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                                                                                                                       Asean Affairs   1 April 2016

Biweekly Update


Philippines, U.S. hold annual exercise; U.S. defense secretary pays visit. U.S. and Philippine forces on April 4 began their annual Balikatan exercise, involving more than 8,000 U.S. and Philippine military personnel. This year marks the first time Australian forces participated in parts of the exercise and Japanese forces were invited to observe. U.S. Defense Secretary Ashton Carter is expected to fly in to observe the live firing of missiles from the U.S. rocket launcher system HIMARS, which was transported to the Philippines for this year’s exercise. U.S. and Philippine officials said the rocket launcher will be moved to Palawan Island following the exercise, which ends on April 15.

U.S. Marine gets reduced jail sentence in homicide case. A court in Olongapo on March 29 reduced the jail sentence for Joseph Scott Pemberton, the U.S. Marine convicted of homicide in the death of Filipino transgender woman Jennifer Laude, from 12 years to 10 years, but it rejected Pemberton’s appeal for “partial reconsideration” of his conviction. The ruling came two weeks before U.S. Secretary of Defense Ashton Carter’s visit to the Philippines, where he is expected to meet with President Benigno Aquino and his Philippine counterpart, Voltaire Gazmin, and finalize details on the Enhanced Defense Cooperation Agreement between the two countries.

Military clashes with Abu Sayyaf in Basilan, at least 18 soldiers and 13 Abu Sayyaf members killed. A 10-hour clash on April 9 between the Philippine military and Abu Sayyaf guerillas in Tipo-Tipo, Basilan, resulted in the death of at least 18 soldiers and five Abu Sayyaf members, including Moroccan bomb expert Mohammad Khattab and the son of Abu Sayyaf leader Isnilon Hapilon. Another 56 soldiers and 20 Abu Sayyaf members were wounded. The military, which was on a mission to capture Hapilon, was ambushed by Abu Sayyaf members. Another encounter on April 10 left eight Abu Sayyaf members dead.

Japanese submarine, warships call in Subic port. Two Japanese destroyers, the JS Ariake and JS Setogiri, and the submarine Oyashio paid a port call to Subic Bay from April 3 to 6. The Philippines has been strengthening its defense ties with Japan amid rising tensions in the South China Sea. The visit marks the first time a Japanese submarine has visited the Philippines in 15 years. The two destroyers sailed to Cam Ranh Bay in central Vietnam for another regional port visit following their stop in the Philippines.

Philippines launches mass dengue immunization for school children. The Department of Health on April 4 launched a school-based dengue immunization program, less than four months after Philippine authorities approved the sale of dengue vaccine. Over a million 9-year-old students in the Manila area, Central Luzon, and Calabarzon will receive the immunization. Health advocates have questioned the “rushed” implementation of the program, as the World Health Organization has yet to issue its recommendations on the world’s first dengue vaccine.

Protest in Kidapawan City violently dispersed. Police in Kidapawan City, the capital city of Cotabato Province in the southern Philippines, on April 1 violently dispersed a protest by farmers, killing at least two and injuring several others on both sides. Thousands of farmers had gathered to demand government assistance in light of an ongoing drought. The Philippine Senate held a public hearing on the incident on April 7 in Davao City, during which police superintendent Alexander Tagum argued that his officers’ use of guns to disperse protesters was justified.


Aung San Suu Kyi becomes state counselor, gives up two ministerial posts. President Htin Kyaw on April 6 signed into law a bill to give Aung San Suu Kyi the title of “State Counsellor of Myanmar,” a position that allows her to use government resources and hold meetings for any purposes she deems fit. The National League for Democracy tabled the bill shortly after it came into power on April 1, and it was quickly passed by both houses of Parliament despite the objection of military lawmakers. Aung San Suu Kyi now serves as state counselor, foreign minister, and minister in the President’s Office. She gave up the posts of education minister and energy and electricity minister to Myo Thein Gyi and Pe Zin Tun, respectively.

Chinese foreign minister visits Myanmar, pledges support for NLD government. Chinese Foreign Minister Wang Yi visited Myanmar on April 5 to meet with his counterpart, Aung San Suu Kyi, shortly after the transfer of power to the National League for Democracy government. Wang said China will support the new government and wants to help Myanmar achieve national reconciliation. Aung San Suu Kyi said she did not talk with Wang about the future of the controversial Chinese-backed Myitsone dam in northern Myanmar. Former president Thein Sein suspended the Myitsone project in 2011 over environmental concerns by the public.

Chinese company approved to develop $3 billion refinery in Dawei. Executives from Guangdong Zhenrong Energy, a Chinese state-controlled commodity trading company, announced on April 5 that their company had won approval from the Myanmar Investment Committee to build a $3 billion refinery in the southeastern city of Dawei. The project will also include an oil terminal and storage and distribution facilities. The Chinese firm will control 70 percent of the project, with three local companies—military-linked Myanmar Economic Holdings, a company affiliated with the Ministry of Energy, and privately-owned Htoo Group—holding the remaining stake.

