President's Newsletter - July 2020

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

July 2020

  1. Dear Members,

    I hope you and your families are well and safe. It has been another busy month for the Council, as we keep close track of and explore ways to adapt to the new political and economic realities across ASEAN.

    U.S. Secretary of State Michael Pompeo announced on July 13 the official alignment of the U.S. position in the South China Sea with the 2016 ruling of the international arbitral tribunal in The Hague, which rejected the PRC’s maritime claims as having no basis in international law. To access the full statement, please click here. Prior to this statement, the United States has never taken an official position on which country does or does not have rightful ownership of these territories. The July 13 statement made a significant clarification of prior U.S. positions but is not a major departure from past policies on the South China Sea. Serendipitously, a few hours after Secretary Pompeo’s announcement was made, the Council hosted a virtual briefing with Deputy Assistant Secretary of Defense for South and Southeast Asia Reed Werner.

    We continue to closely monitor the U.S.-China relationship, including today’s announcement that the State Department has forced the closure of the PRC’s Consulate in Houston, TX. This comes on top of various U.S. sanctions and other actions in response to Hong Kong’s National Security Law and the plight of the Uighurs in Xinjiang. While ultimately no one will win when the world’s two largest economies fight. In the short-term, these events have accelerated trends that have been in motion for decades – namely the diversification of investment and supply chains to Southeast Asia. Vietnam is the clear early winner by one measure – trade between Vietnam and the United States - which grew significantly in the first quarter of 2020. Overall American imports from ASEAN grew 12 percent in the first quarter of 2020 compared to the same quarter in 2019. Vietnam along with Indonesia and Thailand have established cabinet-level task forces to attract new investment in manufacturing supply chains specifically from China. These task forces, along with actions by other ASEAN governments including the Government of the Philippines, are establishing new incentives including significant tax reductions and holidays as part of the push to compete for FDI.

    The 36th ASEAN Leaders Summit convened by teleconference on June 26 and was headed by 2020 ASEAN Chair Vietnam Prime Minister Nguyen Xuan Phuc and virtually attended by leaders of all ten member states. A number of local and foreign dignitaries also attended in person, highlighting the country’s success in responding to the COVID-19 pandemic. The session acknowledged the ramifications brought on by the global pandemic, specifically the human cost, and the alarming rise of socio-economic disparities in the region. Prime Minister Phuc reaffirmed ASEAN’s shared commitment to develop and implement targeted policies through a comprehensive post-pandemic regional recovery plan that would support each nation’s recovery in a post-pandemic world with new normal – in this, the inevitable role of the private sector was recognized. The leaders also discussed the importance of ensuring strong supply chain connectivity and facilitating the exchange of information on best practices, and they highlighted the region’s adoption of a multi-sectoral/multi-stakeholder outlook to meet each nation’s public health challenges head-on. The 36th ASEAN Summit resulted in the adoption of the ASEAN Leaders’ Vision Statement on a Cohesive and Responsive ASEAN: Rising Above Challenges and Sustaining Growth. To access the full statement, please click here. The vision statement touches on deliverables that can be enacted in a cohesive ASEAN which is united, peaceful, integrated and resilient, and also apply to a responsive ASEAN which is a vibrant community in a transforming and uncertain world. To achieve the latter, noting current circumstances, the leaders instructed the ASEAN Coordinating Council (ACC) to come up with a comprehensive recovery regional framework which will be tabled at the ASEAN Summit in November. The Council will look to convene platforms for members to contribute to this process by engaging stakeholders such as the ACC.

    In Singapore, the People’s Action Party (PAP), Singapore’s governing party since the country’s independence in 1965, maintained its supermajority after the General Elections on July 10. The PAP captured 61 percent of the votes, translating to 83 out of 93 seats in Parliament. However, the party’s vote-share went down from 70 percent in the 2015 election despite rolling out four stimulus packages and acting swiftly to address the COVID-19 pandemic. The Workers’ Party (WP) won 10 seats in Parliament and WP leader Pritam Singh will be officially recognized as leader of the opposition and given staff and resources. This marks a small but significant shift in Singapore’s stable, predictable and carefully managed democracy. The reduced PAP vote-share and slim winning margin of Deputy Prime Minister Heng Swee Keat, the expected successor of Prime Minister Lee Hsien Loong, in the East Coast GRC appear to signal an unexpected setback for the PAP. While Singapore voters continued to be concerned with basic issues such as the cost of living, property prices and the management of the Central Provident Fund, a forced savings retirement scheme, younger voters were more concerned about racial inequalities, political rights and a more effective mechanism for checks and balances. Prime Minister Lee Hsien Loong spoke at a news conference after the election conveying that the results showed “a clear desire for a diversity of voices – Singaporeans want the PAP to form the government but they, and especially the younger voters, also want to see more opposition presence in parliament.” During the campaign, Prime Minister Lee Hsien Loong told voters that now is not the time to undermine a system that has worked well. However, WP’s call for inclusion and diversity and its newly elected Sengkang MP Jamus Lim’s call to deny the PAP a blank check resonated with some voters.

    On July 13, Malaysian Prime Minister Muhyiddin and his Perikatan Nasional (PN) government proposed the motion for Tan Sri Mohamad Ariff Md Yusof to vacate the post of the Dewan Rakyat Speaker. Despite the opposition, this motion passed with a slim margin of two votes with 111 MPs approving and 109 MPs rejecting the motion. This vote on the motion implies that PM Muhyiddin and his PN government retain a slim majority in the Dewan Rakyat. Former Election Commission Chairman Datuk Azhar Azizan Harun (better known as Art Harun) was then appointed as the new Dewan Rakyat Speaker without a vote from the MPs. His appointment without a voting session sparked contestation from the Opposition MPs. Datuk Seri Azalina Othman was also named Dewan Rakyat’s first female Deputy Speaker.

