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Volume IV | Issue 15| July 25, 2013

Southeast Asia from the Corner of 18th & K Streets

Inside This Issue

biweekly update

•  Thein Sein pledges nationwide cease-fire, political prisoner release

•  Aquino gives State of the Nation Address

•  Opposition leader Sam Rainsy returns to Cambodia following royal pardon

looking ahead

•  Vietnamese president Truong Tan Sang  speaks at CSIS

•  U.S.-Russia relations and the Asia Pacific

•  The U.S. role in improving Mekong health security

Congress Should Renew Preferential Tariff System Before It Expiresmurray hiebert

July 25, 2013

Murray Hiebert is senior fellow and deputy director of the Sumitro Chair for Southeast Asia Studies at the Center for Strategic and International Studies in Washington, D.C.

Sumitro Chair for Southeast Asia Studies

The U.S. Congress should move with haste to renew the Generalized System of Preferences (GSP) before the program expires at the end of July. Without it, U.S. companies will end up paying an extra $2 million a day in tariffs on imported goods (at 2012 import levels), which would hurt U.S. consumers and dent American small and medium-size companies. It would also hamper the economies of some U.S. developing country friends. 

The GSP program was launched in 1976 to promote economic growth in developing countries by providing preferential duty-free entry for almost 5,000 products when imported from one of nearly 130 countries. Last year, U.S. companies imported nearly $20 billion worth of goods under the program, many of which were used by American manufacturers. A 2005 study by the U.S. Chamber of Commerce estimated that 80,000 jobs are created in the United States by moving GSP products from ports to manufacturers, farmers, and stores. 

Three Southeast Asian countries—Indonesia, the Philippines, and Thailand—are major beneficiaries of the program because it increases the competiveness of their exports to the United States. Last year, Thailand was the second-largest beneficiary in the world, exporting $3.7 billion worth of goods under GSP, including processed food, car tires, rubber gloves, microwave ovens, and fans. Indonesia was fourth with $2.2 billion of exports, including rubber tires, aluminum, plywood, cocoa paste, and musical instruments. The Philippines was sixth with $1.2 billion of exports 

Congress Should Renew Preferential Tariff System Before It Expires (continued)

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Southeast Asia from the Corner of 18th & K Streets  November 9, 2011 | 2

Two Models for Integrating Asia: A Must Win for President Obama (continued)

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Southeast Asia from the Corner of 18th & K Streets  July 25, 2013 | 2

Congress Should Renew Preferential Tariff System Before It Expires (continued)

A tire factory in the Philippines. The Philippines exported $1.2 billion worth of goods, including radial tires, to the United States in 2012 under the Generalized System of Preferences. http://www.flickr.com/photos/65327964@N00/8533492534/in/photolist-e15o2C

of items like measuring instruments, sugar, insulated electric conductors, and radial tires. Cambodia also benefits from GSP, but to a far lesser degree 

Ed Gresser, head of the Progressive Economy think tank that conducts research on trade and globalization issues, says the GSP program helps recipient countries in Southeast Asia compete with the low-cost manufactured products coming out of China, creates jobs, and provides extra income for women and artisans. 

Several Southeast Asian countries are not eligible for GSP. Singapore and Malaysia are too developed. Vietnam, whose president is visiting Washington this week, officially asked to receive GSP benefits in 2008 but was not admitted into the program because its labor unions are seen as dominated by the ruling Communist Party, limiting internationally recognized worker rights. Vietnam’s protection of intellectual property rights is also viewed as inadequate.

A subcommittee of the Office of the U.S. Trade Representative held a public hearing in June to gather testimony regarding the eligibility of Myanmar and Laos for GSP trade benefits. As part of the U.S. rebalance to Asia, which includes an effort by the United States to be more economically engaged with Southeast Asia, Congress and the administration ought to qualify Vietnam, Myanmar, and Laos for GSP benefits. Because most apparel and footwear are ineligible for duty-free treatment under the program, U.S. manufacturers need not fear a sudden surge of such products if those countries are given GSP treatment. 

The current GSP program expires on July 31. In recent weeks, both the House of Representatives and the Senate have taken steps to extend the measure. On July 17, Republican and Democratic leaders of the House Ways and Means Committee drafted legislation to reauthorize GSP. They said it would be put up for a vote if the Senate approves a bill disallowing amendments to the trust fund bill to which the GSP legislation will be attached. A day or two later, the Senate Finance Committee chairman and the ranking Republican member announced similar legislation extending GSP for two years, but it is not clear that all senators have agreed to drop their plans for amendments to the trust fund legislation. 

For the most part, there is strong bipartisan support in both the Senate and the House for the GSP program. Still, there are concerns among U.S. 