NLD government forms new financial commission. The President’s Office on April 5 announced the establishment of a new 21-person financial commission tasked with managing budgets for national-level organizations and regional and state governments. President Htin Kyaw will serve as chair, while the two vice presidents will act as vice chairpersons of the commission. Former lower house speaker Shwe Mann, who currently chairs the parliamentary commission on legal affairs and special issues, has called on the new government to review the $20 billion budget for 2016-17 that was passed in January by the previous government.

New religious affairs minister stirs controversy over remarks about Muslims. Minister of Religious Affairs and Culture Aung Ko said in an interview with the Voice of America Myanmar-language service on April 1 that the previous government “did not oppress or restrict” religious minorities, including Islam and Hinduism, two religions practiced by most “associate citizens” in Myanmar. Aung Ko’s comments created controversy among Muslim organizations in Myanmar, which demanded to know whether the National League for Democracy government supports Aung Ko’s position. Aung Ko was a former military officer and deputy religious affairs minister under the previous Union Solidarity and Development Party government.

NLD government frees political prisoners and activists. The National League for Democracy government on April 9 released 113 political prisoners, two days after State Counsellor Aung San Suu Kyi announced plans to free political prisoners and detained activists as soon as possible. The new government also dropped charges against more than 60 student activists who had been on trial for being involved in last year’s protest against a new education law. The Thailand-based Assistance Association for Political Prisoners estimates that more than 400 political prisoners in Myanmar are awaiting trial.


Air Force prepares to deploy Skyshield air defense systems to Natuna Islands. The Indonesian air force is preparing to deploy four units of the Skyshield air defense systems along the Ranai air base in the Natuna Islands facing the South China Sea, according to an April 5 report by IHS Jane’s. According to the report, Commander-in-Chief General Gatot Nurmantyo informed the commission on defense, intelligence, and foreign affairs in the Indonesian House of Representatives of the deployment during a recent meeting. Nurmantyo reportedly requested $90 million to fund the acquisition of more medium-range air defense systems and fighter aircraft.

Indonesian finance minister wants to pursue U.S. tech companies for back taxes. Finance Minister Bambang Brodjonegoro on April 6 said Indonesia will pursue back taxes from Facebook, Google, Twitter, and Yahoo. According to Bambang, the companies have enjoyed lower taxes for the past few years by running their businesses as representative offices. The minister said Google, Facebook, and Twitter, which were recently forced to incorporate in Indonesia, will now be subject to local taxes. Indonesia has been struggling to meet its 2016 tax collection target of $117 billion.

Pertamina eyes $651 million in savings from liquidation of Petral Group. The president director of state-owned oil and gas company Pertamina, Dwi Soetjipto, on April 4 said that the liquidation of Petral and its two subsidiaries in Hong Kong and Singapore should be completed by the middle of 2016. Petral, which was responsible for managing Pertamina’s oil imports, had been plagued by corruption charges. Pertamina last year decided to dissolve the group and manage its crude oil and fuel oil imports directly. With the dissolution of Petral and its subsidiaries, Pertamina expects to save approximately $651 million.

Indonesia calls on China to return illegal fishing vessel; blows up 23 more foreign fishing boats. Minister of Fisheries and Maritime Affairs Susi Pudjiastuti on April 1 called on China to hand over the fishing boat that was rammed free by the Chinese Coast Guard after it was detained for illegal fishing by an Indonesian vessel near Natuna Islands. Susi also said China should not “bully” smaller countries, and added that she believed the Chinese government will decide to hand over the vessel. Meanwhile, Indonesia on April 5 blew up 10 Malaysian and 13 Vietnamese boats that were caught fishing illegally in Indonesian waters.

Coca-Cola to open $63 million mega distribution center in Surabaya. The president director of Coca-Cola’s Indonesia unit, Kadir Gunduz, on April 1 said the beverage maker will open a $63 million mega distribution center in Surabaya, which is expected to begin operations in late 2016. Indonesia has become one of Coca-Cola’s largest markets, with sales growing by nearly 9 percent between 2014 and 2015. Coca-Cola last year injected $500 million into the country to expand its operations, and currently has mega distribution centers in Cibitung, Medan, and Semarang.

Indonesian vessel hijacked to the Philippines, Special Forces preparing to help rescue hostages. The Indonesian Embassy in Manila on March 28 said Indonesian fishing vessel Adnan 12 had been hijacked and its 10 crew members had been taken as hostages in the Philippines. The terrorist group Abu Sayyaf in the southern Philippines later said it was responsible for the kidnapping, and demanded a $1 million ransom for the release of hostages. The Indonesian police and military have formed a special task force to rescue the sailors should the Philippine government approve the operation.


