President's Newsletter - July 2019

President's Newsletter

July 2019 

Dear Members,

Between the Council’s 35th anniversary gala in Washington, D.C. and the United States’ Independence Day on July 4, it has been a busy and festive few weeks for us as we head into the second half of summer.

First, there have been personnel movements in key U.S. Government positions. The top East Asia diplomatic position at the U.S. Department of State has now been filled for the first time since the position was vacated in January 2017.  Former U.S. Airforce General David Stilwell assumed the position on June 20.  The position of Under Secretary for Economic Growth, Energy, and the Environment was also recently filled by Keith Krach on June 21. U.S. President Donald Trump has nominated current U.S. Ambassador to the Philippines, Ambassador Sung Kim, to be the next U.S. Ambassador to Indonesia.  President Trump also nominated Hong Kong-based lawyer Michael DeSombre to be the next U.S. Ambassador to Thailand. With the Senate’s consent, we look forward to working with Ambassadors Kim and DeSombre.

Our Gala was both an opportunity to reflect on our progress and history in the last 35 years and a chance to embrace what is in store for the years ahead. Our keynote speaker, Assistant Secretary of Defense for Indo-Pacific Security Affairs Randall Schriver, pointed out that the Indo-Pacific region is now the United States’ priority theater.  Secretary of Transportation Elaine Chao, Acting President and CEO of the Overseas Private Investment Corporation (OPIC) David Bohigian, Congressman Ted Yoho and Chairman of the US-ABC Board Keith Williams all shared different perspectives that echoed the importance of the U.S.-ASEAN relationship and the business community’s significant place in supporting it.

More specifically, David Bohigian and Rep. Ted Yoho both spoke at our Gala about The Build Act, which President Trump signed into law in October 2018.  The Build Act will see OPIC reorganized into the U.S. International Development Finance Corporation (USDFC). The USDFC will bring together the capabilities of OPIC and USAID’s Development Credit Authority (DCA), as well as introduce new and innovative financial products to better bring private capital to the developing world. The Build Act also expands USDFC's financial capabilities beyond those of OPIC and DCA to include the ability to make limited equity investments in projects and an increase in the organization's investment cap. USDFC's investment cap will be US $60 billion, more than double OPIC's investment cap of US $29 billion. The Council’s Singapore and Malaysia Country Offices also hosted OPIC Chief of Staff, Eric Jones, for working lunches with members on June 20 and 21, respectively. More information on the Build Act and the new USDFC can be found here and here.

Our keynote speaker, Assistant Secretary Schriver, accompanied recently appointed Assistant Secretary of State for the Bureau of East Asian and Pacific Affairs David R. Stilwell on the Manila, Philippines stop of Stilwell’s travels to Japan, Philippines, Republic of Korea and Thailand this week. During his first visit to Asia in the role of Assistant Secretary, Stilwell will meet Council members in Bangkok tomorrow. 

Meeting Thailand’s new government will be important for both Stilwell and members of the Council. Council delegates will have the opportunity to do so during our annual Thailand Business Mission from August 13-16. The Thai cabinet was announced on July 10 and the allocations appeared as predicted. The ministerial seats were allocated to key parties in the pro-Prayut coalition, including the leading Palang Pracharath Party, the Democrat Party, and the Bhumjaithai Party. Prime Minister Prayut has announced that he will serve as both the Prime Minister and the Defense Minister with General Prawit Wongsuwon, Somkid Jatusripitak, and Wissanu Krea-ngam on as Deputy Prime Ministers. The leaders of the Democrat and Bhumjaithai Parties have also been appointed as Deputy Prime Ministers.

Also in Bangkok, the 34th ASEAN Summit took place from June 22-23. There is reason to believe that the Summit may have been the most significant turning point yet for the state of trade in Asia, more so than G20 meetings and separate dialogues between the United States and China and India.  ASEAN leaders at the Summit made it clear that successfully concluding the RCEP agreement by the end of the year is the bloc’s top trade policy priority.  During the summit, the leaders also announced the “ASEAN Outlook on the Indo-Pacific,” which highlights the centrality of ASEAN and the importance of dialogue, partnerships, and cooperation in the Indo-Pacific region.

