President's Newsletter - December 2019

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

Dear Members,

Happy holidays! We kicked off a busy year-end with our Indonesia Business Mission on December 3-5 in Jakarta, followed concurrently by our ASEAN Business Mission on December 6. The following week, I flew to Hanoi to join the Council’s final Board of Directors’ Meeting for 2019. During our visits to Jakarta and Hanoi, we had the honor to meet with President Joko "Jokowi" Widodo and Prime Minister Nguyen Xuan Phuc.

I was proud to lead a delegation of 46 American companies, the largest delegation to Indonesia since the Council was founded in 1984 and tying the record for the largest delegation to any country. In total, the Council secured 22 meetings with the Government of Indonesia, including highly sought-after briefings with the Ministries of Education & Culture; Tourism; Trade; Finance, and finally, with President Jokowi. During the meeting with President Jokowi, we heard firsthand the details of his objectives for his second term focusing on human capital and work force skills development, infrastructure, improving the ease of doing business, streamlining regulations, simplifying the government structure, and cutting barriers to investment. Additionally, President Jokowi shed light on the ‘positive’ investment list and the omnibus law on tax, which will take Indonesia’s corporate tax rate to 20 percent by 2024.

The Council delegation and the Government of Indonesia engaged in candid discussions on improving the business climate to ensure Indonesia’s economic success. During our meetings, I spoke to His Excellency Pramono Anung, the Cabinet Secretary about the U.S. business community’s continuing commitment to Indonesia. To see a video by the President's Office on our visit, please click here. The Council was also hosted at a reception co-hosted by U.S. Ambassador to Indonesia Joseph Donovan and Chargé d’Affaires of the U.S. Mission to ASEAN, Ms. Melissa Brown on December 3.

Directly following the Indonesia Business Mission, our Senior Vice President & Regional Managing Director Amb. Mike Michalak led the 2019 ASEAN Secretariat Mission on December 6. The delegation met with the Secretary-General of ASEAN, H.E. Lim Jock Hoi and Deputy Secretary-General for ASEAN Economic Community, H.E. Aladdin D. Rillo, among other key officials.

This year’s Mission focused on deepening private sector’s relations with ASEAN stakeholders, understanding the current progress and challenges in building the ASEAN Economic Community (AEC), and exploring opportunities for ASEAN’s external economic relations amidst changing geo-political and geo-economic landscape. As Thailand closes its chairmanship year, the delegation discussed the achievements across the three ASEAN Community pillars and the priority deliverables that will be carried over by Vietnam starting January 2020. The delegation affirmed its commitment to support all ASEAN countries in harnessing industry 4.0 potentials and benefiting fully from the AEC, particularly in the areas of human capital, digital economy, innovation, e-Commerce, standards, and energy cooperation.

The following week, I flew to Hanoi to join the Council’s final Board of Director’s Meeting of 2019, alongside our Chairman Keith Williams, retiring President and CEO of UL. Following the business of the meeting, directors engaged in a robust and productive discussion on trends and themes shaping ASEAN, and the Council’s advocacy work in 2020. We discussed ways in which U.S. businesses can contribute to the environment and sustainability, participate in the evolving trade landscape, and broaden infrastructure development throughout ASEAN.

One Council initiative I highlighted during our Board of Director’s Meeting was the U.S.-ASEAN Internship Program, a joint effort by the U.S. Mission to ASEAN in Jakarta and the US-ASEAN Business Council. Born out of the suggestion of His Majesty Sultan Hassanal Bolkiah of Brunei at the 2016 Sunnylands Summit, the U.S.-ASEAN Internship Program provides an opportunity to match U.S. private sector needs to ASEAN students and young professionals seeking internships in the region. Our one-stop platform allows ASEAN university students to view available internships at U.S. companies in Southeast Asia. Overall, ASEAN students contribute over US$2 Billion to the U.S. Economy. I am passionate about programs like these because they are core to developing the people-to-people relationships which have linked the United States and the countries of ASEAN for decades. I encourage all members to participate in this important program. For more information on how to participate, please contact me directly or our Senior Manager for ASEAN, Mario Masaya at mmasaya@usasean.org.