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Southeast Asia from the Corner of 18th & K Streets  July 25, 2013 | 3

Congress Should Renew Preferential Tariff System Before It Expires (continued)

Cargo containers are loaded onto a ship in Bangkok. Thailand is the second-largest beneficiary of the Generalized System of Preferences, exporting $3.7 billion worth of goods under the program in 2012. http://www.flickr.com/photos/cop4cbt/3427194182/

companies and GSP-recipient countries that the high level of distrust between the leaders of the House and the Senate could result in Congress leaving Washington on August 2 for its long recess without extending the GSP program. Two years ago, a single senator managed to block GSP renewal for months when he tried to protect a sleeping bag company in his state against imports from Bangladesh. 

Allowing GSP to expire would add an average tariff of 3.8 percent to the almost $4 billion worth of tariff-free products imported from Thailand alone—a significant amount in the highly competitive global supply chain, particularly for small and medium-size U.S. firms. Progressive Economy’s Gresser says a long delay in congressional renewal of the benefits could prompt some U.S. companies to shift their long-term sourcing to China and other non-GSP countries. 

Chris Nelson of the Nelson Report, a widely read daily online newsletter focusing on Asia and trade issues, suggested recently that U.S. Trade Representative Michael Froman and Commerce Secretary Penny Pritzker ought to invest an hour to remind key senators that the House is ready to renew GSP if the Senate agrees to attach it to the larger trust fund legislation without allowing amendments.

It would also help if President Barak Obama and Secretary of State John Kerry made some calls suggesting to key senators that renewing GSP would help bolster the U.S. rebalance to Asia ahead of the president’s October trips to Brunei for the East Asia Summit and to Indonesia for the Asia-Pacific Economic Cooperation (APEC) summit. ▪

Biweekly Update

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myanmar

•  Thein Sein pledges nationwide cease-fire, political prisoner release during Europe trip. President Thein Sein visited France and the United Kingdom in mid-July to discuss increasing trade and development assistance to Myanmar. He pledged in a July 15 speech at the London think tank Chatham House to release all remaining political prisoners by year’s end. He also said that the government maintains a zero-tolerance policy on religious violence and that it could reach a nationwide cease-fire with ethnic minority forces within weeks. Protests greeted Thein Sein throughout his Europe trip, with demonstrators calling on the French and British governments to push him on these and other human rights issues.

•  Government disbands controversial border security force. President Thein Sein on July 14 announced the disbandment of the security force Nasaka, which has responsibility for the border with Bangladesh in Rakhine State. International and domestic critics have long accused Nasaka of egregious violations against the marginalized Muslim Rohingya. Human Rights Watch and the U.S. Campaign for Burma alleged to the Myanmar Times on July 22 that Thein Sein reached the decision because the U.S. Treasury Department was on the verge of sanctioning the Nasaka.

•  U.S. sends military legal studies delegation to Myanmar; UK reestablishes military ties. The United States sent a four-person military delegation from the Defense Institute of International Legal Studies headed by Brig. Gen. Thomas Ayres to Myanmar for five days in early July to discuss potential military exchanges focused on promoting human rights protections. The visit coincided with the British government’s offer of military assistance to President Thein Sein during his July 14–16 visit to London. Under the exchange, Britain will appoint a defense attaché to Myanmar and provide military training to help address human rights violations and defuse ethnic tension.

•  Lower House speaker announces committee to review constitutional amendments. Lower House Speaker Shwe Mann announced on July 17 that Parliament will form a committee to explore amending Myanmar’s constitution. Shwe Mann said representatives from all parties in the legislature will take part, but did not elaborate on which amendments will be reviewed. Critics have called for amendments because the constitution reserves 25 percent of parliamentary seats for military officers, does not allow for the federal structure that ethnic minority groups demand, and bars opposition leader Aung San Suu Kyi from running for the presidency. 

President Thein Sein meets with British prime minister David Cameron during his visit to the United Kingdom. During the trip, Thein Sein made several pledges to improve human rights in Myanmar. http://www.flickr.com/photos/number10gov/9290218817/

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Southeast Asia from the Corner of 18th & K Streets  July 25, 2013 | 5

•  Government passes bill establishing central bank autonomy. President Thein Sein signed a bill into law on July 12 establishing the autonomy of the Central Bank of Myanmar four days after Parliament passed it. The World Bank, the government of Japan, and the Asian Development Bank provided technical support in drafting the bill. The central bank previously functioned under the control of the Ministry of Finance. The move will enable the bank to adjust interest rates and enact independent monetary policy, widely considered by economists as fundamental to an open economy.

indonesia

•  More than 200 prisoners, including convicted terrorists, escape from Medan prison. More than 200 criminals, including nine convicted terrorists, escaped from a prison in the North Sumatra city of Medan on July 11 during rioting sparked by a water shortage. Although 103 of the escapees had been recaptured as of July 17, four of the terrorists remain on the loose, including Fadli Sadama, a high-level operative with the Al Qaeda-affiliated Jemaah Islamiyah. The jailbreak has highlighted the poor conditions in Indonesia’s overcrowded prisons. 