This collective announcement voiced ASEAN’s view as the region starts to generate special notice amid U.S.-China trade tensions. Recently, Vietnam drew negative attention from President Donald Trump due to some firms avoiding U.S. tariffs through the practice of transshipment by China through Vietnam. Indonesia has seen a positive impact from the global market distortions. Vietnam has seen similar positive results. Although there have been some short-term benefits for ASEAN nations, attention has mixed results and has created some uncertainties for supply chain structuring and what long-term effects on global trade may be.

Media is taking note of U.S. supply chains shifting out of China, and Southeast Asia is often raised as a new destination for diversifying investment.  We are pleased that Council Senior Vice President of Policy Marc Mealy’s Op-Ed on this subject appeared in the Business Times in Singapore, stating that these supply-chain shifts to ASEAN are more than just a reaction to the U.S.-China tariff war. ASEAN’s geographic position as well as its focus on free trade agreements is driving further investment.

As a timely contribution to these ongoing conversations, the Council is pleased to offer a resource for factual clarity and understanding. The Council will launch the fourth edition of “ASEAN Matters for America/America Matters for ASEAN” in partnership with the East-West Center and ISEAS Yusof-Ishak Institute on July 23. Intended to share with U.S. and ASEAN leaders at all levels, the publication breaks down the latest investment figures, trade data and in-depth research on U.S.-ASEAN economic and commercial ties as well as why social and strategic issues are key to both the U.S. and ASEAN. We look forward to launch events in Washington and Singapore on July 23 and September 27, respectively.

In addition to our upcoming country missions, our next headline events will engage ASEAN Energy Ministers and ASEAN Economic Ministers in Bangkok in early September.  We will also organize events around the UN General Assembly taking place in New York in September. For more information, I encourage you to see links below or visit our website.

- Alex

 
June Highlights
From Left to Right: Congressman Ted Yoho (Chairman of the Subcommittee on Asia and the Pacific), Mrs. Jordan Schriver, Randall Schriver (Assistant Secretary of Defense for Indo-Pacific Security Affairs). Congressman Yoho and Schriver spoke at the Council’s 35th Anniversary gala. Yoho spoke about the success of The Build Act that he introduced in Congress last year while Schriver commented on how the United States now calls the Indo-Pacific region its priority theater. 
US-ASEAN Business Council Senior Vice President and Regional Managing Director, Ambassador Michael W. Michalak, and Vietnam Deputy Minister of Agricultural and Rural Development, His Excellency Phung Duc Tien, during the Council’s the Food and Agricultural Mission to Vietnam from June 27-28. The pair signed an MOU formalizing further collaboration in support of Vietnam’s agricultural development objectives to help strengthen the role of the agriculture sector as an engine of growth for Vietnam’s economy.
His Excellency Pan Sorasak, Cambodian Minister of Commerce and Alex Feldman, US-ASEAN Business Council President and CEO at the Cambodia Business Mission in Phnom Penh, taking place from July 8-9. The mission focused on supporting capacity-building efforts, including human capital development, SME training, and youth leadership programs throughout Cambodia. Representatives from 14 American companies attended the mission.
Country, Industry and Advocacy Updates

