August 2018

Dear Members,

Greetings from Vientiane where we just wrapped up Day One of our annual Business Mission to Laos.  Earlier this week, we also completed our annual Business Mission to Singapore.

In Singapore, our Business Mission gave us a chance to meet with the fourth generation Ministerial leadership.  During the course of the year and through our most recent business mission, we have now been able to meet with the three Ministers who are in the running to become Singapore’s next Prime Minister, including H.E. Heng Swee Keat, H.E. Ong Ye Kung and H.E. Chan Chun Sing.  Each was impressive in his own right, and I am confident that Singapore will be in good hands no matter which of these Ministers ultimately succeeds Prime Minister Lee Hsien Loong sometime in the coming years.

In other news, on July 29, Cambodia held its general elections.  As expected, the ruling Cambodian People’s Party (CPP) won and declared a landslide victory, the result of which will extend Prime Minister Hun Sen’s decades-long rule of Cambodia by five more years.  The CPP outperformed the other 19 parties on the ballot by large margins.  Altogether 6.94 million of the eligible 8.38 million voters cast their ballots, making for an 82.89 percent turnout rate.  The CPP received 4.88 million votes, or a 76.78 percent majority, which far outweighs the runner-up FUNCINPEC’s 370,000 votes, or 5.88 percent of the total.  A new cabinet is expected to be formed by the end of August.

On August 1-5, U.S. Secretary of State Michael Pompeo visited Kuala Lumpur, Singapore and Jakarta, joining ASEAN regional and bilateral meetings, with a focus on regional security issues. Secretary Pompeo participated in four major multilateral ASEAN-centered gatherings in Singapore, including the ASEAN Regional Forum (ARF), Lower Mekong Initiative (LMI) Ministerial Meeting, the East Asia Summit Ministerial, and a U.S.-ASEAN Ministerial Meeting.  At the ASEAN Regional Forum, Secretary Pompeo announced the United States’ intent to provide approximately US$300 million in security assistance across the Indo-Pacific region.  At the East Asia Summit Ministerial, Secretary Pompeo met his 17 counterparts to address the region’s most critical security challenges, including the denuclearization of North Korea, the contested South China Sea issue, terrorism, and maritime and cyber security, and at the U.S.-ASEAN Ministerial Meeting, he co-chaired a meeting with all 10 ASEAN countries.  There, he reaffirmed the United States’ commitment to work with ASEAN members to counter the threat of terrorism, address cybersecurity challenges, and manage investments in the region.  Prior to his visit to the region, Secretary Pompeo also announced an Indo-Pacific economic package “down payment” of US$113 million which would cover new programs focused on Infrastructure, Energy and the Digital Economy. 

On August 9, the Indonesian election cycle went into full swing with Indonesian President Jokowi announcing KH Ma’ruf Amin as his running mate and vice-presidential candidate for the 2019 elections.  Ma’ruf Amin is the leader of Nahdlatul Ulama, Indonesia’s largest Muslim organization, and also serves as Chairman of Indonesia’s Ulema Council, a central authority that issues fatwas (a ruling on a point of Islamic law) and halal certificates.  The Jokowi-Ma’ruf ticket is supported by a coalition of nine political parties (PDI-P, Golkar, Nasdem, Hanura, PPP, PKB, Perindo, PSI and PKPI) with a total of approximately 60 percent of the seats in the parliament.  Running against Jokowi is Prabowo Subianto, a former Special Forces Command (KOPASSUS) lieutenant general who also ran for president in 2014.  Prabowo is running with Sandiaga Uno, the incumbent deputy governor of Jakarta.  The Prabowo-Sandiaga ticket is supported by a coalition of four parties (Gerindra; Partai Demokrat; PAN and PKS) with a total of approximately 25 percent of the seats in the parliament.  The presidential and legislative elections will take place simultaneously on April 17, 2019.

Past Events

• On July 25-27, the Council brought a delegation of senior diplomats from ASEAN Embassies to Philadelphia, my hometown, as part of our Annual ASEAN Ambassadors’ Tour.
• On July 31, the Council hosted a welcome luncheon in Washington, D.C. in honor of H.E. Ha Kim Ngoc, the new Ambassador of Vietnam to the United States.  Ambassador Ngoc, who most recently served as the Vice Minister of Foreign Affairs, has been working in the Foreign Service since 1988 and has built his career working on bilateral and multilateral diplomacy, specifically in the relationship between Vietnam and its partners in the Americas.  Ambassador Ngoc has been tremendously supportive of the Council and its members in his previous roles, and we look forward to building on this already robust relationship.
• On August 2, the Council and the ASEAN Committee in Washington co-hosted the 2018 ASEAN Ambassadors’ Golf Tournament at the Lake Presidential Golf Club in Maryland.   In full spirit of good sportsmanship and camaraderie, ASEAN embassy representatives, along with Council members and staff partook in a game of 18 holes of golf.  Congratulations to the Bruneian Embassy Team on winning the championship cup!
• From August 20-21, the Council led a delegation of 22 U.S. companies on its annual business mission to Singapore.  This year's business mission was framed within the context of the Government of Singapore’s themes for its 2018 ASEAN Chairmanship – innovation and resilience.  The delegation was especially interested in how Singapore's focus on innovation and resilience overlap with Singapore’s Smart Nation initiative and the development of the digital economy.  Given Singapore's ASEAN Chairmanship role for 2018, the delegation also sought Singapore's perspective on the regional implications of innovation and resilience and its overlap with the digital economy on issues such as trade facilitation within ASEAN, deepening services integration and reducing impediments to investment, and deepening ties between ASEAN and its external partners.  Lastly, the delegation met with Ministers who are covering new portfolios after the most recent Cabinet shuffle, which took effect on May 1.
• On August 23-24, the Council held its 2018 Business Mission to Laos.  The Mission focused on building upon the momentum following U.S. Commerce Secretary Ross’ September 2017 visit to Laos and supporting policy and capacity development in Laos, particularly in sectors of potential growth such as ICT, financial services, energy and tourism.  The delegation of 10 companies was the largest in Council history, and met with the Deputy Prime Minister, cabinet minister, and other key political and business stakeholders.