    In Indonesia, President Joko “Jokowi” Widodo officially dissolved the COVID-19 Task Force led by Doni Monardo, Head of the National Board of Disaster Management, on July 20. The Task Force was formed under Presidential Decree No. 7 of 2020 issued in April. In replacement, President Jokowi ratified the new Presidential Regulation No. 82 of 2020 on the formation of a COVID-19 Handling and National Economic Recovery Committee led by the Coordinating Minister of Economic Affairs, Airlangga Hartarto, who oversees the national economic recovery efforts in parallel with COVID-19 pandemic mitigation. Under the committee, the President appointed State-owned Enterprises (SOEs) Deputy Minister Budi Gunawan Sadikin to lead the National Economic Recovery Task Force (NERTC), while the coordination between the National COVID-19 Task Force and NERTC is led by SOEs Minister Erick Thohir. Following this new formation, President Jokowi dissolved 18 agencies, including the Committee for the Acceleration and Expansion of Economic Development, Steering Committee for e-Commerce Road Map, Task Force for the Acceleration of Business Conduct, National Team for Multilateral Trade Negotiations, Financial Sector Policy Committee, National Coordination Agency for Agricultural, Fisheries and Forestry Counseling, Coordinating Team to Improve the Flow of Exported and Imported Goods, National Team on Exports and Investment Increase, and National Committee for the Preparation of ASEAN Economic Community Implementation, to name a few.

    In Myanmar, the Union Election Commission (UEC), announced earlier this month that the country will be moving forward with holding its third general election on November 8, 2020. Myanmar’s President U Win Myint and State Counsellor Daw Aung San Suu Kyi of the ruling National League for Democracy (NLD) party have both announced that they will be contesting in the general election for their old seats in the Lower House of Parliament (Pyithu Hluttaw). According to the UEC, 97 political parties have already registered, with 79 of them contesting for seats nationwide and the rest to focus on individual states and regions. The November polls are expected to test State Counsellor Daw Aung San Suu Kyi's ability to lead the NLD to a convincing victory despite criticism of her government's lackluster economic performance and handling of the humanitarian crisis in Northern Rakhine State. While the ruling party has had its challenges over the past five years, it is indisputable that Daw Aung San Suu Kyi continues to retain significant popularity across the country and that is expected to give the NLD an advantage in the polls come November. Chances of a landslide NLD victory, however, seems unlikely at this time. The Union Solidarity Development Party (USDP), the current opposition party made up of former Tatmadaw (Myanmar military) leaders, is set to challenge the NLD in almost every parliamentary seat across the country. Also among the forefront of the electoral stage this year is the People’s Pioneer Party (PPP) composed of around a thousand members and led by Dr. Thet Thet Khine, a former legislator for the NLD; she has said that the PPP would adopt the framework of achieving and protecting the welfare of the Myanmar people, improving the economy and shifting focus away from reliance on a single leader. In addition, former Speaker of the Lower House of Parliament Thura U Shwe Mann has also founded the Union Betterment Party, which is running on a platform of improving the economy and promoting ethnic inclusivity. Ethnic parties will also be running alongside the more well-known groups, aiming to bring voices of the minority to the forefront of Myanmar politics, and are expected to gain a significant number of seats in the state and regional legislatures.

    COUNCIL EVENTS

    On July 15, the Council and EY co-hosted a thought-provoking panel discussion on foreign direct investment in ASEAN. We were pleased to welcome our members SC Johnson (Gregory Walters, Global Government Relations), and UPS (Penelope Naas, VP and Managing Director for International Public Affairs) to discuss this important topic alongside EY partners and Amb. Ha Kim Ngoc, Ambassador of the Socialist Republic of Vietnam to the United States. Insights and observations on the supportive measures introduced included ASEAN’s growth outlook, ASEAN’s path to economic recovery through regional integration and cooperation, impact and opportunities of potential fiscal spending priorities, incentive trends for private sector investments, and the role of ASEAN in global supply chains and distribution channels. We look forward to continuing to partner with EY on future events focused on ASEAN.

    On July 10, the Council conducted its second Small and Medium Enterprises (SMEs) Webinar event in response to the COVID-19 pandemic, as part of its ASEAN SME Capacity Building Program in 2020. The webinar, entitled “Enhancing Digital Skills for Thailand SMEs in COVID-19,” saw around 100 owners and executives of Thai SMEs participate directly on the virtual conferencing platform, with nearly 450 viewers streaming the webinar through Facebook Live. The event was conducted in close collaboration with the Office of SMEs Promotion (OSMEP) Thailand and Thammasat Business School and covered three sessions, including the Thai Government’s measures to help Thailand SMEs cope with COVID-19, the importance of digital payments and cashless transactions for SMEs amidst COVID-19, and the impact of COVID-19 on global supply chains.

    On July 1, the Council hosted a Senior Leaders Forum on U.S.-ASEAN Health Cooperation. This virtual forum, joined by the Honorable Eric D. Hargan, Deputy Secretary of the U.S. Department of Health and Human Services (HHS), His Excellency Nguyễn Quốc Dũng, Vietnam’s Vice Minister of Foreign Affairs, and His Excellency Kung Phoak, Deputy Secretary General of ASEAN for ASEAN Socio-Cultural Community, was a private sector response to three events: (1) the ASEAN-United States High-level Interagency Video Conference on Cooperation to Counter COVID-19 on March 31, 2020; (2) the meeting between U.S. Secretary of State Michael Pompeo and the ASEAN Foreign Minsters on April 22, 2020, during which the U.S.-ASEAN Health Futures Initiative was launched; and (3) the meeting between U.S. Secretary of Health and Human Services Alex Azar and ASEAN Health Ministers on April 30, 2020. During the forum, participants discussed areas for public-private collaboration under the recently launched U.S.-ASEAN Health Futures Initiative, which captures existing and ongoing public health work with ASEAN and lays the groundwork for long-term partnerships, targeted assistance and a renewed focus on the health and well-being of the combined one billion people of ASEAN and the United States. Over the last 20 years, the United States has invested more than US$3.5 billion in shared health goals and collaboration with ASEAN nations. Council member participants were also able to elaborate further on some of their specific initiatives in vaccine development, transformative technology and PPE donations. Other topics discussed included the unintended consequences of the COVID-19 pandemic, such as disruptions in continuity of care for non-COVID patients in oncology, child vaccinations, as well as how digital technologies have the potential to re-invent healthcare delivery models—particularly in primary care.