In Hanoi, our Board of Directors also met with Prime Minister Nguyễn Xuân Phúc and offered congratulations on Vietnam’s recent gold medal in men's and women's soccer during the recent SEA games. We also discussed the strong bilateral relationship between the U.S. and Vietnam, as well as priorities for Vietnam’s 2020 Chairmanship of ASEAN. There are many areas where U.S. businesses can support greater economic cooperation with Vietnam, particularly in sectors of high growth such as infrastructure, technology, aviation, and financial services. We also addressed Vietnam's growing trade deficit with the United States and opportunities for further improvement of the business environment, especially in the digital economy, agriculture, and energy sectors. 2019 marked the 25th anniversary of the establishment of economic relations between the U.S. and Vietnam, while 2020 will celebrate the anniversary of official diplomatic relations between the two countries. President Trump invited all 10 ASEAN leaders to a Special Leaders Summit in the United States which will likely take place in March 2020.

The official hand offs for Vietnam’s 2020 ASEAN Chairmanship, and Malaysia’s 2020 APEC Chairmanship took place in November. Next year, we are eager to resume our Co-Chair role of the US-APEC Business Coalition, supporting the goals of priorities of U.S. business in the APEC process. Among other priorities, Malaysia will focus on increasing its presence as a regional tourism hub. On January 14-16, the Council will lead its mission to the 23rd Meeting of ASEAN Tourism Ministers (M-ATM) in Bandar Seri Begawan, Brunei. Early-bird registration for the mission has ended, but you can still register up until the mission takes place. To register, click here.

Overall, 2019 was a defining year for the Council. We celebrated and built upon the relationships rooted in our organization’s 35 year history, achieved important advocacy successes and delivered results for our members, welcomed new staff to our US-ABC family, and continued to increase our membership base which will ultimately strengthen our lineup of programming and engagements next year.

At the Council, we strive to continually improve the services that we provide to you and your company. As a part of this effort, I would appreciate a few moments of your time to let us know how we did over this past year, and how we might better serve your company's interests in the future. If you have not done so already, please consider filling out our 2019 Membership Survey which provides us valuable feedback, helps us understand what we’re doing well, and gives us insight into what we can improve on next year and beyond.

I wish you a joyous holiday season, safe travels, and good health. May 2020 be a wonderful year for you and your company.

Sincerely

Alex

 

December Highlights

The US-ABC delegation comprised of representatives from 46 American companies is pictured with President Joko Widodo in Jakarta, Indonesia on December 5. Companies participating in the delegation included Agoda, AIG, Amazon, Apple, BowerGroupAsia, BP, Chevron, Cisco Systems, Citi, Coca-Cola, ConocoPhillips, Diageo, Disney, Expedia, ExxonMobil, Facebook, FedEx, Freeport-McMoRan, GE, Gilead Science, Google, Harley-Davidson, Herbalife Nutrition, HP Inc., IBM, JUUL Labs, Marriott International, MasterCard, McLarty Associates, Netflix, Oracle, PayPal, Pernod Ricard, Procter & Gamble, Qualcomm, Salesforce, Sampoerna/Philip Morris, Sanofi, SAS, Scowcroft Group, Udemy, UL, United Technologies, Varian Medical Systems, Visa, and VMware

Amb. Michael W. Michalak, Senior Vice President and Regional Managing Director of the US-ASEAN Business Council shakes Prime Minister of Vietnam Nguyễn Xuân Phúc’s hand prior to the delegation’s meeting. The delegation of board directors, led by outgoing US-ABC Chairman Keith Williams and President & CEO Alexander Feldman, discussed the strong bilateral relationship between the U.S. and Vietnam, as well as priorities for Vietnam’s 2020 Chairmanship of ASEAN. 2019 marked the 25th anniversary of the establishment of economic relations between the U.S. and Vietnam, while 2020 will celebrate the anniversary of official diplomatic relations between the two countries. Over the past 25 years, U.S. businesses have brought capital, corporate governance, and training programs to Vietnam.

