Amb. Ted Osius
President & CEO
US-ASEAN Business Council
Greetings from Kuala Lumpur! Our hearts go out to those affected by the bombings in Bangkok. It is our hope that those responsible are swiftly brought to justice. We also send hopes and prayers to those affected by the flooding in Myanmar. Members interested in contributing to relief can find information here.
The next month will be another busy one for the Council. From August 22-25 the Council will have our 16th annual engagement with the ASEAN Economic Ministers which will include a meeting with all 10 Ministers, the United States Trade Representative Ambassador Michael Froman and AUSTR and chief TPP negotiator Barbara Weisel. On September 10 and 11, we will visit the ASEAN Agriculture and Forestry Ministers Meeting for the first time in Manila. And of course, the U.S. Ambassadors’ Tour and the United Nations General Assembly are fast approaching.
We are very excited to have Ambassador Mike Michalak starting as our Singapore based, Senior Vice President and Managing Director. Ambassador Michalak and I will be visiting our teams in Jakarta, Bangkok and Manila during his first week and overlap in Singapore on September 14-15. Stay tuned for member events in each of these cities to introduce Mike to you and your colleagues.
As always, you can access our calendar at the Council website to get a sense of our many upcoming events in Southeast Asia and Washington, D.C.
Highlights
Advocacy
Our key advocacy efforts over the past month have included:
- The Council’s 2015 Business Mission to Thailand served as a platform for members to advocate for policy reforms and initiatives related to increasing incentives for attracting greater FDI, promoting a competitive digital economy, 21st century skills and human capital development, resolution of the overlapping claim issue to spur investment in energy, and strengthening Thailand’s ability to benefit from the launching of the ASEAN Economic Community. We engaged Prime Minister Prayut and his cabinet on busy two day visit.
- The Council transmitted a letter to Indonesia’s financial services regulatory body (OJK) on behalf of a member regarding regulations related to foreign ownership limits of domestic insurance companies and the schedule for implementing the regulations.
- The Council helped develop an industry advocacy letter which provided Council members with a platform to transmit comments to the Government of Malaysia on the development of data protection standards under Malaysia’s Data Privacy Law.
- The Council successfully advocated for extension of the time period for transmitting comments to the Government of Indonesia on their draft ministerial regulations on personal data in electronic systems, information security management and electronic systems software.
If you have questions about the Council’s advocacy efforts, please reach out to Marc Mealy at mmealy@usasean.org.
Intelligence
- Our Indonesia team took an in-depth look at the recent cabinet reshuffle
- Our Myanmar team offered their take on the recent cabinet and leadership reshuffle
- We’ve added the ASEAN Top 5, a twice-monthly refresher of the top business stories in the region, to our website. Search on Twitter: #ASEANTop5
- Please also expect to see Council updates on the new Thai Cabinet and the upcoming Singapore elections shortly.
Relationship Building
United Nations General Assembly (UNGA): September 21-25 The Council will host a number of ASEAN leader and senior officials around the UNGA in New York. For further details, please contact Carr Slayton at cslayton@usasean.org.
Business Missions
For more information on the Council’s 1st mission to the ASEAN Ministers of Agriculture and Forestry September 10 and 11 in Manila, please contact Sunita Kapoor at skapoor@usasean.org.
The US-ASEAN Business Alliance for Competitive SMEs is a powerful way to support the growth of small businesses in ASEAN. The Business Alliance was created at the request of the ASEAN Economic Ministers, and the AEM receives regular updates on its progress. Please contact Mario Masaya at mmasaya@usasean.org for more information.
Promotion
The Council’s annual US Ambassadors’ Tour will be held September 28- October 2.
Confirmed Ambassadors include:
- U.S. Ambassador to Indonesia Robert Blake
- U.S. Ambassador to Malaysia Joseph Yun
- U.S. Ambassador to the Philippines Philip Goldberg
- U.S. Ambassador to Vietnam Ted Osius
We are in the process of seeking sponsorship and determining which U.S. cities to visit. If you or your company are interested in more information, please contact Ian Saccomanno at isaccomanno@usasean.org or Anthony Nelson at anelson@usasean.org.