Looking Ahead:

• On August 30-September 1, the Council will mount its 19th consecutive Business Mission to the ASEAN Economic Ministers (AEM) Meeting in Singapore.  Our annual participation in the official AEM-USTR Consultation is a unique opportunity for our members to engage all ten trade ministers in a single setting, and we will also meet on a bilateral basis with key ASEAN countries and the U.S. government delegation led by Deputy U.S. Trade Representative Jeffrey Gerrish.  We will raise priority issues relating to ASEAN economic integration, digital economy, and Council initiatives such as the ASEAN SME Academy and the recently-launched U.S.-ASEAN Internship Program.
• Please save the date for the Council’s Annual Business Mission to Cambodia in Phnom Penh from October 2-3.  This year’s business mission is significant, since we will be engaging with a reshuffled or entirely new batch of cabinet ministers, after the ruling CPP’s landslide electoral victory on July 29.  Please contact Jack Myint at jmyint@usasean.org with any questions or to express interest.

• Please save the date for the Council’s Annual Business Mission to Malaysia in Kuala Lumpur from October 16-18.  The mission will be a great opportunity to engage the new government and seek a greater understanding of the new administration’s priorities.  Please contact Kim Yaeger at kyaeger@usasean.org and Tina Jamaluddin at tjamaluddin@usasean.org with any questions or to express interest.

I would like to express my heartfelt congratulations to long-time Council friend, Principal Deputy Assistant Secretary of State W. Patrick Murphy, for his recent nomination to be U.S. Ambassador to Cambodia.  The Trump Administration couldn’t have picked a better person to represent the United States at this pivotal time in the U.S.-Cambodia relationship. 

Last but not least, I join Council members and staff in sending our sincerest condolences to the people of Indonesia, Laos, and Myanmar who have suffered the perils of natural disasters over the past month.  They are all in our thoughts and prayers. 

Highlights

Advocacy

• As the Council prepares for our 2018 Business Mission to the ASEAN Economic Ministers (AEM) meeting, our proposed discussion agenda and AEM White Paper contain a wide range of advocacy messages related to trade policy, regional digital economy development within the formation of the ASEAN Economic Community (AEC), and industry-specific commercial challenges and recommendations including:  Support for ASEAN Member States to continue to pursue regional trade and investment modernization initiatives such as the CPTPP and RCEP; continued adoption of ASEAN insurance integration and banking integration frameworks; free flow of data with no localization requirements; establishment of central e-portals for government procurement activities; implementation of the ASEAN privacy framework and coordinated cybersecurity policy; and over-the-top (OTT) services facilitation.
• The Council’s recent advocacy efforts with the Government of Vietnam on its new Law on Cyber Security (LOCS) have prompted us to re-evaluate our methods and engagement strategies with different parts of the government bureaucracy with a view towards strengthening our capabilities to engage more proactively.  Looking forward, we have identified the following areas for further advocacy efforts in Vietnam:  proposed Decree on Cashless Payments; proposed Decrees on the IRRs for the Cyber Security Law; circular on National Centralized Procurement of Medical Devices; decree on OTT Contents; and various tax-related laws.  For each issue area, we have identified specific advocacy targets and have begun developing engagement opportunities for members over the next three months in Vietnam, the United States and in the region.   
• Earlier in August, the Council transmitted a letter to the Philippines Secretary of Finance which focused on ways which the government could strengthen the business case for attracting more American participation in infrastructure projects.  The letter advocated that the government continue to accept unsolicited proposals, adopt fast-track award approval processes, and organize more project-specific outreach activities as a way of boosting U.S. business interest.  It also recommended that the government explore alternative delivery methods for large and complex projects as a way of de-risking such projects for potential U.S. contractors and the government.    

Intelligence

• On July 29, Cambodian Prime Minister Hun Sen declared a landslide victory on behalf of his ruling Cambodian People’s Party (CPP), lengthening his decades-long rule of Cambodia by five more years.  Facing no significant electoral challengers after dissolving the main opposition, the Cambodia National Rescue Party (CNRP), and imprisoning CNRP President Kem Sokha in 2017, Prime Minister Hun Sen and his party claim to have won all 125 seats of the National Assembly.  To read a full analytical update on the Cambodia elections, please click here.
• Amid the ongoing U.S.-China trade war, Vietnam is taking precautions to protect its economy and insulate itself from the consequences of the conflict.  Stuck between two superpowers – with their top two export destinations being the United States. and China – Vietnam's National Centre for Socio-economic Information and Forecast (under the Ministry of Planning and Investment) issued a report last month estimating the economic costs that the trade war will incur on the country.  If the trade war continues its current trend of back-and-forth retaliation, Vietnam's economy could suffer from a reduction from exports and foreign investment.  Domestic production could also be hurt, as Vietnam is heavily dependent on Chinese and American imports for production.  Like other countries in the region, Vietnam is also threatened by financial volatility and a tendency for inflation rates to rise when currency and stocks falter.  To counter the adverse effects of the trade war, Vietnamese economic analysts are suggesting that Vietnam begin to limit the amount of imported Chinese goods through increased scrutiny during quality checks.  The Vietnam Institute for Economic and Policy Research also advised that Vietnam devalue the dong against the U.S. dollar to support domestic products within the market.

Membership

As of August 1, we are pleased to welcome Amerigo Education to the Council at the Corporate Level.  Amerigo helps international students discover their passions, build lifelong friendships, and most importantly, thrive in the classroom. Through their boarding programs operated in partnership with American preparatory schools, they ensure that students receive the support they need to prosper in high school and grow into leaders who go on to succeed at American universities.  At all of their campuses, Amerigo builds a close-knit community with support from caring mentors and programs to advance English skills, academic abilities, and personal development.

Regional Highlights

APEC

Looking Ahead

Please mark your calendar for the annual APEC CEO Summit in Port Moresby, Papua New Guinea, November 15-17. To request an invitation, please visit https://abacpng.com/apec-ceo-summit-2018 and complete the form.  CEO Summit sponsors do not need to request an invitation.