Chairman of the Council’s Board of Directors, Keith Williams (CEO, UL) gives remarks at the Board of Directors Reception on December 11 in Hanoi, Vietnam. “I am now completing my fourth and final year as Chair of the US-ASEAN Business Council, and I am excited and very honored that Prime Minister Phúc has accepted our invitation to receive the Board of Directors this afternoon.” said Keith Williams, CEO UL. “Vietnam is an important growth market for our business. Our investments here support local manufactured products to meet global standards and requirements for export markets. In addition, our research in safety science goes toward helping safe, secure and sustainable living and working environments in Vietnam.”

A delegation of U.S. companies met with the Secretary-General of ASEAN, H.E. Lim Jock Hoi during the 2019 ASEAN Business Mission. The US-ASEAN Business Council led a delegation with six leading U.S. companies engaging key ASEAN stakeholders to further strengthen the public and private sectors ties across many spectrums of ASEAN cooperation. The Mission was led by Ambassador Michael W. Michalak, Senior Vice President & Regional Managing Director of the US-ASEAN Business Council. The Council’s engagement with the ASEAN Secretariat has been the cornerstone of its expanding participation in various ASEAN Ministerial Meetings.

 

Country, Industry and Advocacy Updates

 

Key Developments

  • United States Imposes Sanctions Against Senior Commanders in the Myanmar Military: On December 10, the U.S. Treasury Department announced sanctions on senior Myanmar Military (Tatmadaw) officials in response to claims of human rights abuses and crimes against humanity perpetrated in Northern Rakhine State. Tatmadaw Commander in Chief Senior General Min Aung Hlaing, his deputy, and two commanders deployed to command Rakhine State operations are now subject to sanctions. The sanctions coincide with the first day of hearings at the International Court of Justice (ICJ) where State Counsellor Daw Aung San Suu Kyi defended the country against claims of genocide. See more.
  • Myanmar Liberalizes Insurance Sector; Challenges Remain: On November 28, Myanmar’s Ministry of Planning and Finance (MoPF) officially allowed five foreign life insurers to operate in the local market as 100 percent wholly owned subsidiaries. In April 2019, these companies were given provisional licenses as “preferred applicants,” and MoPF placed a temporary hold on their commercial operations. Those that have been allowed to operate include the UK’s Prudential, Japan’s Dai-ichi Life, Hong Kong’s AIA, the United States’ Chubb, and Canada’s Manulife, making them the first foreign insurance providers to operate in Myanmar without local joint venture partners. The announcement marks a significant step in the right direction for Myanmar’s financial sector liberalization efforts. It also signals that one of the world’s last untapped insurance markets is now open for business. According to statistics from Myanmar’s State-owned Myanma Insurance (MI), less than 0.1 percent of Myanmar’s approximately 60 million people hold life insurance policies, making Myanmar’s insurance penetration rate lower than any other country in the ASEAN region.
  • Thailand to Launch New 5G Regulations: On December 13, the National Broadcasting and Telecommunications Commission (NBTC) announced that they will launch new regulations regarding 5G technology in March of 2020. An initial 5G regulatory framework is expected in early 2020 before the 5G license auction in February 2020. Key regulations include technical standards, numbering and identification of Internet of Things (IoT) devices, data privacy and security standards, and data interoperability. As a result, Thailand will have to ensure the compatibility between its 5G regulatory framework and other existing Acts. NBTC noted that they would construct privacy and security regulations in line with the Personal Data Protection Act. See more.
  • USDA’s 2020 Agricultural Trade Forecast: According to the 2020 agricultural trade forecast, the US Department of Agriculture predicts a slight increase in US exports to ASEAN from US$13.6 billion to US$13.7 billion in 2020. Forecasted exports to the Philippines have experienced an adjusted decrease of US$100 million to US$3 billion, as a result of increased competition from Argentinian soymeal. Malaysia’s forecast is also down by US$200 million to $1.3 billion, because of lower expected demand for bulk commodities like soybeans. Yet the total export forecast for ASEAN is unchanged, as increased exports to Singapore and Myanmar have offset stated decreases. US Imports from ASEAN are predicted to be down US$100 million to US$13.5 billion from USDA’s August forecast. Nonetheless, US Agri-imports from ASEAN are calculated to increase by US$500 million from US$13 billion. Expectations of Indonesian imports have decreased and as a result, they are down US$100 million to US$3.3 billion. Vietnamese imports are also expected to be down US$100 million to US$2.4 billion. Meanwhile, imports from Malaysia are the same as August predictions at US$1 billion. Thailand, however, is up US$200 million at US$2.8 billion. Overall, the two-way agricultural goods trade between the US and ASEAN is expected to grow as compared to 2019. Despite the global economic slowdown, agricultural trade ties between the US and ASEAN appear to remain stable.
