ASEAN Top 5 - December 17, 2015

Customs Update: ASEAN Policymakers Reaffirm Commitment to Trade Facilitation

Following a ceremony to celebrate the launch of the ASEAN Economic Community (AEC), Southeast Asian leaders issued a joint statement on November 19 reiterating their commitment to economic integration for the 2015-2025 period.  A substantial portion of the document focused on ASEAN’s plans for trade facilitation post-AEC.  Delegates pledged to maintain ASEAN’s customs reform agenda by fully implementing National Single Windows in all Member States and widening the scope of the ASEAN Single Window project to include more documents and stakeholders.  They further committed to the implementation of a rules of origin framework capable of encouraging private-sector participation, particularly among SMEs, in robust cross-border commerce throughout the region.  Delegates also agreed to aim towards convergence in trade facilitation regimes among ASEAN Member States, and to move the bloc closer to global best practices in customs administration.  While a renewed commitment on the part of ASEAN policymakers to trade facilitation is an encouraging development, significant challenges remain.  The Council urges ASEAN to continue its efforts reduce and eliminate barriers to cross-border commerce, so as to achieve competitive, efficient, and seamless movement of goods throughout the region.  The ASEAN delegates’ remarks on trade facilitation can be found on pages 61-64 of the document, “ASEAN 2025: Forging Ahead Together”.

Vietnam Update: Vietnam to Boost ASEAN Telecommunications

2015 marks the 15th ASEAN Telecommunications and Information Technology Ministers Meeting (ASEAN TELMIN) and the second time Vietnam has hosted the meeting since 2005. The event, entitled: "Towards a Digitally-enabled, Inclusive, Secure and Sustainable ASEAN Community", drew over 300 delegates including Ministers of Telecommunications and IT from ASEAN countries, the Secretary General of ASEAN, officials from  China, South Korea, Japan, India, the EU, the International Telecommunication Union (ITU) and VietNam. The leaders discussed programs and cooperation opportunities to boost information technology infrastructure and narrow the digital divide among ASEAN countries. Deputy Prime Minister Nguyen Xuan Phuc said, "In realising the ASEAN Community Vision 2025, I firmly believe that the success of the 15th ASEAN Telecommunications and Information Technology Ministers Meeting will practically contribute to tightening the connection and effective co-operation of the region, and forming a unified, multiple-identity and sustainably developed ASEAN Community." Since Information and Communication Technology (ICT) is deeply linked to socio-economic development, it is important to acknowledge the impact that ICT has had on Vietnam’s growth and development. The Ministers were commended for their completed initiatives under the ASEAN ICT Master plan 2015 (AIM 2015). At the conclusion of the meeting, the Ministers adopted the ASEAN ICT Master Plan 2020 (AIM 2020). The AIM 2020 will include eight strategic points: Economic Integration and transformation; Integration and empowerment through ICT, innovation, ICT infrastructure development, human resources development, ICT in the single market, new media and communications, and information security and assurance. ASEAN member countries and the International Telecommunication Union (ITU) also signed a Memorandum of Understanding (MoU) to boost co-operation in joint initiatives of ICT security and assurance of IT network, broadband implementation, building policy of telecommunication and IT, and ICT applications on natural disasters.

Indonesia Update: Seventh Stimulus Package Unveiled

On December 4, Coordinating Minister for Economic Affairs Darmin Nasution announced Indonesia’s seventh economic stimulus package. The package is primarily meant to support labor-intensive export-oriented manufacturers through income tax allowances. The income tax reduction will apply to workers who earn less than Rp 50 million ($3,700 USD) who work at companies that employ at least 5,000 people in operations that export at least 50 percent of their production. The tax reduction will last for two years, after which it may be extended. Implementation of the tax reduction will require a revision to Government Regulation No. 18 of 2015 on Income-Tax Facilities for Investment in Certain Business Fields and/or in Certain Regions. The package also includes a provision for the Investment Coordinating Board (BKPM) to add four new types of licenses to its new three-hour permitting service.  The final provision in the package will allow street vendors in certain designated government-owned spaces to obtain Building Exploitation Permits (Hak Guna Bangunan, HGB). The HGBs will give the street vendors access to government backed micro-loans. 34 areas have been registered for the plan and implementation will start in Banten in late December. In addition to their promise to provide the property certifications, the government may also have to ensure the designated spaces provide good accessibility to customers and are equipped with necessary support infrastructure for this plan to succeed. The seventh package was originally set to be announced on November 12, but the process was delayed to allow more time for internal discussions and completing the regulations for the previous six packages. Before the delay, it was expected that package seven would focus on supporting rural development and streamlining village funding arrangements, in addition to the income tax allowances. President Jokowi, however, seems to have instructed the ministries to prioritize measures that would prevent further layoffs in the industrial sector.

Thailand Update: Thailand “Highly Likely” to Join TPP

Deputy Prime Minister Somkid Jatusripitak said last week that it is “highly likely” Thailand will seek to join the Trans-Pacific Partnership (TPP).  During a visit to Tokyo, he also said that Japan had pledged to support such a bid.  Mr. Somkid suggested that continued study of TPP’s impact will be required, and that he plans to convene specialists to consider its potential effect on agriculture, pharmaceuticals, and other sectors.  Whether this will delay an announcement—previously expected during the inaugural meeting of the International Trade Development Committee on December 9—is yet to be seen.  U.S. Ambassador Glyn Davies reiterated this week that the U.S. “will be ready to work with Thailand” if and when such an announcement is made, but clarified that he was not attempting to convince Thailand to join.  During his remarks in Tokyo, Mr. Somkid emphasized that, despite a slowdown in growth, the overall outlook for the Thai economy is strong.  A series of stimulus packages implemented in the past several months is expected to spur consumer and industrial confidence—an outlook that may be bolstered by a positive announcement on TPP. 

Myanmar Update: Ministry of Commerce Allows Limited Imports by Foreign Companies

The Myanmar Ministry of Commerce announced that it would, for the first time, allow limited onshore imports by international firms.  While the new regulations, issued via Ministry circular 96/2015 on November 11, 2015, require partnership with a local company, and for now extend only to agricultural and healthcare products, the opening up indicates relaxed trade rules following the recent successful election.  International companies will be required to register with the Directorate of Investment and Company Administration (DICA), and then apply for a trading license from the Ministry of Commerce.  Categories of permitted imports are expected to expand in the future, but are currently limited to fertilizers, insemination seeds, pesticides, and hospital equipment.  According to Deputy Director U Win Kyi, this is in response to the urgent requirements of the agriculture and medical sectors.  The rules do not stipulate a minimum share percentage for the local partner.  This move is an important first step towards loosening restrictions long advocated for by international companies, but may not be indicative of future changes in policy given the incoming NLD administration. The NLD has made clear that development of the agriculture sector, Myanmar’s main employer, will be a major concern for them. The Council will continue to monitor the policy.