Amb. Ted Osius
President & CEO
US-ASEAN Business Council
Welcome to the July President’s Newsletter. Last month saw the completion of our second annual CEO Business Mission to Vietnam and the Philippines. Council Chairman Evan Greenberg of ACE led a group of CEOs from nine leading U.S. companies. The delegation was joined by Secretary of Commerce Penny Pritzker, and several of the CEOs and I traveled on with her to Myanmar. You can read an op-ed on the importance of trade with Asia co-authored by Evan Greenberg and Secretary Pritzker here.
This week we concluded our first Board of Directors Meeting of the year, where our Board Members held off-the-record briefings with Ambassador Stapleton Roy and National Security Council Senior Advisor for Asian Affairs Evan Medeiros.
In the month of July, we will host an SME program in Manila and the Council’s third annual business mission to Myanmar, while August will bring our annual mission to the ASEAN Economic Ministers Meeting, an SME training event in Myanmar, and a Food and Agriculture mission to the Philippines.
We are also happy to announce that our 30th Anniversary Gala will be October 2. The gala will be the opening of our annual U.S. Ambassadors’ Tour, and we hope many of you will be able to attend and support this important milestone.
Highlights
Myanmar Business Mission
The Myanmar Business Mission is now confirmed for the week of July 28, with further information to follow. Members with questions or interest in joining should contact Anthony Nelson at anelson@usasean.org.
US-ASEAN Business Alliance for Competitive SMEs
The Business Alliance has now held successful events in Ho Chi Minh City, Kuala Lumpur, Jakarta and Singapore, and we have events scheduled in Manila for July and Myanmar for August. Members who are interested in this highly praised program should contact Anthony Nelson at anelson@usasean.org.
AEM Mission
The Council’s annual business mission to the ASEAN Economic Ministers meeting in Naypyitaw will take place August 27-29. For more information, please contact Anthony Nelson at anelson@usasean.org.
APEC Business Travel Card
As of June 13, 2014, U.S. Customs and Border Protection began accepting applications for the U.S. APEC Business Travel Card. For the first time, U.S. citizens are able to participate in this program which will ensure that you can zip through immigration lines in the 20 other APEC member economies around the Pacific. To read the Council’s update on how to apply please click here.
Bloomberg Business Week
The Council is once again cooperating with Bloomberg Business Week to create a special advertising section focused on ASEAN. The next section will be released the week of September 15. To access the Bloomberg prospectus, please click here.
30th Anniversary Gala
The Council’s 30th Anniversary Gala will be held October 2 in Washington, D.C. For sponsorship information, please click here. If you have questions, please reach out to Mads Stockwell at mstockwell@usasean.org.
Membership
The Council is happy to announce that members Intel and TE Connectivity have upgraded to the Chairman’s Council Membership level. We are also pleased to welcome our newest Council members, Alliant Techsystems Inc. (ATK) and Smiths Group, both of which joined on July 1 as Corporate members. Descriptions for both companies are provided below.
Alliant Techsystems Inc. (ATK)
Alliant Techsystems Inc. (ATK) is a premier aerospace, defense and commercial products company with major operations in the United States, Puerto Rico and other countries. The company is headquartered in Arlington, Virginia and employed 14,000 people as of March 31, 2013.
Smiths Group
Smiths Group PLC is a global technology group, which delivers products and services for the threat and contraband detection, energy, medical devices, communications and engineered components markets. The group primarily operates in the Americas, Europe and Asia, and employed 23,250 people as of July 31, 2013.
Regional HIGHLIGHTS
APEC
On May 16-18, the APEC Ministers Responsible for Trade (MRT) met in Qingdao, China, to discuss how to improve trade and economic growth across the region. To read the MRT statement please click here.
The United States has launched the APEC Scholarship Initiative to promote the creation of privately and publicly funded APEC-branded scholarship, training and internship opportunities to benefit students and professionals, especially youth and women in developing APEC economies. This initiative was formally endorsed at the APEC MRT meetings in May in Qingdao. The State Department is requesting submissions of interest before July. Please click here for the Scholarships Sponsorship Package.