  • Philippine Central Bank launches digital payments platform with national QR code underway: Bangko Sentral ng Pilipinas (BSP) made great strides in its digital transformation program with the announcement of two new digital payment platforms. During the launch of the Government e-Payments (eGov Pay) Facility and the National QR Code Standard (QR Ph) on November 20, BSP Governor Benjamin Diokno said the Philippines will be “cash-lite” by 2023. With one third of all financial transactions being digitally processed, Diokno shared the BSP’s updated target of capturing 30% of total payments electronically in 2020. The EGov Pay facility officially launched in August 2019 following a successful pilot with the Bureau of Internal Revenue and the Department of Trade and Industry. The facility serves as a platform for citizens to complete financial transactions directly with government agencies using a portal operated by the Lank Bank of the Philippines.
  • Singapore signs Fighter Training Detachment Pact with US to establish RSAF fighter training detachment in Guam: On December 6, Singapore Defence Minister Dr Ng Eng Hen and US Secretary of Defense Mark Esper signed the Fighter Training Detachment Pact, to solidify The Republic of Singapore Airforce’s (RSAF) presence on Guam. The agreement will establish a permanent RSAF Fighter Training Detachment in Anderson Airforce Base (AAFB) by 2029. Singapore plans to station a squadron of F-15SG and F-16 fighter aircraft, with supporting assets like the Gulfstream 550 Airborne Early Warning system (G550-AEW) at AAFB. This will be the 4th RSAF detachment on US territory, following detachments in Luke Airforce Base in Arizona, Mountain Home Base in Idaho and another detachment in Marana also in Arizona. The RSAF also has two training detachments in Australia and one in Bordeaux France. See more.
  • Indonesia Considers Allowing Energy Companies to Choose Either Gross Split PSC or Cost Recovery Scheme: The Indonesian Minister of Energy and Mineral Resources, Arifin Tasrif, who was appointed in October, recently announced that the Ministry is considering whether to allow contractors to operate under the gross split production sharing contract (PSC) introduced in 2017 or the prior cost-recovery scheme. Under the gross split scheme, contractors are allowed to retain a larger portion of the oil and gas that they recover in exchange for bearing the exploration and production costs. As the name implies, the cost recovery scheme would see the government reimburse the contractors for these costs. The base share for oil and gas under the gross split scheme is the government’s 52 percent to the contractor’s 48 percent for gas and 57 percent to 43 percent for oil. Under the cost recovery scheme, the percentages were much more heavily weighted toward the Indonesian government – 70 percent and 85 percent for gas and oil, respectively. See more.
  • Airports of Thailand Greenlights Expansion of Suvarnabhumi Airport”: The Board of Directors of Airports of Thailand (AoT) officially greenlit the controversial northern expansion of Suvarnabhumi Airport, which serves Bangkok, on November 20. Initial estimates put the project, which includes building a second terminal near the existing main terminal, at around 42 million THB (US$1.3 million) project. The proposed plan also incorporates the construction of a fourth runway, which would increase the airport’s handling capacity to 150 million passengers per year and 120 flights an hour. The new addition to the airport is expected to take three to four years and enable people to connect from the main terminal to the north expansion.
  • Vietnam Issues National Defense White Paper 2010: On November 25, the Ministry of National Defense of Vietnam released its long-awaited 2019 National Defense White Paper centered on the themes of peace and self-defense. The paper outlines major points in Vietnam’s national defense strategy and outlook, and seeks to increase transparency, understanding and confidence-building between Vietnam and other countries in the international community with hopes of attaching national peace and interests to regional and global peace, security and stability. The White Paper is divided into three parts: strategic context and national defense policy; building the all-people national defense; and the history and development of the Vietnam People’s Army (VPA), and the militia and self-defense force. See more.
  • Vietnam’s National Assembly Approves Revised Labor Code: On November 20, the National Assembly voted to amend the labor code after months of debate on the subject. The new code adds an additional paid holiday either preceding or following Independence Day, and also includes provisions regarding work duration, retirement age and independent unions. Despite calls to reduce work hours, the approved labor code maintains a 48-hour ‘normal’ work week. The code does recommend a 40-hour work week. It also includes a stipulation that overtime work must be agreed upon by workers and implements caps for overtime work. Certain industries such as garment, footwear, electronics and agribusiness have been granted an extension on overtime caps to accommodate seasonal demands. The new labor code also incrementally increases the retirement age from 60 to 62 years for men and 55 to 60 years for women. The new labor code allows laborers to independently set up a labor union or join one of their choosing. Previously, workers were required to join the State-run Vietnam General Confederation of Labour (VGCL). Representative organizations will need to obtain a license in order to be considered legal.

