President's Newsletter - April 2014

Welcome to the April President’s Newsletter! It has been a busy month for the Council, as we have launched ASEAN Matters for America and continued planning for many major initiatives. The Council held a number of events around the World Bank/IMF spring meetings, including our ASEAN Risk Conference in New York with participation from Indonesia’s Finance Minister Basri and Central Bank Governor Agus, and meetings in D.C. with Finance Secretary Purisima of the Philippines and Governor Prasarn of the Bank of Thailand.

U.S. President Barack Obama travels to the region at the end of the month, visiting Malaysia and the Philippines, and on April 17 Commerce Secretary Penny Pritzker announced that she will travel with the Council’s CEO Mission to Vietnam and the Philippines this June, and will also travel to Myanmar. This high-level focus on ASEAN by the Administration gives the Council an unprecedented opportunity to build our momentum in the region and push forward the key goals laid out in the Council’s policy paper.

Highlights

On April 9 the US-ASEAN Business Council launched “ASEAN Matters for America” with the East-West Center. U.S. Senate East Asia and Pacific Affairs Subcommittee Chairman Ben Cardin, House Foreign Affairs Committee Chairman Ed Royce and Undersecretary of State for Economic Growth, Energy, and the Environment Cathy Novelli spoke at the forum on Capitol Hill on the importance of the relationship both economically and politically. The initiative is part of an effort by the Council to raise awareness around the importance of the U.S.-ASEAN relationship and endeavors such as the Trans Pacific Partnership which will benefit the relationship. One-pagers on the importance of the relationship for each state and congressional district have also been created. To visit the ASEAN Matters for America website, please click here.

President Obama will visit Malaysia and the Philippines during his trip to the region at the end of April. The Council has prepared “Sense of Business” papers for both countries to provide input. For more information, please contact Carr Slayton at cslayton@usasean.org on the Philippines and Colette Morgan at cmorgan@usasean.org on Malaysia.

On Thursday, April 17, U.S. Secretary of Commerce Penny Pritzker officially announced her intention to travel with the US-ASEAN Business Council’s CEO-level mission to Vietnam and the Philippines followed by a trip to Myanmar in June. This tour, organized by the Council, will see a number of CEOs visit the three countries to engage the senior-most government officials and business leaders. For additional information on the trip, please contact Mads Stockwell at mstockwell@usasean.org.

The “Managing Risk in ASEAN” conference, organized in cooperation with the American-Indonesian Chamber of Commerce, in New York City on April 14 gave Council members the opportunity to discuss political and economic developments in ASEAN with Finance Minister Chatib Basri and Central Bank Governor Agus Martowardojo of Indonesia, who each served as panelists at the conference. To read the press release from the ASEAN Risk Conference, please click here.

Regional Spotlight

Defense & Security
On April 1, the first US-ASEAN Defense Forum to be held on U.S. soil occurred in Honolulu, Hawai’i followed the next day by a defense ministerial roundtable. Defense ministers from all 10 ASEAN countries were in attendance. The forum emphasized not only the U.S. rebalance to Asia, but also ASEAN’s growing importance as a security grouping. The forum highlighted cooperation on humanitarian assistance and disaster relief efforts, with the participation of leaders from the National Oceanic and Atmospheric Administration (NOAA) and the U.S. Agency for International Development (USAID). After completing his meeting in Hawaii, U.S. Defense Secretary Chuck Hagel met with Chinese Defense Minister Chang Wanquan in Beijing. In their remarks, Hagel and Chang largely aired their countries' well-known positions about territorial disputes, including the South China Sea. He also traveled to Japan. To read the Council’s latest Defense updates, please click here.

Financial Services
On April 5, member companies of the Council’s Financial Services Committee, led by co-chairs Juan Andrade of ACE Group, Darren Buckley of Citi and Marc Mealy of the Council, attended the 18th ASEAN Finance Ministers’ Meeting (AFMM) in Nay Pyi Taw, Myanmar. The 12-company delegation and Myanmar Ministry of Finance co-hosted a working luncheon with ASEAN Finance Ministers and Central Bank officials to discuss key regional initiatives concerning natural catastrophe risk financing, a post-ASEAN Economic Community (AEC) economic agenda and financial inclusion efforts such as financial literacy programs and improved regional lending infrastructures. The Finance Ministers focused their own meetings on regional financial market stability amid global dynamics, progress toward the AEC and programs such as the Chiang Mai and Asian Bond Market Initiatives. Both the Council delegation and Finance Ministers stressed the need for the region’s citizens who lack financial services to quickly secure connections to banking and insurance. To read the press release from the Council’s business mission to the ASEAN Finance Ministers’ Meeting, please click here.