•  Indonesia vows to ratify ASEAN haze pact. Environment Minister Balthashar Kambuaya announced on July 17 that Indonesia’s Parliament is expected to ratify the long-delayed ASEAN Haze Pact by early 2014. Indonesia is the only ASEAN member that has not ratified the pact, which requires signatories to mobilize resources to cooperatively detect and fight fires. Kambuaya made the announcement following a three-day meeting on the topic in Kuala Lumpur with counterparts from Brunei, Malaysia, Singapore, and Thailand. Forest and peat fires in Sumatra led to record levels of unhealthy smog over Singapore and the southern Malay Peninsula in June.

•  Indonesia threatens to permanently ban sending migrant workers to five countries. Indonesia’s Migrant Worker Placement and Protection Agency during the weekend of July 13–14 threatened to permanently halt the flow of Indonesian migrant workers to Jordan, Kuwait, Malaysia, Saudi Arabia, and Syria if those countries do not take steps to protect the workers’  basic legal rights. Indonesia has suspended sending workers to those countries over allegations of maltreatment. Jakarta previously stopped workers from going to neighboring Malaysia in 2009–2011 due to alleged abuse.

•  Bank Indonesia hikes benchmark interest rate. Indonesia’s central bank surprised observers by raising its benchmark interest rate 50 points, or half a percentage point, on July 11, citing increased capital outflows. 

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Southeast Asia from the Corner of 18th & K Streets  July 25, 2013 | 6 

President Benigno Aquino giving a public lecture. Aquino made economic growth and poverty alleviation the centerpiece of his fourth State of the Nation Address on July 22. http://www.flickr.com/photos/10816734@N03/6170233437/

The rate change followed a 25-point hike in June. The central bank also said it would combat the falling value of Indonesia’ currency, the rupiah, promising more frequent foreign exchange swap auctions and releasing plans to strengthen loan-to-value requirements for lenders. 

•  Three more Chevron employees convicted in oil cleanup case. The Jakarta Anti-Corruption Court between July 17 and July 19 sentenced Chevron employees Kukuh Kertasafari, Endah Rumbiyanti, and Widodo to two years in prison each for failing to adhere to proper procedures during an environmental cleanup project that cost the state of Riau millions of dollars. Chevron officials pushed back, saying that the project had received appropriate government approval before it began. The ongoing case has sparked concern among several international investors who see Chevron as a scapegoat.

•  Indonesia’s ambassador to the United States considering presidential run. Ambassador to the United States Dino Patti Djalal told the Jakarta Globe on July 18 that he is considering an invitation from President Susilo Bambang Yudhoyono to run for the Democratic Party’s nomination for its 2014 presidential candidate. Yudhoyono’s Democratic Party has seen its popularity drop in polls, falling well behind rivals Golkar and Indonesian Democratic Party-Struggle, and is searching for a candidate to reverse its fortunes. Djalal previously served as Yudhoyono’s press spokesperson and key adviser.  

philippines

•  Aquino gives State of the Nation Address. President Benigno Aquino delivered his fourth State of the Nation Address on July 22 at the Philippine House of Representatives. Aquino hailed the Philippines’ economic growth in the first three years of his administration, vowed to increase efforts to help the poor, and lauded the work of several of his cabinet officials, especially Foreign Minister Albert del Rosario. But critics charged that the speech, while uplifting, lacked details of Aquino’s plans for the second half of his term, which ends in 2016.

•  Government, Muslim separatists reach wealth-sharing deal. The Philippine government and the Moro Islamic Liberation Front separatist group reached a deal on July 18 on the wealth-sharing annex to their 2012 framework peace agreement. Under the deal, the autonomous government in Mindanao will receive 75 percent of revenues from oil and other minerals extracted in the region, while the central government will 

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Southeast Asia from the Corner of 18th & K Streets  July 25, 2013 | 7 

get 25 percent. Both groups plan to reach a decision on the remaining contentious annexes, on power sharing and normalization of relations, by the end of 2013.

•  Supreme Court extends freeze on reproductive health bill. The Philippine Supreme Court voted 8-7 on July 16 in favor of indefinitely extending a hold on the implementation of the controversial 2012 Reproductive Health Law. The law allows the government to subsidize contraceptives and family planning methods for impoverished Filipinos. The court issued a temporary hold on the law on March 19 so it could hear oral arguments from 15 petitioners questioning its constitutionality. The Supreme Court was due to resume oral arguments on July 23.