APEC
The APEC Customs Business Dialogue (ACBD) will be held on August 25 in Cebu, Philippines. The ACBD is on the sidelines of the third APEC Senior Officials Meeting (SOM III) and will provide opportunities for engagement between the private sector and APEC member economies. For questions please contact Ian Saccomanno at isaccomanno@usasean.org.
View the Council's latest APEC updates
ASEAN
The Council is leading its annual mission to the ASEAN Economic Ministers Meeting in Kuala Lumpur from August 22-25. Please contact Anthony Nelson at anelson@usasean.org for more information.
The ASEAN Online SME Academy is a fantastic opportunity to share content with a wide variety of SMEs and ensure the lasting success of the US-ASEAN Business Alliance for Competitive SMEs. To contribute to the Academy, please contact Mario Masaya at mmasaya@usasean.org to discuss opportunities.
View the Council's latest ASEAN updates
TPP
On July 31 in Maui, trade ministers from the 12 TPP negotiating countries concluded a productive round of negotiations and agreed that essential progress was made toward a successful conclusion of the negotiations. While multiple negotiating partners including the United States, Singapore and Vietnam, traveled to the Maui round seeking to reach a final deal, outstanding issues including intellectual property, rules of origin and agricultural market access remain to be worked out at a later date. The 12 ministers stated in their press conference at the conclusion of the round that bilateral and group negotiations will resume shortly to reach resolutions on remaining issues leading up to an additional required TPP ministerial. A date and location for that ministerial has not yet been set.
View the Council's latest TPP updates
Customs
On July 28, Taiwan and Thailand accepted the expanded Information Technology Agreement (ITA), allowing the agreement to move toward finalization. The negotiations are expected to be wrapped up during the WTO’s December Ministerial Conference in Nairobi. By October 30, each member will submit draft schedules for the elimination of the tariffs. The agreement will be implemented on a most favored nation basis to include all WTO members and should increase the competitiveness of the IT industry world-wide. The agreement also contains commitments to hold a new round of talks by January 2018 to further update the products list and intensify discussions on non-tariff barriers. Taiwan and Thailand agreeing to the treaty was the key to completion, because it cannot take effect until it covers 90 percent of the world’s IT industry.
An investigation into the causes of lengthy dwelling time at Indonesian ports by the Jakarta Police has led to multiple arrests at the Trade Ministry and will expand to include 18 government agencies. During the week of July 26, three top MOT officials from the Directorate General of Foreign Trade were arrested, including Director General Partogi Pangaribuan around August 1 on four counts of corruption and three counts of money laundering. The DG of Foreign Trade is responsible for the issuance of import permits. Police say they are now pursuing those who may have made the suspected bribes. MOT says that import licensing procedures have returned to normal after the disruption. MOT Inspector General Karyanto Suprih is temporarily overseeing the DG of Foreign Trade as Acting Director General. The investigations began after President Jokowi visited Tanjung Priok in June and discovered that officials had been misleading him about progress in shortening container dwelling times. On August 12, Minister of Trade Rachmat Gobel was replaced by Thomas Trikasih Lembong as part of a wider reshuffling of the Indonesian cabinet. More information on the cabinet reshuffle can be found in the Council’s Indonesia updates.
View the Council's latest Customs updates
Defense & Security
In May the Council surveyed the Defense & Security Committee for a list of challenges and recommendations to advocate for greater access for U.S. companies to Vietnam’s defense market. We have consolidated the feedback from the anonymous survey into a draft report that will be sent to Hanoi. Prior to final submission, we would like to offer the Committee the opportunity to provide feedback on the draft report. To access the draft report, please click here.
