue to consult industry before issuing additional obligations and standards. The Bill is expected to be tabled in Parliament in early 2018. The Council's joint submission with BSA | The Software Alliance is available here, and notes from our meetings with CSA on August 22 and October 12 can be found here and here, respectively.

View the Council's latest Singapore updates

Thailand

Major Developments

• On November 29, the new Cabinet members took their oath before His Majesty King Maha Vajiralongkorn. The King endorsed the line up on November 24, and it was published in the Government Gazette that same day (found here in Thai). The new line-up removes nine officials, reshuffles six, adds a position to one existing official, and adds ten new officials. More information can be found in our recent Analytical Brief here.
• On November 30, former Thai Foreign Minister and ASEAN Secretary-General Surin Pitsuwan passed away at age 68 from an acute heart attack. His funeral took place on December 1. King Maha Vajiralongkorn sent a gift of royal soil and a wreath to the funeral, and Prime Minister Prayut Chan-o-cha assigned Suwaphan Tanyuvardhana, Minister attached to the Prime Minister’s Office, to attend the funeral. Dr. Surin was deeply dedicated to strengthening and deepening the US-Thailand relationship, and will be deeply missed. The Council’s full press release can be found here.
• On December 1, the Director General of the Revenue Department, Mr. Prasong Poontaneat stated that an “e-business tax” will most likely be enacted in 2018. The tax would apply to any online transaction taking place in Thailand regardless of the e-commerce operator’s location, and would supersede the double-tax agreement which enforces countries to have a permanent presence in any countries they are liable to pay tax in. The bill would also remove the Revenue Department’s VAT exemption for online shopping on goods worth less than $1,500 baht that are purchased from foreign vendors outside of Thailand. The first public consultation period ended on July 11 (see the Council’s comments for this period here.) A second public consultation period is expected to be held in January. Further information on this issue can be found in our recent Thailand Update here.
• From November 11-12, Prime Minister Prayut attended the APEC Economic Leaders’ Meeting in Da Nang Vietnam. During the meeting, the Prime Minister laid out his vision for innovative growth and employment, food security and “smart” agriculture, and “green” business, particularly related to MSMEs. For more information, see our recent Thailand Update here.

View the Council's latest Thailand updates

Vietnam

Major Developments

Vietnam’s Ministry of Health (MOH) recently proposed measures to reduce and simplify administrative procedures in food safety management, in a continued effort to overhaul its system and increase efficiency for local and international food enterprises. Deputy Director of MOH’s Vietnam Food Administration Tran Viet Nga announced last month a proposal to cut five groups of procedures: food production and trading conditions; food product announcement and inspection; certification on food safety standards; food advertisement; and food safety knowledge certification. The MOH also launched its online public services to expedite the registration process for enterprises in the health care sector. Companies can now submit required forms, handle documents and payments through the online service with reduced time and expenses. This platform is meant to better help trading and food production companies in applying for certifications on food safety regulations and conditions. It also offers greater access and transparency for public services and health administrative management in Vietnam.

Advocacy

• On December 5, the Vietnam Chamber of Commerce and Industry (VCCI), in coordination with the Vietnam Tax Consultants Association (VTCA), hosted a consultation seminar to gather comments on a draft proposal to amend the Tax Management Law. During this session, the drafting team expressed their intention to regulate tax for new types of transactions and admitted that more research is being done and that the provisions in this Draft Proposal are not final. Comments submitted by members were raised during the seminar and received by the MOF drafting team. In addition, local stakeholders also expressed concerns about other provisions of the proposal such as social insurance tax authority and the merge of tax forms and financial statements. For comments or questions, please contact Vu Tu Thanh at tvu@usasean.org.
• The Council has been monitoring the draft decree to revise Decree 140/2007/ND-CP ("Decree 140") regarding regulations on logistics services. Most notably, this draft decree would allow for 100 percent foreign investment in three logistics service areas - trade forwarding, warehousing, and fast delivery services. This change is in line with Vietnam's WTO commitments. The draft decree is currently pending and is available here (Vietnamese). If you are interested in engaging the GOV on this draft decree, please contact Vu Tu Thanh at tvu@usasean.org.

View the Council's latest Vietnam updates