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                                                                                                                       Asean Affairs  August 22, 2014 

Biweekly Update


Kerry attends ASEAN Regional Forum, meetings in Myanmar. Secretary of State John Kerry on August 9–10 led a U.S. delegation to attend the August 10 ASEAN Regional Forum (ARF), U.S.-ASEAN Ministerial Meeting, and Lower Mekong Ministerial Meeting in Naypyidaw. Tensions in the South China Sea took center stage during the ARF, which includes 26 nations and the European Union as well as the meeting of the 10 ASEAN foreign ministers. Kerry voiced support for preventive diplomacy and peaceful resolution of maritime disputes according to international law. He also supported a Philippine proposal for a freeze on escalatory actions in disputed waters, which China had already rejected. Kerry also highlighted U.S. efforts to support regional stability and inclusive economic growth in Southeast Asia.


First credit rating coming soon. Officials in Myanmar said August 12 that they are in talks for the country to receive its first official credit rating. UK-based Standard Chartered Bank has already begun the process of analyzing the country’s financial records to determine how much risk investors can expect. Analysts predict that Myanmar, which is one of the poorest countries in the world, will receive a credit rating far below the investment level common among developed countries.

Kerry stays in hotel owned by blacklisted businessman. Secretary of State John Kerry inadvertently stayed the night in a hotel owned by Zaw Zaw, a Myanmar businessman sanctioned by the U.S. Treasury Department, during the secretary’s August 9–10 visit to Naypyitaw for the ASEAN Regional Forum and related meetings. The hotel is managed by a company based in France, but Zaw Zaw, who is blacklisted for his ties to Myanmar’s previous military regime, owns the property. The State Department has maintained that Kerry broke no laws by staying in the hotel.

First foreign telecom begins wireless operations. Qatar-based Ooredoo on August 15 became the first foreign telecommunications company to begin offering services in Myanmar. Norway’s Telenor will join it in September. The two are the only foreign companies so far granted telecom contracts by the government. Eight of every 10 phones sold in Myanmar is a smartphone, suggesting that most people will be using phones as their primary means of accessing the Internet, according to research firm Deloitte. Experts still expect coverage to remain spotty for several months even in urban areas like Yangon as Ooredoo and Telenor scramble to build mobile phone infrastructure.

Chinese firm says it will renegotiate dam terms to meet local energy needs. Power Construction Corporation of China, which has contracts to build a series of hydroelectric dams in Myanmar, consented on August 11 to renegotiate its prior agreements to ensure its projects better serve Myanmar’s energy needs. The company previously cut deals with the government of Myanmar to transmit over 90 percent of the electricity produced by its planned dams back to China. Myanmar officials recently promised to provide electricity to the whole country by 2030. Only a quarter of the population currently has regular access to electricity.

Curfew lifted in Mandalay, but security forces remain vigilant. The Mandalay regional government on August 12 lifted a curfew put in place on July 3 after clashes between Buddhist and Muslim residents left two dead. Authorities say the violence began when three Buddhists spread a false accusation that a Muslim shop owner had raped a Buddhist woman, leading to rioting. The three are currently on trial. The government said it will not pare back the heavy security presence on the streets for the foreseeable future despite lifting the curfew.


Aquino expresses interest in second term. President Benigno Aquino said in an August 13 interview that he would be open to amending the Philippine constitution to allow him to run for a second six-year term. Aquino has rejected the idea of constitutional reform in the past, but the Supreme Court’s recent decision to strike down one of his administration’s key spending programs has emboldened him to push for amendments limiting the court’s power. His current term as president will end in 2016.

EU approves $41 million loan for health sector improvements, typhoon relief. The European Union on August 12 approved a $41 million loan package to the Philippines to aid in health sector reform and relief for victims of November 2013’s Typhoon Haiyan. The agreement brings total EU support for these efforts to nearly $160 million since 2006. Finance Secretary Cesar Purisima thanked a visiting EU delegation for the bloc’s assistance to those still suffering from the effects of Haiyan, adding that the aid package would complement the government’s own health care reform efforts.