As of June 13, 2014 U.S. Customs and Border Protection began accepting applications for the U.S. APEC Business Travel Card. For the first time, U.S. citizens are able to participate in this program which will ensure that you can zip through immigration lines in the 20 other APEC member economies around the Pacific. To read the Council’s update on how to apply please click here.
APEC China CEO Forum, July 10-11, 2014, Seattle, Washington
The APEC China CEO Forum is an initiative of the Beijing-based APEC China Business Council, organized this year in partnership with the National Center for APEC, to promote business and economic communications between Chinese business leaders, officials and other stakeholders in China and the Asia-Pacific region. If you have any questions, you can visit the website for more information, or contact Erik Day at eday@ncapec.org.
Our colleagues at the National Center for APEC (NCAPEC) have kindly provided a draft agenda for the Asia-Pacific Financial Forum (APFF) in Seattle on July 7. NCAPEC is co-hosting this event with the APEC Business Advisory Council. The Financial Services Committee has advocated to ASEAN policy makers the role which several APFF-related work streams could play in supporting financial sector development in ASEAN. For specific questions regarding the draft agenda, please contact NCAPEC's Robert Fiddick at rfiddick@ncapec.org. The draft agenda for the APFF can be downloaded here.
Energy
The 32nd ASEAN Senior Officials Meeting on Energy was held in Laos June 9-13. ASEAN Senior Energy Officials discussed energy development issues such as conservation of energy and production of energy for security and sustainability. They were joined by representatives from dialogue partner countries, and collectively pledged to increase cooperation in energy development. In Indonesia, the Ministry of Energy and Mineral Resources and the Ministry of Small and Medium Enterprises recently signed a Memorandum of Understanding on increasing the participation of small businesses in the development of renewable energy sources.
On June 10 the Council met with Brunei’s Minister of Energy, H.E. Pehin Yasmin to discuss opportunities in the energy sector and Brunei’s Energy White Paper. Click here for a copy of Minister Yasmin’s presentation from the roundtable.
Financial Services
In early June, Mr. Lee Boon Ngiap, Chairman of the ASEAN Capital Markets Forum (ACMF) and Assistant Managing Director of the Capital Markets Group at the Monetary Authority of Singapore (MAS), joined Financial Services Committee members for a one-hour conference call. Chairman Lee and committee members discussed the ACMF's top priorities for 2014 and 2015, when the ASEAN Economic Community (AEC) will come into being, including continued development of the Collective Investment Scheme (CIS) between Malaysia, Singapore and Thailand and implementation of the ASEAN Trading Link. Financial Services Committee members presented questions to Chairman Lee regarding the ASEAN capital markets development agenda following AEC implementation and how members can aid marketing efforts on the CIS and the ASEAN Exchanges Initiative. Members also used the call as an opportunity to engage Chairman Lee on participation at the ACMF’s annual meeting October 10-11 in Singapore along with other opportunities for future cooperation. Chairman Lee kindly offered to continue engagement with the Financial Services Committee members in both his ACMF and MAS capacities. Notes from the call can be found here.
Food & Agriculture
The Food & Agriculture (F&A) Committee is exploring a one-to-two day F&A Mini Mission to the Philippines during the week of August 4, 2014. This first mission is expected to be a model for other subsequent missions to Vietnam, Indonesia and Thailand. The objectives of this mission are to build opportunities for strategic engagement, exchange of views and partnership between F&A member companies and key governmental organizations and industry associations in the Philippines, obtain updates from Philippines leadership on key F&A related initiatives, facilitate growth and development of the Philippines agriculture and food processing sector and provide policy recommendations based on concrete examples in other markets. The Council looks forward to visiting the Philippines with a strong American business delegation. Please register your interest in the F&A mini mission to the Philippines via this survey. Please feel free to email Sunita Kapoor at skapoor@usasean.org if you have any questions.
