January 2019

Alexander C. Feldman
Alexander C. Feldman
President & CEO
US-ASEAN Business Council

Dear Members,

I hope you enjoyed your holidays with family and friends and that your 2019 is off to a strong start.  As many of you may know, 2019 is a special year for the Council as we celebrate our 35th anniversary.

To help map your year, the first version of ASEAN’s 2019 calendar under Thailand’s Chairmanship is available and can be accessed here.  You may note that according to this calendar, as of December 28, the first ASEAN Summit will take place on June 20-23, later than first summits held in previous years.  This later date accommodates Thailand’s planned general elections on March 24 as well as the formal Coronation of King Rama X from May 4-6.  On January 23, Thailand’s Election Commission announced the election date will be on March 24, in response to a royal decree issued by His Majesty King Maha Vajiralongkorn and signed by Prime Minister Prayut Chan-o-cha.

In February, U.S. President Trump will travel to the region for a second nuclear summit with North Korean Leader Kim Jong Un.  Currently, Hanoi is being considered as a venue for the talks, but Danang, the site of the 2017 APEC meetings, and Ho Chi Minh City are also being discussed.

In ASEAN, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) officially took effect in Vietnam on January 14.  The CPTPP is expected to bring major benefits to Vietnam’s economy, as well as considerable changes for both its domestic market and legal framework.  Improved access to markets with lower tariffs, as well as countries with which Vietnam does not have a Free Trade Agreement (namely Canada, Mexico and Peru) stand to boost Vietnam’s exports and global competitiveness in attracting foreign direct investment.

As our first event of the year, the Council led a mission to the 22nd Meeting of the ASEAN Tourism Ministers (M-ATM) in Ha Long, Vietnam January 16-17.  This is our second mission to the M-ATM, following our highly successful inaugural mission last year, and focused on networking with high level tourism officials, national tourism organizations, and other key stakeholders about budgets and priorities for the year.

Our next opportunity to engage in the region is January 29-30, when the Council will hold our annual Brunei Business Mission.  This mission closely follows a recent Cabinet reshuffle and is an opportunity to meet newly appointed officials.  The mission’s themes support the Brunei Government’s diversification efforts, while recognizing the continued significance of the oil and gas sector. 

The Council would like to offer its gratitude and well wishes to Indonesian Ambassador Budi Bowoleksono as he returns to Indonesia after four years of service in Washington.  Ambassador Bowoleksono, known to us as “Ambassador Sonny,” has been a true friend to the Council and has achieved tremendous progress throughout his career in promoting trade and investment relations between our two countries.  We would also like to take this opportunity to welcome former BKPM Chairman Mahendra Siregar back to Washington, D.C., as the incoming top diplomat from Indonesia to the United States. Ambassador-designate Siregar previously worked in the Indonesian Embassy in Washington and is a long time friend of the Council.  

Finally, as we welcome the advent of the Year of the Pig in early February, we wish our members and friends throughout the region a happy and prosperous Lunar New Year and Tet. 

Highlights

Looking Ahead

  • Brunei Business Mission, January 29-30: This timely mission is especially valuable in light of Brunei’s cabinet reshuffle, allowing members to directly engage new cabinet ministers. Confirmed meetings include those with the Minister of Foreign Affairs II, Minister of Energy, Manpower and Industry, Officials from the Manpower Authority of Brunei Darussalam, CEO of the Brunei Economic Development Board, Deputy Minister of Education, Minister of Transportation and Info-communications, Minister of Finance and Economy II, Minister at Prime Minister’s Office and Chairman of Brunei Economic Development Board, Chargé d’affaires Scott Woodward and the U.S. Embassy Team. The Brunei government is eager to meet the U.S. private sector to discuss economic opportunities and is looking forward to a productive engagement early in 2019.
  • Farewell Luncheon in Honor of H.E. Budi Bowoleksono, Indonesia Ambassador to the U.S, February 12: Ambassador Bowoleksono is leaving his post as Indonesia's Ambassador to the United States, a position he has held since 2014.  Over the past four years, Ambassador Bowoleksono and the Indonesian Embassy have shown tremendous energy and commitment to improving U.S.-Indonesia bilateral relations.  The Council considers Ambassador Bowoleksono a dear friend and a strong supporter who has extended his time and effort to opening new doors to trade and investment in Indonesia.  We have greatly enjoyed working with Ambassador Bowoleksono, one of the most seasoned Indonesian diplomats to have served in Washington, D.C.  We hope you will join us in honoring the Ambassador and wishing him the best of luck in his future endeavors as he returns to Indonesia.  To register, please contact Artha Sirait at asirait@usasean.org or click here.