•  Taiwan tightens visa applications for Philippine workers. Manila Economic and Cultural Office chairman Amadeo Perez said on July 12 that Taiwan has tightened visa application procedures for Philippine workers as part of sanctions against the country in the aftermath of the May 9 fatal shooting of a Taiwanese fisherman by the Philippine Coast Guard. Under the new protocol, Philippine workers have to wait at least 14 days for their visas to be issued, in comparison to a three-day processing time before the shooting. Taiwan’s hiring freeze has affected at least 16,000 Filipino workers, according to Perez.

vietnam

•  President Sang visits Washington. President Truong Tan Sang is visiting the United States from July 24 to July 26 at the invitation of U.S. president Barack Obama. The two will meet at the White House on July 25 to discuss bilateral relations, regional cooperation, and trade issues. Sang will meet with representatives of the U.S. administration, Congress, scholars, and business executives as well as the Vietnamese community in the United States. He will speak at CSIS’s Banyan Tree Leadership Forum on July 25.

•  Five drug dealers sentenced to death. State-run Vietnam News Agency reported on July 16 that a court in Bac Giang Province sentenced three men and two women to death for dealing about 172 pounds of heroin in the country. Four other women were sentenced to life in prison, and another four defendants received 20 years in jail. Vietnam has not conducted any executions since 2011, when it switched from using firing squads to lethal injections. There are currently more than 500 people on death row.

•  McDonald’s plans to open first store in Vietnam. McDonald’s announced on July 16 that it will open its first Vietnamese store, in Ho Chi Minh City, in 

A McDonald’s restaurant in Thailand. The fast food chain announced that it will open its first store in Vietnam in early 2014. http://www.flickr.com/photos/88774309@N00/367815572/

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Southeast Asia from the Corner of 18th & K Streets  July 25, 2013 | 8 

early 2014. Henry Nguyen, a Vietnamese-American investor and son-in-law of Prime Minister Nguyen Tan Dung, was selected as the company’s main franchise partner. Other western restaurant chains, including Starbucks, Subway, and Pizza Hut, have already opened stores in Vietnam. McDonald’s operates in more than 100 countries around the world, including 38 in Asia.

•  World Bank forecasts 5.3 percent growth for Vietnam. The World Bank released an economic outlook update on July 12 predicting that Vietnam’s economy will grow at a moderate rate of around 5.3 percent in 2013 and 5.4 percent in 2014. Vietnam’s growth has failed to breach the 6 percent benchmark for six consecutive years. Current economic growth has been the second slowest since the early 1990s. The World Bank warned that, without structural reforms in the state-owned sector, Vietnam faces the risk of a prolonged period of slow growth.

•  New decree holds strict data requirements for foreign companies. Prime Minister Nguyen Tan Dung signed a new set of legal requirements for Internet companies operating in Vietnam on July 15. The decree requires that foreign companies adhere to strict guidelines governing content hosted on their Web sites. It also mandates that they turn over personal information about users who violate Vietnamese law, though it omits an earlier draft’s requirement that foreign companies maintain offices in Vietnam. The new decree will take effect on September 1. 

thailand

•  Government reduces troops in the south during 40-day cease-fire. Deputy Prime Minister Pracha Promnok announced on July 16 that Thailand would temporarily withdraw troops from the country’s restive south. The announcement followed a lull in violence after the government and the insurgent group Barisan Revolusi Nasional (BRN) signed a 40-day cease-fire agreement for the Muslim holy month of Ramadan on July 12. Minor attacks have been reported since the agreement was signed, but no deaths have been reported. The army and BRN continue to disagree over whether Sadao District in Songkhla Province is included in the cease-fire.

•  Tests show chemicals in Thai rice; government says rice is safe for consumption. Thailand’s nongovernmental consumer watchdog agency, the Foundation for Consumers, on July 16 released the results of chemical and fungicide contamination tests on packed Thai rice available for sale. The results showed that 74 percent of the sampled rice contained methyl bromide, a toxic chemical used to kill rice-eating bugs. Prime Minister Yingluck Shinawatra played down contamination concerns by eating cooked rice in a factory to show that it is safe. She said the Public Health Ministry’s tests meet public safety standards. 