The “Managing Risk in ASEAN” conference in New York City on April 14 gave Council members the opportunity to discuss political and economic developments in ASEAN with Finance Minister Chatib Basri and Central Bank Governor Agus Martowardojo of Indonesia, who each served as panelists at the conference. To read the press release from the ASEAN Risk Conference, please click here.

Brunei
Brunei recently released its first Energy White Paper during ENERGY Week at the beginning of April. The White Paper outlines priorities and goals for the Sultanate's energy sector through 2035, including developing upstream industry to ensure stable production, implementing measures to maximize economic opportunities in the downstream sector, and reducing energy intensity by 45 percent by 2035, in line with Brunei’s APEC commitment. To read Brunei’s Energy White Paper, please click here.

Cambodia
Prime Minister Hun Sen announced that he and opposition leader Sam Rainsy have “agreed in principle” to hold the next elections five months early, in February 2018.  The Prime Minister added that Kem Sokha, Sam Rainsy’s deputy, disagrees and has voiced his opposition to an agreement. Hun Sen also warned that if no agreement had been reached by April 11, the blame should be placed on the opposition Cambodia National Rescue Party (CNRP). Sam Rainsy has since left for a trip Europe and is scheduled to return on April 29, but suggested he could return earlier if there was a major breakthrough in negotiations. Cambodian politics have been in gridlock since last summer’s disputed election, the fallout of which has seen the opposition boycotting the National Assembly.  For the latest Council Cambodia updates, please click here.

Indonesia
Indonesians took to the polls on April 9 to vote in the legislative elections in which 12 political parties competed. Though it will take a month before official results are released, several accredited organizations doing “quick counts” of the popular vote have been reporting the following numbers:

• PDI-P: 19.24%
• Golkar: 15.01%
• Gerindra: 11.77%
• PD: 9.43%

To nominate a presidential candidate in the July presidential elections, a party must win either 20 percent of seats in the Parliament or 25 percent of the popular vote. The three parties in the lead (PDI-P, Golkar and Gerindra) have begun to make moves to form coalitions in order to achieve this threshold; these coalitions will determine the Presidential and Vice Presidential tickets in the July presidential elections, and it is highly likely that the July elections will feature three tickets. The PDI-P has announced that Jakarta Governor Joko Widodo will be their presidential nominee, Golkar has named Aburizal Bakrie, and Gerindra has named General Prabowo Subianto. The National Democrat Party (NasDem), led by Surya Paloh, who received 6.71 percent of the legislative vote (according to current quick counts) announced on April 13 that it would support the PDI-P. This gives the PDI-P the votes required to nominate its candidate of choice, Jokowi. The PDI-P is currently deciding who it will select to run as VP on their ticket. To read more on the Council’s take on Indonesia’s legislative elections please click here. The Council will continue to monitor developments related to the elections. For questions please contact Alex Stuart at astuart@usasean.org.

Malaysia
Council President Alexander Feldman will be returning to Malaysia April 26 and 27.  While in Malaysia, he will be attending the State Dinner and conducting additional meetings related to President Obama’s visit to the region. In preparation for the President’s visit to Malaysia, the Council has developed a “Sense of Business” paper which highlights barriers to trade and investment. The paper, as well as a compilation of U.S. business accomplishments in Malaysia, will be transmitted to the White House.  To review the paper or provide input, please contact Colette Morgan at cmorgan@usasean.org.

Myanmar
Myanmar recently announced bid winners for 20 oil and gas blocks giving companies (including Chevron and ConocoPhillips) the rights to explore offshore oil and gas deposits. Contracts will be awarded to those companies only after a profit-sharing contract between each company and the Ministry of Energy has been approved by the Union Attorney-General Office. The bid winners will have to conduct environmental and social impact assessments, and initiate corporate social responsibility programs within six months of signing the agreement. The companies awarded rights to 16 onshore blocks last October have still not signed their contracts, which were expected to be completed in November or December. Ten more offshore blocks remain to be auctioned off, and the bidding is likely to take place in 2015.

The Council co-hosted the launch of NBR’s special report, entitled “Myanmar’s Regional Role” on March 25. To read the NBR report, please click here.

Council Myanmar Director Anthony Nelson will be in Yangon from April 26-29. If you would like to arrange a meeting, please reach out at anelson@usasean.org.