Advocacy

  • The Council is coordinating with the American Council of Life Insurers, the Indonesian Life Insurance Association and joint chambers (including British Chambers of Commerce, American Chambers of Commerce, European Chambers of Commerce and Indonesia Canada Chambers of Commerce) on a recent reinterpretation of Indonesia’s technical tax rules.  The reinterpretation has led to several companies facing a challenge from the Tax office that claims payments are not deductible for corporate income tax.  Industry estimates an impact of IDR40 trillion (approximately US$2.8 billion) of back-tax charges in 2016 and 2017, with payments affecting around 18 life insurance companies. Thirteen life insurance companies will fall below the mandatory risk-based capital levels, triggering Financial Authority Body (OJK) supervision and requiring them to file Financial Recovery Plans under POJK 71/POJK05/2016.  As such, the proposed amendment to PMK No. 81/2009 Article 14 needs to be aligned with applicable insurance regulations and practices.  This issue has been discussed with the Director General for Tax, and OJK, and a follow up meeting has been requested.  The Council and our partners will also meet with the Fiscal Policy Agency on January 24.
  • The Council continued its advocacy efforts with the Government of Indonesia regarding their GR-82 regulation.  On December 20, the Council organized a business roundtable discussion in Jakarta to update members on key provisions in the revised draft of the regulation.  During the meeting it was confirmed that the definition of “strategic” data was approved by the President, data classified as “high” will be determined by sectors and approved by KOMINFO, financial sector data will fall under the authority of Bank Indonesia and the financial regulator OJK, and registration will be mandatory for electronic system and transaction operation businesses doing online transactions involving the storing or processing personal data.  The revised draft also contained several of the Council’s recommendations, including that electronic system operators would have the opportunity to defend themselves in court.
  • As part of the Council’s 2019 Food & Agriculture Committee work plan, several advocacy efforts involving agricultural import policies and regulations will be pursued.  The Council will engage the Government of Thailand regarding a new import regulation governing distillers’ dried grains with solubles (DDGS) which went into effect on January 1.  We will also continue our efforts to work with the Governments of Vietnam and Indonesia to find alternative approaches to legitimate agricultural public policy challenges, including their new import regulations which would respectively prohibit and restrict imports of U.S. wheat export shipments.

Intelligence

  • On January 23, Thailand’s Election Commission (EC) announced March 24 as the general election date in response to a royal decree issued by His Majesty King Maha Vajiralongkorn and signed by Prime Minister Prayut Chan-o-cha.  The EC was required to set an election within five days of the royal decree, which was published in the Royal Gazette.  According to Deputy Prime Minister Wissanu Krea-ngam, the March 24 date will allow political parties enough time for election campaigning.  EC Chairman Ithiporn Boonprakong stated that candidates are scheduled to register from February 4-8 and their names will be revealed to the public on February 15.
  • Recently, I shared my insights on how American businesses are responding and adapting to the ongoing U.S.-China trade war and how, amidst these trade tensions, ASEAN is playing an increasingly critical role in supporting regional supply chains.  ASEANFocus is a bimonthly periodical published by the ASEAN Studies Centre at ISEAS-Yusof Ishak Institute.  The January 2019 edition, which also includes an editorial on ASEAN priorities under Thailand’s chairmanship and the “State of Southeast Asia: 2019” survey report, can be accessed here.

Promotion

Report on How Industry 4.0 Is Transforming ASEAN’s Energy Sector: The Council, in conjunction with the ASEAN Centre for Energy, is soliciting sponsorship for a publication that will examine how Industry 4.0 is transforming ASEAN's energy sector.  The changes brought about by the innovative technologies and processes that characterize Industry 4.0 will affect multiple sectors.  In the energy sector, Industry 4.0 is most readily seen in the trend of digitalization and the implications this trend has for improving energy efficiency and the operations of energy assets, as well as the application of big data and analytics to provide deeper insight into patterns and trends.  The main goal is for the report to highlight best practices and recommendations of our members companies that have had to adapt to digitalization in the energy sector.  The sponsorship deadline is February 15.  For more information on the report and sponsorship opportunities, please contact Riley Smith at rsmith@usasean.org

Regional Highlights

APEC

Looking Ahead

Debriefing for First Senior Officials Meeting (SOM-1) of APEC: On February 23-March 8, the first Senior Officials Meeting (SOM-1) of APEC will be held in Santiago, Chile.  Following SOM-1, the U.S. APEC Business Coalition will organize a debriefing with U.S. Government officials and interested stakeholders on the outcomes of the meetings.  If you have any questions, please contact Hai Pham at hpham@usasean.org

View the Council's latest APEC updates

ASEAN

Major Developments

On January 15, the Government of Thailand released an updated notional calendar of events for Thailand’s 2019 ASEAN chairmanship year (available here).  Please note that the notional calendar does not yet include all ministerial meetings taking place over the year.  It is, however, useful for an impression of what the official schedule for the year will look like.

Advocacy

The Council has completed the 2019 Work Plan for its SME Program (available here).  The Work Plan focuses on improving SME digital and regional competitiveness and focuses on four initiatives:

  • In-country Training and Workshops
  • The ASEAN SME Academy
  • SME Advocacy Dialogue
  • SME Newsletter

A report of the Council's 2018 SME activities is available here.  Please contact Mario Masaya at mmasaya@usasean.org or Vinsensius Kangen at vkangen@usasean.org if you have any questions about the SME Program or are interested in sponsorship.

View the Council's latest ASEAN updates

CPTPP

Major Developments

On January 14, Vietnam became the seventh nation to bring into force the Comprehensive and Progressive Trans Pacific Partnership (CPTPP) free trade agreement.  The CPTPP will provide exporters in Vietnam with new preferential access to markets in Canada and Mexico.  The Government of Vietnam will also be required, over various periods of time, to implement domestic economic policy reforms in a wide range of areas including labor, environment and ICT. 

Advocacy

During the Council’s upcoming Brunei Business Mission, the Council will advocate that Government of Brunei successfully complete its domestic CPTPP ratification process.

View the Council's latest CPTPP updates

Industry Highlights

Customs

Major Developments

ASEAN governments are stepping up the fight against illicit trade and counterfeit goods amidst the rising incidence of cases in several countries.  With increasingly complex global supply chains, illicit and counterfeit goods across a wide range of industries continue to evade authorities, posing health, financial, social and other risks to legitimate businesses and populations.  In Malaysia, Minister of Finance Lim Guan Eng announced plans to install RM700 million (approximately US$170 million) worth of new entry point scanning equipment by the end of 2019.  The Philippines’ Bureau of Customs will install new high-tech non-intrusive scanners by the end of 2019.  National customs authorities are also stepping up bilateral cooperation, with the Philippines and Indonesia, and Vietnam and Cambodia announcing new partnerships in recent months against illicit trade, complementing existing bilateral and ASEAN-level regional initiatives and mechanisms.