Negotiators prepared to submit draft Bangsamoro law to president’s office. Negotiators from the Philippine government and the Moro Islamic Liberation Front on August 15 concluded talks on a draft Bangsamoro Basic Law to establish an autonomous political unit on the southern Philippine island of Mindanao. President Benigno Aquino’s office will now review the draft and forward it to the Philippine Congress. The law is required to implement a peace deal that the government and Moro separatists reached in March. The government had hoped to complete the draft by May 5, and legislators are now concerned that the delay will prevent them from passing it into law by the end of 2014, as originally envisioned.

Police apprehend fugitive ex-general. Philippine police on August 12 captured former general Jovito Palparan, who had been on the run for nearly three years. Palparan was wanted in connection with the 2006 disappearance of two University of the Philippines students active in leftist groups. Palparan has continued to maintain his innocence, saying he has no regrets following his decades of fighting Communist insurgents. According to Congressman Carlos Zarate, military contacts may have been involved in helping Palparan evade capture for so long.

Indonesia, Malaysia, Philippines form ad hoc body to arrest militant. Indonesia, Malaysia, and the Philippines on August 12 agreed to form an ad hoc body tasked with arresting Zulkifli Abdhir, known as Marwan, a Malaysian leader of the terrorist group Jemaah Islamiyah believed to be hiding in the southern Philippines. The Philippine military had reported that Marwan was killed in a 2012 air strike on an Abu Sayyaf camp, but authorities recently acknowledged that he likely survived. Indonesia, Malaysia, and the Philippines signed an agreement in 2002 to cooperate in fighting terrorism within their borders.


Freeport resumes copper exports. U.S.-based mining giant Freeport McMoran on August 12 resumed exports of copper from Indonesia after a seven-month hiatus. The company reached an agreement with the Indonesian government that includes provisions to pay higher export taxes until the company divests a 30 percent share of its smelting subsidiary to Indonesian stakeholders. Freeport halted exports in January when a controversial ban on the export of unprocessed mineral ores came into effect. The ban is an attempt by Indonesian authorities to spur investment in domestic processing facilities and increase the value of the country’s exports.

Jokowi says Indonesia ready to assume mediator role in South China Sea disputes. President-elect Joko “Jokowi” Widodo on August 12 expressed interest in seeing Indonesia play a mediating role in ongoing territorial and maritime disputes in the South China Sea. His comments followed the August 10 ASEAN Regional Forum, during which participants discussed the disputes but failed to make any progress. Jokowi has refused to consider possible military escalations in the South China Sea, focusing instead on the role of diplomacy and conclusion of a code of conduct among parties to the disputes.

Corruption commission probes former governor of Bank Indonesia over tax waiver. Indonesia’s Corruption Eradication Commission on August 11 questioned former Bank Indonesia governor Darmin Nasution as part of an ongoing investigation into possible wrongdoing by his predecessor, Hadi Poernomo. Hadi is accused of accepting kickbacks in 2004 to approve a tax waiver for Bank Central Asia (BCA), the third-largest lender in the country. After BCA was denied a tax waiver, the decision was overturned by Hadi one day before the bank would have been forced to pay over $32 million in back taxes.

Government considers selling off public stakes in banks in plan to reduce borrowing costs. An official from Indonesia’s Coordinating Ministry for Economic Affairs said August 11 that the Indonesian government may consider selling off some of its bank shares in order to free up more credit for industry investment. President-elect Joko “Jokowi” Widodo has set a goal of 7 percent annual economic growth when he takes office in October, which will be difficult to achieve if the cost of borrowing remains high. Jokowi is also considering other options to redistribute state funds, including eliminating Indonesia’s expensive fuel subsidies.


U.S. senators visit Vietnam; McCain supports lifting ban on arms sales. U.S. senators John McCain (R-AZ) and Sheldon Whitehouse (D-RI) visited Vietnam from August 7 to 10 for talks with senior Vietnamese officials including Prime Minister Nguyen Tan Dung and Communist Party general secretary Nguyen Phu Trong. During a meeting with Defense Minister Phuong Quang Thanh, McCain said he supports the gradual lifting of the U.S. ban on lethal arms sales to Vietnam starting in September. Both senators discussed recent tensions in the South China Sea, including the need to abide by international law, and Whitehouse told the media that the United States would work with Vietnam to complete the Trans-Pacific Partnership trade agreement.