On July 2, the Council's Food and Agriculture and Health and Life Sciences Committees met with a delegation from the Indonesian Food and Drug Control Agency (BPOM), accompanied by representatives from the Indonesian private sector, including the Food and Beverage Association (GAPMMI). The delegation was led by the Chair of BPOM, Dr. Roy Sparringa. During the roundtable, Dr. Sparringa discussed Indonesia's role in ASEAN, citing the work that BPOM does on the ASEAN pharmaceutical, processed foods and cosmetic products working groups. The delegation highlighted, in particular, a focus on SME development and expressed great interest in the Council's Business Alliance for Competitive SMEs. The chair of GAPMMI, Adhi Lukman, who is also on the board of the ASEAN Food and Beverage Association (AFBA), explained the work being done to harmonize standards across the various working groups of the ASEAN Consultative Committee on Standards and Quality (ACCSQ).
ICT
On June 24, the Second Executive Committee meeting of the Indonesia ICT Consultative Forum (IICF) was held in Jakarta with more than 80 participants, including members, industry associations and government officials. The meeting, titled “Cyber Security and its Implications to Indonesia’s Citizens and Banks,” focused on banking, security and e-commerce, and also included a report on “The Cost of Data Localization: Friendly Fire on the Economic Recovery” by the European Centre of International Political Economy. Click here for the agenda of the Second Executive Committee meeting of the IICF. A full update from the meeting will be sent to members shortly. For the latest update on the IICF workstreams click here.
Brunei
On June 10, the Council hosted Brunei’s Minister of Energy H.E. Pehin Yasmin, and Minister of Foreign Affairs and Trade II H.E. Pehim Lim for a roundtable discussion in Washington, D.C. Minister Yasmin is one of the Sultan of Brunei's leading strategic advisors, while Minister Lim is one of Brunei's leaders on the Trans Pacific Partnership (TPP) negotiations. The Ministers briefed the Brunei Committee members on energy opportunities in Brunei, Brunei’s role in TPP negotiations and changes to the penal code to include Sharia law. Click here for a copy of Minister Yasmin’s presentation from the roundtable. To read the latest Council update on Brunei, please click here.
Indonesia
The Indonesian Presidential Election will take place on July 9. There are two candidates running for president: Prabowo Subianto and Joko Widodo. Prabowo Subianto is a former three-star general and founder and Chairman of Gerindra (the Great Indonesia Movement Party). His running mate, Hatta Rajasa, is the Chairman of PAN (the National Mandate Party) and recently resigned as Coordinating Minister for Economic Affairs. The popular governor of Jakarta, Joko Widodo (“Jokowi”), nominated by the Indonesian Democratic Party-Struggle (PDI-P) is running with Jusuf Kalla who served as vice-president from 2004-2009 and is the former Chairman of Golkar. There will be five presidential debates before July 9, and four of those have already taken place. Jokowi started the race in the lead, but recent polls show that the race has narrowed significantly. After stating it would remain neutral, the Democrat Party announced its support for Prabowo. To read the Council’s analysis of the presidential platforms please click here.
On June 5, Newmont Mining Corporation notified the Government of Indonesia that it is declaring force majeure at its Batu Hijau copper mine and plans to place 80 percent of its 4,000 employees on leave with reduced pay. Declaring force majeure allows the company to back out of contracts without penalty. This move comes after Newmont failed to reach an agreement in an ongoing dispute with the GOI over export taxes. Following the implementation of the 2009 Mining Law, in January of this year the GOI implemented a ban on the export of raw minerals with exemptions for certain minerals (including copper concentrate). These exemptions were granted in tandem with an increasing tax on the continued exports of these concentrates. Both Newmont and Freeport have consistently maintained that, on the basis of their existing Contracts of Work, they should be exempt from the export tax which kicks in at 25 percent and rises to 60 percent in 2016, before a total concentrate export ban is enforced in 2017.
Malaysia
The US-ASEAN Business Council’s 2014 Malaysia Business Mission is September 7–10. If you are interested in joining the program or have any questions, please contact Colette Morgan at cmorgan@usasean.org.