Advocacy

The Council, with support from UPS, has launched an online resource “ASEAN Customs Made Easy for Online Shoppers.”  Aimed at assisting online buyers and sellers navigate the rules of cross-border trade, the website contains information such as potential landed costs, information needed by customs authorities for clearance, prohibited items and individual ASEAN country import guides.  Individual ASEAN customs administrations were also involved in verifying the content.  Please support us by sharing the resource with your networks and send any feedback to Lucius Lee at llee@usasean.org.

Looking Ahead

Workshop on Tackling Illicit Trade & Counterfeit Goods in ASEAN, February 25: The Council, in partnership with the ASEAN Customs Enforcement and Compliance Working Group (CECWG), is organizing a full-day workshop February 25 in Brunei.  The workshop is an opportunity for members to work with ASEAN customs officials and highlight recent case studies of illicit trade and counterfeit goods in ASEAN, discuss how to promote best practices in supply chain security, enforce intellectual property rights and brand protection, and describe ways for the private and public sector to share actionable intelligence to tackle these challenges.  The CECWG is a group comprising customs enforcement and compliance policymakers from the 10 ASEAN countries, and its goals include enforcing customs laws and customs-related legislation, establishing risk management frameworks, promoting voluntary compliance, and working with businesses to protect the international supply chain and manage risk, among others.  Please contact Lucius Lee at llee@usasean.org for sponsorship, speaking and participation opportunities.

View the Council's latest Customs updates

Defense & Security

Major Developments

The Philippines Government is currently considering a review of its decades-old mutual defense treaty with the United States, with the objective of whether to “maintain it, strengthen it, or scrap it.”  On December 20, Philippines Defense Secretary Delfin Lorenzana said the government is studying ways for the Philippines to negotiate a better deal under the treaty.  The United States and the Philippines have long been strategic allies bound by a mutual defense pact and engage in regular war games, both bilaterally and multilaterally, that involve joint exercises and Humanitarian and Disaster Relief preparedness trainings.  Under the existing treaty, Manila and Washington are bound to aid each other in the event of an attack.  However, the treaty's role beyond the Philippines’ metropolis, particularly in disputed territories of the South China Sea, remains unclear.  The Philippines currently occupies nine areas in the South China Sea, and the largest, Pag-asa Island, serves as the seat of government of Kalayaan town in Palawan.  

View the Council's latest Defense & Security updates

Energy

Major Developments

The Sarawak Government intends to impose a 5 percent sales tax on all petroleum and petroleum products for the export market, despite concerns from the Malaysian National Government and international oil companies that the tax could discourage investment in the state’s oil and gas industry.  According to Chief Minister of Sarawak Datuk Patinggi Abang Johari Tun Openg, the tax will cover crude oil, natural gas, liquefied natural gas, chemical-based fertilizers and gas-to-liquid products, with the revenue expected to help develop Sarawak’s coastal areas.  The imposition of the sales tax is the latest salvo in an ongoing political tussle between Sarawak, the new National Government following general elections last May, and Petronas, Malaysia’s national oil company.  More information on Sarawak’s 5 percent sales tax on exported petroleum and petroleum products can be found here.

Advocacy

  • The Council's Energy Committee notified member companies that the Philippines House of Representatives' Committee on Energy had requested stakeholder feedback on the Draft Substitute Bill on Developing a Downstream Natural Gas Industry in the Philippines.  The draft bill can be found here.  The draft bill aims to:
    • Promote the role of natural gas as an indispensable contributor to grid security that is cost-effective and economically efficient
    • Highlight natural gas as an energy fuel with the potential to satisfy increasing local and Asia-Pacific regional demand through the development of infrastructure to make the Philippines an LNG trading and transshipment hub
    • Provide a conducive environment through the issuance of policies, plans and programs intended to promote the development of the Philippine Downstream Natural Gas Industry.
  • The Council, along with the ASEAN Centre for Energy, is seeking sponsorship for a publication that will examine how Industry 4.0 is transforming ASEAN's energy sector via the trend of digitalization.  This trend has major implications for improving energy efficiency and energy asset operations.  The main goal of the report is to highlight best practices and recommendations of our members companies that have had to adapt to digitalization in the energy sector.  For more information on the report and sponsorship opportunities, please contact Riley Smith at rsmith@usasean.org.