View the Council's latest APEC updates

ASEAN

Major Developments

• From August 15, U.S. Secretary of State Michael Pompeo visited Kuala Lumpur, Singapore, and Jakarta, joining ASEAN regional and bilateral meetings, with a focus on regional security issues. Secretary Pompeo participated in four major multilateral ASEAN-centered gatherings in Singapore, including the ASEAN Regional Forum (ARF), Lower Mekong Initiative (LMI) Ministerial Meeting, the East Asia Summit Ministerial, and a U.S.-ASEAN Ministerial Meeting. At the ASEAN Regional Forum, Secretary Pompeo announced the United States’ intent to provide approximately US$300 million in security assistance across the IndoPacific region; at the East Asia Summit Ministerial, Secretary Pompeo met his 17 counterparts to address the region’s most critical security challenges, including the denuclearization of North Korea, the contested South China Sea issue, terrorism, and maritime and cyber security; and at the U.S.-ASEAN Ministerial Meeting, Secretary Pompeo co-chaired a meeting with all 10 ASEAN countries. There, he reaffirmed the United States’ commitment to work with ASEAN members to counter the threat of terrorism, address cybersecurity challenges, and managing investments in the region. For Secretary Pompeo’s remarks at the U.S.-ASEAN Ministerial, please click here. For more information, see the Council’s recent Update here.
• For the second straight year, U.S. Trade Representative Robert Lighthizer will not attend the ASEAN Economic Ministers’ (AEM) Meeting, held this year in Singapore the last week of August.  He was scheduled to attend in 2017 before being called away on a lastminute Cabinet meeting, so the USTR delegation was led by then-Assistant U.S. Trade Representative for Southeast Asia and the Pacific Barbara Weisel.  This year the USTR delegation will be led by Deputy U.S. Trade Representative for Asia, Europe, the Middle East, and Industrial Competitiveness Jeffrey Gerrish. Also attending will be the Honorable Manisha Singh, Assistant Secretary of State, Bureau of Economic and Business Affairs.

Looking Ahead

• Meeting in Singapore on August 30September 1. The Mission will include participation in the official AEM-USTR Consultation as well as bilateral meetings with key ASEAN Ministers and the U.S. government delegation. Registration is now closed. Please contact Mario Masaya at mmasaya@usasean.org with any questions.

View the Council's latest ASEAN updates

TPP

Major Developments

• On July 19, Singapore became the third member of the group of 11 nations (joining Mexico and Japan) to formally ratify the Comprehensive and Progressive Trans Pacific Partnership (CPTPP) agreement.  With national ratification processes under way in Canada and New Zealand, and Vietnam expected to start its ratification process in the fall, there is a significant likelihood that six of the 11 members will successfully ratify the agreement by the end of 2018, which would enable the agreement to go into force in Q1 of 2019.   

Advocacy

The Council will include advocating to the Government of Malaysia that it ratify the CPTPP as an agenda item during our 2018 Senior Executives Business Mission to Malaysia in October.   

Looking Ahead

In addition to CPTPP-related ratification processes in the 11 member states, CPTPP trade officials have also initiated CPTPP expansion discussions with several nations.  To date, the following nations have indicated their interest in joining the CPTPP:  Thailand, Indonesia, South Korea, Taiwan and Colombia.  

View the Council's latest TPP updates

Industry Highlights

Customs

Advocacy

On July 31, the Council held a meeting with Customs and Excise Director General Heru Pambudi and his senior staff, spending several hours reviewing private sector challenges and trade facilitation initiatives.  The meeting covered e-commerce facilitation, proposed intangible goods tariffs, HS codes, new cargo manifest reporting regulations, intellectual property protection, proposed de minimis changes, plastics excise taxes, and 3D printing.  The meeting was followed on August 7 by a meeting with Deputy Director for Import Customs Djanurindro Wibowo and other business associations to review the implementation of the new cargo manifest regulation, Ministerial Regulation No. PMK-158/ PMK.04/ 2017.  The Council is also exploring working-level meetings and letters to further discuss and offer input on several other issues, including ongoing challenges with HS code classification.

Looking Ahead

September 27:  U.S.-Singapore Trade Facilitation Workshop in Singapore.  USTR and Singapore MFA are organizing a weeklong workshop for ASEAN government officials September 24-28 on the implementation of the WTO Trade Facilitation Agreement, and inviting our members to speak on a series of private sector panels on September 27.  The governments hope to hear perspectives from manufacturers and logistics companies on TFA-related issues, including your challenges with customs systems that the TFA could address and how you envision being able to effectively interact with governments.  Please contact Ian Saccomanno at isaccomanno@usasean.org if you are interested in joining the event.

View the Council's latest Customs updates

Defense & Security

Major Developments

On July 16-20, the United States and Malaysia held a biennial Pacific Air Forces tactical airlift exercise called “Cope Taufan” at various air bases across Malaysia, including the Subang Air Base.  The Cope Taufan, an exercise that has been held since the early 1980s focused on improving tactical mobility and boosting interoperability between the U.S. and Royal Malaysian air forces, allows various exchanges of technical expertise and standard operating procedures as well as trainings for aircrew and maintenance personnel.  Approximately 500 service members from the U.S. Air Force 36th Airlift Squadron, Yokota Air Base (AB), Japan, and the Royal Malaysian Air Force (RMAF) participated.  On the U.S. side, participating assets included the U.S. Air Force C-130J Super Hercules aircraft and RMAF aircraft.  This ongoing exercise demonstrates the stable military relationship between Malaysia and the United States, amidst Malaysia’s government change this past year.  RMAF Maj. Gen. Zahani Zainal Abidin, Air Operation Command Headquarters Chief of Staff, stated during the exercise how important the bilateral relationship is between the U.S. and Malaysia, and how the exercise helped strengthen both countries’ tactical airlifts.  Likewise, the U.S. Pacific Air Forces’ participation in exercises with military forces in the Indo-Pacific demonstrates its commitment to peace and stability in the region.

View the Council's latest Defense & Security updates

Energy

Major Developments

• Commencing September 1, the Government of Indonesia will require that all vehicles and heavy machinery use B20 biodiesel fuel – 20 percent biodiesel blended into regular diesel.  The new regulation, which Renewable Energy Director General Rina Mulyana announced on August 2, comes amid efforts by the administration of President Joko “Jokowi” Widodo to reduce Indonesia’s current account deficit, which is estimated to widen from US$17 billion in 2017 to US$25 billion this year.  President Jokowi reportedly requested the regulation as part of an immediate implementation of the expansion of Indonesia’s biodiesel program, one of the aims of which is to reduce the amount of diesel imports.
• On July 2, President Jokowi inaugurated Indonesia’s first commercial-scale wind farm, the largest wind farm in Southeast Asia to date.  The power plant is one of several initiatives that the Government of Indonesia hopes will help it meet its ambitious goal of producing 45 GW of renewable energy and achieving 23 percent renewable energy in its national energy mix by 2025.  Currently, renewables account for only around 8 percent of Indonesia’s energy mix.  Out of 441.7 GW of potential renewable energy reserves, the country utilizes only 9.29 GW, just over 2 percent of its estimated potential.  The drive to increase Indonesia’s renewable power generation capacity is also part of Indonesia’s larger initiative to expand its general power generation capacity by an extra 35 GW, as well as the program of reducing greenhouse gas to 29 percent by 2030.