Key Developments

  • Constitutional Court Confirms Jokowi’s Victory in April Elections: On June 27, the Constitutional Court rejected Prabowo Subianto’s challenge of the April election results, confirming President Joko “Jokowi” Widodo’s victory for a second term in office. See more details about the election here. All nine judges in the court rejected the plaintiff’s case, citing a lack of evidence to indicate cheating or misuse of state funds on the part of Jokowi. Prabowo, leader of the opposition Gerindra party, admitted his disappointment in the ruling but stated that he would accept the Constitutional Court’s results and called for continued calm among his supporters.
  • Global African Swine Fever Outbreak Threatens Pig Industry in Southeast Asia: A global outbreak of African Swine Fever (ASF), a highly contagious disease that has also been termed “pig Ebola,” is creating significant impacts on Asia’s pork industry. The virus is thought to have been originated in Kenya, making its way through Eastern Europe and subsequently Asia. ASF’s impact in the ASEAN region has been most severe in Cambodia, Vietnam, and Thailand. While the virus is not a food safety issue, its spread in Asia and the catastrophic livestock losses that follow are posing a severe economic problem in the region. Currently, there are no available vaccines or treatment to the disease, making culling the exposed and infected pigs the only prevention mechanism.
  • Indonesia issues Government Regulation on Implementing Regulation of the Halal Law: On May 2, the Government of Indonesia issued Government Regulation No. 31/2019 “GR31” concerning the Implementing Regulation of Law No. 33/ 2014 of Halal Product Assurance. Industry players believe that the regulation is more business-friendly than the previous draft. To that end, only food, beverages, and products containing animal derivatives require halal certification. Such products that have passed certification are required to display a halal label. Non-halal labelling requirements, including the non-halal logo, will be stipulated in the upcoming Religious Affairs Ministerial Regulation. 
  • Reforming Vietnam's Decree 54 mandates for foreign pharmaceutical companies: On December 31, 2018, the Vietnamese Government issued a new decree, Decree 155, which will revise regulations under Decree 54. The new decree aims to help simplify and expedite labeling, certification and licensing processes for drug imports and medical equipment for foreign businesses. With this decree in place, the Vietnamese government anticipates that it will incentivize more foreign companies to enter its market, which has grown 10 percent annually and is expected to continue its double-digit growth over the next 5 years. However, lack of clarity still remains on warehousing technical requirements, as well as FIE licensing process and timing. 
  • Malaysia Implements a New Sugar Tax, following regional trend: On July 1, the Government of Malaysia implemented its new sugar tax, which taxes the import and manufacturing of packaged sugary beverages. The implementation of this sugar tax by the Government of Malaysia follows the regional trend seen in recent years by its neighbors. Just last year, the Philippine Government implemented a tax on sugar-sweetened beverages as part of its TRAIN 1 economic reform. In Vietnam, the Ministry of Finance has also been proposing a special consumption tax on sugar-sweetened beverages. These taxes, if not structured with careful consideration, may have unintended consequences on trade as well as local industries. It remains to be seen how beverage companies in Malaysia will adjust and how prices of soft drinks will ultimately be affected.
  • Malaysia, Indonesia, Philippines and Vietnam Receive Unarmed Surveillance Drones from United States: The U.S. Department of Defense announced in its list of contracts for May 31 (here) that the United States is selling 34 ScanEagle drones to the governments of Malaysia, Indonesia, the Philippines, and Vietnam for a total of US$47 million. Malaysia received 12 of the unarmed drones, Indonesia and the Philippines eight each, and Vietnam six. Officials from these countries announced that the drones will be used for surveillance of local waterways, including the disputed South China Sea.  
  • Myanmar Government-ordered Blackout of Internet in Rakhine, Chin States Raises Concerns over Use of 2013 Telecommunications Law: On June 20, the Ministry of Transport and Communications (MTC) ordered telecom companies to shut off mobile internet in parts of northern Rakhine and Chin State. The Government has claimed that the internet blackout is allowed under the 2013 Telecommunications Law, which as prompted renewed calls from civil society groups for the law’s review. Under the Telecommunications Law, the Government can order telecom companies to suspend service or intercept communications in the case of an emergency.
  • Vietnam and EU Sign EU-Vietnam Free Trade Agreement (EVFTA): The EVFTA is expected to boost Vietnam’s exports to the EU by 20 percent by 2020, and its gross domestic product (GDP) is projected to rise 2.18-3.25 percent annually by 2023. It is expected that the EVFTA will be approved by the EU by early 2020. 