View the Council's latest Energy updates

Financial Services

Major Developments

  • Indonesia issued Ministry of Finance Regulation No. 210/PMK.010/2018 on the tax treatment of commercial transactions by means of electronic systems (e-commerce tax), which will come into effect on April 1.  The Finance Ministry Spokesperson stated that Indonesia now requires e-commerce marketplaces to notify authorities of individual vendors’ income.  Sellers with revenue of at least IDR4.8 billion (approximately US$337,600) are required to charge value-added tax to buyers.  Meanwhile, small to medium-sized businesses are required to pay 0.5 percent of revenue as income tax, while larger companies are required to pay the corporate tax rate of 25 percent on profits.  Indonesia’s e-commerce market itself is predicted to rise from US$8 billion in 2018 to as much as US$65 billion by 2022.  Local e-commerce associations have voiced concern, stating that the new requirement would drive e-commerce sellers to utilize other avenues, such as social media platforms to avoid taxes.
  • On January 1, new regulations on insurance sales came into effect in Thailand.  These regulations, issued by the Office of Insurance Commission (OIC), establish recognition and requirements, for the first time, for telesales, sales via electronic platforms and sales made outside of the insurance broker’s head office, including remote sales.  These regulations reflect OIC’s efforts to align with growing digitization and expansion of business methods in the insurance sector, which reflect similar changes occurring across all sectors in Thailand.  Please contact Ella Duangkaew at eduangkaew@usasean.org with any questions.
  • On January 2, the Myanmar Ministry of Planning and Finance announced that it would allow up to three foreign life insurance companies to operate wholly owned local subsidiaries, while other foreign companies providing life and non-life insurance would have to form joint ventures with local partners to operate in the country.  Specific application details and criteria are expected to be announced as early as the beginning of February.  The penetration rate of auto insurance in Myanmar, which is considered an indicator of achieving emerging market status, is only around 10 percent.  Foreign insurers were allowed to operate in Myanmar starting only in 2013.  Prior to that, government-owned insurers dominated the market, which contributed to a drainage of industry know-how from the market.  The Government’s decision to allow foreign companies to operate insurance businesses in Myanmar is an attempt to tap these companies’ expertise and increase overall insurance penetration.

Advocacy

The Council is coordinating with the American Council of Life Insurers, the Indonesian Life Insurance Association and joint chambers (including British Chambers of Commerce, American Chambers of Commerce, European Chambers of Commerce and Indonesia Canada Chambers of Commerce) on a recent reinterpretation of Indonesia’s technical tax rules.  The reinterpretation has led to several companies facing a challenge from the Tax office that claims payments are not deductible for corporate income tax.  Industry estimates an impact of IDR40 trillion (US$2.7 billion) of back-tax charges in 2016 and 2017, with payments affecting around 18 life insurance companies. Thirteen life insurance companies will fall below the mandatory risk-based capital levels, triggering Financial Authority Body (OJK) supervision and requiring them to file Financial Recovery Plans under POJK 71/POJK05/2016.  The proposed amendment to PMK No. 81/2009 Article 14 needs to be aligned with applicable insurance regulations and practices.  As such, this issue has been discussed with the Director General for Tax, and OJK, and a follow up meeting has been requested.  The Council and our partners will also meet with the Fiscal Policy Agency on January 24.

Looking Ahead

  • Invest Myanmar Summit, January 28-29: Invest Myanmar Summit 2019 is a collaboration between the Union Government of Myanmar, the Region States of Myanmar and the business community to create a platform for businesses to meet.  The two-day event is designed to provide international and local investors the opportunity to discover the investment potential of Myanmar.  It is a platform where Regional Government officials will also showcase business potential in their own states.  Speakers include State Counsellor Daw Aung San Suu Kyi, Union Minister for Investment and Foreign Economic Relations U Thaung Tun, Deputy Minister of Planning and Finance U Set Aung, among many others.  To register, please click here.
  • Mission to the 2019 ASEAN Finance Ministers’ and Central Bank Governors’ Meeting, April 1-4: The Council will lead a mission to Chiang Rai, Thailand, where the ASEAN Finance Ministers’ and Central Bank Governors’ Meeting will be held.  For more information, please contact Michaela Wong at mwong@usasean.org.

View the Council's latest Financial Services updates

Food & Agriculture

Major Developments

On December 24, 2018, the Government of Thailand issued a notice that all U.S. exports of distillers’ dried grains with solubles (DDGS) to Thailand would be subject to methyl bromide fumigation.  The notice was issued after beetles were found in two shipments of DDGS in August and November of last year.  This new regulation went into effect shortly after January 1 giving very little time for the industry to consult with the Thai Ministry of Agriculture and Cooperatives to come up with a solution.  Consequently, U.S. DDGS exports have been temporarily suspended.  Reuters reports that the U.S. Department of Agriculture will discuss the issue with the government of Thailand this month.  This DDGS import regulation is reminiscent of a similar 2016 case in Vietnam, in which the Plant Protection Department of the Ministry of Agriculture and Rural Development placed a ban on DDGS imports after shipments were found to contain beetles.  After a period of discussions with industry, the Government of Vietnam agreed to resume DDGS imports in 2017, providing shipments follow new fumigation guidelines.

Advocacy

In late 2018, the Ministry of Health and Health Promotion Board of Singapore released a public consultation on possible measures to reduce sugar intake from pre-packaged sugar-sweetened beverages (SSBs).  This consultation paper seeks views on four proposed non-exclusionary measures: (i) mandatory front-of-pack nutritional label; (ii) stricter advertising regulations; (iii) excise duty on manufacturers and importers; and/or (iv) nation-wide ban on sale of higher-sugar SSBs.  Following its release, the Council collected comments from members and is currently organizing a consolidated draft to circulate to members for review before final submission to relevant agencies.  For more information, please contact Sunita Kapoor at skapoor@usasean.org.

View the Council's latest Food & Agriculture updates

Health & Life Sciences

Major Developments

The United Nations Secretary-General’s Office has approved the Council’s commitment to the UN’s Every Woman Every Child (EWEC) movement.  The Council is committed to working together with ASEAN governments, the U.S. private sector and civil society to promote child, adolescent and maternal health.  We look forward to working with members over the coming years to showcase our commitment to the EWEC movement and advancing the EWEC global strategy.

