Presidents Newsletter - November 2019

President's Newsletter

November 2019 
Dear Members,

ASEAN was center stage this month, with the spotlight squarely on Bangkok during November's eventful first weekend. The Council was invited to attend the ASEAN Business and Investment Summit (ABIS) from November 2-3 in Bangkok, helped plan the 2ndIndo-Pacific Business Forum (IPBF) and co-hosted a VIP dinner for U.S. Secretary of Commerce Wilbur Ross as part of the IPBF on November 4.

The November 2-4  35th ASEAN and Related Summits brought ASEAN leaders together in Bangkok. The Chairman’s Statement of the Summit, released upon its conclusion, recognized the need to implement new and sustainable technologies to help ASEAN grow and adapt to Industry 4.0. Notably, the Council received specific mention in reference to our flagship SME Initiative and internship programs. The East Asia Summit (EAS) also took place in Bangkok on November 4. The EAS Chairman’s Statement noted the multiple meetings surrounding energy cooperation and sustainability initiatives throughout the year and the implementation of regional initiatives to tackle environmental concerns.

Contrary to some reports, ASEAN leaders did not boycott the Seventh ASEAN-U.S. Summit. Rather, attendance was dictated by protocol. Seven out of ten ASEAN countries sent their Foreign Ministers, whom they believed held a slightly higher rank than U.S. National Security Advisory Robert O'Brien, sent as President Trump's Special Envoy to the Summit. Thailand, as Chair of ASEAN, Vietnam, as incoming Chair of ASEAN, and Laos, as the U.S. dialogue partner, all sent Prime Ministers to the meeting. President Trump, according to a letter Ambassador O’Brien read at the Summit, invited ASEAN leaders for a “special summit” in the United States. The event, likely set in the first quarter of 2020, would potentially be held at the President’s Mar-a-Largo resort in West Palm Beach, Florida.

American businesses, however, showed up in full force. Nearly 200 business executives from American Fortune 500 firms with over US$ 2.8 trillion collective annual revenue attended the November 4 IPBF in Bangkok. American businesses were also engaged at the ABIS, taking place from November 2-3 in Bangkok. The IPBF, which welcomed more than 1,000 attendees from government and business, was hosted by the U.S. Government, with Secretary Ross serving as the lead government official.  He was joined by the heads of the Export-Important Bank of the United States, the Overseas Private Investment Corporation and the U.S. Trade Development Agency. 

I spoke to CNBC’s Martin Soong about the American business community’s commitment to ASEAN, as demonstrated by the top representation from American companies over the course of high-level, ASEAN-focused events from November 2-4.  The Council’s Senior Vice President and Regional Managing Director Ambassador Michael Michalak spoke to Bloomberg’s Haslinda Amin to answer questions on U.S. Government attendance and movement on the Regional Comprehensive Economic Partnership agreement.

During the IPBF, I moderated a panel on infrastructure development. Discussion focused on meeting the projected US $20 trillion in infrastructure investment the Indo-Pacific region needed through 2030. As the third largest economy in the Indo-Pacific and fifth largest economy in the world, ASEAN is at the heart of the Indo-Pacific region, representing an important wedge of US $2 trillion worth of infrastructure investment opportunities in road, rail, port, airport, power, water and telecommunications infrastructure to maintain economic growth. The IPBF panel I moderated featured perspectives from U.S. Trade and Development Agency’s Acting Director Thomas Hardy, Thailand’s Eastern Economic Corridor Secretary General Dr. Kanit Sangsubhan, Cheniere Energy’s Senior Vice President, Policy, Government and Public Affairs Christopher Smith and General Electric’s Asia Pacific President & CEO Wouter Van Wersch. You can watch a recording of the panel discussion here

The IPBF, bringing business and government leaders together, created opportunities to ink a number of new deals and programs. The U.S. Department of State released a Fact Sheet on November 3 detailing commercial deals, new initiatives and U.S. partner efforts to advance a Free and Open Indo-Pacific at the IPBF. Among those announced was the Blue Dot Network concept, a U.S. partnership starting with Australia and Japan. The goal of the Blue Dot Network is to create a “globally recognized seal of approval” for high-quality infrastructure projects. Other deals announced include several new commitments aimed at bringing more private-sector funding into infrastructure and development projects in the region, as well as capacity building, market development and strengthening of financing architecture.