  • U.S. Government pitches Asia Enhancing Development and Growth through Energy (EDGE) initiative in Vietnam and Thailand: During recent trips to Hanoi, Vietnam, and Bangkok, Thailand, last month, Assistant Secretary of State for Energy Resources Francis R. Fannon pitched the U.S. Government’s Asia EDGE initiative, stressing that one of the main objectives of his visit was to catalyze U.S. investment in both countries’ energy sectors. Asia EDGE is the energy-focused pillar of the U.S. Government’s Free and Open Indo-Pacific (FOIP) strategy.
Current Advocacy
  • UN Every Woman Every Child (EWEC):  As part of our EWEC commitment, the Council is putting together a website to consolidate and display related projects members are involved with in Southeast Asia. We are collecting submissions from members who would like their work featured. This can include past, present, or future programs related to EWEC. This work will be used to show ASEAN governments the positive impact the American Business Community has on the communities in which we operate. If you are interested in participating, please submit your content to Hai Pham (hpham@usasean.org).
  • New Draft Regulation to Replace GR82 on Electronic Systems & Transaction Operations: As of June 25, the Government of Indonesia is drafting a new regulation (“Draft GR”) that will replace the existing Government Regulation No. 82/2012 (“GR 82”) regarding Electronic Systems and Transaction Operations. The new version has replaced the old categorizations of data into low, high, and strategic electronic data with a simpler public vs. private classification system. This new classification seems to suggest that only companies working directly with public data or at the behest of a public entity will be subject to BSSN Regulations and/or required to localize data in Indonesia.
  • Philippines’ Plans to Expand the Maximum Drug Retail Pricing (MDRP): On June 24 the Council submitted a letter to the Philippines Department of Health (DOH) regarding the government’s intention of broadening price regulation to cover 1,154-2,394 (26-54 percent) out of the 4,473 drug preparations available in the Philippine market in June 2019. The DOH also seeks to amend the Cheaper Medicines Act (CMA) to make price regulation the central tool to lower prices of medicines instead of market competition and dynamics. The letter highlighted the two primary concerns of the MDRP as greater market uncertainty and disincentivizing innovation. 
  • Final Industry Submission for Singapore's Public Consultation on Proposed Data Portability and Data Innovation Provisions: The Council has developed its final draft industry submission for Singapore's Personal Data Protection Commission (PDPC) Public Consultation on Proposed Data Portability and Data Innovation Provisions. The Council will plan to submit our industry submission during the week of July 8, in advance of the July 17 deadline for the public consultation. Contact: Jamie Lim (jlim@usasean.org) or Ella Duangkaew (eduangkaew@usasean.org).
  • Consultation on 2019 TELMIN Plenary Luncheon Concept Note: The Council is drafting a concept note for our plenary luncheon during the 2019 ASEAN Telecommunications and ICT Ministers (TELMIN) Meetings. Following approval of the luncheon from the Lao Ministry of Post and Telecommunications (the host for the 2019 meetings), the Ministry requested a preliminary draft concept note by July 15. The Ministry requested that our concept note focus on “Empowering Workforce Development and Building a Developed Ecosystem”.  Input was collected before July 12.  Contact: Jamie Lim (jlim@usasean.org) or Ella Duangkaew (eduangkaew@usasean.org).
  • Vietnam Cybersecurity Regulations Update: This week, the Ministry of Public Security (MPS) shared the latest draft of the cybersecurity decree with the U.S. Embassy in Hanoi. This draft was submitted to the government in mid-May and has been circulated among members of the cabinet for comments. Some Ministries have completed their review and submitted comments while others have not. At this time, industry can comment on the draft. No official deadline for comments is set, but it is recommended that comments be submitted by early August. Please click here to review translated excerpts from the draft decree. The U.S. Embassy plans to send U.S. Government comments on this draft by the end of July. Members are encouraged to send comments as soon as possible so the Council can coordinate with the U.S. Embassy and align messaging. The Council is also planning to submit a position paper on this draft. The deadline for members to submit comments is August 12. A Call for Input will be sent to members soon regarding this position paper. Contact: Vu Tu Thanh (tvu@usasean.org)
  • US-ABC Prepares Compilation of Member Companies' CSR Activities in Myanmar for Senate Foreign Relations Committee: Due to escalating discussions in the U.S. Congress regarding potential sanctions towards Myanmar, the Council prepared a compilation of members companies' Corporate Social Responsibility activities in the country to share with Senate Foreign Relations Committee staff. The goal was to highlight the growing presence of U.S. businesses in Myanmar and show how they have helped support capacity-building efforts in the country. Contact: Jack Myint (jmyint@usasean.org)