Looking Ahead

Please save the date for the Council’s Health & Life Sciences Industry Mission to Vietnam from March 14-15, following the Council's annual Vietnam Business Mission from March 12-14. This mission will focus on continuing our strong engagement with the Ministry of Health (MOH), including our regular Joint Working Group Meeting as part of the Council's MOU with MOH.  For questions or to express interest, please contact Lucius Lee at llee@usasean.org or Hai Pham at hpham@usasean.org.

View the Council's latest Health & Life Sciences updates

ICT

Major Developments

  • As of January 15, the ASEAN Framework on Digital Data Governance has been made public (see the full Framework here).  The Framework sets out strategic priorities, principles and initiatives to guide ASEAN countries in policy approaches towards digital data governance, including four strategic priorities: data life cycle and ecosystem, cross border data flows, digitalization and emerging technologies, and legal, regulatory and policy; and four initiatives to support the four priorities:  an ASEAN Data Classification Framework, ASEAN Cross Border Data Flows Mechanism, ASEAN Digital Innovation Forum, and ASEAN Data Protection and Privacy Forum.  For more information, see our recent ICT Update here.
  • On January 1, new regulations on insurance sales came into effect in Thailand.  These regulations, issued by the Office of Insurance Commission (OIC), establish recognition and requirements, for the first time, for telesales, sales via electronic platforms, and sales made outside of the insurance broker’s head office, including remote sales.  These regulations reflect OIC’s efforts to align with growing digitization and expansion of business methods in the insurance sector, which reflect similar changes occurring across all sectors in Thailand.  Please contact Ella Duangkaew at eduangkaew@usasean.org with any questions.
  • On December 11, Vietnam’s Ministry of Information and Communications (MIC) convened a conference to discuss the development of a code of conduct to regulate the behavior of users on social media platforms.  The code of conduct will revolve around four principles: respect, responsibility, effectiveness and safety.  Despite MIC generally being more progressive and business-friendly than its more conservative counterparts like the Ministry of Public Security (MPS, which leads development of the Law on Cybersecurity), the code of conduct reflects some concerning alignment between MIC and MPS in tightly controlling social media activities and use of user data.  For more information, see our recent ICT Update here.

Advocacy

  • As of January 1, the Vietnam Law on Cybersecurity draft implementation decree has not yet been finalized or signed by the Prime Minister, despite reports that the decree would come into effect on January 1.  No further action is required at this point, but the Council plans to closely engage with the Ministry of Public Security as it drafts circulars to guide specific provisions of the draft implementation decree.  Please contact Vu Tu Thanh at tvu@usasean.org or Ella Duangkaew at eduangkaew@usasean.org with any questions.
  • On December 21, the Council submitted comments on Malaysia’s draft National Fiberisation and Connectivity Plan.  For any questions or a copy of the submission, please contact Ella Duangkaew at eduangkaew@usasean.org or Kim Yaeger at kyaeger@usasean.org.
  • On December 21, the Council submitted comments on the latest draft of Thailand’s Cybersecurity Bill.  For any questions or a copy of the submission, please contact Ella Duangkaew at eduangkaew@usasean.org or Praab Pianskool at praab@usasean.org.

Looking Ahead

  • In-Person Committee Meeting, February 15: The Council’s ICT Committee Chair, Cisco, will host an in-person ICT Committee Meeting February 15 in Singapore.  The meeting will build upon what was discussed in the Q1 Committee Call on January 23, and discuss strategy and next steps for the Committee’s 2019 plans and priorities.  Click here to register for the meeting, and please contact Ella Duangkaew at eduangkaew@usasean.org with any questions.

View the Council's latest ICT updates

Infrastructure

Major Developments

  • On December 14, Thai Prime Minister Prayut Chan-o-cha and his Lao PDR counterpart, Thongloun Sisoulith, attended the third Thailand-Lao PDR Joint Cabinet Retreat in Vientiane, Laos.  During the meeting, the Heads of State signed several MOUs advancing bilateral ties and cooperation in transportation and other sectors.  A planned high-speed train linking these two countries is expected to facilitate cross-border land transportation and promote the joint development of Southern Laos and Thailand’s Northeast region (Isan).  Given Laos’ limited resources and high public debt, the government may need to decide whether it will prioritize Chinese infrastructure development at the expense of deepening ties with its ASEAN neighbors.  For more information, see our recent Laos Update here.
  • Singapore launched a new government agency “Infrastructure Asia” to spur investments and support regional infrastructure projects.  A second initiative – Singapore Infrastructure Dispute-Management Protocol – was also introduced to help parties manage disputes and minimize the risk of time and costs overruns.  As a regional financial hub, Singapore hopes to play the role of a neutral and reliable facilitator between private investors and ASEAN states.  Other regional infrastructure development bodies based in Singapore include the Infrastructure Financing Center of Excellence and the Asia Infrastructure Center of Excellence which is the “sister entity” to the ASEAN Infrastructure Fund headquartered in Malaysia.  The Asian Development Bank estimates that developing economies in Asia will need to invest about US$26 trillion in infrastructure projects until 2030.  Singapore aims to “increase [the] bankability” of projects and cooperate more closely with various stakeholders by leveraging its comparative advantages of a robust ecosystem between project structuring and development, and financial and legal advisory.  In 2016 and 2017, Singapore was the largest overseas investment destination for China along the Belt and Road, capturing 22.3 percent of total investment outflow from China to Belt and Road countries.  With this initiative, Singapore may come to be an effective counterweight amid rising regional concerns of over-dependence on China and global protectionist trends.