Looking Ahead

• Powertrends 2018, September 4-6:  The 13th International Exhibition and Conference on Directions for Energy, Power and Electricity will take place September 4-6 at SMX Convention Center in Pasay City, Metro Manila, the Philippines.  Co-organized by the Philippine Department of Energy and Leverage International since 1995, Powertrends is the most significant and longest-running energy-focused conference and exhibition in the Philippines.  Each year, the event draws key business leaders, vendors, developers, institutions and principal energy policymakers responsible for the development of the Philippine energy sector.  More information on Powertrends 2018, including how to get a 20 percent discount on exhibition fees as a Council member company, can be found here.
• Singapore International Energy Week 2018, October 29-November 2:  Singapore International Energy Week (SIEW) is an annual platform for energy professionals, policymakers and commentators to discuss and share best practices and solutions within the global energy space.  SIEW aims to facilitate the exchange of ideas and discussions on pertinent energy-related issues, while simultaneously meeting the strategic objectives of Singapore’s commitment to becoming a global leader among energy companies converging on the event, as well as providing a platform to showcase innovative products and solutions in the energy marketplace.  A calendar of SIEW 2018 events can be found here.

View the Council's latest Energy updates

Financial Services

Major Developments

On July 15, the new leadership of BNM unveiled a reorganization of the central bank.  Although some reorganization is typical of new bank governors, these changes are particularly substantial.  Governor Nor Shamsiah has taken more direct power over the Bank's core economic functions and appears to be positioning herself for a more active managerial role.  Additionally, regulatory roles have been separated into their own section within BNM, and the criminal enforcement offices have been elevated in stature.  The new organizational structure can be viewed here and the previous structure can be viewed here.

Advocacy

On August 3, the Council submitted comments to the State Bank of Vietnam on a newly proposed cashless payments regulation that would further limit the ability of foreign companies to compete in the Vietnamese market if implemented as drafted.  The proposal is found in both the Outline of Regulations on Non-Cash Payment and a Draft Proposal Letter.  The letter gives substantial insight into where the regulations may be going, although the language in the Outline itself remains broad. The Council continues to encourage governments to take a risk-based approach to regulation and promote competition, openness and interoperability.

View the Council's latest Financial Services updates

Food & Agriculture

Major Developments

In late July, the Singapore government announced the formation of the Singapore Food Agency (SFA), The SFA is set to officially begin work on April 1, 2019.  SFA was developed as a statutory board to oversee all of Singapore's food safety and security, and will fall under the leadership of current AVA Chief Executive Lim Kok Thai.  SFA will be managed by the Ministry of the Environment and Water Resources (MEWR), under which it will aim to help Singapore manage its climate change-induced global food supply challenges, as well as better position Singapore to seize global opportunities in the food industry. SFA will also work to maintain collaborative and positive relations with stakeholders in the food industry to develop solutions to some of the largest food-related issues facing the country, including advancing climate-resilient farming, improving food manufacturing techniques, and preventing oxygen-depleting plankton blooms from threatening fish stocks.

Prior to the development of SFA, the oversight of food safety and security was under the domain of the Agri-food and Veterinary Authority of Singapore (AVA), the National Environment Agency (NEA), and the Health Sciences Authority (HSA).  By consolidating food safety and security under one agency, Singapore will be able to streamline its processes and minimize inter-agency confusion over what issues fall under whose responsibility.  SFA will also lessen potential reaction times in responding to food-borne illness outbreaks and better coordinate product tracing and recall.  Additionally, with the creation of SFA, food retailers and businesses will be able to get all of their production and distribution licenses from a single agency.

Advocacy

Following our recent Food & Agriculture Industry Mission to Vietnam, the Council is working on a potential Memorandum of Understanding with the Vietnam Ministry of Agriculture & Rural Development.  Please review the draft MoU here and send us your priorities as categorized under the different industry sectors, including Agricultural Trading, Animal Health, Food & Beverage, Petcare, and Plant Science.  Our target is for the signing ceremony to take place in Hanoi on the sidelines of the 40th ASEAN Ministerial Meeting on Agriculture and Forestry October 10-12.  Please submit your input or any questions to Sunita Kapoor at skapoor@usasean.org and Hai Pham at hpham@usasean.org at your earliest convenience.  We will convene a planning call to discuss the MoU in the coming weeks.

Looking Ahead

• 2018 ASEAN Agricultural Attaché Roundtable: Please join the Council for a roundtable discussion between the American business community and the ASEAN Agricultural Attachés on September 6 at the Embassy of the Philippines in Washington, DC.  The roundtable will also include embassy representatives from the economic and commercial sections.  Please contact Hai Pham at hpham@usasean.org with any questions.
• Business Mission to the 40th ASEAN Ministerial Meeting on Agriculture and Forestry (AMAF): During the week of October 8, the Council will organize its Business Mission to the 40th ASEAN Ministerial Meeting on Agriculture and Forestry (AMAF) in Hanoi.  The Council is currently drafting a concept note addressed to the Ministers on key topics for discussion.  The Council is also planning to conduct individual bilateral meetings with key priority ASEAN countries, as well as potential meetings with dialogue partners like China, Japan and South Korea. For more information, please contact Sunita Kapoor (skapoor@usasean.org) and Hai Pham (hpham@usasean.org)

View the Council's latest Food & Agriculture updates

Health & Life Sciences

Major Developments

Malaysian Deputy Minister of Health Dr. Lee Boon Chye recently announced that the Ministry will be looking into a price-control mechanism for medicines, citing that the continual increase in medicine price would affect the affordability of healthcare in the country.  The Deputy Minister also noted that the Health Ministry will discuss this plan with the Ministry of Domestic Trade and Consumer Affairs, noting that many other factors would need to be considered before this can materialize.