New prime minister takes office. The National Assembly on April 7 elected Nguyen Xuan Phuc as Vietnam’s new prime minister, after the Politburo and Central Committee of the Vietnamese Communist Party put forward Phuc’s name for the post in January. Phuc, who was a deputy prime minister under former premier Nguyen Tan Dung, pledged to defend Vietnam’s sovereignty, fight corruption, and improve conditions for business in his first official speech as prime minister.

U.S. religious envoy makes study trip across Vietnam, including in Central Highlands. David N. Saperstein, U.S. ambassador-at-large for international religious freedom, said during his visit to Vietnam from March 26 to 31 that Vietnam is “moving in the right direction” on legal religious freedom. Saperstein met with government, religious, and other civil leaders in the central provinces of Kontum and Gia Lai, home to a number of Vietnam’s ethnic minorities. He said, however, that problems remain in areas, such as authorities’ harassment of unregistered churches in ethnic minority communities.

NTE report shows U.S.-Vietnam trade increasing, but barriers remain. U.S. exports to Vietnam increased by 23 percent to $7.1 billion, while imports from Vietnam grew by 24 percent to $38 billion between 2014 and 2015, according to the U.S. Trade Representative’s 2016 National Trade Estimate report released on March 23. U.S. foreign direct investment in Vietnam reached $1.5 billion in 2014, a 10.7 percent increase from 2013. The report highlights U.S. concerns over food safety and intellectual property rights protection, as well as the fact that most U.S. exports to Vietnam still face tariffs of up to 15 percent.

LG to invest $1.5 billion toward display screen factory in Vietnam. South Korean electronics conglomerate LG on April 5 signed an agreement with local authorities in the northern city of Haiphong to invest $1.5 billion to construct an OLED (organic light-emitting diode) display screen factory in Haiphong. Construction on the new factory is expected to begin in May and be completed in late 2017. LG launched operations on an existing $1.5 billion manufacturing plant in Haiphong in March 2014.

Vietnam seizes Chinese refueling vessel for trespassing in Vietnamese waters. The Vietnamese Coast Guard said it seized a Chinese resupply vessel that was allegedly disguised as a fishing boat on March 31 for trespassing into Vietnamese territorial waters. The vessel reportedly carried 26,000 gallons of oil to be sold to Chinese fishing boats operating in the South China Sea. Vietnam claims that the vessel was encroaching on its territorial waters near the northern island of Bach Long Vi in the Gulf of Tonkin. Authorities have taken the vessel and its crew to Haiphong.

Authorities jail four for South Vietnam flag, anti-state propaganda. Authorities in Ho Chi Minh City on March 30 issued jail sentences to four people for “anti-state propaganda,” including three women who flew the flag of the former South Vietnam government in front of the city’s U.S. Consulate to protest land confiscations by the government. The women were sentenced to three to four years in jail, with two years of probation. The fourth person convicted was a blogger, Nguyen Ngoc Gia, who had been in custody since December 2014 but was sentenced to an additional four years.


Leaked letter confirms transfer of funds from Saudi royal family were donations to Najib. The Australian Broadcasting Corp.’s Four Corners program on March 28 leaked a letter from Prince Saud Abdulaziz Majid of Saudi Arabia to Prime Minister Najib Razak in 2011 that confirmed earlier announcements by the Malaysian government that the $375 million transferred to Najib’s bank account in 2011 were a donation from the Saudi royal family. The donation was meant to applaud Najib’s global efforts as a modern Islamic leader. The funds were transferred through company accounts such as Blackstone Asia Real Estate Partners Ltd., a company linked to Najib and Malaysian businessman Jho Low.

1MDB board of directors resign following parliamentary report; opposition member detained for leaking auditor-general’s report. The Public Accounts Committee on April 7 released a report on state investment fund 1Malaysia Development Bhd (1MDB) that leveled allegations of fraud against 1MDB’s management, including its board of directors. Following the report’s release, 1MDB’s board of directors collectively resigned on April 7. Separately, the secretary-general of the opposition People’s Justice Party, Rafizi Ramli, was arrested on April 5 under the Official Secrets Act for allegedly leaking information from the auditor-general’s 1MDB report.

Proton receives government bailout package, Mahathir resigns as Proton chairman. The Malaysian government approved a $384 million bailout package for national car maker Proton, which has suffered from heavy losses and declining sales, in an effort to alleviate its debt. The bailout was conditioned on plans for Proton to reform and be monitored by a public-private task force, according to an April 8 Channel News Asia report. Former prime minister Mahathir Mohamad, who set up Proton in 1983 to spearhead Malaysia’s industrialization drive, was dismissed as its chairman on March 31.