View the Council's latest Infrastructure updates

Travel & Tourism

Advocacy

  • On January 15–17, the Council held its second engagement with the 22nd Meeting of ASEAN Tourism Ministers (M-ATM) in Ha Long Bay, Vietnam.  The Council’s delegates to the ministerial comprise of senior executives from leading companies across the travel and tourism value chain. During the consultation session with the ASEAN National Tourism Organizations, the Council explored opportunities to strengthen collaboration through multiple platforms, such as organizing a panel on the role of the digital economy in travel and tourism and business mission road shows to ASEAN countries, among others.  The presentation was well received by the Member States and some of the Ministries invited the Council to present a proposal for collaboration during the upcoming ASEAN Tourism Competitiveness Committee Meeting.

View the Council's Travel & Tourism page for coming updates

Country Highlights

Brunei

Major Developments

  • Brunei and China upgraded their relationship from a Strategic Cooperative Relationship to a Strategic Cooperative Partnership during President Xi Jinping’s visit to Brunei late last year.  The elevated relationship also establishes a joint committee that allows for regular ministerial dialogue.  China considers Brunei an important part of the Belt and Road Initiative (BRI) and has poured roughly US$4.1 billion in foreign investment in the country.  Brunei views China’s BRI as an opportunity to achieve its goal of a sustainable, diverse economy under Vision 2035.  During his visit, President Xi reiterated China’s continued support of Brunei’s economic development by signing a new MoU on BRI cooperation.  While no new projects were announced, China has agreed to continue cooperation with Brunei on ongoing ventures, including the Hengyi refinery on Pulau Muara Besar, the Brunei-Guangxi Economic Corridor and the PBS-COSL Oilfield Service Company, which has begun building six oil platforms.

Looking Ahead

Brunei Business Mission, January 29-30:  The annual Brunei Business Mission will take place January 29-30 in Bandar Seri Begawan.  Registration for the mission has closed.  Please contact Artha Sirait at asirait@usasean.org with any questions.

View the Council's latest Brunei updates

Cambodia

Major Developments

On January 15, Prime Minister Hun Sen unveiled a new campaign to boost economic independence and reduce the reliance on preferential trade statuses from Western countries by providing better trade facilitation and eliminating unnecessary procedures.  The campaign will put into place a series of trade facilitations and relieve Camcontrol, the Ministry of Commerce’s Cambodia Import-Export Inspection and Fraud Repression Directorate-General, from its inspection duties at border checkpoints.  This change is expected to reduce customs clearance procedures and lower the fees for container good inspections.  It is currently unclear when the change will take effect.  If properly enforced, this is a step in the right direction for the Cambodian government to incentivize more investments and boost business competitiveness in the country.  

View the Council's latest Cambodia updates

Indonesia

Major Developments

  • Presidential candidates Joko Widodo and Prabowo Subianto have each released their platforms gearing up for the general election which will take place this April.  The Jokowi-Ma’ruf ticket entitled their platform “Indonesia Moving Forward;” it aims to create a developed Indonesia that is sovereign, independent and cohesive, a theme which helped Jokowi win the 2014 election.  Jokowi’s platform contains nine missions, an echo and continuation of his ongoing Nawa Cita development program, which include sectors of human capital development, economic competitiveness, arts and culture, rule of law, defense and security, maritime security and rural development.  Meanwhile, the Prabowo-Sandi ticket’s “Victorious Indonesia” aims for Indonesia to achieve self-sufficiency in food, energy and water, and to develop stronger government institutions.  Prabowo’s sectors of concern are largely rooted in social welfare, ensuring justice, promoting quality democracy, providing better healthcare, creating jobs and boosting industrialization.  The first of five presidential debates took place on January 17 and focused on law, human rights, terrorism and corruption.  The next debate will be on February 17 and will focus on energy, food, natural resources, environment and infrastructure.
  • Indonesia issued Ministry of Finance Regulation No. 210/PMK.010/2018 on the tax treatment of commercial transactions by means of electronic systems (e-commerce tax), which will come into effect on April 1.  The Finance Ministry Spokesperson stated that Indonesia now requires e-commerce marketplaces to notify authorities of individual vendors’ income.  Sellers with revenue of at least IDR4.8 billion (approximately US$337,600) are required to charge value-added tax to buyers.  Meanwhile, small to medium-sized businesses are required to pay 0.5 percent of revenue as income tax, while larger companies are required to pay the corporate tax rate of 25 percent on profits.  Indonesia’s e-commerce market itself is predicted to rise from US$8 billion in 2018 to as much as US$65 billion by 2022.  Local e-commerce associations have voiced their concerns, stating that the new requirement would drive e-commerce sellers to utilize other avenues, such as social media platforms to avoid taxes.

Advocacy

  • The Council is coordinating with the American Council of Life Insurers, the Indonesian Life Insurance Association and joint chambers (including British Chambers of Commerce, American Chambers of Commerce, European Chambers of Commerce and Indonesia Canada Chambers of Commerce) on a recent reinterpretation of Indonesia’s technical tax rules.  The reinterpretation has led to several companies facing a challenge from the Tax office that claims payments are not deductible for corporate income tax.  Industry estimates an impact of IDR40 trillion (US$2.7 billion) of back-tax charges in 2016 and 2017, with payments affecting around 18 life insurance companies. Thirteen life insurance companies will fall below the mandatory risk-based capital levels, triggering Financial Authority Body (OJK) supervision and requiring them to file Financial Recovery Plans under POJK 71/POJK05/2016.  As such, the proposed amendment to PMK No. 81/2009 Article 14 needs to be aligned with applicable insurance regulations and practices.  This issue has been discussed with the Director General for Tax, and OJK, and a follow up meeting has been requested.  The Council and our partners will also meet with the Fiscal Policy Agency on January 24.
  • On January 17, the Council, in partnership with EuroCham and AmCham Indonesia, submitted and presented our joint advocacy input on the Ministry of Religious Affairs draft regulation on Halal certification. Please contact Artha Sirait at asirait@usasean.org or Angga Antagia at aantagia@usasean.org for a readout of the meeting or with any questions.