The Malaysian economy should continue to experience robust growth with an improving trade balance; however, rising oil prices could stunt growth and drive up inflation. A further boost to the Malaysian economy should come with the increase in business activity between Malaysia and the United States, as Malaysia is moving quickly to join the US Visa Waiver Program.
Rumors that Prime Minister Najib was planning to reshuffle his cabinet reached their end on June 25 when the Prime Minister announced changes to his government following the weekly cabinet meeting in Putrajaya. MCA president Dato’ Seri Liow Tiong Lai has taken over the Transport Minister’s portfolio from Defense Minister Datuk Seri Hishammuddin Hussein and Gerakan leader Datuk Mah Siew Keong became a Minister in the Prime Minister’s Department along with MCA deputy Datuk Dr. Wee Ka Siong. MCA vice presidents, Datuk Chua Tee Yong and Dato’ Lee Chee Leong, were named Deputy Finance Minister and Deputy Minister of International Trade and Industry, respectively. The addition of the MCA and Gerakan leaders substantially increases Chinese representation in the predominantly Bumiputera BN Cabinet.
Biographical profiles for the new Cabinet Ministers are listed below:
- Dato’ Seri Liow Tiong (Transport Minister)
- Datuk Mah Siew Keong (Minister) and Datuk Dr. Wee Ka Siong (Minister)
- Datuk Chua Tee Yong (Deputy Finance Minister) and Dato’ Lee Chee Leong (Deputy Minister, MITI)
Myanmar
The Council’s Myanmar mission will now take place the week of July 28. Members with questions or interesting in joining can contact Anthony Nelson at anelson@usasean.org.
The Council will host a roundtable discussion with Assistant Secretary of State for Democracy, Human Rights, and Labor Tom Malinowski on Friday, July 18th from 9:30-10:30 AM. He will discuss his recent trip to Myanmar, with a particular focus on SDN delisting. To register, please click here.
Myanmar fulfilled a long-held goal of the reform effort when it was accepted as a candidate member of the Extractive Industries Transparency Initiative (EITI). The EITI should help assuage concerns raised in a report released by Global Witness, an international NGO based in the U.K., about transparency in the Oil and Gas sector. The report underscores the need for an update of the Myanmar Companies Act of 1914 which did not outline the need for company transparency, especially private family enterprises. Although the Companies law has been identified as a target for reform, the Global Witness report raises concerns for companies that may wish to enter the Oil and Gas space, especially considering the extra scrutiny and reporting requirements around doing business with Myanmar Oil and Gas Enterprises (MOGE). The full Global Witness report can be read here. The EITI statement on Myanmar’s candidacy can be read here.
Philippines
The government of the Philippines continues to signal that considerations will be made to relax foreign ownership restrictions of the Constitution to make the country more attractive to investors. The Constitution currently sets a 40 percent limit on foreign ownership in certain sectors. While strong economic growth in the last several years has made the Philippines an increasingly attractive destination for investment, foreign investors still remain hesitant to accept a minority shareholding if they carry a large share of the risk and provide the management expertise and the technology. Speaker Feliciano Belmonte, Jr. of the House of Representatives, has filed Resolution No. 1 which seeks amendments to relax or provide flexibilities in the constitutional restrictions on foreign investments, in an effort to encourage investment into the country. However, President Aquino has remained firm in saying that no changes will be made to the Constitution during his remaining term.
In the spirit of further liberalizing key sectors of the Philippine economy, the Senate passed Bill No. 2159 which allows up to 100 percent foreign ownership of domestic banks. The bill amends a 20-year-old foreign banking act which originally restricted foreign ownership of domestic banks to 60 percent. The approval is expected to give an advantage to the country in the economic integration of ASEAN in 2015, where a common banking framework is scheduled to be implemented. A similar counterpart bill was approved in the House last month. The two bills by both chambers of Congress will need to be reconciled in a bicameral conference committee before it is sent to President Benigno Aquino III for his approval.