Joint Chiefs chairman visits Vietnam. Gen. Martin Dempsey on August 14–17 became the first chairman of the U.S. Joint Chiefs of Staff to visit Vietnam since 1971. He met with Vietnam’s army chief of general staff Do Ba Ty in Hanoi. The two generals addressed the legacies of the Vietnam War but focused on maritime security issues, including the possibility of the United States helping to boost Vietnam’s Coast Guard law enforcement capabilities. Dempsey also visited Danang, site of a former U.S. military base, and Ho Chi Minh City.

Vietnam to lift casino ban on locals. Vietnam’s Ministry of Finance on August 12 submitted to Prime Minister Nguyen Tan Dung a draft decree that would lift a ban on citizens gambling in casinos within the country. The decree would also ease requirements for those looking to invest in casinos but would restrict casinos from running online gambling services. Vietnam’s Communist Party Politburo in 2013 agreed that Vietnamese who meet certain criteria could gamble at a casino to be built in the Van Don Economic Zone in northeastern Vietnam’s Quang Ninh province.

Vietnam cancels multiple hydropower projects due to high risks. Vietnam’s Ministry of Industry and Trade on August 13 canceled 12 planned hydropower projects due to environmental concerns and uncertain economic returns. The projects are located across three provinces in central and northern Vietnam: Dien Bien, Quang Ngai, and Kontum. Vietnam has cancelled 415 planed small hydropower projects in recent years and currently has 284 operational hydropower projects with a combined capacity of over 14,000 megawatts.


Supreme Court rejects Thaksin’s complaint against defunct graft court. Thailand’s Supreme Court on August 14 rejected a complaint by former prime minister Thaksin Shinawatra about a graft charge that prompted his self-imposed exile in 2008. The now-defunct Assets Scrutiny Committee had charged Thaksin with abuse of authority due to a conflict of interest in his wife’s purchase of land from a state-run institution. The Supreme Court claimed it has no jurisdiction over the case because it falls under Thailand’s Criminal Division for Holders of Political Positions.

Economy grows in second quarter. Thailand’s economy grew 0.4 percent in the second quarter of 2014 compared to the same period in 2013, according to an August 18 report by the country’s National Economic and Social Development Board. It was the first annualized quarterly growth since the country suffered severe flooding in late 2011. Thailand’s exports grew for the first time in four quarters—by 0.4 percent. Despite these positive signs, the board revised its projection for annual economic growth to 1.5–2 percent, down from 1.5–2.5 percent, due to a 10 percent drop in tourist arrivals.

Junta cracks down on commercial surrogacy. Junta leaders on August 13 approved a draft bill that would make the commercial contracting of surrogate mothers illegal in Thailand. The decision follows two high-profile surrogacy cases that have attracted international attention. One case involves an Australian couple’s alleged abandonment of their child with Down syndrome to their Thai surrogate, while a second concerns a Japanese businessman who may have fathered as many as 13 children with Thai surrogates. The bill is currently awaiting approval by the National Legislative Assembly and King Bhumibol Adulyadej before becoming law.

Thailand extradites drug traffickers accused of smuggling North Korean meth to U.S. The United States on August 12 charged five individuals for attempting to smuggle over 200 pounds of methamphetamines from North Korea to the United States. The suspects were apprehended in Thailand during a September 2013 drug raid, but authorities in Bangkok only recently agreed to extradite them to the United States for trial. Police in Northeast and Southeast Asia confiscated 59 percent more meth in 2014 than the previous year, due in part to its growing popularity among youth, according to the United Nations.