From August 1 to 6, Malaysia hosted the 48th annual ASEAN Foreign Ministers’ Meeting (AMM) in Kuala Lumpur. The agenda featured initiatives on ASEAN Community Building and developing regional integration projects. Despite concerns over maritime security in the South China Sea, the topic was not added to the agenda. China has urged officials to avoid discussions about the dispute. Chinese Vice Foreign Minister Liu stressed that the meetings should focus on promoting cooperation. Furthermore, China has accused the U.S. of attempting to militarize the region. Recently, the U.S. has strengthened military partnerships with Vietnam and increased military drills with the Philippines. There remains no signs of compromise or agreement with the growing tensions in the South China Sea between ASEAN regions, China and the U.S. Singapore’s Foreign Minister Shanmugam has reiterated that these challenges should not overshadow other important topics. This year’s AMM focused on boosting community connectivity, strengthening ties with partners, and expanding their involvement in the roles of peace and stability.
View the Council's latest Defense & Security updates
Energy
At the conclusion of a recent bilateral meeting between the European Union and the Philippines on renewable energy (RE), EU ambassador to the Philippines Guy Ledoux urged the country to relax its 60:40 equity rule on foreign investment. The regulation, applicable to all foreign investment and joint ventures in the Philippines, restricts foreign firms from owning more than 40 percent of any business ventures in the country. The energy sector is one of the fastest growing sectors in the Philippines, and there have been calls for the easing of the regulation from all levels in the Philippines. Renewable energy in particular is highly capital intensive, and requires the investment available from foreign companies. Former Energy Secretary Carlos Petilla has also argued in favor of relaxing the 60:40 equity rule, explaining its critical role in promoting investment in renewable energy. By allowing foreign firms to own more than 40 percent of any joint venture in the Philippines, companies will be better able to convince financiers of the long term security of any given project.
In order for the Department of Energy (DOE) to achieve its goals of a balanced power mix that has 30 percent renewable energy, there must be greater investment in the sector. With the large number of coal plants planned for the next 5 years, about 2,700 megawatts (MW) of renewable energy is required to maintain the DOE’s target power mix. The only current exception to the 60:40 equity rule is for coal power plants. Industry leaders have argued that wind and solar energy projects, among other renewable energy sources, are much more capital intensive than coal, and thus more urgently require an exemption from the current equity rules. Representative Reynaldo Umali, Chairman of the House Committee on Energy, has said that this proposal is currently under review.
On August 2, Indonesian President Jokowi launched the Donggi Sonoro Terminal, a part of the Pertamina Integrated Mega Project planned for Central Sulawesi. The Donggi Sonoro Terminal is a liquefied natural gas (LNG) plant located in Banggai Regency and is the fourth LNG plan in the country. With a total investment of US $5.8 billion, the Pertamina Integrated Mega Project aims to integrate upstream and downstream oil and gas industries by connecting gas producers and users. The megaproject comprises the Central Processing Plant, the Senoro-Toili and Matindok blocks, the Donggi Senoro LNG Plant, and an ammonia plant. Investors in the project include Pertamina and its relevant subsidiaries as well as Medco Energi, Mitsubishi Corporation, Korea Gas Corporation, and PT Panca Amara Utama. President Jokowi spoke of the project’s importance in meeting needs for natural gas in Sulawesi and Eastern Indonesia, and called on authorities in the region to identify and solve potential obstacles that may hamper the progress of the project. The megaproject is part of a larger push to strengthen the national energy infrastructure, by optimizing gas utilization to fulfill energy independence and create additional value within Indonesia. The current administration has focused on the acceleration of energy infrastructure development as the key for current and future energy independence, and with this project, is focusing on the petrochemical and LNG sectors and power plants.
View the Council's latest Energy updates
Financial Services
The ASEAN Capital Markets Forum (ACMF), which comprises capital market regulators from the 10 ASEAN countries, has invited the Council’s Financial Services Committee (FSC) members to its annual meeting in Kuala Lumpur on September 2 at the Mandarin Oriental Hotel. The meeting will be hosted by current ACMF chair Securities Commission Malaysia, and will include senior regulators from multiple ASEAN countries. Its focus is on key current ACMF initiatives in ASEAN capital markets development. The ACMF welcomes FSC members’ inputs on topics including, but not limited to: deepening and expanding the ASEAN Trading Link, developing the ASEAN Collective Investment Scheme, promoting the use of technology in integrating ASEAN’s capital markets, and building out SME and infrastructure finance channels. As in 2014, the FSC seeks to prepare a brief position paper for submission to the ACMF prior to the meeting.