    Sincerely,

    Alex
 

July Highlights

On July 15, the Council and EY co-hosted a thought-provoking panel discussion on foreign direct investment in ASEAN. We were pleased to welcome our members SC Johnson and UPS to discuss this important topic alongside EY partners and Amb. Ha Kim Ngoc, Ambassador of the Socialist Republic of Vietnam to the United States.

On July 1, the Council hosted a Senior Leaders Forum on U.S.-ASEAN Health Cooperation. This virtual forum was joined by the Honorable Eric D. Hargan, Deputy Secretary of the U.S. Department of Health and Human Services (HHS), His Excellency Nguyễn Quốc Dũng, Vietnam’s Vice Minister of Foreign Affairs, and His Excellency Kung Phoak, Deputy Secretary General of ASEAN for ASEAN Socio-Cultural Community.

 

Country, Industry and Advocacy Updates

 

COVID-19 Update

Brunei
As of July 19, Brunei has zero active COVID-19 cases. To date, Brunei has had a total of 141 COVID-19 cases with 138 recovered and 3 deaths and as of July 6 has begun Phase 3 of de-escalation. Mosques and religious halls throughout the country have resumed group activities at a capacity of 80 percent. The number of people permitted at mass gatherings has been increased from 30 to 50 people. New activities that are now allowed to operate at the current level (Level 1) under Phase 3 include activities at public swimming pools and cinemas. Special needs classes, daycare centers, museums, galleries, libraries, and Internet cafes resumed operations at Level 2 on July 6. Religious activities, tuition centers, gyms, indoor and outdoor sporting facilities, restaurants, cafes and food courts, and markets can advance from Level 2 to Level 3 in early July. Brunei has yet to reopen its borders as of July 9. Exceptions applied to those who have received an entry permit from the Prime Minister’s Office for urgent matters. Brunei is also in discussion with Malaysia over reopening its borders.

Cambodia
As Cambodia gradually enters its reopening phases, the government is lightly easing travel restrictions while most safety measures stay in place. Among new regulations was a stipulation that travelers must pay a US$ 3,000 deposit to cover COVID-19 costs, along with obtaining a compulsory US$ 50,000 in health insurance upon entry. On June 29, the country’s State Secretariat of Civil Aviation (SSCA) removed both requirements, but only for Cambodian citizens with foreign passports and travelers with a Visa K entry permit. It is important to note that they are still required to present a health certificate indicating a COVID-19 negative status issued 72 hours before departing form the residing country. The Government is also planning to adjust quarantine measures and prepare special arrangement for investors, technical experts and consultants coming into the country. Some possible measures include travelers undergoing testing and if confirmed negative, they will be allowed to enter the country while the government places an IT system to keep track. There would also be a deposit reduction for COVID-19 cover charge from US$3,000 to US$2,000. These regulations are expected to apply only to potential investors classified under the investment list of the Council for the Development of Cambodia and other government memorandums.

Indonesia
After reopening in early July, the number of COVID-19 cases in Indonesia has jumped up above its neighboring countries in Southeast Asia and has surpassed China. As of July 21, there are 89,869 confirmed cases and 4,320 deaths. The Health Ministry announced 127 COVID-19 deaths on Sunday alone, the highest one-day death toll so far. President Jokowi said the estimated peak of COVID-19 cases will be in August or September.
During the Large-Scale Social Distancing (PSBB) transition period that was extended until July 17, Jakarta alone has recorded 6,748 new COVID-19 cases. Governor of Jakarta Anies Baswedan explained that the steep increase was due to the government’s actively tracing new cases. He reminded that safety guidelines must remain in place. He added that, in line with PSBB Transition Regulation, he will conduct regular assessment to avoid the situation where an emergency brake is needed, and social distancing needs to be re-applied.
The Directorate General of Immigration updated their immigration regulations through Circular No. IMI-GR.01.01-1102 of 2020, effective July 13. Holders of Stay Permits (ITK, ITAS, ITAP) currently residing in Indonesia can apply for an extension at the immigration offices. However, holders of Permanent Stay Permit (ITAP) and Temporary Stay Permit (ITAS) need to obtain an approval letter from the Ministry if they wish to extend then apply in-person at the immigration offices within 60 days of July 13. Visitors with 2B21, 2B11, D212 visas who hold Emergency Stay Permits (ITKT) can extend this status. Similarly, visa-on-arrival holders can extend their ITKT within 30 days of July 13, while free visit visa holders must depart within 30 days from July 13.

Laos
As of June 20, officials have reported that the total number of COVID-19 confirmed cases in Laos has remained at 19 with no new cases reported for more than 90 consecutive days. The last COVID-19 patient was discharged from the hospital on June 9. To prevent a second wave of COVID-19 outbreak, the Lao government has continued to encourage people to strictly follow preventive measures. Laos first began easing restrictions in late May. On June 30, the Prime Minister’s Office released a notice detailing updated lockdown measures. The notice allows casinos to be re-opened and all kinds of sports to be organized if preventive measures are observed. Festive and religious events, celebrations, wedding parties have also been permitted, while entertainment ships, karaoke venues, and game shops are to remain closed. Meanwhile, the government continues to strictly monitor people entering the country. Laos’s borders are to remain closed, and travelers must obtain testing and medical certificates before being allowed to exit Laos.