Government encourages farmers to cut down rubber trees, replace with oil palms. Thailand’s government on August 5 announced plans to encourage farmers to reduce their reliance on rubber trees and switch instead to more lucrative crops like oil palm. The government said it will pay farmers $655 for every 1,600 square acres of rubber trees they cut down. An increase in production in recent years has driven the price of rubber down 60 percent, making it unprofitable for many growers. Thailand is currently the world’s largest producer and exporter of rubber.


Najib says ASEAN is key to keeping Malaysia peaceful. Prime Minister Najib Razak gave a speech on August 8 praising ASEAN’s success in keeping Southeast Asia, and Malaysia in particular, peaceful and prosperous. Najib made the speech to commemorate the 47th anniversary of ASEAN’s founding in 1976. He stressed the importance of maintaining ASEAN solidarity amid tensions with China that have at times put the organization’s member states at odds with each other. Malaysia will take over as chair of ASEAN in 2015 and will oversee the implementation of the ASEAN Economic Community at the end of that year.

Selangor chief minister considers dissolving state assembly. Khalid Ibrahim, chief minister of western Malaysia’s Selangor state, said August 15 that he would consider dissolving the state assembly and resigning, but only after speaking with the Sultan of Selangor, who is currently traveling abroad. A disciplinary council within the opposition People’s Justice Party ousted Khalid from the party in early August for refusing to step aside in favor of party president Wan Azizah Wan Ismail. The months-long political struggle has set members of the three-party opposition coalition at odds.

Government announces takeover of Malaysia Airlines. The Malaysian government’s investment arm, Khazanah Nasional, announced on August 8 that it would delist struggling Malaysia Airlines and buy out stockholders ahead of a planned restructuring of the company. The national airline was already facing financial hardship before the losses of Flight 370 in March and Flight 17 in July, forcing the government to take action. Shortly after the announcement, Malaysia Airlines’ stock price shot up about 10 percent.


Government plans to revise state pension plans. Prime Minister Lee Hsien Loong announced plans on August 17 to revise parts of Singapore’s state-run savings plan, including additional financial assistance to low-income pensioners with insufficient savings. The planned changes come after 2,000 people in June took part in one of the largest public demonstrations in Singapore’s recent history to protest a government plan to raise the minimum retirement savings threshold by 3.9 percent. Lee has said he will still continue with the planned increase, which will take place in July 2015.

Economy unexpectedly expands. Singapore’s Ministry of Trade and Industry released a report on August 11 showing the country’s economy grew 0.1 percent in the second quarter of 2014, beating projections of a 0.8 percent contraction. Singapore is highly export-dependent and the unexpected growth seems to be due largely to recovering economies elsewhere around the world. Prime Minister Lee Hsien Loong has predicted the city-state’s economy will grow between 2.5 and 3.5 percent in 2014.

Singapore hosts annual naval exercises. Singapore on August 11 began hosting the five-day Southeast Asia Cooperation and Training (SEACAT) exercises, which included naval personnel from Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand, and the United States. The exercises simulate potential maritime security challenges requiring multinational responses, including piracy and smuggling, which have continued to plague Southeast Asia in recent months. SEACAT began in 2002 as cooperative exercises to combat terrorism in the region.

New Singaporean airline Vistara to begin flights in October. Singapore Airlines and India’s Tata Sons announced on August 11 that the first flights of their newly formed airline, Vistara, would begin in October 2014. Vistara plans to operate flights to and from India and will compete with current carriers Jet Airways India and Air India. Most Indian airlines are currently losing money due to high fuel costs, but the gamble by Singapore Airlines and Tata may pay off if the Indian market for air travel continues to grow as analysts predict.


Australian immigration minister to visit Cambodia for conclusion of refugee resettlement deal. Cambodia’s Interior Ministry said August 11 that Australian immigration minister Scott Morrison will soon visit Phnom Penh to finalize a deal that would send refugees to Cambodia from an Australian detention facility on Nauru. The ministry also said that Australian ambassador to Cambodia Allison Burrows met with Cambodian interior minister Sar Kheng on August 9 for final negotiations on the deal. Australian authorities refused to confirm either Morrison’s planned visit or Burrows’s meeting with Sar Kheng.