ASEAN is also at the heart of the Regional Comprehensive Economic Partnership (RCEP) agreement, which India officially backed out of on November 4 in Bangkok.  On the same day, ASEAN issued a joint leaders' statement on RCEP on behalf of heads of state and government of ASEAN, Australia, China, Japan, Korea and New Zealand. India's ultimate move to pull out of RCEP, citing domestic economic concerns, came as a surprise to observers, with many of the countries participating in negotiations reportedly hoping that the ASEAN Summit would be an opportunity to finalize the agreement. In the wake of India’s withdrawal, all 16 members of RCEP adopted the “ASEAN-X” principle and agreed to move forward. The joint statement notes that that the remaining 15 members of RCEP have concluded “text based” negotiations on 20 chapters of the agreement and plan to sign the deal in 2020 in Vietnam.

Another test to global multilateral cooperation came with the cancellation of the APEC 2019 Summit due to a wave of protests in Chile, deemed the largest social unrest seen in a generation. As Malaysia will be APEC Chair next year, I was planning to attend the scheduled Summit in Chile with Ambassador Michalak. The Council will be a Co-chair of the U.S. Business Coalition for APEC during the 2020 Malaysia Chair Year.  Prime Minister Tun Dr. Mahathir Mohamad will be the first head of government to host APEC twice. In the lead up to 2020, Malaysia continues to emphasize its priorities on inclusive growth in its APEC theme development. The Council will continue to monitor APEC events and keep members updated.

2020 will also see Vietnam assume the ASEAN Chairmanship from Thailand. The official hand-off ceremony took place on November 4 at the conclusion of the 35th ASEAN Summit in Bangkok. Thai Prime Minister Prayut Chan-o-cha handed the official Chairmanship hammer to Vietnam Prime Minister Nguyen Xuan Phuc. Prime Minister Phuc was also quoted saying that “Cohesive and Responsive” would be the 2020 ASEAN theme.

The Council will soon engage the new Indonesian Government during the December 3- 5 Indonesia Business Mission.  The deadline for registering for the Indonesia Business Mission is Tuesday, November 19.  The Indonesia Business Mission will be followed by our seventh consecutive Mission to the ASEAN Secretariat on December 6.

- Alex
November Highlights
U.S. Trade and Development Agency Director (Acting) Thomas R. Hardy and USABC President & CEO Alexander Feldman speak during a panel moderated by Feldman on Infrastructure Development at the Indo-Pacific Business Forum on November 4 in Bangkok. GE ASEAN President & CEO Wouter Van Wersch, Senior Vice President, Policy, Government and Public Affairs of Cheniere Christopher Smith and Secretary General of the Eastern Economic Corridor Office of Thailand were also participants on this panel. Through 2030, there is estimated to be well over $20t in infrastructure investment needed to meet growing needs of countries in the Indo-Pacific. 
From left to right: USABC President & CEO Alexander Feldman, Ambassador of Thailand to the United States Thani Thongphakdi and Principal Deputy Assistant Secretary of State at the Bureau of East Asian and Pacific Affairs Atul Keshap at the USABC welcome luncheon for Ambassador Thani.  Ambassador Thani has already enjoyed a distinguished diplomatic career, most recently serving as Deputy Permanent Secretary for the Ministry of Foreign Affairs of Thailand (2017-2019).   Ambassador Thani's full biography can be found here.
From October 23-25, the USABC led a delegation of top U.S. companies on its Business Mission to the 19th ASEAN TELMIN, including Amazon Web Services, Cisco, Facebook, Google, Qualcomm, Salesforce, and SAP. In addition to conducting bilateral meetings with ASEAN Ministers and participating in a consultation between the ASEAN Telecommunications and IT Senior Officials and the U.S. Government, the USABC also hosted a plenary luncheon with the ASEAN TELMIN on October 25. 
Country, Industry and Advocacy Updates