For further information and submissions of content for the briefing paper, please contact Shay Wester at swester@usasean.org.
View the Council's latest Financial Services updates
Food & Agriculture
This week, Union Minister for Cooperatives in Myanmar U Kyaw San announced that over K160 billion ($144 million) will be given to regions and states to help farmers grow monsoon crops. These loans would be distributed with extremely low interest rate of 0.5 percent per year, touted as a vast improvement over money lenders who may charge as much as 10 percent per year. The Minister said that the loans are not coming from the government’s budget, but from money borrowed from China and farm machinery bought on credit from South Korea. The move is apparently motivated by the vulnerability of debt-carrying farmers to unstable weather and unfavorable market conditions, leading them to become stuck in debt cycles. The initiative is being passed despite strong opposition from other, unnamed quarters. U Kyaw San stated on June 21 that “It has been difficult to approve the loan. We struggled with critics and objections in the parliament." In recognizing the importance of this issue to the Government of Myanmar, the Council will look to involve insurance industry members in future engagements involving our Food & Agriculture committee.
View the Council's latest Food & Agriculture updates
Health & Life Sciences
On July 30, the Council met with Vietnam’s Deputy Minister of Health Nguyen Thanh Long and other officials from the Ministry of Health (MOH) to discuss the first draft of our Memorandum of Understanding formalizing partnership between the Council and MOH to address priority health issues in Vietnam. We would like to request that all interested members review the latest draft MOU and provide input to Fatimah Alsagoff at falsagoff@usasean.org by Friday, August 21. Members who wish to be listed as members of the Health & Life Sciences Committee should indicate their company name (as it should be printed) in Appendix A. The target date for conclusion of this MOU is October 2015.
The Philippine government health budget is slated to increase by 25 percent from last year’s totals if President Benigno Aquino’s 2016 proposed budget is approved by Congress. The Department of Health has been allocated P128.5 billion (US $2.78 billion) as part of the largest ever national budget of P3 trillion (US $64.8 billion). Budget Secretary Florencio Abad noted that more than 15,000 additional nurses and almost 1,000 new doctors will be hired in 2016 along with other healthcare workers. Secretary Abad also reported that P3.3 billion has been earmarked for family health and responsible parenting program, P1.1 billion for tuberculosis control and P793 million for public health disease treatment.
The increase in the health budget echoes Indonesia's recent announcement of a 58 percent rise in its 2016 health budget. The Government of Indonesia plans to apportion five percent of the national budget, or Rp 119 trillion (US $874 million), to health services next year. The decision fulfills the Government's obligation under the 2009 Health Law (Law No. 36/2009), which mandates that five percent of the national budget be allocated to health at both the central and regional levels. The Ministry of Health applauded the decision as it seeks to address pressing underlying issues that are the result of insufficient funding, such as the lack of access to health practitioners and well-resourced health facilities.
View the Council's latest Health & Life Sciences updates
ICT
To implement Indonesia’s Government Regulation 82 of 2012, the Ministry of Communication and Information Technology issued draft ministerial regulations regarding protection of personal data in electronic systems (Bahasa), information security management system (Bahasa) and electronic system software (Bahasa). The Council, the U.S. Chamber of Commerce and AmCham Indonesia are jointly developing comments for submission. The comments on Protection of Personal Data in Electronic Systems have been completed and the other two draft letters will be distributed soon. Please contact Kim Yaeger at kyaeger@usasean.org for more information.
Indonesia's Ministry of Communications and Information Technology (MCIT) published the final version of their regulation governing technical standards and local content requirements for LTE devices. The regulation moves the deadline for meeting the local content requirements out to January 2017, but seems to make few other changes from the previous draft. MCIT Regulation 27/2015 can be found at this link (in Bahasa Indonesia). The Council's Indonesia ICT Consultative Forum met with the Coordinating Ministry for Economic Affairs and the relevant DG from the Ministry of Ministry of Industry on August 12 to discuss the LTE local content issue. Details from the meeting can be found at this link.