Thai rice for sale. Tests conducted by the Foundation for Consumers showed that 74 percent of packaged Thai rice contained methyl bromide, a toxic insecticide. http://www.flickr.com/photos/roadtrip-life/3936438539/

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Southeast Asia from the Corner of 18th & K Streets  July 25, 2013 | 9 

•  Criminal Court approves arrest warrant for defrocked monk. Thailand’s Criminal Court issued an arrest warrant on July 18 for ex-monk Wirapol Sukpol. The warrant, which is valid for 10 years, was issued for posting false information on the Internet to raise donations, statutory rape of a minor under the age of 15, and taking the minor away from her parents. The ex-monk was a relative unknown until a YouTube video of him in a private jet with lavish accessories went viral in June, sparking outrage in Thailand.

•  Yingluck calls on envoys to prepare for ASEAN Economic Community. Prime Minister Yingluck Shinawatra, in a meeting on July 16, called on Thailand’s ambassadors to ASEAN countries to help prepare the region to meet the 2015 deadline for the establishment of the ASEAN Economic Community. She stressed that the ASEAN Community is about cultural, security, and societal as well as economic integration. Foreign Minister Surapong Tovichakchaikul said on July 16 that he would transfer any Thai envoys to ASEAN countries who fail to meet their performance targets by the 2015 deadline.

•  Chulalongkorn apologizes for Hitler mural on campus. Chulalongkorn University, one of Thailand’s most prestigious universities, apologized on July 15 after students created a mural depicting Adolf Hitler among comic book superheroes. First-year students at the university created the mural as a congratulatory billboard for the 2013 graduating class and it hung for several days before being removed amid criticism. Art school dean Suppakorn Disatapundhu said that the students meant for Hitler, who was painted in gray, to be a contrast with the heroes, in color. He said the university is taking the matter “very seriously.”

cambodia

•  Opposition leader Sam Rainsy returns to Cambodia following royal pardon. Opposition leader Sam Rainsy, who had been living in self-exile in France since 2009, returned to Cambodia on July 19. King Norodom Sihamoni pardoned Rainsy on June 12 for his alleged involvement in Cambodia-Vietnam border protests, for which he was sentenced to 10 years in prison. Government officials said the decision was not related to the July 28 national elections, though they face considerable pressure to allow Rainsy to run. The National Election Commission said on July 22 that he remains barred from voting or running for office.

•  U.S. ambassador leads reverse trade mission to California. U.S. ambassador to Cambodia William Todd in early July led a delegation of more than 50 Cambodian business leaders to California and Washington, 

Ambassador to Cambodia William Todd (left) and Secretary of Defense Leon Panetta (right) at Angkor Wat in 2012. Todd led a reverse trade visit of Cambodian business leaders to California and Washington, D.C., to attract U.S. investment to the country. http://www.flickr.com/photos/secdef/8190847524/

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Southeast Asia from the Corner of 18th & K Streets  July 25, 2013 | 10

D.C., to advance commercial ties between the two countries. Delegates visited several U.S. groups, including the Overseas Private Investment Corporation in Washington and city officials in Long Beach, California, which is home to the country’s largest population of Cambodian-Americans. American Chamber of Commerce representative Daniel Mitchell testified before the House of Representatives Foreign Affairs Subcommittee as part of the visit, calling on Congress not to follow Republican lawmakers’ calls to withdraw aid to Cambodia following the July 28 elections. 

•  Cambodian families, UK sugar company head to court over illegal land seizures. A lawsuit filed by more than 200 Cambodian families against UK sugar company Tate & Lyle over alleged land seizures will proceed to court following failed negotiations in London in early July. Law firm Jones Day, which represents the complainants pro bono, said the company purchased sugar from a Thai firm that illegally evicted the families. Rights groups such as Global Witness say that firms have seized around 14 percent of Cambodia’s land from farmers for private profit.

malaysia

•  Vatican envoy apologizes for comments on use of “Allah.” The Vatican’s first-ever ambassador to Malaysia, Archbishop Joseph Marino, apologized to Foreign Minister Anifah Aman on July 16 for making a public statement five days earlier supporting non-Muslims’ right to use “Allah” to refer to God. Marino said he had not intended to meddle in Malaysia’s internal affairs and was advised to refrain from commenting on open court cases. Conservative Islamic groups contend that Christians’ use of “Allah” amounts to proselytizing and have demanded Marino’s expulsion from Malaysia. 

•  Two bloggers charged with sedition for Ramadan Facebook post. Prosecutors charged two ethnic Chinese bloggers, Alvin Tan and Vivian Lee, with inciting religious enmity and publishing seditious literature on July 17. The two had posted a “Ramadan greeting” on Facebook with a photo of themselves eating pork stew. The post sparked anger as an insult to Islam, and a group of Malaysian men kidnapped, stripped, and beat an ethnic Chinese man in apparent retaliation. Tan and Lee face up to eight years in prison if convicted and are being held without bail awaiting their next hearing on August 23. 