Malaysia
As of July 20, there are a total of 122 active COVID-19 cases in the country. Presently, the country is under the new Recovery Movement Control Order (RMCO) which began on June 10. Under the RMCO, most economic sectors and businesses have resumed operations including hair salons, night markets, and farmers markets. Selected social, educational, and religious activities are also allowed as of June 10. Religious gatherings such as Hari Raya Aidiladha celebration and Qurban are now permitted as well as social gatherings of up to 250 people as of July 1. Strict Standard Operating Procedures (SOPs) are observed at these activities. Cinemas can operate at a capacity of 250 in closed venues starting July 1. However, other crowd-inducing activities such as team sports, religious parades, nightlife, and entertainment outlets are still restricted. On June 24, the government announced that it will also allow some categories of expatriates with a valid pass to enter Malaysia without the need to apply for advance entry permission as required by the previous MCO guidelines. Expats with EP I, RP-T, and PVP from Malaysia’s Green Zone country list are exempted from the advance entry permission requirement. The government is in discussions with the Green Zone countries (Singapore, Brunei, Australia, New Zealand, Japan, and South Korea) to reopen its borders. As of July 6, Malaysia has announced that the decision to reopen the borders with Singapore will be announced as early as August.

Myanmar
Myanmar currently has up to 336 confirmed cases. On July 13, the government of Myanmar extended COVID-19 restrictions until July 31. These restrictions include limiting gatherings, social distancing in public and taking protective measures and limited on highway buses and numbers in restaurants, as well as travels ban on all kinds of visas and international flights besides diplomatic visits, cargo, and relief flights. Depending on new COVID-19 developments, airports are expected to resume operations for international flights only after the third quarter of this year. However, the government also announced its plans to take part in “travel bubbles” with Thailand and Vietnam initially. In the meantime, Myanmar is allowing essential businesses and officials to enter the country under the “Fast Track” scheme; participants will be given a special quarantine program. The requirements include taking a RT-PCR test and obtaining a COVID free health certificate 36 hours before boarding to Myanmar. The travelers at arrival will also go through a swab test and require a 5-day facility quarantine after test is confirmed negative. Moreover, the Ministry of Health and Sports’ National Health Laboratory (NHL) has started to provide COVID-19 tests to provide travel-fit certificates for urgent overseas travel at a cost of USD $147. Domestic tourism is slowly restarting as many hotels have reopened with increased COVID-19 control measures.

Philippines
With more than 65,000 recorded cases of COVID-19 to date, the Philippines has among the highest number of COVID-19 cases in ASEAN. The majority of the country remains under Modified General Community Quarantine (MGCQ), the least restrictive phase of quarantine in which the movement of people is allowed. Most industries may operate at full capacity, and mass gatherings are limited to 50% capacity. However, the National Capital Region, which has been under General Community Quarantine (GCQ) since June 6, will remain under GCQ until July 31 due to the continued increase in COVID-19 cases within the region. Under GCQ, public transportation and the movement of people remains limited, but most industries there are permitted to operate at full capacity. Despite the extension of community quarantine measures throughout the country, the government has begun to ease restrictions on travel. On July 7, the government lifted the suspension of non-essential travel within the country and outbound travel. Beginning on August 1, the Philippines will permit foreign nationals with long-term visas to enter the country. On July 27, President Duterte will deliver his State of the Nation Address (SONA), and Congress will resume its second regular session. It is expected that Congress will prioritize the passage of significant economic stimulus measures that have been pending since the start of Congressional recess on June 5.

Singapore
Since June 19, Singapore has remained in Phase 2 of reopening, which enables retail outlets, food and beverage outlets, public facilities, and schools to reopen. The government has since permitted further activities to resume. Places of worship and select museums were permitted to reopen at the end of June, tourism businesses began to resume operations in stages starting on July 1, and cinemas reopened on July 13. Singapore was recently able to hold in-person elections on July 10, with a number of restrictions and public health measures implemented during election campaigning and on polling day to reduce the risk of transmission. Singapore’s borders are gradually reopening, but inbound travel remains restricted. Although travelers from select cities in Australia, New Zealand, and East Asia may transit through Changi Airport, all other short-term travelers are not permitted entry or transit through the country. Singapore and Malaysia are working to implement a Reciprocal Green Lane (RGL) and Periodic Commuting Arrangement (PCA) targeted to begin on August 10, and Singapore has confirmed that it is working with various countries to implement bilateral travel agreements.

Thailand
Thailand has reported no locally transmitted COVID-19 cases for more than 50 consecutive days. As of July 20, the total number of confirmed cases in Thailand since the outbreak stood at 3,250 (313 in state quarantine.) Thailand entered the fifth phase of lockdown easing on July 1, but the state of emergency has been extended until July 31. Bars, pubs, and entertainment venues have been permitted to reopen, and may operate until midnight, but must follow safety guidelines, such as proper distancing between tables. Shopping malls, schools, and educational institutes have been allowed to re-operate as normal. Since the beginning of July, eleven groups of people have been allowed to enter Thailand. All visitors will be tested for COVID-19 and required to undergo a mandatory quarantine period. On July 19, the Centre for COVID-19 Situation Administration and the Department of Disease Control (CCSA) announced that the sixth phase of re-opening should take place by the end of July. Under the new phase of relaxation, five select groups of foreigners and migrant workers are expected to be permitted to enter Thailand.