Advocacy

The Ministry of Health (MOH) of Vietnam is tasked by the government to issue regulations for national centralized procurement of medical supplies.  Following up on the Health & Life Sciences Industry Mission to Vietnam in March this year, the Council organized a study visit to the United States in late May for MOH and Vietnam Social Security (VSS) officials in charge of drafting these regulations and more recently held a training workshop on best practices and international regulations in Hanoi on August 11 for them and their colleagues in relevant departments.  The Council will share with members the draft circular when it becomes available for comments.  The first draft of the circular will not be ready until September.  Council members will have an opportunity to comment on it in October.  MOH hopes to issue the circular by the end of the year.

View the Council's latest Health & Life Sciences updates

ICT

Major Developments

• On July 10, the Philippines Department of Information and Communications Technology (DICT) announced that it will develop a National ICT Ecosystem Framework (NIEF) 2022 to expand internet access and encourage collaborative use by key stakeholders.  More information can be found in our ICT Update here.  The DICT also resolved to adopt a new paradigm to select its new third major telecommunications player based on who has the highest committed level of services (HCLoS).  For more information, see our recent ICT Update here.
• Between June 27 and July 4, hackers carried out the largest and most serious cyberattack on Singapore, targeting SingHealth, the citystate’s largest healthcare group.  Over the course of the week, hackers stole the nonmedical personal data of 1.5 million people and the outpatient dispensed records of 160,000 people.  For more information, see our recent ICT Update here.
• On July 23, Vietnamese President Tran Dai Quang suspended Minister of Information and Communications Troung Minh Tuan from his position, after he was found guilty of directing the implementation of a governmentfunded project to purchase 95 percent of private TV firm AVG Audiovisual JVG through the state’s MobiFone Telecommunications Corporation. For more information, see our recent ICT Update here.
• On August 16, the Malaysian Parliament passed a Bill to repeal the AntiFake News Act 2018, which was passed on April 2.  The Bill states that the Act is irrelevant because fake news can be dealt with under existing laws.  For more information, see our recent ICT Update here.

Advocacy

• On July 18, the Council submitted comments on Singapore’s Draft Goods and Services Tax (GST) Amendment Bill 2018, which incorporated feedback from a previous public consultation on the Inland Revenue Authority of Singapore’s (IRAS) draft eTax Guide.  For more information and to access the submission, see our recent ICT Update here.

View the Council's latest ICT updates

Infrastructure

Major Developments

On July 30, during an address at the U.S. Chamber of Commerce in Washington, DC, U.S. Secretary of State Michael Pompeo unveiled a funding initiative for countries in Southeast Asia in the areas of technology, energy and infrastructure.  The US$113 million package is part of the economic strategy of President Donald Trump for a “free and open Indo-Pacific,” aiming to cast Washington as a trustworthy partner in the region.  In the context of China investing billions in infrastructure throughout the region, observers have noted that the initiative is insufficient to counter China’s influence in the region.

Beijing’s Belt and Road Initiative is estimated to be worth around US$2.1 trillion.  This is in addition to other Chinese investment projects in Southeast Asia outside of the Belt and Road framework, such as the Kalbar-1 coal power station in Indonesia.  Even compared to Japan, American funding plans appear low.  In June, Japan announced a US$50 billion lending facility at the Japan Bank for International Cooperation, specifically aimed at environmental projects.  In 2015, Japan also increased its Partnership for Quality Infrastructure funding by 30 percent to US$110 billion for the period of 2016-2020.

View the Council's latest Infrastructure updates

Country Highlights

Brunei

Major Developments

The government of Brunei remains committed to its diversification efforts.  With energy making up approximately 60 percent of its GDP, unstable energy prices have underscored the need for Brunei to diversify its economy.  With the rise in demand for halal products in the Southeast Asia region including Indonesia and Malaysia, Brunei is hopeful to be a market leader in Southeast Asia as it is the only shariah jurisdiction in the region.  Still in the spirit of diversification, Brunei has been actively inviting foreign businesses to invest in the country, including welcoming China’s Belt and Road Initiative.  Brunei aims to benefit from Beijing’s US$900 billion initiative to build up infrastructure and strengthen trade routes in the region.  In recent years, Chinese investment in Brunei has been steadily streaming in.  In September 2017, Chinese President Xi Jingping and Brunei’s Sultan Hassanal Bolkiah agreed to increase cooperation under the Belt and Road framework.  According to the American Enterprise Institute's China Global investment tracker, total Chinese investment in Brunei currently stands at US$ 4.1 billion.

View the Council's latest Brunei updates

Cambodia

Major Developments

On July 29, Cambodian Prime Minister Hun Sen declared a landslide victory on behalf of his ruling Cambodian People’s Party (CPP), lengthening his decades-long rule of Cambodia by five more years.  Facing no significant electoral challengers after dissolving the main opposition, the Cambodia National Rescue Party (CNRP), and imprisoning CNRP President Kem Sokha in 2017, Prime Minister Hun Sen and his party claim to have won all 125 seats of the National Assembly.  To read a full analytical update on the Cambodia elections, please click here.

Looking Ahead

Please save the date for the Council’s Annual Business Mission to Cambodia, which will take place in Phnom Penh from October 2-3.  This year’s business mission is significant, since we will be engaging with new cabinet ministers, after the ruling CPP’s landslide electoral victory on July 29.  Please contact Jack Myint at jmyint@usasean.org with any questions or to express interest.