View the Council's latest Indonesia updates

Laos

Major Developments

On December 14, Thai Prime Minister Prayut Chan-o-cha and his Lao PDR counterpart, Thongloun Sisoulith, attended the third Thailand-Lao PDR Joint Cabinet Retreat (JCR) in Vientiane, Laos.  During the meeting, the Heads of State signed several MOUs advancing bilateral ties and cooperation in transportation and other sectors.  A planned high-speed train linking these two countries is expected to facilitate cross-border land transportation and promote the joint development of Southern Laos and Thailand’s Northeast region (Isan).  Given Laos’ limited resources and high public debt, the government may need to decide whether it will prioritize Chinese infrastructure development at the expense of deepening ties with its ASEAN neighbors.  For more information, see our recent Laos Update here.

Looking Ahead

Laos Business Mission, March 7-8: Please save the date for the Council's 2019 Laos Business Mission, tentatively scheduled from March 7-8.  Please contact Ella Duangkaew at edaungkaew@usasean.org with any questions.

View the Council's latest Laos updates

Malaysia

Major Developments

Dato’ Azmil Mohd Zabidi has been named Ambassador-Designate of Malaysia to the United States.  Dato’ Azmil previously served as Assistant Secretary (Economy) and Principal Assistant Secretary (Regional Cooperation, Social and Cultural) at the Ministry of Foreign Affairs.  Dato’ Azmil has also served as Director General at the Southeast Asia Regional Centre for Counter Terrorism and held various assignments at the Malaysian embassies in China, Vietnam, Belgium and New Zealand.

Advocacy

Bank Negara has issued its final outsourcing guidelines, effective January 1.  The guidelines appear to have resolved the largest issue from previous drafts, which the Council commented on during the call-for-input period.  Under the final guidelines, financial institutions are now able to outsource IT services, granted that appropriate controls and safeguards are in place to address risks and Bank Negara is still able to exercise its regulatory supervisory powers.  Further, outsourcing arrangements involving cloud service providers are permitted and third-party certification and reporting can now be used for auditing.

View the Council's latest Malaysia updates

Myanmar

Major Developments

  • On January 2, the Myanmar Ministry of Planning and Finance announced that it would allow up to three foreign life insurance companies to operate wholly owned local subsidiaries, while other foreign companies providing life and non-life insurance would have to form joint ventures with local partners to operate in the country.  Specific application details and criteria are expected to be announced as early as the beginning of February.  The penetration rate of auto insurance in Myanmar, which is considered an indicator of achieving emerging market status, is only around 10 percent.  Foreign insurers were allowed to operate in Myanmar starting only in 2013.  Prior to that, government-owned insurers dominated the market, which contributed to a drainage of industry know-how from the market.  The Government’s decision to allow foreign companies to operate insurance businesses in Myanmar is an attempt to tap these companies’ expertise and increase overall insurance penetration.
  • On December 27, the Myanmar Government announced the transfer of the General Administration Department (GAD) from the Ministry of Home Affairs (MOHA), one of the three key ministries run by Myanmar’s military, to the newly-created and civilian-run Ministry of the Office of the Union Government (MOOUG).  For more than three decades, the GAD has been one of the most powerful institutions in Myanmar as it has direct governing authority over the day-to-day operations of all district, township, ward and village administrations.  Per the 2008 Constitution, it serves as the primary link between the Union Government and the State and Region Governments, provides administrative and coordination functions for all government offices and the Parliament office, manages fiscal planning and financial management of the State and Region Governments, and is tasked with supporting government security efforts – which includes, but is not limited to, reporting on basic demographic data, population movements, security incidents, and enforcing civil laws and settling local disputes.  The decision to move GAD to MOOUG from MOHA has met with substantial resistance from the military and the opposition Union Solidarity and Development Party.  Regardless, increasing the Government’s oversight capabilities over the majority of Myanmar’s bureaucracy is a positive change and one of the most significant reforms undertaken by the current Government.

Looking Ahead

Invest Myanmar Summit, January 28-29: Invest Myanmar Summit 2019 is a collaboration between the Union Government of Myanmar, the Region States of Myanmar and the business community to create a platform for businesses to meet.  The two-day event is designed to provide international and local investors the opportunity to discover the investment potential of Myanmar.  It is a platform where Regional Government officials will also showcase business potential in their own states.  Speakers include State Counsellor Daw Aung San Suu Kyi, Union Minister for Investment and Foreign Economic Relations U Thaung Tun, Deputy Minister of Planning and Finance U Set Aung, among many others.  To register, please click here.

View the Council's latest Myanmar updates

Philippines

Major Developments

  • The Philippines Government has seen a gradual rise in the fiscal debt ceiling in the last year which is expected to continue to rise to accommodate infrastructure improvement projects and social services.  The current predicted deficit is two percent of the national GDP (US$371.7 billion).  The proposed budget for 2019 has increased by 13 percent of the 2018 budget, rising from Ph3.326 trillion (approximately US$63.4 billion) to Ph3.757 trillion (approximately US$71.6 billion).  Fitch has given the Philippines a credit rating of “BBB,” which is one rating above the minimum investment grade and is considered stable.  The outlook for growth is favorable if the Philippines can move forward with proposed infrastructure projects and domestic demand increases. 
  • On December 20, 2018, President Duterte signed the Telecommuting Act into law.  The law allows for an alternative work arrangement for private sector employees on a “voluntary basis.”  Combined with the Department of Information and Communications Technology’s efforts to ensure that teleworkers have reliable internet connections, the law aims to ease traffic congestion in metropolitan areas.