•  Government maintains low palm oil export taxes to spur demand. Malaysia plans to maintain a low 4.5 percent export tax on crude palm oil in August for the sixth month in a row, according to a July 15 government 

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Southeast Asia from the Corner of 18th & K Streets  July 25, 2013 | 11

report. The country is seeking to boost exports as global demand for palm oil falls and exports decline. Malaysia—the world’s number-two palm oil producer—is competing with top producer Indonesia and against the growing volume of soybean oil on global markets. Malaysia’s production has exceeded demand since late 2012. 

south china sea

•  Arbitral proceedings between China, Philippines begin. The UN tribunal hearing the Philippines’ case against Chinese claims in the South China Sea convened in The Hague, Netherlands, on July 11. The tribunal approved a draft set of rules to govern the proceedings during the meeting. The draft rules have been sent to Beijing and Manila, which have until August 5 to submit comments on them. China has so far refused to take part in the proceedings.

•  CNOOC, BP sign production-sharing contract. China National Offshore Oil Corporation and UK-based BP signed a production-sharing agreement on July 16 to develop a deep-water oil and gas block in the South China Sea. The 54/11 block is located in the Pearl River Mouth Basin in the northern portion of the sea and is not disputed with China’s Southeast Asian neighbors. BP already owns two deep-water blocks in the vicinity, both of which are in the exploration phase. 

•  War of words continues between Beijing and Manila. The latest round of rhetoric between Beijing and Manila over the South China Sea, which started at the ASEAN Regional Forum on July 2, continued with a July 16 statement from China’s Foreign Ministry accusing the Philippines of a lack of commitment to resolving disputes in a “step-by-step” manner. The Philippine Department of Foreign Affairs responded, calling the statement “baseless” and arguing that China’s “rigid” position on the disputed waters has made continuing bilateral discussions on the issue impossible.

singapore

•  Biden on six-day trip to Singapore, India. Vice President Joseph Biden arrived in Singapore on July 25 as part of a six-day trip that includes India. Biden’s meetings with Singaporean leaders will focus on “the centrality of Southeast Asia in [U.S.] regional strategy,” according to a White House statement. Biden gave a speech July 18 at George Washington University in Washington, D.C., during which he cited ASEAN’s economic importance to the United States and Singapore’s role in counter-proliferation and counter-piracy efforts as reasons for his visit to the city-state. 

A palm oil plantation. Malaysia will maintain its low export tax on crude palm oil to spur demand. http://www.flickr.com/photos/45423546@N07/5701875645/

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Southeast Asia from the Corner of 18th & K Streets  July 25, 2013 | 12

U.S. and Singaporean naval personnel collaborate during the 2013 CARAT exercises in the South China Sea. This year’s exercises end on July 26. http://www.flickr.com/photos/compacflt/9291994173/

•  Economy experiences strongest growth since 2011. Singapore’s economy grew an unexpected 15.2 percent in the second quarter of 2013, its best quarter since 2011, on the back of increased output from the electronic manufacturing industry. Economists expect growth to slow despite the strong quarter, citing continued sluggishness in the U.S. economy, China’s economic slowdown, recent regulations making it more difficult for companies to hire foreign workers, and the inevitable end of current inventory stockpiling by Singapore’s electronics and biomedical sectors. 

•  United States, Singapore hold joint naval exercises. Singaporean and U.S. forces are holding their annual Cooperation Afloat Readiness and Training (CARAT) exercises in the South China Sea from July 15 to 26. The exercises feature more than 1,400 personnel, two submarines, naval helicopters, war planes, and eight ships, including the littoral combat ship USS Freedom. The United States engages in eight bilateral CARAT exercises annually in an effort to boost interoperability between U.S. and partner nations’ forces in the Asia Pacific. 

•  Singapore surprised, disappointed with latest U.S. Country Report on Terrorism. Singapore’s Ministry of Home Affairs and Ministry of Foreign Affairs released a joint statement on July 17 expressing 

disapproval of the U.S. State Department’s 2013 Country Report on Terrorism, which accused the Singaporean intelligence community of providing only “selective cooperation.” The ministries highlighted what they described as solid working relationships with U.S. agencies. They also said that the report shows “a lack of understanding” of Singapore’s commitment to cooperative anti-terrorism efforts.  

trans-pacific partnership

•  Negotiators meet for 18th round of negotiations. Negotiators held the 18th round of the Trans-Pacific Partnership free trade negotiations in the Malaysian resort town of Kota Kinabalu from July 15 to July 25. Japan participated for the first time but had to wait until the last two days of the talks, after a 90-day U.S. congressional notification period for its inclusion ended. Details of the negotiations were not made public, but agricultural and dairy subsidies, rules of origin for textile exports, the role of state-owned enterprises, government procurement regulations, and pharmaceutical patents remain highly contentious topics of discussion. Negotiators continue to insist that an agreement is possible by the end of 2013, though most outside observers are skeptical of that time frame.