View the Council's latest Cambodia updates

Indonesia

Major Developments

• On August 9, President Joko “Jokowi” Widodo announced that he is running with KH Ma’ruf Amin as his vicepresidential candidate.  Ma’ruf Amin is the leader of Nahdlatul Ulama, Indonesia’s largest Muslim organization and currently the chairman of Indonesia’s Ulema Council (MUI).  MUI is a central authority that issues fatwas (a ruling on a point of Islamic law).  MUI also provides recommendations on the issuance of halal certificates.  The JokowiMa’ruf ticket is supported by a coalition of nine parties (PDI-P, Golkar, Nasdem, Hanura, PPP, PKB, Perindo, PSI and PKPI) with a total of approximately 60 percent of the seats in the parliament.  Running against Jokowi is Prabowo Subianto, a former Special Forces Command (KOPASSUS) lieutenant general who also ran for president in 2014.  Prabowo is running with Sandiaga Uno, the incumbent deputy governor of Jakarta.  The PrabowoSandiaga ticket is supported by a coalition of four parties (Gerindra, Partai Demokrat, PAN and PKS) with a total of approximately 25 percent of the seats in the parliament.  The presidential and legislative elections will take place simultaneously on April 17, 2019.
• U.S. Secretary of State Mike Pompeo met President Jokowi in Jakarta as part of his visits to Malaysia, Singapore, and Indonesia.  This is his first visit to Indonesia since being appointed Secretary of State in April.  He arrived in Jakarta on August 4 after attending the East Asia Summit ministerial meeting and the ASEAN Regional Forum in Singapore.  President Jokowi was accompanied by Foreign Minister Retno Marsudi, Trade Minister Enggartiasto Lukita, State Secretary Pratikno, and Indonesian Ambassador to the United States H.E. Budi Bowoleksono.  Secretary Pompeo reiterated that the country is a strategic partner of the United States ahead of the 70th  anniversary of the bilateral relationship next year and that it valued the growth of democracy in Indonesia.  Minister Retno stated that President Jokowi expressed to Secretary Pompeo Indonesia’s hope that the U.S. preferential tariff scheme under the Generalized System of Preferences (GSP) will be maintained.  Indonesia currently enjoys lower tariffs on approximately US$2 billion of exports to the United States based on the scheme.  Previously, on July 30, at a speech in Washington, DC, Secretary Pompeo unveiled a funding initiative for countries in Southeast Asia in the areas of technology, energy and infrastructure.  The US$113 million funding is part of the economic strategy of President Donald Trump for a “free and open IndoPacific.”

View the Council's latest Indonesia updates

Laos

Major Developments

• On July 24, the Xe-Pian Dam in the Sanamxay District of the southern province of Attapeu, burst its banks, leading to more than five million tons of water to flood into the local area and causing widespread damage to 13 villages.  As of recent counts, the disaster has left 34 people dead and around 123 missing.  For more information see our previous Laos Update here.
• Following the dam burst, there has been an outpouring of support from the international community, and the Lao Government has taken many serious measures to ensure prevention of further similar disasters.  This has included suspension of all new hydropower dam projects, review of all existing dam projects, and the enactment of a special committee to conduct these reviews, the establishment of a new task force to look into the Attapeu dam collapse, and the creation of a special new task force for national level crises.  The disaster has caused Laos to reconsider its plans to become the “Battery of ASEAN,” despite the heavy investment it has put into its energy sector, which has been a major driver of growth for the Lao economy.  For more information, see our Laos Update here.

Advocacy

• The Council conducted its 2018 Business Mission to Laos August 2324.  The Mission focused on building upon the momentum following U.S. Commerce Secretary Ross’ September 2017 visit to Laos—the first visit of a U.S. Commerce Secretary to Laos—and supporting policy and capacity development in Laos, particularly in sectors of potential growth such as ICT, financial services, energy and tourism.  The delegation of 10 companies was the largest in Council history, and met with Ministers and senior officials in the Ministries of Planning and Investment, Post and Telecommunications, Public Health, Finance, Industry and Commerce and the Bank of Lao PDR, as well as the U.S. Ambassador to Laos, experts from the World Bank, ICF and USAID, and representatives from the AmericanLao Business Association.  

View the Council's latest Laos updates

Malaysia

Major Development

Through its first 100 days in power and completing its first session of Parliament, the Pakatan Harapan government (PH) made steady progress on delivering on its major campaign pledges made during the General Election season.  The most notable pledge that was passed during this parliamentary session included the formal repeal of the Goods and Services Tax (GST) after it was zero-rated in June.  The GST system is to be replaced by a Sales and Services Tax (SST) system.  The Sales Tax Bill 2018 was passed by Parliament on August 7 with the sales tax set at 10 percent and the Services Tax Bill 2018 was passed on August 8 with services tax at 6 percent.   The SST system could be implemented as early as September 1.  The Council is following up with Customs on expected implementation of the SST and advocating that implementation not be rushed.

Looking Ahead

The 2018 Malaysia business mission is October 16-18.  The mission will be a great opportunity to engage the new government and seek a greater understanding of the new administration’s priorities.  Invitations for the mission and mission planning calls will be sent to members shortly.  Contact Kim Yaeger at kyaeger@usasean.org and Tina Jamaluddin at tjamaluddin@usasean.org with any questions.

View the Council's latest Malaysia updates

Myanmar

Major Developments

• On August 17, the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) added four Burmese military and Boarder Guard Police commanders, and two Burmese military units to the Global Magnitsky List for “their involvement in ethnic cleansing in Burma’s Rakhine State and other widespread human rights abuses in Burma’s Kachin and Shan States”.  This is the second round of sanctions imposed by the Trump Administration towards Myanmar’s military officials since the NLD government came into office in November 2015.  It is important to note that both sanctions were under the Global Magnitsky Act and aimed towards military personnel on the operations side, thus the real impact on the business landscape remains minimal to non-existent.  To read the U.S. Department of Treasury’s press release on the sanctions announcement, please click here.
• The Myanmar Kyat continued its precipitous decline against the U.S. dollar, with the exchange rate hitting a new high of 1570 kyat to the dollar on August 16, up more than 10 percent since May.  To counter the rate fluctuations, the Central Bank of Myanmar has sold a record amount of dollars—starting at US$100,000/day in late July, up to USD$4 million/day on August 16—to private banks at auction, and in turn has urged banks to sell more foreign currency into the market.  The rate had settled to approximately 1500 kyat to USD by August 17.  The Central Bank’s efforts, though apparently effective in the short-term, are but a Band-Aid for foundational issues such as high levels of debt to international lenders, a mounting trade imbalance due to a dearth of domestic production, and a large informal trade sector, all leading to monetary instability.