Vietnam
By July 20, Vietnam has gone 95 days without community transmission, a testament to the country’s response to contain the pandemic. All the recent cases have been imported as Vietnam allows Vietnamese citizens, foreigners with diplomatic passports, and especially foreign experts or highly skilled workers to enter the country. All incoming passengers must be quarantined for 14 days on arrival. More than 11,600 people are quarantined at hospitals, quarantine centers and at home. On July 16, the Ministry of Foreign Affairs said it is working with its foreign counterpart to resume commercial international flights to Seoul (Republic of Korea), Tokyo (Japan), Taiwan (China), Guangzhou (China), Vientiane (Laos), and Phnom Penh (Cambodia) from mid-July, on the basis of ensuring compliance with prevention measures to ensure the coronavirus does not spread in the community. Vietnam continues to leverage its successful response to COVID-19 pandemic to bolster the economy. While the IMF has predicted ASEAN economies will contract by 2 percent this year and the global economy by 4.9 percent, Vietnam’s economy has grown by 1.81 percent in the first half of 2020. Pointing out that there remain latent risks for the economy, the PM emphasized that macro-economic stability remains an important target, adding that this year’s CPI must be kept below 4 percent, any untapped room in fiscal and monetary policies capitalized upon to fuel growth, and public investment disbursement accelerated. During the first half of 2020, the Vietnamese Government spent over VND4.1 trillion (US$176 million) on COVID-19 prevention activities and VND11.3 trillion (US$486 million) in support of 11 million affected households.

 