Chinese firm to open duty-free stores in Cambodia. The manager of China Duty Free Group Cambodia said August 12 that the company plans to invest $35 million to set up two duty-free stores in Siem Reap and Phnom Penh. The stores will be the company’s first outside of Cambodia’s airports. Cambodia receives five million tourists every year and its tourism industry is growing at an annual rate of 15 percent.

South China Sea

Philippines warns of renewed tensions over Chinese presence in Reed Bank. Philippine Department of Foreign Affairs spokesperson Charles Jose on August 18 warned Beijing that the continued presence of Chinese vessels in disputed waters around Reed Bank could lead to heightened tensions between the two countries. The Philippine Navy reported that two Chinese research ships were spotted in the disputed waters, which are believed to hold significant natural gas reserves. London-listed Forum Energy has held a license from the Philippines to explore for oil and gas in Reed Bank since 2010.

Indian warship visits Vietnamese port. The INS Shivalik, an Indian guided missile stealth frigate, on August 5 visited Vietnam’s Haiphong port on the South China Sea in what an Indian Navy spokesperson insisted was an effort to strengthen bilateral ties. India has increased naval ties with Southeast Asian nations in recent years as part of its “Look East” policy, which has at times drawn objections from China. Indian Navy vessels last visited Haiphong in May 2012, drawing a rebuke from China for transiting the South China Sea without Beijing’s permission.


Sultan makes $2 billion bid for New York, London hotels. Luxury hotel operator Dorchester Collection, which is owned by the Brunei Investment Agency and by extension Sultan Hassanal Bolkiah, has reportedly made a $2 billion bid for New York’s Plaza Hotel and Dream Hotel in Manhattan and the Grosvenor House in London, according to an August 16 Wall Street Journal article. A spokesman for the sultan on August 18 denied the report, which sparked criticism from human rights groups. Dorchester properties in Europe and the United States, including the Beverly Hills Hotel, have been the target of boycotts following Brunei’s implementation of shar‘ia law in May.

Royal Brunei Airlines purchases new aircraft, considers more flights to Australia. Royal Brunei Airlines chief commercial and planning officer Karam Chand said August 8 that his company’s recent order of seven Airbus A320neo planes would open up the possibility for more flights to Australia in the coming years. The new planes are 15 percent more fuel-efficient than their predecessors are, allowing another 500 nautical miles of range and saving thousands of dollars on fuel each trip. The planes are expected to be delivered in 2018.


United Nations expects drop in Laos’s annual rice production. The United Nations’ Food and Agriculture Organization expects Laos’s rice production to decrease by 3 percent in 2014 compared to the year before, according to an August 13 Laos Investment Review report. The organization says low rice prices have caused farmers to switch to alternative crops. It expects Laos’s cereal exports—mainly to neighboring Cambodia, China, Thailand, and Vietnam—to increase by 3 percent.

Lao army director, National Assembly delegation meet Vietnamese counterparts. Vilay Lakhamphong, director of the Lao People's Army, hailed the effectiveness of cooperation between the Lao and Vietnamese armies during an August 12 meeting in Danang with Vietnam People's Army Department of Politics head Ngo Xuan Lich. Lich expressed hope that Laos will continue to facilitate the search for the remains of Vietnamese soldiers killed during the Vietnam War. On the same day, Vietnam National Assembly Committee for External Relations vice chairman Nguyen Manh Tien visited Vientiane and pledged to support the country in hosting the upcoming ASEAN Inter-Parliamentary Assembly.

Trans-Pacific Partnership

Indian commerce secretary suggests forming economic bloc to challenge TPP. India’s commerce secretary, Rajiv Kher, said August 12 that India should increase its trade with Africa, China, Latin America, Russia, and certain ASEAN countries to challenge the Trans-Pacific Partnership (TPP). He said that although it was not invited to join the TPP, India should strengthen its support infrastructure and reduce red tape in order to become more competitive. Kher also suggested that India boost relations with Cambodia, Laos, and Vietnam and make use of those countries’ existing arrangements with major markets.

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This year in Thailand-what next?

AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More






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