View the Council's latest ICT updates
Infrastructure
On August 5, PwC and Oxford Economic released Building Indonesia’s Future: Unblocking the Pipeline of Infrastructure Projects. The report discusses the infrastructure investment targets set by the Jokowi administration and analyzes the performance and future outlook of those goals. PwC estimates that Indonesia may fall short of its targeted infrastructure spending for the 2015 – 2019 period, but can realize as much as 80 percent of the target through an approximate disbursement of Rp. 2.2 quadrillion (US $162 billion) in government spending. Analysis of target sectors reveals strong performance in the transport, utilities, and manufacturing sectors, with investment in transport expected to reach 37 percent of total infrastructure spending over the next four years. However, the mineral extraction, oil and gas, water, railway, ports, and airports sectors will underperform due to structural issues in Indonesia. The lack of a stable investment climate, bureaucratic bottlenecks and a lack of coordination within government institutions are all critical factors hampering the success of accelerating infrastructure development. Mineral extraction investment is failing to meet investment targets due to low commodity prices and the export ban on unprocessed mineral ore. Oil and gas is also suffering due to volatile and weak global oil prices. Investment in water utilities has been derailed due to the recent constitutional court ruling on water resources. While investment in ports is expected to pick up due to political pressure to improve logistical performance, it will not meet set targets by 2019. The two industries expected to meet or exceed the Jokowi administration’s targets are transport, particularly in roads across the country, and the 35 gigawatt (GW) electricity procurement plan. However, new Coordinating Maritime and Resources Minister Rizal Ramli has expressed concern about the project's completion by 2019. Given difficulties regarding delays in construction and the continuation of projects left over from the previous administration, 4 years may not be enough to complete every phase of the initiative. PwC makes three critical recommendations to boost Indonesia’s investment in infrastructure to meet the goals of the initiative: improve the investment climate, strengthen strategic leadership below the level of the President, and ensure success in pilot projects across industries (PwC’s full report).
View the Council's latest Infrastructure updates
Manufacturing
On July 27, the U.S. State Department released its much anticipated annual Trafficking in Persons (TIP) report. The TIP report rates governments’ efforts to combat human trafficking through the use of a three-tier scale. In the 2015 TIP report, the State Department upgraded Malaysia’s ranking from the lowest tier (Tier 3) to the second-lowest tier (the Tier 2). This follows Malaysia’s 2014 downgrade from Tier 2 to 3 due to concerns over trafficking activities connected to the country’s manufacturing supply chains, and in particular in its electronics sector. According to the State Department, Tier 3 is reserved for countries that fail to fully comply with the minimum U.S. standards and are making no significant efforts to do so, while countries on the Tier 2 Watch List are making significant efforts to address human trafficking. The upgrade has wider political ramifications as the Trans-Pacific Partnership (TPP) is likely close to completion of negotiations. In June, the U.S. Congress passed a bill with language barring the United States from “fast tracking” any trade agreements with Tier 3 countries. The language barring fast track privileges was supposed to be softened through a pending Customs Bill. However, that bill appears to have floundered in committee. With a final TPP agreement possibly nearing, the upgrade of Malaysia’s human trafficking ranking removes a potential roadblock to U.S. ratification of an agreement including Malaysia. Given the timing of the upgrade, human rights activists and Congressional leaders have accused the State Department of placing trade priorities above human rights, stating that Malaysia’s upgrade is a calculated move to streamline U.S. adoption of the TPP. In the days prior to the release of the report, 160 members of the U.S. House and 18 U.S. senators wrote a letter to Secretary of State John Kerry urging him to keep Malaysia at Tier 3. After the release of the report, Human Rights Watch stated that “Malaysia’s record on stopping trafficking in persons is far from sufficient to justify this upgrade.” Responding to these claims in a news release on July 27, U.S. Under Secretary of State for Civilian Security, Democracy and Human Rights, Sarah Sewall, denied that Malaysia’s upgrade was connected to the TPP. Explaining the upgrade, the TIP report noted that the Malaysian government had consulted stakeholders from civil society to produce amendments to its anti-human trafficking law. Additionally, the TIP report noted that Malaysia had doubled its number of trafficking investigations, though successful prosecutions remained relatively few. Despite the politicization of the TIP report, the positive implications for the TPP, and for Malaysia’s potential connections to TPP manufacturing supply chains, are undeniable.