Current Advocacy

  • Indonesia Government Regulation No. 80 of 2019 on Trade Through Electronic Systems: The Government of Indonesia has recently issued a regulation governing electronic-based trading activities (e-commerce) in Indonesia, which came into force on November 25, 2019. The Government Regulation No. 80 of 2019 on Trade Through Electronic Systems (GR 80/2019) was released to provide greater certainty and improve governance in regard to the increasingly fast development of internet and electronic-based trading activities in the country. GR 80/2019 includes provisions regarding:
  1. Different types of e-commerce parties
  2. Requirements for e-commerce business players, including:
    • Securing of business licenses
    • Compliance with general business requirements
    • Assistance with government programs
    • Provision of valid, clear and honest information
  3. Taxation on foreign business players
  4. The obligation to protect consumers
  5. A transitional period
  • USABC Position Paper on Philippines Senate Bill No. 2068 on “Pet Food Additive Information Act”: Members of the USABC Food & Agriculture Committee and representatives from the Council’s Philippines Office attended a public hearing held by Philippine Senate to discuss the Pet Food Additive Information Act (Senate Bill No.2068) and present the Council’s position paper to the Philippine Senate, outlining the Council's stance on the proposed Pet Food Additive Information Act. The Council is scheduling meetings with key Senators and government officials from the Bureau of Animal Industry (BAI) for December 2019, as a direct outcome of the hearing.
  • Recommendations to Vietnam’s Drafting Committee of Decree Providing Guidelines to Implement Animal Husbandry Law
    On November 19 2018, Vietnam's National Assembly passed the Law on Animal Husbandry which will be effective from January 1st 2020. Together with the Ministry of Agriculture & Rural Development (MARD), the Council has co-organized two consultative workshops (in June and October 2019) for the draft Decree providing guidelines to implement this Law focusing on the provisions on management of animal feed. Following the 16 October 2019 workshop on best practices and international regulations on the use of antibiotics in livestock production, the Council has submitted a letter to MARD highlighting concerns around the removal of non-medically important antimicrobials for prevention use by the end of 2025.
  • Energy Roundtable Features Briefing on Japan-U.S. Cooperation on Developing Southeast Asia’s Energy Sector: On December 5, the Energy Committee held its most recent roundtable in its Energy Roundtable Series with Mr. Aaron Ringel, Senior Advisor at the State Department's Bureau of Energy Resources. Mr. Ringel briefed member companies on the role that the Japan-U.S. Strategic Energy Partnership (JUSEP) is playing in energy market and infrastructure development in Southeast Asia. JUSEP has been promoting universal access to affordable and reliable energy in the Indo-Pacific region and sub-Saharan Africa since it was first announced in November 2017. More recently, the partnership has focused on supporting the U.S. Government's (USG) Asia Enhancing Development and Growth Through Energy (EDGE) initiative. It was through JUSEP in 2018 that Japan pledged US$10 billion in public and private finance and capacity building training towards the Asia EDGE initiative. In September 2019 Japan announced that it intends to increase its support by another US$10 billion. Also, in August 2019, the U.S. and Japan announced the Japan-U.S. Mekong Power Partnership (JUMPP), which aims to promote economic growth and enhanced electricity interconnections among the Mekong countries through free, open, stable and rules-based regional electricity markets. As a follow-up to the roundtable, the Energy Committee is asking member companies to send in their preferences for countries the USG should prioritize under Asia EDGE and, if possible, projects that they would like to see prioritized.