Key Developments

  • U.S. Secretary of State Mike Pompeo’s Statement on South China Sea, 25th Anniversary of US-Vietnam Relations
    On July 13, the U.S. Secretary of State released a press statement to reaffirm the U.S. position on a free and open Indo-Pacific and rejects China’s claims in the South China Sea. The statement asserts that China does not have a legal claim to the “Nine-Dash Line” announced in 2009, upholding the 2016 Arbitral Tribunal’s ruling against China, and condemns China’s aggression in the maritime area such as the harassment of Philippine fisheries and offshore energy development. Responding to the Secretary’s statement, the Vietnam Ministry of Foreign Affairs stated that Vietnam welcomes positions of countries on the South China Sea issue in line with international laws and shares the viewpoint, as mentioned in the statement at the ASEAN’s 36th Summit, that the UNCLOS 1982 is a legal framework governing all maritime activities. The Ministry stated that peace, stability, cooperation and development in the South China Sea are the common aspirations and goals of the countries in the sea, the region and the international community. To read more about this update, click here.
  • Vietnam Approves First Public-Private Partnership (PPP) Law to Boost Infrastructure
    On June 18, the National Assembly of Vietnam passed the new PPP Law, which allows the government to share risks with companies in financing public infrastructure projects. The Law permits transport, grid infrastructure and power plants, water management, IT infrastructure, schools and hospital projects as eligible for PPP deals. The projects will be considered only if they meet a list of criteria, such as obtaining establishment and operation registration certificate issues by a competent agency of the country stating the investor is operating independent financial accounting. According to the Ministry of Planning and Investment, the law anticipates attracting greater private sector participation in infrastructure development while reducing the pressure on public funds. The PPP model would help ease the burden on the state budget while promoting the effectiveness of the management over the projects. To read more about this update, click here.
  • Bank Negara Policy and Regulatory Support in the Fight against COVID-19
    Bank Negara Malaysia (BNM) has been supporting the fight against the economic challenges that arose from the COVID-19 disruption. Since the beginning of the COVID-19 pandemic, BNM has offered a number of policy support to combat the negative economic impacts of the pandemic and to support the country’s economic recovery efforts. In July, BNM’s monetary policy committee decided to cut the overnight policy rate (OPR) by 25 basis points to a record low of 1.75 percent from the previous 2.00 percent. BNM’s latest OPR cut is further supported by its previous measures. BNM had deployed broad measures within the last six months including the deferment of loan and financing repayments for a period of six months for individual and SME borrowers, daily market operations to ensure liquidity in banks, and enhancement of BNM’s financing facilities for SMEs to ensure the sustainability of business operations. BNM’s monetary policy support is in conjunction with the government’s economic stimulus packages that have been in place since March 2020. Additionally, BNM has announced that it will postpone the issuance of a new reference rate framework (RRF) to “no earlier than 2021.” To read more about this update, click here.
  • Myanmar Import Protection Law to Take Effect July 2021
    On July 1, the Office of the President of Myanmar announced notification 83/2020 that the Law to Prevent an Increased Quantity of Imports will come into effect on July 1, 2021. The law was originally passed on December 24, 2019 by the Pyidaungsu Hluttaw (Assembly of the Union) under the law No. 25/2019. According to the law, an increased quantity of imports is defined as “a quantity of any kind of imports into the country is significantly higher than the amount of domestically produced goods that are similar or directly competitive”. The law also enables the investigation of any injuries or threats to domestic producers due to the increased quantity of imports. The inspection measures include monitoring the share of local production volumes, sales, productivity, profits and losses and the conditions of employment. The law enables the formation of the Committee for Preventing an Increased Quantity of Imports, which will be led by the Union Minister of Commerce and the chair of the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI) will be included as a member representing the private sector. To read more about this update, click here.
  • Singapore Launches First National Standard on E-commerce Transactions
    As online retail sales in Singapore increased during the COVID-19 pandemic, Enterprise Singapore (ESG) and the Singapore Standards Council (SSC) on June 12 launched Technical Reference 76 (TR76), the first ever guidelines to put out a national standard for e-commerce transactions. Given the rapidly growing e-commerce sector in the city-state, the new guidelines aim to bolster the digitization and online presence of SMEs. TR 76 will provide a practical reference for e-retailers and online intermediaries such as e-marketplaces on a variety of business topics. Businesses can refer to the guidelines as a checklist to develop e-commerce processes, policies, and to convey clear and comprehensive information to consumers. This includes details on the e-retailer or merchant, their products or services, returns and refunds policies, and payment and shipping processes. To read more about this update, click here.
  • The U.S. Withdraws from Stalled Talks on Digital Service Taxes
    The U.S. has withdrawn from participating in the Organization for Economic Cooperation and Development negotiations to establish a new tax framework, aimed at superseding digital services taxes implemented or proposed by many U.S. trading partners. On June 17, U.S. Trade Representative Robert Lighthizer confirmed that U.S. Treasury Secretary Steven Mnuchin decided to pull out of negotiations on digital services taxes with European Union officials after failing to make progress. Earlier in June, the U.S. Trade Representatives (USTR) announced the launch of a trade probe into digital services taxes being adopted or considered by Austria, Brazil, the Czech Republic, the European Union, India, Indonesia, Italy, Spain, Turkey, and Britain. The U.S. government could impose new tariffs if it finds that these countries permitted unfair trade practices. Following the USTR’s announcement, Indonesian Finance Minister Sri Mulyani Indrawati also made a statement on June 16 that the Indonesian government will press ahead with collecting digital tax. According to the Finance Minister, the Indonesian government would require internet companies to pay value-added tax (VAT) on sale of digital products and services starting from July 1. To read more about this update, click here.
  • Upcoming Position Changes in Thailand’s Central Bank and Finance Ministry
    As the five-year tenure of Bank of Thailand Governor Veerathai Santiprabhop ends on September 30, the Bank of Thailand (BoT) has been accepting applications for the next BoT governor. The application period began on May 26, and the deadline has been extended to July 10. The selection committee will convene a meeting to discuss applicants’ qualifications on July 17 and allow candidates to present their visions on July 21. On July 17, the Council met Deputy Governor of Financial Institutions Stability, Ronadol Numnonda, as part of the 2020 Financial Services Virtual Meeting Series. Deputy Governor Ronadol is considered a potential candidate for the BoT governor position. Meanwhile, on June 22, Deputy Prime Minister Prawit Wongsuwan, has accepted the invitation to become the new leader of Thailand’s ruling Palang Pracharat Party (PPRP), replacing Uttama Savanayana. The current Finance Minister lost the party leadership after the dissolution of the party’s executive board, following the June 1 mass resignation. As of July 3, the party was reportedly forming a new economic panel to replace the Finance Minister. On July 16, Finance Minister Uttama Savanayana, Energy Minister Sontirat Sontijirawong, and two other members announced their resignation from cabinet effective immediately. To read more about this update, click here.
  • BSP Issues Guidelines for Establishing Digital Banks
    The Bangko Sentral ng Pilipinas (BSP), the Philippines’ central bank, is set to issue the guidelines for the establishment of digital banks in the Philippines. According to BSP Governor Benjamin Diokno, digital banks will be included as a distinct classification of banks that include universal banks, commercial banks, thrift banks, rural banks, cooperative banks, and Islamic banks. Under the guidance, digital banks are not permitted to establish physical branches for banking operations other than customer service. Digital banks are to be classified into two types: a basic digital bank and an advance digital bank with minimum capital requirements of P400 million and P900 million respectively. A basic digital bank may accept saving, time, and foreign currency deposits. It may also grant unsecured loans, provide remittance and bill payment services, and issue e-money products. On the other hand, an advance digital bank will be allowed to provide all the services of basic digital banks and issue credit cards. To read more about this update, click here.
  • Vietnam Appoints New Minister of Health
    On July 7, Vietnam Prime Minister Nguyen Xuan Phuc signed the Decision to appoint H.E. Nguyen Thanh Long as the new Minister of Health, succeeding Deputy Prime Minister Vu Duc Dam who has overseen the Ministry of Health since November 2019. Minister Nguyen Thanh Long has a doctorate in medicine and is an infectious disease expert who has held senior positions in the preventive medicine and HIV/AIDS prevention departments under the Ministry of Health. Before assuming the post, Minister Nguyen Thanh Long was Deputy Minister of Health since January 31, 2020. He is also one of the Deputy Heads of the National Steering Committee for COVID-19 Prevention and Control during the COVID-19 pandemic. To read more about this update, click here.
  • Vietnam Passes New Laws on Investment and Enterprises 2019
    On June 17, the National Assembly of Vietnam passed the Law on Investment 2019 and the Law on Enterprises 2019, both effective from January 1, 2021 They replace the respective Law on Investment 2014 and on Enterprises 2014. The changes in the Law on Investment include: (1) Updated list of conditional business lines and a list of business lines restricted to foreign investment, including lines for which foreign investment is not permitted or is subject to conditions. (2) New foreign ownership threshold: the threshold has been lowered from 51% to 50% to determine if an economic organization with foreign-owned capital must satisfy conditions prior to the investment. (3) Investment projects subject to investment policy decisions: the Prime Minister or provincial People’s Committee will be able to make investment policy decisions in a revised categories of investment projects. The Law on Enterprises has made some changes to reduce administrative procedures for enterprises as well as clearly defining what a State-Owned Enterprise is. Following the passages of the new laws, on June 19 the National Assembly also ratified the government’s proposal to cut corporate income tax by 30 percent and apply to all businesses if their revenue does not exceed the US$8.8 million threshold in 2020. To read more about this update, click here.
  • Reshuffle on Indonesian E-commerce Authorities
    In response to the draft Trade Ministerial Regulation No. 50/2020 on e-commerce, the US-ABC submitted member inputs and proposed a virtual discussion with Director General of Domestic Trade. The request has been pending and one of the reasons being a reshuffle under the Trade Ministry and Coordinating Ministry of Economic Affairs, particularly the units that are in charge to implement Government Regulation 80 on E-commerce. The new appointments within the Ministry of Trade and Coordinating Ministry of Economic Affairs with oversight of GR 80 implementation and related e-commerce issues are as follows: Ministry of Trade; Secretary General: Mr. Suhanto, who previously held the position of Director General of Domestic Trade; Director General of Domestic Trade: Currently still vacant; Director of Business Development and Distribution Actors at the Directorate General of Domestic Trade: Ms. Nina Mora; Coordinating Ministry of Economic Affairs; Deputy IV (Digital Economy, Employment and Micro, Small and Medium Enterprises): Mr. Mohammad Rudy Salahuddin. The Council is in close communication with the Ministry of Trade and Coordinating Ministry of Economic Affairs and will keep members updated on any new developments. To read more about this update, click here.