Key Developments

  • United States Open to Negotiations with Thailand on GSP Cuts: Following last month’s announcement that the United States Government (USG) would revoke approximately one-third of Thailand’s trade privileges under the Generalized System of Preferences, the Thai Government announced that the USG was willing to enter into negotiations over the cuts. During a speech on the United States’ commitment to Asia at the Indo-Pacific Business Forum in Bangkok on November 4, U.S. Secretary of Commerce Wilbur Ross said, “there’s still time to renegotiate the underlying issue of workers’ rights” before the suspension takes effect in April 25, 2020. Thai Prime Minister Prayut Chan-o-cha said that he hoped the United States would reconsider the suspension. During a dialogue with Secretary Ross at the November 4 forum, he sought to assure the Commerce Secretary that the Thai government is ready to cooperate in suppressing human trafficking while supporting U.S. firms in Thailand. See more.
  • Ban of Glyphosate, Paraquat, and Chlorpyrifos Takes Effect December 1, Despite U.S. Government Objections: A ban on the use of the herbicides paraquat and glyphosate and the pesticide chlorpyrifos will come into effect on December 1. The implementation of the ban comes after the National Hazardous Substances Committee reclassified the chemicals as Type 4 toxic substances, the highest designation under Thailand’s Hazardous Substance Act (HSA). According to the HSA, it is illegal to import, export, transfer, or possess chemicals classified as Type 4 substances. The efforts to reclassify the chemicals have drawn official protests from the U.S. Government. In a letter to Thailand Prime Minister Prayut Chan-ocha, Undersecretary Ted McKinney at the U.S. Department of Agriculture asked Thailand to “postpone action on glyphosate,” warning that it could adversely affect Thailand’s ability to import certain agricultural commodities, including soybeans and wheat. The Thai Government has thus far rejected the U.S. Government’s concerns, and Prime Minister Prayut has said that he would send officials to the U.S. Embassy in Bangkok to explain the reasoning behind the ban.
  • e-Conomy Southeast Asia Report Highlights Digital Financial Services: This month, Google, Temasek, and Bain & Company released the e-Conomy SEA 2019 report, which focused mainly on the digital economy and e-commerce in the six largest ASEAN markets (Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam). The e-Conomy report notes payments, remittances, lending, investment, and insurance are major areas ripe for transformation in digital fintech. Digital payments themselves are expected to cross US$1 trillion in Southeast Asia by 2025. See the report here.
  • Malaysia’s 2020 Budget Includes Focus on Rural Infrastructure Development: On October 11, the Malaysian Minister of Finance Lim Guan Eng presented the full-year 2020 budget, which unlike previous budgets emphasizes boosting infrastructure investment in the historically overlooked provinces of Sarawak and Sabah. The types of projects highlighted in the budget include infrastructure for water projects and flood mitigation, several large transportation-related projects, and continued implementation of the National Fiberisation & Connectivity Plan (NFCP) 2019-2023. Minister of Finance Lim Guan Eng noted that the Government will attempt to prioritize public-private partnerships when undertaking these projects, with the Government providing support for the construction of primary infrastructure and the private sector investing in critical business assets.
  • Prime Minister Mahathir Announces New Measures to Boost the Digital Economy: On October 16, Malaysian Prime Minister Dr. Mahathir announced new initiatives to boost the digital economy during the 30th Multimedia Super Corridor (MSC) Implementation Council Meeting. These new initiatives are intended to keep Malaysia on the cutting edge of new technology and utilize technology for the government’s vision of shared prosperity. The implementation of these project will be overseen by the Malaysia Digital Economy Corporation (MDEC). Additionally, the government has proposed the formation of the National Digital Inclusion Council to assist in creating digital economy income opportunities. See more.
  • Electricity Generating Authority of Thailand to Discuss Power Trading Agreements with Cambodia, Myanmar: To further Thailand’s goal to be an energy trading hub for Mainland Southeast Asia, the country’s Energy Minister Sontirat Sontijirawong has asked the Electricity Generating Authority of Thailand (EGAT) to discuss potential future power trading arrangements with energy authorities in Cambodia and Myanmar. Electricity trading to both countries could begin in 2023 after energy officials in Cambodia and Myanmar complete assessments of the needed power capacity, transmission lines, power tariffs, and how long the trading agreements will last. See more.
  • Indonesia Enacts New Provisions to Enhance the National Film Industry: The Ministry of Education and Culture recently issued regulations aimed at growing and protecting the domestic film industry in Indonesia. Among these regulations, Regulation 34/2019, the Distribution, Screening, Export and Import of Films addresses the requirement and procedures surrounding film distributors, screening businesses, and imports. The new regulations require film distributors and film screening businesses to increase cooperation through the drafting of cooperation agreements that must be submitted to the Film Development Center. See more.
  • Indonesia to Meet Social Media Firms as Government Eyes ‘Negative Content’ Fines: On November 5, Director of Information Applications for the Ministry of Communication and Information, Semuel Abrijani Pangerapan, stated that the Ministry is looking to issue new regulations regarding content regulation on digital platforms. The new regulations are aimed at removing “negative content” such as pornography, violence, and radicalism from digital platforms, specifically social media. Companies potentially face fines of up to US$36,000 for noncompliance. Director General Pangerapan noted that the fines could go into effect in 2021.