•  Business coalition calls for more domestic concessions on TPP. A coalition of 48 U.S. business associations sent a letter to United States 

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Southeast Asia from the Corner of 18th & K Streets  July 25, 2013 | 13

Trade Representative Michael Froman on July 23 urging his office to “tackle remaining sensitivities” in the ongoing Trans-Pacific Partnership (TPP) negotiations that might delay timely completion of the agreement. The groups indicated that Froman should address “the priorities of our TPP partners,” including in sectors like textile, apparel, sugar, and footwear. The coalition suggested that making concessions on such sensitive topics for the sake of concluding an agreement would serve the United States’ broader economic interests. 

asean

•  ADB cuts ASEAN growth forecast. The Asian Development Bank (ADB) released its annual Asian Development Outlook on July 16, projecting slower than expected economic growth for ASEAN countries in 2013 and 2014. ASEAN is now projected to grow at 5.2 percent in 2013 and 5.6 percent in 2014, down from April projections of 5.4 percent and 5.7 percent respectively. The ADB cited China’s drop in trade and scaling back of investment as the main factors for the slowdown. 

•  Indonesia’s foreign minister calls on ASEAN to play bolder role in world affairs. Indonesian foreign minister Marty Natalegawa on July 10 called on ASEAN countries to move beyond the “mantra of ASEAN centrality” and robustly assert the organization’s role on the world stage. Marty said ASEAN countries must be active in shaping and molding developments in the Asia Pacific as larger powers compete for influence. He also stressed the need for ASEAN to achieve the ASEAN Economic Community by 2015 to create a more unified and influential bloc.

laos

•  Deputy defense minister dies suddenly. Lao state media reported on July 19 that Deputy Defense Minister Maj. Gen. Sanyahak Phomvihane had died at the age of 45. Official reports did not disclose the cause of death but did reveal that the minister had sought treatment for a medical condition from both local and foreign doctors. Sanyahak, who was the son of Communist Laos’s first president, Kaysone Phomvihane, climbed quickly through the ranks of the Lao military and was viewed as a rising leader in the Communist Party.

•  South Korea to double aid to Laos. South Korea’s Foreign Ministry requested in mid-July that the Finance Ministry double foreign aid to Laos to $4.3 million in 2014. The assistance will support infrastructure, health, and education projects in the country. The move comes after Laos deported nine orphaned North Korean defectors to China, which maintains 

Indonesian foreign minister Marty Natalegawa. He called on ASEAN members to play a bolder role in shaping and molding developments in the Asia Pacific. http://www.flickr.com/photos/ctbto/6216744253/

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Southeast Asia from the Corner of 18th & K Streets  July 25, 2013 | 14 

a policy of repatriating refugees from North Korea. South Korean Foreign Ministry officials have not said whether the dispute prompted the assistance request. 

timor-leste

•  Timor-Leste turns back Rohingya asylum seekers. Timor-Leste maritime police turned away a boat carrying a group of Rohingya asylum seekers from Myanmar after they landed on one of the country’s outlying islands, according to a July 18 statement by the Australia-based Refugee Action Coalition. The asylum seekers subsequently traveled to nearby Wetar Island in Indonesia, then set off for Australia, where they are currently seeking asylum. Thousands of Rohingya have fled Myanmar by boat since May 2012 and are frequently denied access to other countries, especially Thailand and Australia.

apec

•  Business leaders meet in Kyoto for APEC Business Advisory Council. Business leaders from around the Asia Pacific attended the July 8–11 APEC Business Advisory Council meeting in Kyoto to offer recommendations for governments to deal with regional economic issues. They urged national leaders to continue promoting economic integration as a means of bolstering resilience and sustaining economic growth. Participants also agreed to recommend that APEC grant observer status to Colombia at future Regional Economic Integration Working Group meetings, in an acknowledgement of the need for greater cooperation between APEC members and Latin American nations.

brunei

•  Bruneians celebrate Sultan’s 67th birthday. Bruneians celebrated Sultan Hassanal Bolkiah’s 67th birthday on July 15, filling mosques across the country to pray for his welfare and the country’s security. The sultan attended a special thanksgiving prayer with members of the royal family at Jame’ ‘Asr Hassanil Bolkiah Mosque. A traditional 21-gun salute was also held in commemoration of the special occasion.