View the Council's latest Myanmar updates

Philippines

Major Developments

• On July 26, President Rodrigo Duterte signed the Bangsamoro Organic Law (BOL), fulfilling one of the key promises of his presidential campaign.  An overview of the major provisions of the law can be found in the July 19 Philippines Update, which previewed Duterte’s third State of the Nation Address (available here).  The next hurdle for the BOL, formerly called the Bangsamoro Basic Law, to overcome will be its implementation, starting with a plebiscite meant to determine which areas will be included in the newly formed Bangsamoro region.  The Government aims to hold the plebiscite before the end of 2018, as mandated by the BOL.  If approved in the plebiscite, which is likely, President Duterte can begin appointing members of the Bangsamoro Transition Authority (BTA) by early 2019.  In addition to uncertainty over how the BOL’s implementation will be funded, Duterte has already indicated his willingness to renegotiate aspects of the law, adding yet another dimension of uncertainty, as any revisions would require legislative action.  While there is a better than fair chance that any revisions could pass in Congress without much resistance, it nevertheless underscores that the BOL in its current form remains a work in progress. More information on the BOL can be found here.
• A combination of three trends is making the Philippines an increasingly attractive market for Malaysian oil and gas and power generation companies.  These three trends are:
  • The expected 44 GW of additional power generation capacity that the Philippines is estimated to need by 2040
  • A drive by the new government of Prime Minister Mahathir in Malaysia to cut government expenditures
  • 30 percent electricity reserve in Malaysia.
• Over the last month, Malaysia’s Petroliam Nasional Bhd (Petronas) held preliminary talks with the state-owned Philippine National Oil Company (PNOC) on the former’s interest in helping to build a US$2 billion liquified natural gas (LNG) hub in the Philippines that will feed gas-fired power plants.  Philippine Secretary of Energy Alfonso Cusi also reportedly met with Tenaga Nasional Bhd (TNB) during a recent working trip to Kuala Lumpur as part of Philippine President Rodrigo Duterte’s delegation.  Out of the two, the talks on the proposed LNG hub appear to the be furthest along, although still in the preliminary stages.  Petronas’ interest in the Philippine LNG hub stems from the market that is expected to open up once the current main source of LNG for the Philippines, Malampaya, is depleted, which is expected to occur between the mid- to late-2020s.  More information on this topic can be found here.

Looking Ahead

• Powertrends 2018, September 4-6:  The 13th International Exhibition and Conference on Directions for Energy, Power and Electricity is September 4-6 at SMX Convention Center in Pasay City, Metro Manila, the Philippines.  Co-organized by the Philippine Department of Energy and Leverage International since 1995, Powertrends is the most significant and longest-running energy-focused conference and exhibition in the Philippines.  Each year, the event draws key business leaders, vendors, developers, institutions and principal energy policymakers responsible for the development of the Philippine energy sector.  More information on Powertrends 2018, including how to get a 20 percent discount on exhibition fees as a Council member company, can be found here.
• Innovation Series: "Augmented Reality/Virtual Reality - Enriching our Perceptions," September 4:  The Council has partnered with the Makati Business Club and Manila House to launch the inaugural Innovation Series between August and November 2018, a program composed of three separate talks on emerging, transformative and disruptive technologies.  For each talk in the series, an international thought leader or subject matter expert will present an expansive look at cutting-edge innovations and leapfrogging technologies that are disrupting and/or transforming industries, business models and lifestyles.  The first talk, entitled "Augmented Reality/Virtual Reality: Enriching our Perceptions," will focus on how augmented and virtual reality (AR/VR) are expected to disrupt traditional service industries while opening up new opportunities in industries not often associated with AR/VR technologies.  More information on the Innovation Series and the September 4 talk can be found here.

View the Council's latest Philippines updates

Singapore

Major Developments

• On July 19, Singapore ratified the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a revision of the original Trans Pacific Partnership (TPP) from which U.S. President Donald Trump withdrew the United States in January 2017, just three days after taking office.  CPTPP members are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam, which collectively form a combined market of 500 million people with a GDP of US$10 trillion.  Overall, the combined market of the CPTPP members accounts for 13.5 percent of the global economy.  The CPTTP is an important agreement for Singapore, as the ten other member countries accounted for 22.2 percent of Singapore’s total trading goods in 2017.  Much of the CPTPP is unchanged from the original TPP.  The main exception is 22 suspended provisions, approximately half of which deal with intellectual property rights, that can be reinstated if the United States rejoins the agreement.  More information on this topic can be found here.
• On July 20, Minister for Health Gan Kim and Minister for Communications and Information S Iswaran announced that between June 27 and July 4 hackers carried out the largest and most serious cyberattack against Singapore to date, targeting SingHealth, the city-state’s largest healthcare group.  Over the course of about a week, the hackers stole the non-medical personal data of 1.5 million people and the outpatient dispensed medicines’ records of 160,000 people.  Those affected by the hack include people who visited SingHealth’s outlets from May 1, 2015, to July 4, 2018.  According to the Ministry of Health (MOH) and the Ministry of Communications and Information (MCI), the hackers specifically and repeatedly targeted Prime Minister Lee Hsien Loong’s records.  Even though the incident points to the challenges that arise in protecting privacy and personal information in digitally-enabled and -connected public systems, the Government of Singapore has said that it will continue to push forward with its Smart Nation initiative.  More information on this topic can be found here.

Advocacy

• From August 20-21 the Council led a delegation of 22 U.S. companies on its annual business mission to Singapore.  This year's business mission was framed within the context of the Government of Singapore’s (GOS) themes for its 2018 ASEAN Chairmanship – innovation and resilience.  The delegation was especially interested in how Singapore's focus on innovation and resilience overlap with Singapore’s Smart Nation initiative and the development of the digital economy.  Given Singapore's ASEAN Chairmanship role for 2018, the delegation also sought Singapore's perspective on the regional implications of innovation and resilience and its overlap with the digital economy on issues such as trade facilitation within ASEAN, deepening services integration and reducing impediments to investment, and deepening ties between ASEAN and its external partners.  Lastly, the delegation met with Ministers who are covering new portfolios after the most recent Cabinet shuffle, which took effect on May 1.
• On August 1, the Council submitted comments on the draft Goods and Services Tax (GST) (Amendment) Bill 2018 after Singapore's Ministry of Finance (MOF) granted the Council a deadline extension.  The draft Goods and Services Tax (GST) (Amendment) Bill 2018 levies GST on imported services, including digital services such as streaming movies and music, starting January 1, 2020.  In response, the Council solicited member company input and drafted comments.  A copy of the feedback submission can be found here.