Cambodia
Cambodia's insurance sector recorded gross premiums of US $32.2 million in the first six months of 2015, an increase of 20 percent over the previous year, according to data from the Insurance Association of Cambodia (IAC). In comments to local media, IAC President Huy Vatharo credited the industry’s heady growth to strengthening FDI, advances in financial literacy, and the economic dividend engendered by political stability. Cambodia’s non-life insurance segment is expected to comprise the largest sector of expansion in the medium term, in line with anticipated increases in consumer spending. Non-life products currently comprise 70.8 percent of the Cambodian insurance market, with the largest category being fire-related policies (38.7 percent). There are currently 11 insurance companies and one reinsurance company licensed to operate in Cambodia. Of these 11 firms, six provide general insurance, three offer life insurance, and two focus on micro-insurance. The potential for further growth is evident, and the Cambodian government has designated development of the insurance industry as a vital element of its financial sector development strategy for the next half decade. Given the importance of risk management products in sustaining and protecting broad-based economic growth, the Council urges a redoubling of this effort. Cambodia's Financial Sector Development Strategy for 2011-2020 can be read here.
View the Council's latest Cambodia updates
Indonesia
On August 12, President Jokowi announced a reshuffle of six members of his working cabinet (kabinet kerja). The slowing growth of the Indonesian economy has been met with increasing public dissatisfaction, prompting the President to make changes that will allow for a more effective and coordinated cabinet to respond to the challenges facing the country. The cabinet reshuffle goes into effect immediately. Luhut Pandjaitan has replaced Tedjo Edhi Purdijatno as Coordinating Minister for Political, Legal, and Security Affairs. Rizal Ramli has replaced Indroyono Soesilo as Coordinating Minister for Maritime Affairs, and Darmin Nasution, former Governor of Bank Indonesia, has replaced Sofyan Djalil as Coordinating Minister for Economic Affairs. Thomas Trikasih Lembong has replaced Rachmat Gobel as Minister of Trade. Sofyan Djalil, former Coordinating Minister for Economic Affairs, has replaced Andrinof Chaniago at the National Development Planning Agency (BAPPENAS). Pramono Anung has replaced Andi Widjajanto as Cabinet Secretary. President Jokowi’s cabinet reshuffle, and China’s announcement on August 10 of a devaluation of the Yuan, along with a number of other factors, have led to further weakening of the Indonesian Rupiah. The Indonesian currency has weakened about 8.5 percent this year. The Rupiah currently stands at a 17-year low, and is the second worst performing Asian currency in 2015.
On June 29 the Ministry of Manpower (MOM) issued Regulation No. 16, which pertains to procedures behind employing expatriates in Indonesia. The new regulation replaces 2013’s Regulation No. 12. According to the new regulation, foreign workers who are coming to Indonesia for short periods of time to train employees, present lectures, or attend meetings must now also apply for short term employment visa permits – either Rencana Penggunaan Tenaga Kerja Asing (RPTKA) or Izin Memperkerjakan Tenaga Kerja Asing (IMTA). Further, expatriate non-resident directors and commissioners of Indonesian companies must also obtain work permits sponsored by the relevant Indonesian entity. A new ratio of foreign workers to Indonesian workers has also been stipulated in the new regulation, stating that for every one foreign worker, the relevant company must employ 10 Indonesian workers (1:10). Certain positions, such as members of the Board of Directors or Board of Commissioners of a company may apply for exemptions from the ratio requirement. Expatriates working in Indonesia now are also required to hold Taxpayer Registration Numbers (NPWP), and enroll in the National Social Security Program for Manpower (SJSN) if working in Indonesia for longer than six months. Regulation No. 16/2015 does eliminate rulings on expatriate workers being proficient in Bahasa Indonesia. While this was a stipulation in the previous regulation, it was not strictly enforced. Following Regulation No. 16/2015’s implementation, there has been no allowed transition period. The regulation can be found here (in Bahasa). The Council is pursuing greater clarity in the regulation. If you have a question about this regulation please contact the Council's Indonesia team.