•  Russia-Brunei in discussions on joint economic projects. Russia proposed on July 16 to establish a bilateral commission with Brunei to develop joint economic ventures in the sultanate. Russian ambassador to Brunei Victor Seleznev said that opportunities for public-private cooperation and the diversification of links between Russian and Bruneian businesses should be explored. Russia and Brunei have developed closer relations since 2012 due in part to their involvement in APEC activities. ▪

View of downtown Kyoto. Business leaders from across the Asia Pacific traveled to the city for the APEC Business Advisory Council meeting. http://www.flickr.com/photos/gryphtor/2665840923/

Sultan Hassanal Bolkiah (foremost standing) celebrates his birthday in 2005. Bruneians gathered in mosques on July 15 to pray for the sultan’s welfare on his 67th birthday. http://www.flickr.com/photos/ameztegui/3445388315/

Looking Ahead

1800 k street nw, washington dc 20006 | t. 202.775.3211 | f. 202.775.3199 | www.csis.org

•  Vietnamese president Truong Tan Sang speaks at CSIS. CSIS will host Vietnam’s president Truong Tan Sang for a Banyan Tree Leadership Forum speech on July 25. President Sang is visiting the United States at the invitation of U.S. president Barack Obama and will be meeting with U.S. officials, legislators, and the business community. The event will begin at 5:00 p.m. in the CSIS B1 Conference Center, 1800 K St., NW. Attendance is by invitation only, but the speech will be webcast here.

•  U.S.-Russia relations and the Asia Pacific. The International Institute for Strategic Studies (IISS) will host a panel discussion July 26 on the Asia Pacific’s growing importance to the United States and Russia and the challenges it presents for U.S.-Russia relations. The speakers will be Moscow State Institute of International Relations’ Oleg Barabanov, IISS’s Samuel Charap, CSIS’s Jeffrey Mankoff, and Princeton University’s Gilbert Rozman. The event will be held from 10:00 a.m. to 11:00 a.m. IISS, 2121 K St., NW, Suite 801. Please RSVP here.

•  The U.S. role in improving Mekong health security. CSIS will host a discussion July 29 on how the United States can creatively and cooperatively utilize its health-care capacities and good will to strengthen partnerships and improve health security in the Mekong Delta. Admiral William Fallon, U.S. Navy (retired), and Lieutenant General James Peake, U.S. Army (retired), will provide keynote addresses, followed by an expert panel. The event will be held from 12:00 p.m. to 2:00 p.m. in the CSIS B1 Conference Center, 1800 K St., NW. Please RSVP here.

•  Panel on urban spaces and global sustainability in Asia. The Wilson Center will host an expert panel discussion on July 29 on the relationship between industrial and urban environmental threats and their impact on local and global interests in Asia. Warren Evans, senior adviser for sustainable development at the World Bank, will moderate the discussion. The event will be held from 1:00 p.m. to 3:30 p.m. on the fifth floor of the Wilson Center, 1300 Pennsylvania Ave., NW. Please RSVP to cusp@wilsoncenter.org, indicating “July 29” in the subject line.

•  Wildlife trafficking and its links to development in Asia and Africa. The Society for International Development will host a discussion on July 30 on the threat of wildlife trafficking to the environment, economic and 

1800 k street nw, washington dc 20006 | t. 202.775.3211 | f. 202.775.3199 | www.csis.org

Southeast Asia from the Corner of 18th & K Streets  July 25, 2013 | 16 

national security, and public health in Asia and Africa. Steve Galster, executive director of the Freeland Foundation and chief of party of USAID’s program on Asia’s Regional Response to Endangered Species Trafficking, will be the main speaker. The event will be held from 9:30 a.m. to 11:00 a.m. on the third floor of the Society for International Development, 1101 15th St., NW. Please RSVP here. ▪

This newsletter is published by the Sumitro Chair for Southeast Asia Studies at the Center for Strategic and International Studies (CSIS) in Washington, D.C., a pri-vate, tax-exempt institution focusing on international public policy issues. CSIS’s research is nonpartisan and nonproprietary. CSIS does not take specific policy po-sitions; accordingly, all views, positions, and conclusions expressed in this publica-tion should be understood to be solely those of the author(s).

© 2013 by the Center for Strategic and International Studies. All rights reserved.

For more details on our programs and to follow CSIS with real-time updates,      follow the CSIS Chair for Southeast Asia Studies:

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Thank you for your interest in U.S. policy in Southeast Asia and the CSIS  Sumitro Chair for Southeast Asia Studies. Join the conversation!  

southeast asia from the corner of 18th & k streets CSIS Sumitro Chair for Southeast Asia Studies contributors:

Ernest Bower, Senior Adviser and Chair Murray Hiebert, Senior Fellow and Deputy Director Gregory Poling, Research Associate Phoebe De Padua, Researcher Amy Killian, Researcher Matthew Hnatio , Researcher Noelan Arbis, Researcher Blake Day, Researcher