Looking Ahead

• Singapore International Energy Week 2018, October 29-November 2:  Singapore International Energy Week (SIEW) is an annual platform for energy professionals, policymakers and commentators to discuss and share best practices and solutions within the global energy space.  SIEW aims to facilitate the exchange of ideas and discussions on pertinent energy-related issues, while simultaneously meeting the strategic objectives of Singapore’s commitment to becoming a global leader among energy companies converging on the event, as well as to provide a platform to showcase innovative products and solutions in the energy marketplace.  A calendar of SIEW 2018 events can be found here.

View the Council's latest Singapore updates

Thailand

Major Developments

• On August 1, Thailand’s Election Commission (EC) selected Ittiporn Boonpracong as its new Chairman.  Only five of the legally required seven election commissioners are currently in place, but the Constitution Drafting Committee (CDC) permitted the selection meeting.  The selection of the new EC chairman is critical to determine who will supervise the highlyanticipated elections, which are currently planned for early 2019.  For more information, see our Thailand Update here.
• On August 2, Deputy Prime Minister Somkid Jatusripitak announced that the National Economic and Social Development Board is currently formulating a development plan for the Southern Economic Corridor.  The development scheme will include a highspeed rail network, a double-track rail system, road construction, and an upgrade of Ranong port, similar to the ongoing, heavily-touted Eastern Economic Corridor development scheme.  For more information, see our Thailand Update here.
• On August 9, the National Legislative Assembly proposed amendments to delay the selection of poll inspectors until the new Election Commission is in place.  The timeline required to put these amendments in place, should the proposal be accepted, may delay the election by up to a year.  However, polls have shown widespread approval for the amendments, as they would increase transparency and accountability in the election process.  For more information, see our Thailand Update here.
• On August 10, Prime Minister Prayut approved a plan to apply a publicprivate partnership (PPP) model to the development of the Eastern Economic Corridor for Digital (EECD), which will allow the private sector to bid for the development and management of the EECD.  The Terms of Reference for this bidding process are targeted for completion by the end of 2018, and the bidding process will aim to begin at the beginning of 2019.  For more information, see our Thailand Update here.

View the Council's latest Thailand updates

Vietnam

Major Developments

Amid the ongoing U.S.-China trade war, Vietnam is taking precautions to protect its economy and insulate itself from the consequences of the conflict.  Stuck between two superpowers – with their top two export destinations being the United States and China – Vietnam's National Centre for Socio-economic Information and Forecast (under the Ministry of Planning and Investment) issued a report last month estimating the economic costs that the trade war will incur on the country.  If the trade war continues its current trend of back-and-forth retaliation, Vietnam's economy could suffer from a reduction from exports and foreign investment.  Domestic production could also be hurt, as Vietnam is heavily dependent on Chinese and American imports for production.  Like other countries in the region, Vietnam is also threatened by financial volatility and a tendency for inflation rates to rise when currency and stocks falter.

To counter the adverse effects of the trade war, Vietnamese economic analysts are suggesting that Vietnam begin to limit the amount of imported Chinese goods through increased scrutiny during quality checks.  The Vietnam Institute for Economic and Policy Research also advised that Vietnam devalue the Vietnamese dong against the U.S. dollar to support domestic products within the market.  However, while devaluing the dong may increase Vietnamese products' competitiveness, it also risks provoking inflation and increasing costs of the imported goods used to make domestically-manufactured products.  Finally, the Central Institute for Economic Management stated that by reducing the number of required permits and licenses to produce and distribute goods, the degree of inter-country trade may increase.  Ultimately, analysts are trying to brainstorm different protectionary courses of action that will not result in increased tariffs, which would likely do additional harm to the state of Vietnam's economy.

Looking forward, the role of Vietnam’s trade policy is likely to become a strategic policy instrument to help mitigate the economic impacts of a U.S.-China trade war.  Vietnam has been one of the most active users of free trade agreements (FTAs) in ASEAN.  While its participation in the Regional Comprehensive Economic Partnership agreement (RCEP) is ongoing, Vietnam’s ratification of the Comprehensive and Progressive Agreement for Trans Pacific Partnership (CPTPP) is also expected to bolster Vietnam's economy by deepening its preferential trade linkages with ten other nations, including Japan, Mexico, Canada and Australia.  Last month, the Ministry of Foreign Affairs (MOFA) stated that the Ministry of Industry and Trade is currently in the process of preparing necessary documents for the National Assembly's CPTPP approval.  As one of the largest FTAs to date, the CPTPP will help to boost trade between member countries and promote further economic cooperation and regional integration.  Once in effect, the CPTPP is projected to cover 14 percent of the world's GDP with net benefits for member countries standing at US$37.3 billion.

By finalizing the National Assembly's approval procedures to move CPTPP forward, Vietnam will become more resilient to economic upheavals – like the current U.S.-China trade war – via its strengthened regional economic support network.  The CPTPP can also serve as an additional step forward for Vietnam to protect itself from the entanglements of foreign countries and further grow its economy.  Finally, Vietnamese analysts are hopeful that joining the CPTPP will promote institutional reform within the country, by creating competitive pressure on both businesses and the economy to promote and practice sustainable growth.  The National Assembly is expected to vote on approving Vietnam's entry into the CPTPP by the end of the year

Advocacy

The Government of Vietnam is pushing through an ambitious legislative agenda for the remainder of 2018.  The drafting agencies are currently seeking comments on the legislation they are preparing.  Details of each piece of legislation, including background, timeline, relevant documents and engagement opportunities, can be found in the link here.  Members should review each law and regulation below to see if or how they may affect your business, and send any comments and questions to the Council's Vietnam Team:  Vu Tu Thanh (tvu@usasean.org), Bui Kim Thuy (tbui@usasean.org) and Hai Pham (hpham@usasean.org).

Looking Ahead

Dinner in Honor of H.E. Tran Dai Quang, President of Vietnam (September 26, New York):  Please join the Council and the U.S. Chamber of Commerce for a reception and dinner in honor of His Excellency Tran Dai Quang, President of the Socialist Republic of Vietnam, on the sidelines of the UN General Assembly in New York.  During his first visit to the United States, President Quang will emphasize the importance of deepening the comprehensive partnership between the United States and Vietnam.  The President will discuss U.S.-Vietnam bilateral relations with special emphasis on future cooperation and engagement.  For more information or to express interest, please contact Hai Pham at hpham@usasean.org.

View the Council's latest Vietnam updates