The World Trade Organization Committee on Trade in Goods (WTO-CTG) approved the Philippines’ petition for an extension of its quantitative restrictions on rice imports effective June 2014, signifying that the Philippines can continue to keep the high duties on imported rice under the Minimum Access Volume at 40 percent and incoming rice shipments at 50 percent outside the MAV. Further, the WTO-CTG has pledged to endorse the decision at the WTO General Council in July 2014.
To read the Council’s latest Philippines update, please click here.
Singapore
On June 24, the US-ASEAN Business Council and U.S. Chamber of Commerce celebrated the 10th Anniversary of the U.S.-Singapore Free Trade Agreement (USSFTA) with His Excellency Lee Hsien Loong, Prime Minister of Singapore. The Prime Minister’s speech at the reception can be found here.
Thailand
Thai military leaders, led by General Prayuth, have established the National Council for Peace and Order (NCPO) and have begun organizing public dialogues at the central and regional levels to promote reconciliation and conflict resolution. The dialogues and stakeholder engagement comprise the first phase of the NCPO’s roadmap towards delivering Thailand back to civilian control, expected to last roughly three months. The second phase is the formation of an interim government, a reform council and a legislative council, with the goal of enacting reforms acceptable by all before moving towards a free and fair national election in about 15 months.
The military-led government has further outlined an eight-year, three trillion baht (US$ 92.5 billion) investment plan for infrastructure development. Deputy Chief of the National Council for Peace and Order, Air Chief Marshal Prajin Juntong, who is charged with overseeing economic issues, met with the relevant state agencies and reprioritized the previous government’s 350 billion baht water management project.
Fearing a crackdown on illegal foreign labor, almost 220,000 Cambodians have fled from Thailand to Cambodia. The Thai military issued a warning that illegal migrants could face arrest and deportation. NCPO Spokesman Winthai Suvaree has commented that the problem of illegal laborers has been “accumulating for ten years” and the Foreign Ministry stated that the NCPO’s policies intend to “clean up society from illegal activities which include gambling, drugs and illegal workers.”
The U.S. Department of State released its annual Trafficking in Persons (TIP) Report June 20. The results of this year’s report saw a downgrade for Thailand – from tier two watchlist to tier three, the lowest ranking a country can receive. The report claims tens of thousands of migrants from neighboring countries are being exploited in the commercial sex industry, on fishing boats or as domestic servants. The government of Thailand has taken steps to prove it is working on these issues in earnest, but given that Thailand has held its tier two watchlist status for four years with little perceived progress from the State Department’s perspective, the downgrade was issued. In response, Thailand has registered its disappointment with the State Department over its decision and will continue to work on these issues.
To read the Council’s latest Thailand update, please click here.
Vietnam
With the territorial disputes in the South China Sea and the subsequent riots fueled by anti-Chinese sentiment that occurred throughout southern Vietnam, significant attention is being paid to Vietnam economic ties with China. China is Vietnam’s #1 trade partner, although the relationship is asymmetric in China’s favor. According to Vu Tien Luc, Chair of the Vietnam Chamber of Commerce and Industry, it is unlikely that China will sever its economic relations with Vietnam even as disputes in the South China Sea intensify. As China supplies more than 60 percent of raw materials used in Vietnamese industry, some of China’s poorest provinces would be hit hard in the event such shipments were stopped. In addition, Chinese engineering, procurement and construction contractors work on 90 percent of Vietnam’s public projects. Between 1990 and 2010, trade between China and ASEAN as a whole increased more than 36 times, from US$7.96 billion in 1990 to over $292.78 billion in 2010. Yet despite the dramatic increase in economic integration, dispute settlement in the South China Sea has not become any easier, contrary to much liberalization theory. This is causing many economists in Vietnam to recommend that the country begin to diversify its economic partnerships.
Prime Minister Nguyen Tan Dung has approved a list of projects that require foreign investment. These projects will take place over the next six years with a tentative completion date of 2020. The list includes 127 projects in several industries and will require US$58 billion in investment to complete. The sectors that should benefit the most are infrastructure, which received the majority of the capital invested into 35 projects, and the agricultural sector, with 44 projects planned. For a copy of the project list, please click here.