View the Council's latest Philippines updates

Singapore

Major Developments

  • Integrated Health Information Systems, a subsidiary of Singapore’s Ministry of Health Holdings (MOH), has found itself on the receiving end of a hefty fine of S$750,000 (approximately US$553,000) for negligence in securing patient data that resulted in Singapore’s worst data breach.  The breach of SingHealth, another subsidiary of MOH, last June resulted in 1.5 million patients’ personal information being compromised.  SingHealth received the second largest fine of S$250,000 (approximately US$184,500) for its negligence that led to the cyber-attack.  Steps such as upgrading threat protection technology and use of database activity monitoring tools have been put in place to mitigate vulnerability.
  • The Government Technology Agency of Singapore and Cyber Security Agency of Singapore are partnering with local and overseas ethical hackers, also known as “white hats,” from December 2018 to January 2019 to search for vulnerabilities in five highly used government systems.  This is Singapore’s second government bug bounty program after the Ministry of Defense ran a similar program in early 2018.  Key findings are expected to be shared in March.

Advocacy

  • The Council is drafting comments on Singapore’s possible measures for pre-packaged sugar-sweetened beverages (SSBs).  On December 4, 2018, Singapore’s Ministry of Health and the Health Promotion Board opened public consultation on four possible measures, including mandatory front-of-pack nutrition labels, advertising regulations, excise duty on manufacturers and importers of pre-packaged SSBs, and a nationwide ban on the sale of higher sugar pre-packaged drinks. Comments must be submitted by the January 25 deadline.  Please contact Sunita Kapoor at skapoor@usasean.org with any questions.

View the Council's latest Singapore updates

Thailand

Major Developments

  • On January 23, Thailand’s Election Commission (EC) announced that the general election will be held on March 24 in response to a royal decree issued by His Majesty King Maha Vajiralongkorn and signed by Prime Minister Prayut Chan-o-cha.  The EC was required to set an election within five days of the royal decree, which was published in the Royal Gazette.  According to Deputy Prime Minister Wissanu Krea-ngam, the March 24 date will allow political parties enough time for election campaigning.  EC Chairman Ithiporn Boonprakong stated that candidates are scheduled to register from February 4-8 and their names will be revealed to the public on February 15.  Please contact Ella Duangkaew at eduangkaew@usasean.org with any questions.
  • On December 14, Thai Prime Minister Prayut Chan-o-cha and his Lao PDR counterpart, Thongloun Sisoulith, attended the third Thailand-Lao PDR Joint Cabinet Retreat (JCR) in Vientiane, Laos.  During the meeting, several MOUs were signed, including plans for a highspeed rail linking southern Laos and northern Thailand.  For more information, see our update here.
  • As of January 1, new regulations on the sale of life and non-life insurance products came into effect in Thailand.  Issued by Thailand’s Office of Insurance Commission (OIC), the update will replace OIC’s 2008 notifications on the sale of insurance.  Please contact Ella Duangkaew at eduangkaew@usasean.org with any questions.

Advocacy

On December 21, the Council submitted comments on the latest draft of Thailand's Cybersecurity Bill.  The Bill was revised following a public hearing period that ended in October (the Council submitted comments for this public hearing on October 12), and the latest draft was shared on December 14.  According to the Bangkok Post, the bill was set to be tabled for Cabinet approval the week of December 24, though no further information on the bill's status has been released since then.  Please contact Ella Duangkaew at eduangkaew@usasean.org or Praab Pianskool at praab@usasean.org with any questions or for a copy of the submission.

View the Council's latest Thailand updates

Vietnam

Major Developments

On January 14, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) came into effect in Vietnam.  It is expected to bring major benefits for the country’s economy, as well as considerable changes for both its domestic market and legal framework.  According to the country’s Ministry of Planning and Investment, the CPTPP will boost Vietnam’s GDP by 1.3-2 percent, exports by 4 percent and imports by 3.8 percent by 2035.  This growth would be largely due to Vietnam’s improved access, under the CPTPP, to markets with lower tariffs, as well as countries with which Vietnam does not have an FTA, namely Canada, Mexico and Peru.  In 2019, the CPTPP will be an important driving force to accelerate the process of economic restructuring in Vietnam, helping to push the business and investment environment of the country to become more open and transparent.  As the country works to realize its commitments under the agreement, the Vietnamese Government will have to adjust and amend many laws, decrees and other legal documents to bring the country’s legal framework closer to international standards.

Advocacy

As of January 1, the Vietnam Law on Cybersecurity draft implementation decree has not yet been finalized or signed by the Prime Minister, despite reports that the decree would come into effect on January 1.  No further action is required at this point, but the Council plans to closely engage with the Ministry of Public Security as it drafts circulars to guide specific provisions of the draft implementation decree.  Please contact Vu Tu Thanh at tvu@usasean.org or Ella Duangkaew at eduangkaew@usasean.org with any questions.

Looking Ahead

Vietnam Business Mission, March 12-14: Please save the date for the 2019 Vietnam Business Mission March 12-14 in Hanoi.  More details including registration information will be sent to members soon.  In addition, the Council’s Health & Life Sciences Industry Mission to Vietnam will immediately follow the general mission, on March 15. For questions or to express interest, please contact Hai Pham at hpham@usasean.org.

View the Council's latest Vietnam updates