  • TELMIN Ministers Approve Approach for ASEAN Cross Border Data Flows Mechanism: During the 19th ASEAN Telecommunications and Information Technology Ministers’ Meeting (TELMIN), the Ministers approved the next steps in the development of the ASEAN Cross Border Data Flows Mechanism (CBDF). The CBDF will have a dual-track approach, including an ASEAN Certification and ASEAN Model Contractual Clauses. The goal is to align the ASEAN Cross Border Data Flows Mechanism with international standards such as the APEC Cross Border Privacy Rules (CBPR) and OECD standards, and to have the ASEAN CBDF be interoperable with other international data protection principles.
Current Advocacy
  • Unofficial English Translation Available for New Government Regulation 71/2019 on Data Localization (Replacement of GR 82/2012):  On October 4, the revision to GR 82/2012 was signed. The new regulation, GR 71/2019 on Electronic System and Transaction Operations, replaces GR 82/2012 and came into force on October 10.  Key highlights include changes in categories for data storage, public Electronic System Operators (article 20), Private Electronic System Operators (article 21), Strategic Data (Public Electronic System Operators). There have also been key updates regarding breaches and the right to be forgotten.
  • Halal Law Takes Effect in Indonesia as of October 17: On October 15, 2019, the Ministry of Religious Affairs Regulation on the Implementation of Halal Product Assurance was signed just two days before the law came into effect on October 17, 2019. The long-awaited law covers a wide range of fields including halal application procedures, examination agency registration, labeling, administrative sanctions, renewal mechanisms, and international cooperation. The law stipulates all applications for halal certification will be overseen by the halal agency, BPJPH. Some remain concerned about the readiness of the BPJPH to lead the certification process, since the responsibility has historically fallen to the top Muslim clerical agency, MUI. There is also concern over public awareness of the grace period for implementation, as well as fear of potential false charges.  Our members are also concerned about the requirement to use a non-halal logo or label affixed to the packaging, which will distinguish non-halal from halal-certified products.
  • USABC Director Riley Smith Publishes Essay in National Bureau of Asian Research (NBR) on Developing ASEAN’s Liquefied Natural Gas (LNG) Markets: ASEAN's energy demand is set to quadruple by 2030, but obstacles to developing the region’s LNG markets risk hindering its ability to meet this rising demand. Smith’s essay, "Advancing Gas Market Reforms in the Indo-Pacific: Key Issues for Southeast Asia," examines three factors crucial to the development of LNG markets in Southeast Asia and proposes recommendations to overcome challenges to this development. See the essay in The National Bureau of Asian Research’s Special Report no. 81 here.
Relationship Building
  • 2019 Mission to ASEAN Telecommunications and IT Ministers Meeting (TELMIN): Empowering a skilled digital workforce, increasing regional connectivity, and understanding the impact of technology on jobs and productivity were central themes for this year’s meetings between the USABC delegation and the ASEAN Telecommunications and IT Ministers. The meetings took place in Vientiane, Laos from October 23-25 and included bilateral and plenary engagements. The mission reinforced USABC’s ongoing efforts to promote data governance conducive to growth and innovation in ASEAN. In August, USABC’s ICT Committee released a white paper, “Digital Data Governance in ASEAN: Key Elements for a Data-Driven Economy” (accessible here). This publication provides U.S. industry recommendations on digital data governance frameworks, in complement to the ASEAN Framework on Digital Data Governance.
  • TELMIN-AEM roadshow (name change to AEM-ADGMIN) – The USABC has moved dates for the inaugural AEM-TELMIN Digital Economy Roadshow to the United States to early February, which will also be now called the AEM-ADGMIN, short for the ASEAN Digital Ministers Meeting (ADGMIN), to signal a renewed commitment to accelerate the development digital technologies and digital transformation. The roadshow will visit one city on the West Coast, one city in the middle of the country, and Washington, DC. Contact: Riley Smith (rsmith@usasean.org) or Mario Masaya (mmasaya@usasean.org).
  • ASEAN Women’s Council in Washington, DC recipe book: The book contains recipes from the 10 countries of ASEAN. There are 30 recipes in total, including Singaporean Chicken Curry Puff, Malaysian Nasi Lemak, Thai Tom Yum Goong, Halo-Halo from the Philippines, and many others. The book – A Taste of ASEAN Cuisine, will be launched on November 22, retailing at $20, and all profits will go towards Doctors Without Borders, an NGO providing medical care in conflict zones and countries affected by endemic diseases. If you are interested in purchasing this cookbook and supporting its cause, please click here and fill out an order form. For any queries regarding ordering, please contact Hui Xin at (202) 257-2807 or via email at huixin@gmail.com.
Looking Ahead
Upcoming Events See our full calendar
 
Media Highlights
Nov.03 -- Michael Michalak, senior vice president and regional managing director at the U.S.-Asean Business Council, discusses the absence of the U.S. at the Asean summit, the moving ahead of the RCEP deal, what it means for the U.S. relations with Asean, the U.S.-China trade deal. He speak on “Bloomberg Daybreak: Asia” from the sidelines of the Bloomberg Asean Summit in Bangkok.
Membership Update
Please join us in welcoming our new Membership and Development Director, Bernie Baskin!
We are pleased to welcome new members to the Council:  The Scowcroft Group, Pernod-Ricard and The Scoular Company all at the Corporate level. The Council now has 73 Corporate members and 89 Chairman’s Council members.
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