Philippines
President Obama will visit Manila April 28 – 29 to discuss a range of issues including defense, trade, and people-to-people ties with President Aquino and stakeholders. The Council has composed a “Sense of Business” paper on the Philippines to capture key challenges and opportunities for American businesses operating in the Philippines which will be submitted to the White House in advance of the President’s trip. For questions on the Sense of Business paper, please contact Carr Slayton at cslayton@usasean.org.

Council President Alexander Feldman will visit Manila from April 28-29 alongside President Obama’s visit. He will hold an all-members meeting at the office of member company PWC. For more information, contact Evelyn Mariano at emariano@usasean.org.

The Philippines will be sending more flights to the United States after an assessment by the Federal Aviation Authority (FAA), the lead US civil aviation body, upgraded the Philippines' rating to Category 1 on April 9. The Philippines' civil aviation was downgraded to Category 2 in January 2008 due to a lack of global-based regulations to oversee air carriers and a civil aviation regulator deficient in areas like technical expertise, trained personnel, record keeping and inspection procedures. The upgrade means that more Philippine carriers can mount flights and add new routes to the United States using fuel-saving aircraft. On the same day, the European Union lifted a ban on Cebu Air, imposed in 2010, over concerns about local aviation safety standards.

On April 11, the Philippines and United States announced that they have reached an agreement on a new security accord that will see American military forces sharing bases in the Philippines for maritime and humanitarian operations. As tensions in the South China Sea have increased, speculation about U.S. forces returning to the bases at Subic Bay and Clark Airfield they departed after 1992 has run high. The accord follows the Defense Department’s strategy of “places, not bases” which gives touchpoints for U.S. forces in places like Singapore and Darwin, Australia to expand their reach and quick response time. The accord is expected to be signed during President Obama's April 28-29 stop in Manila. To read the Council’s latest Philippines updates, please click here.

Singapore
The US-ASEAN Business Council conducted its annual business mission to Singapore from March 26-28. The delegates engaged the Singapore government on a range of policy issues with the focus on improving the business environment in Singapore and around the ASEAN region. The delegation met with key officials from several Singaporean government ministries including Minister for Trade & Industry Lim Hng Kiang. In addition to focusing on bilateral U.S.-Singapore economic ties, the delegation discussed areas of mutual concern including the Trans-Pacific Partnership (TPP). To view the press release from the Council’s Singapore Business Mission, please click here.

Thailand
Even though the nationwide Senatorial election held on March 30 was carried out successfully with Thailand's Election Commission (EC) endorsing 58 candidates who won seats, the Senate is unable to convene even with these candidates endorsed. The Constitution stipulates that at least 95 percent of the Senate’s 150 members are needed for the first convention. The EC is investigating complaints against 19 other winning candidates for allegedly violating the election law during the campaign. Thailand’s Senate is composed of 150 members serving a six-year term; 77 senators come from election, while the remaining 73 are appointed to represent various sectors and professional groups. The makeup of the Senate could be crucial if Prime Minister Yingluck Shinawatra faces impeachment hearings. The Prime Minister is being investigated by the National Anti-Corruption Commission over alleged malfeasance in administering a rice support program.

Bangkok Governor Sukhumbhand Paribatra stepped down after the Election Commission ruled that several members of his Democrat Party had defamed his opponent during last year’s campaign, thereby nullifying the poll. A new election will be scheduled soon and a Deputy Governor will assume the responsibilities in the meantime.

Council Members met with Bank of Thailand Governor Prasarn during his visit to Washington D.C. for the IMF/World Bank meetings, where he offered his view that while Thailand’s GDP projection for 2014 would dip in response to political uncertainty, 2015 would see an uptick due to favorable macroeconomic conditions. Governor Prasarn added that a resolution to political complications in Thailand would immediately raise the projected rates of return to growth for the second half of 2014 into 2015.

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

Vietnam
The government of Vietnam is set to make wide-ranging changes to its investment law, widely seen as unwieldy, complex and protectionist, in an effort to attract more foreign investment capital. Vietnam's economy increasingly relies on such inputs, with FDI amounting to between 3 and 12 percent of GDP per year for the past 20 years. However, there is widespread agreement that reform is necessary in the form of increased transparency, especially with regard to transactions between the government and the many state-owned enterprises in the country. Indeed, Transparency International ranked Vietnam 123 out of 176 countries in terms of corruption in 2013 - a position which has remained fairly steady since 2007. However, concerns over competition from other Southeast Asian nations are driving the government of Vietnam towards further reform, and many are sure to welcome the move. To read the Council’s latest Vietnam update, please click here.