  • US-ABC Drafts AEC White Paper to achieve ASEAN Economic Goals: The AEC White Paper is being developed to help prepare the Council for its participation in this year’s ASEAN Economic Ministers’ Meeting (AEM) and will focus on policy recommendations aimed at accelerating economic integration in ASEAN. During this drafting process, the Council invites member companies to provide industry-specific inputs on achievements, challenges, and recommendations that can help ASEAN achieve the goals laid out in its ASEAN Economic Community (AEC) Blueprint 2025. The Council plans to use the AEC White paper at AEM and other related ASEAN ministerial meetings. Contact: Mario Masaya (mmasaya@usasean.org)
Relationship Building
  • Senate Confirms Two Department of State Positions: Former Airforce General David Stilwell was sworn in as Assistant Secretary of State for the Bureau of East Asian and Pacific Affairs (EAP) on June 20.  He will meet with the Council on July 19 in Bangkok. Assistant Secretary Stilwell is the first confirmed Assistant Secretary from EAP in the Trump Administration. On the same day that the Senate confirmed Assistant Secretary Stillwell, they also confirmed Keith Krach to be Under Secretary of State for Economic Growth, Energy, and the Environment.
  • Nominations of U.S. Ambassadors to Indonesia and Thailand: President Trump has nominated Ambassador Sung Kim to be the next U.S. Ambassador to Indonesia.  Ambassador Kim currently serves as U.S. Ambassador to the Philippines.  President Trump also nominated Hong Kong-based lawyer Michael DeSombre to be the next U.S. Ambassador to Thailand. With the Senate’s consent, we look forward to working with Ambassador Kim and Ambassador DeSombre.
  • Personnel Movement at U.S. Embassies in Singapore, Kuala Lumpur and Jakarta: In the past month, we have welcomed a number of new foreign service officers in Washington D.C. before they depart for their posts in the region, including Rafik Mansour, new Chargé d'affaires at the U.S. Embassy, Singapore; Senior Commercial Officer Chris Quinlivan, U.S. Embassy Singapore; Senior Commercial Officer Dennis Simmons, U.S. Embassy Kuala Lumpur; and Economic Counselor Juha Salin, U.S. Embassy Kuala Lumpur. On July 24, we will also be welcoming the new Senior Commercial Officer heading to the U.S. Embassy Jakarta, Mark Lewis.
  • US-ABC, EU-ABC, and CropLife Asia Hold ASEAN Safe, Nutritious Food PPP Workshop in Vietnam, June 26: The Council, in partnership with CropLife Asia and the EU-ASEAN Business Council (EU-ABC) jointly conducted a workshop in Hanoi last week with national, regional and international food value-chain stakeholders that signaled the second installment of the ASEAN Safe, Nutritious Food PPP Initiative. The three organizations have joined forces to lead a discussion around supporting a safe and nutritious supply of food in the region as well as greater partnership between public and private sectors across the value chain.
  • 2019 Food & Agriculture Industry Mission to Vietnam, June 27-28: The Council’s third Food & Agriculture Industry Mission to Vietnam focused on establishing productive dialogues with key agricultural and Vietnam government officials and introducing them to the ways in Council members can support national goals, especially if constraints on business expansion are addressed. We view the mission as the start of an engagement process and not a one-off event. Contact: Sunita Kapoor (skapoor@usasean.org).
  • US-ASEAN Business Council Hosts OPIC Chief of Staff for Working Lunches in Kuala Lumpur and Singapore, June 20 and 21: The Council's Malaysia and Singapore Country Offices each hosted Eric Jones, Chief of Staff at the Overseas Private Investment Corporation (OPIC), for working lunches with member companies. During the working lunches, Jones gave member company representatives an update on OPIC’s worldwide activities and how the development finance institution fits within the U.S. Government's broader Free and Open Indo-Pacific vision. More information on the Build Act and the new U.S. International Development Finance Corporation can be found here and here, respectively.
Looking Ahead
Upcoming Events: See our full calendar
 
Media Highlights
Cyber attacks are estimated to occur once every 39 seconds. In the face of increasing attacks, building a cyber resilient culture is critical.

Watch our fourth episode of ACE (American Corporate Excellence) to see how the Cisco Networking Academy has been providing IT skills training to educational institutions in Singapore for almost 20 years. This program is part of Cisco’s corporate social responsibility program, and also goes a long way toward ensuring cyber resilience.

The ACE video series showcases American companies that have outstanding corporate social responsibility initiatives; high standards for quality, reliability, and partnership; produce innovative products and services; and employ and train exceptional individuals. ACE is brought to you by U.S. Embassy Singapore and the US-ASEAN Business Council.
Country and Industry Updates
See our most recent Updates and Analysis for more detail:
Brunei
Cambodia
Indonesia
Laos
Malaysia
Myanmar
Philippines
Singapore
Thailand
Vietnam
ASEAN
Customs & Trade Facilitation
Defense & Security
Energy
Financial Services
Food & Agriculture
Health & Life Sciences
Information & Communications Technology
Infrastructure
Manufacturing
Travel & Tourism