Current Advocacy

  • COVID-19 Task Force and Thought Leadership
    Following the Council’s last Board of Directors meeting, the Council continues to work on building out new initiatives like the formation of the Council’s COVID-19 Taskforce and thought leadership programs to support ongoing advocacy efforts. The Council’s ASEAN Digital Data Governance: Cross Border Data Flow Mechanism paper has been finalized. We will use it as an advocacy tool to engage Singapore’s Personal Data Protection Commission and the ASEAN regional entities charged with the implementation of the ASEAN Cross Border Data Flows Mechanism. The Council’s upcoming Indonesia Digital Economy Virtual Meeting series will serve as a new platform for members to engage key entities in Indonesia’s digital ecosystem on a wide range of policy, legal and regulatory issues.
  • USABC Signs onto Multi-association Recommendations on Digital Trade to G20
    USABC recently signed onto a multi-association effort on 2020 G20 Recommendations for Promoting Innovation, Digital Technologies, and Trade. The recommendations focus on facilitating a global response to COVID-19 pandemic, advancing global data free flows with trust, promoting cross-border innovation and the adoption of new technologies, and ensuring the benefits of technology are realized by all. The effort was led by the Information Technology Industry Council (ITI) and included 40 signatories from the around the world. The recommendations have already been shared with U.S., EU, and Japanese G20 officials as well as the U.S. press and with USABC stakeholders in ASEAN.
  • Virtual Meeting with Philippine DICT Assistant Secretary Emmanuel Rey Caintic
    On June 28, the Council held a virtual meeting with Philippine DICT Assistant Secretary Emmanuel Rey Caintic who oversees Digital Philippines within the Department of Information of Communications Technology (DICT). The meeting discusses the DICT and Digital Philippines’ programs and activities that enable the country’s transition towards digital transformation and the ICT best practices in a post COVID-19 environment, including cloud first policy, digital signature, digital payment, and healthcare digitization. Please see attached for a copy of the call notes and direct further questions or comments to Norika Pineda (npineda@usasean.org) and Natalie Tantisirirat (ntantisirirat@usasean.org).
  • Philippine House Substitute Bill to Amend the Data Privacy Act of 2012
    The Philippine House of Representative recently released a House Bill in substitution of House Bills 1188 and 5612 amending the Data Privacy Act of 2012. The Substitute Bill combines the House Bills 1188 and 5612 and expands to include a definition of financial data. Overall, it has not addressed the concerns raised by the Council’s submission for the House Bills 1188 and 1152. Please see attached for a copy of the substitute House Bill and contact Lilibeth Almonte-Arbez (lalmonte@usasean.org) for comments and questions.
  • Philippine House Ways and Means Committee Hearing on Digital Tax
    On June 25, Representatives Sharon Garin and Joey Salceda from the Philippines House Committee on Ways and Means held a Technical Working Group meeting on digital taxation. The focus of the meeting was to discuss a new substitute bill to House Bill 6765 and House Bill 6944 otherwise known as “Value-added Tax on Digital Transactions Act.” The bill seeks to impose a value-added tax on digital transactions in the Philippines. The Council has submitted a position paper to the council and attended the hearing to represent the members’ position to the Committee. Please contact Kim Yaeger (kyaeger@usasean.org), Shay Wester (swester@usasean.org), Lilibeth Almonte-Arbez (lalmonte@usasean.org) and Michaela Wong (mwong@usasean.org) for more information.
  • Planning Call for the 2020 ATRC Stakeholder Consultative Dialogue
    After receiving the response from the Thailand National Broadcasting and Telecommunication Commission (NBTC) regarding the ATRC-OTT Dialogue, the Council on June 25 held a planning call for the 2020 ATRC Stakeholder Consultative Dialogue to update members on the response and discuss a follow-up strategy. The NBTC has responded as follows: (1) The ATRC is an ASEAN initiative planned to be adopted by ADGMIN in Q3 2020 which is now delayed due to the pandemic. (3) The planned meeting in August in Bangkok will likely be delayed to early 2021. The Council will verify the timeline with Malaysia as the Chair of ADGMIN. (3) The NBTC has responded to the Council’s submission and will change some of the languages as the submission proposed. The Council and members on the call have decided on a course of action to prepare for the meeting next year. Please see attached for a copy of the call notes and email Mario Masaya (mmasaya@usasean.org) and Natalie Tantisirirat (ntantisirirat@usasean.org) if you have any questions or additional comments.
  • Indonesia Personal Data Protection (PDP) Bill Public Hearing and Debriefing Call
    On July 6, the Indonesia Commission 1 DPR invited the Council to a General Public Hearing on the PDP Bill. The Commission 1 DPR also invited PERSI (Indonesian Hospital Association), IDEA (Indonesia E-Commerce Association), and AFTECH (Fintech Association) for the same hearing and has previously held hearings with academics and 7 other organizations, including ASTI (Indonesian Telecommunication in Indonesia), Coalition for Personal Data Protection, and APJII (Indonesian Internet Providers Associations). In the hearing, the Council proposed four key recommendations: Narrow the definition and scope of various data; Process personal data including data transfers that are accountable; Ensure effective management of failure; Impose grandfathering clauses. The DPR will have a recess starting from July 15 to August 14, after which the PDP Bill will enter a new stage to discuss Problem Inventory List (DIM) with the Ministry of Communication and Information Technology (KOMINFO). Please reach out to Angga Antagia (aantagia@usasean.org) for questions and information.
  • Indonesia Ministry of Trade’s Ministerial Regulation No 50/2020 on E-commerce