On July 23, the Ministry of Finance raised import tariffs on consumer goods, food, and vehicles by as few as 10 and as much as 150 percentage points. Commenting on the new tariffs, Ministry of Trade’s Director General of International Trade Cooperation Bachrul Chairi said, "We raised them based on our national interest and it does not violate the [WTO] rules." Members of the Ministry of Finance said their objective is to support local industry. The Indonesian Food and Beverage Association (GAPMMI) welcomed the new tariffs. GAPMMI's chairman, Adhi Lukman, noted that the old rules applied higher tariffs to raw materials rather than to finished goods, which he claims created a disadvantage for local manufacturers. Indonesian manufacturing has been contracting since October 2014, chiefly due to falling foreign demand. It is unlikely that domestic consumers, who are already showing strain, can replace that demand. These tariff increases should more than cancel out any gains from the recent decrease in luxury taxes. They will not apply to free trade agreement partners. The regulation is available on the MOF website at this link. Shortly after the tariff increase took effect, Indonesian economists Arianto Patunru and Sjamsu Rahardja released a study discussing the growth of protectionist policies in Indonesia. The Lowy Institute-sponsored study, Trade Protectionism in Indonesia: Bad Times and Bad Policy, can be accessed here. Patunru and Rahardja argue that Indonesia has become more protectionist since the 2008 Financial Crisis and that those protectionist efforts have intensified over the past year as the economy has weakened. They predict that these adverse policies will continue to be implemented with broad political support and that they will continue to damage the economy.
View the Council's latest Indonesia updates
Malaysia
On July 28, Prime Minister Najib Razak announced a much anticipated Cabinet reshuffle. The Prime Minister has faced discord regarding his leadership within his party for several months. Rumors of the reshuffle began more than a month ago, when rifts emerged between various officials over the handling of allegations made against the Prime Minister involving the 1Malaysia Development Bhd (1MDB) government linked fund. In early June, the Prime Minister is said to have issued an ultimatum to his Cabinet, telling ministers that if they did not support his handling of the rehabilitation of 1MDB, they should tender their resignations. The most notable change in the Cabinet was the removal of Deputy Prime Minister Muhyiddin Yassin, who also served as the Minister of Education. In recent weeks, Muhyiddin made several statements distancing himself from Prime Minister Najib and was increasingly critical of the Prime Minister’s handling of 1MDB. Replacing Muhyiddin is Home Minister Datuk Seri Dr. Ahmad Zahid Hamidi. In addition to his promotion to the role of deputy prime minister, Ahmad Zahid will retain the Home Ministry portfolio. The Deputy Prime Minister was not the only official sacked in the reshuffle. For a full overview on the changes to the Malaysian Cabinet, please click here.
View the Council's latest Malaysia updates
Myanmar
Myanmar’s cabinet and the USDP leadership were dramatically reshuffled August 12 as security forces were employed to force Speaker of the House Thura U Shwe Mann from his party leadership role. The Council’s full update is here.
Flooding in Myanmar has affected more than one million people, and long-term rebuilding efforts are required. The Council is working with AmCham to catalog the efforts U.S. companies are making to help support Myanmar during this crisis, and working to create a new program that will support flood damaged schools. For more information and to find out about donating, please click here.