Relationship Building

  • 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 Q1 of 2020, 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).
  • 2019 Indonesia Business Mission – On December 3-5, the USABC led a delegation of 46 American companies, the largest delegation to Indonesia since the Council was founded in 1984 and tying the record for the largest delegation to any country, to meet President Joko Widodo and representatives of his new cabinet during the mission. The Council was also invited to a reception at Ambassador Donovan’s residence on December 3. In total, the Council secured 22 meetings, including highly sought after briefings with the Ministries of Education & Culture; Tourism; Trade; Finance, and finally, with President Joko Widodo. During the Mission, the Council engaged in candid discussions on improving the business climate ensuring Indonesia’s economic success and affirmed the U.S. business community’s continued commitment to Indonesia.
  • 2019 ASEAN Secretariat Mission – On December 6, the Council led its annual business mission to the ASEAN Secretariat in Jakarta. The delegation met with the Secretary-General of ASEAN, H.E. Lim Jock Hoi and Deputy Secretary-General for ASEAN Economic Community, H.E. Aladdin D. Rillo. The delegation also had a briefing by the officials from the U.S. Mission to ASEAN and engaged in an open dialogue on Regional Comprehensive Economic Partnership (RCEP) with Dr. Ir. Donna Gultom, Director for ASEAN Negotiations at the Ministry of Trade of Indonesia and Dr. Lili Yan Ing, Senior Economist at Economic Research Institute for East Asia and ASEAN (ERIA). The Mission was preceded by a reception co-hosted by Ms. Melissa Brown, Chargé d’Affaires at the U.S. Mission to ASEAN and the Honorable Joseph R. Donovan Jr., U.S. Ambassador to Indonesia. This year’s ASEAN Mission focused on deepening the private sector’s relations with ASEAN stakeholders, understanding the current progress and challenges in building ASEAN Economic Community, and exploring opportunities for ASEAN’s external economic relations amidst changing geo-political and geo-economic landscape.
  • Engagement with Vietnam’s Prime Minister Nguyen Xuan Phuc Following Board of Directors Meeting: The US-ABC, following its Board of Directors meeting December 12 in Hanoi, met with Prime Minister of Vietnam Nguyễn Xuân Phúc. The delegation of board directors, led by US-ABC Chairman Keith Williams and President & CEO Alexander Feldman, discussed the strong bilateral relationship between the U.S. and Vietnam, as well as priorities for Vietnam’s 2020 Chairmanship of ASEAN. For Vietnam’s ASEAN Chairmanship in 2020, Prime Minister Phúc articulated his vision for a “Cohesive and Responsive ASEAN” with the goal of upholding stability, solidarity, and unity through economic and cultural links. Furthermore, 2020 will mark the halfway point to completing the Master Plan on building the ASEAN Community by 2025, and Vietnam’s chairmanship is an opportunity to boost the community’s development.
 

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.

 

Country and Industry Updates

See our most recent Updates and Analysis for more detail:

 

Questions? Please contact Jack Myint at jmyint@usasean.org

 

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