    In May 2020, the Ministry of Trade has released an implementing regulation under Government Regulation No. 80 on 2019 on E-Commerce, namely the Trade Ministerial Regulation No. 50 of 2020 on the Provisions of E-Commerce Business licensing, Advertising, Development and Supervision of Business Actors. In anticipation of the Ministry of Trade's (MOT's) consideration to revisit their Ministerial Regulation No. 50/2020 in English (US-ABC's updated translation is attached), US-ABC has been compiling members’ inputs to be circulated the draft recommendation letter to members prior to submission once it is ready. Please contact Mega Valentina (mega@usasean.org) or Angga Antagia (aantagia@usasean.org) if you have any questions.
  • Indonesia Food and Drug Agency (BPOM) Regulation No. 8 of 2020 on the Online Drugs and Food Distribution
    a part of the implementation of Government Regulation No. 71 of 2019 on the Organization of Electronic Systems and Transactions, the National Agency of Drug and Food Control (BPOM) issued Regulation No. 8 of 2020 on the Supervision of Drugs and Food Distributed Online (Reg 8/2020) April 2020. The Council has been compiling members’ inputs and will draft a recommendation letter to BPOM. Please reach out to Mega Valentina (mega@usasean.org) or Angga Antagia (aantagia@usasean.org) for any questions.
  • ASEAN Cross Border Data Flows Mechanism
  • Thank you to those who have submitted feedback on the ASEAN Cross Border Data Flows Mechanism recommendation paper. The Council submitted the recommendation paper to the Singapore Personal Data Protection Commission (PDPC) on Friday, July 17. For a copy of the submitted first version of the recommendation paper, please contact Mario Masaya at (mmasaya@usasean.org or Natalie Tantisirirat at (ntantisirirat@usasean.org). To support ASEAN in implementing the ASEAN Framework on Digital Data Governance, the US-ABC ICT Data Governance Subcommittee agreed to draft a short paper on key considerations and recommendations that would be submitted to Singapore PDPC. This paper hopes to help provide recommendations for ASEAN when they consider implementing the recently-approved “ASEAN Cross Border Data Flows Mechanism”. The ASEAN Cross Border Data Flow Mechanism is comprised of a “dual-track” approach, which includes ASEAN Certification and ASEAN Model Contractual Clauses. This recommendation paper intends to provide some of the Council’s key perspectives on the dual-track approach.
  • COVID-19 Best Practices for the ICT Industry
    The Council has finalized its input on a set of COVID-19 best practices for the ICT industry to share with ASEAN governments and for consideration as input into the ASEAN Digital Masterplan 2025. It highlights the contributions of the ICT sector and includes recommendations for practices for a post-COVID-19 environment. Thank you to those who provided feedback to our draft. The Council sent cover letters to ASEAN Digital Ministers (ADGMIN) on Friday, July 13. The letter summarizes key elements in the document and propose a video conference meeting with ADGMIN to discuss how members could help ASEAN governments implement these best practices. Please see attached for a copy of the final version of the best practices document and email any questions or comments to Mario Masaya at (mmasaya@usasean.org) or Natalie Tantisirirat (ntantisirirat@usasean.org).
  • USTR Section 301 Investigation on the Indonesia Digital Services Tax
    The United States Trade Representatives (USTR) recently announced that it is initiating Section 301 investigations into digital services taxes in a number of jurisdictions, including Indonesia's electronic transaction tax, and sought public comments for investigation. On July 15, the Council submitted a letter to USTR. For a copy of the submitted letter, please contact Michaela Wong (mwong@usasean.org) and Steven Gunawan (sgunawan@usasean.org). The USTR’s announcement came after the Indonesia Government issued Government Regulation in Lieu of Law (Perppu) No. 1 of 2020 on March 31st. Perppu 1/2020 introduced a new electronic transaction tax in response to the economic slowdown and national emergency status due to COVID-19 global pandemic. The Council has previously submitted recommendations on digital taxation to the Indonesian Ministry of Finance.
  • US-ABC Submission on Philippine Digital Taxation
    The Council has consolidated your feedback on the new substitute bill to House Bill 6765 and House Bill 6944 otherwise known as “Value-added Tax on Digital Transactions Act.” Comments have been submitted to Representative Joey Salceda, Chair of the Ways and Means Committee of the House of Representatives. Please find attached the June 30 letter on the Substitute Bill for House Bills 6765 and 6944 and the June 5 letter. For queries about the Digital Tax, please contact Kim Yaeger (kyaeger@usasean.org). For all other Philippines advocacy queries, please contact Elizabeth “Maxie” Magsaysay-Crébassa (em.crebassa@usasean.org) and Lilibeth Almonte-Arbez (lalmonte@usasean.org) .
  • US-ABC joint position paper and meeting report on the proposed Corporate Recovery and Tax Incentives for Enterprises Act (CREATE)
    The Council joined in the submission of a multi-organization letter and attended a meeting with Senator Pia Cayetano, Senate Committee Chair of Ways and Means to provide comments on the renamed CITIRA bill seeking to reduce corporate income tax and rationalize incentives. Attached are copies of the May 27 joint letter and the June 30 meeting report. Organizations involved in this effort are Alyansa Agrikultura, American Chamber of Commerce of the Phils., Inc., Australian-New Zealand Chamber of Commerce of the Phils, Canadian Chamber of Commerce of the Phils., Inc., Confederation of Wearable Exporters of the Phils., European Chamber of Commerce of the Phils., Inc., Information Technology and Business Process Association of the Phils., Japanese Chamber of Commerce & Industry of the Phils., Inc., Korean Chamber of Commerce of the Phils., Inc., Makati Business Club, Philippine Association of Multinational Companies Regional Headquarters, Inc., Philippine Ecozones Association, US-ASEAN Business Council, and Semiconductor & Electronics Industries in the Philippines, Inc.
 

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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