View the Council's latest Myanmar updates
Philippines
International business organizations have urged the Aquino administration to reevaluate its economic policies following a significant downturn in foreign direct investment. Recent figures published by the Bangko Sentral ng Pilipinas (BSP) show that net FDI inflows reached US $1.23 billion in the first four months of this year, about half of that registered during the same period in 2014. Equity placements dropped about 60 percent to US $369 million, while withdrawals similarly fell 77 percent to US $90 million. The BSP has attributed much of the decline in FDI to exogenous market forces, but many observers cite restrictions on foreign ownership and competition as the more pressing concern. Under the terms of the 1987 Constitution, foreign firms are only permitted to hold up to a 40 percent stake in many key industries. Offshore equity is essentially prohibited for certain sectors of the economy, such as mass media and natural resource extraction. Both in and outside the Philippines, there is a growing consensus that these restrictions should be revised in light of current economic trends. Local think tank Stratbase ADR Institute has described the Philippines as being only “half open for business,” as its potential for growth is limited by regulatory barriers to foreign entry. For its part, the American Chamber of Commerce has warned the country may cede an increasing share of offshore investment to other ASEAN states. “[FDI] in Vietnam is quite remarkable,” said Senior Adviser John Forbes in a recent interview with The Philippine Star. “It is now the number one exporter in this region to the U.S. and is capturing the lion’s share of the relocation of investment from China.” House Speaker Feliciano Belmonte Jr. has publicly resolved to re-table discussion of economic reforms in Congress, though he acknowledges the window for action is closing. Timely progress in the realm of foreign market access is thus heavily dependent on the outgoing administration.
View the Council's latest Philippines updates
Thailand
The Council offers its sincerest condolences to the Royal Thai Government and Thai people for the losses and injuries suffered as a result of the August 17 bombings in Bangkok. We hope the perpetrators are swiftly apprehended and brought to justice.
The Council held its annual business mission to Thailand August 6-7. Discussions between the delegation and the government focused on how U.S. companies can continue to support ongoing economic reforms and opportunities to participate in Thailand’s ambitious and broad-ranging development plans, including those in the digital, financial, health and legal sectors. The delegation was comprised of representatives from 29 member companies from various sectors. For more information on the discussions, please contact Carr Slayton at cslayton@usasean.org.
View the Council's latest Thailand updates
Vietnam
U.S. Secretary of State John Kerry attended a series of events in Vietnam in early August held to commemorate the 20 year anniversary of the normalization of diplomatic ties between the U.S. and Vietnam. He gave a speech on the state of U.S.-Vietnam relations to participants at a conference, gave a web address to 100 participants of the Obama Administration’s Young South East Asian Leaders Initiative, as well as made a joint press statement with the Vietnamese Deputy Prime Minister and Foreign Minister Pham Binh Minh. Throughout the day Kerry emphasized the closeness of the two countries 20 years after diplomatic normalization and the importance of Vietnam’s continued cooperation in the Trans-Pacific Partnership (TPP) negotiations.
Prime Minister Nguyen Tan Dung signed a decision that dismissed Nguyen Xuan Son from his position as the Chairman of the Board of Directors of the state-owned oil and gas firm PetroVietnam. The decision named Nguyen Quoc Khanh, who is currently the Chief Executive Officer of PetroVietnam, as temporary replacement to the ousted Mr. Son. The decision cited proposals from the Minister of Industry and Trade and the Minister of Interior as causing the dismissal, without elaborating further. However, a source told Thanh Nien Newspaper that Mr. Son is accused of committing “economic management violations” during his term as the Chief Executive Officer of Dai Duong Ocean Commercial Bank (OceanBank) between December 2008 and November 2010. OceanBank was subject to a corruption sting last year when Ha Van Tham was arrested in his home and charged with siphoning hundreds of millions of dollars from OceanBank to other Ocean Group investments. Ha Van Tham is the Chairman of the Ocean Group, which is OceanBank’s parent company. Following the arrest of Mr. Tham, three more senior officials of the bank were detained between December 2014 and March 2015 as a part of the investigation. As of July 30, Mr. Son had been arrested for alleged financial irregularities during his tenure at OceanBank.