China General Nuclear Power Corporation to set up regional headquarters in Malaysia. State-owned China General Nuclear Power Corporation (CGN) on April 12 announced plans to establish its Southeast Asian headquarters in Malaysia, following its takeover of state investment fund 1Malaysia Development Bhd’s (1MDB) clean energy assets. CGN president Zhang Shanming said the new headquarters will allow CGN to promote the development and investment of clean energy across the region. 1MDB sold its power assets to CGN last November for $2.3 billion.


Sembcorp signs deal to supply power to Myanmar for 22 years. Singapore-based Sembcorp Industries on March 30 signed a long-term power purchase agreement with Myanmar Electric Power Enterprise, a company under the Ministry of Electric Power, to supply 225 megawatts of power to Myanmar over 22 years. The power will be generated at Sembcorp’s planned power plant in Myingyan, Mandalay, in central Myanmar. The plant, estimated to cost $300 million to build, will be the largest gas-fired independent power plant in Myanmar when completed in 2018. Sembcorp will hold an 80 percent stake in the project.

Moody’s revises outlook on Singapore’s largest banks to negative. Credit rating agency Moody’s Investors Service on March 31 lowered its outlook on Singapore’s largest banks from stable to negative, given slower economic growth and trade expansion. The affected banks are DBS Bank, DBS Group, Oversea-Chinese Banking Corporation, and United Overseas Bank. Nevertheless, Moody’s noted the strong financial buffers maintained by these banks, particularly on capital and loan loss provisions. Other factors working to the banks’ advantage include their robust funding and liquidity.

Singtel enters deal to build Singapore-Perth submarine cable. Telecommunications company Singtel on March 31 signed a deal with Australia-based APX-West to build a new international submarine cable connecting Singapore and Perth in western Australia. The new cable will expand data connectivity and capacity between Singapore and Australia, allowing Singtel to meet its regional customers’ growing data demands. Construction on the cable is expected to begin in July and scheduled to be completed by 2018.

LinkedIn establishes its first international data center in Singapore. Professional networking company LinkedIn on April 6 announced it has opened its first international data center in Singapore. The $59 million facility will process all of LinkedIn’s online traffic in the Asia-Pacific region, which makes up about a third of the company’s global traffic. The number of LinkedIn users based in the Asia Pacific has more than doubled to 85 million since 2013. According to LinkedIn, the new facility will complement its growing storage and processing needs.

Singapore PM criticized by sister for “hero worship.” Lee Wei Ling, the sister of Prime Minister Lee Hsien Loong and daughter of former prime minister Lee Kuan Yew, on April 10 accused her brother of using the first anniversary of their father’s death to “hero worship” him. Lee Wei Ling made the accusations publicly on Facebook, alleging that Singapore’s leading paper, the Straits Times, had turned down her op-ed on Lee Hsien Loong’s abuse of power. The prime minister responded in a Facebook post that the claims were “completely untrue.”


Thai military to be granted policing powers. Thailand’s military junta on March 29 announced that it would grant expanded powers of arrest, detention, search, seizure, and interrogation to military officers ranked at sublieutenant and higher, allegedly to combat organized crime more effectively. The announcement cited a shortage of police officers as justification for the decree. The U.S. State Department and human rights groups have expressed concerns about the decision to grant policing authority to military forces.

Under Secretary of State Sewall visits southern Thailand; roadside ambush kills three. U.S. under secretary of state for civilian security, democracy, and human rights Sarah Sewall visited Thailand and Bangladesh from March 25 to 31 to meet with government and civil leaders. While in Thailand, Sewall traveled to the restive southern region, where she affirmed U.S. commitment to human rights and gave a talk at a local university. She acknowledged Thailand’s progress in tackling human trafficking. Thailand’s southern provinces have seen increased violence in recent weeks. A roadside ambush on March 29 in Narathiwat Province killed three Thai police officers and wounded six during Sewall’s visit.

Final draft constitution met with protest. The Constitution Drafting Committee on March 29 released the final version of the country’s latest draft constitution. The draft constitution is scheduled for a vote in a national referendum on August 7, although it has already attracted broad criticism from political parties and activists. It includes controversial proposals for a fully appointed Senate and the possibility of an unelected prime minister selected by the National Assembly.

Authorities crack down on Thaksin’s “red bowl” gifts to supporters. A woman in Chiang Mai in northern Thailand was ordered on March 29 to report to a military court after she posted a picture of herself on Facebook holding a “red bowl” and a photograph of former prime ministers Thaksin and Yingluck Shinawatra. Thaksin’s Pheu Thai party distributed the red bowls to its supporters, known as the Red Shirts, for Songkran (Thai New Year) festivities, which Thai authorities view as symbols of the opposition and acts of sedition.

South China Sea

China begins operation of lighthouse on Subi Reef. China’s Transport Ministry on April 5 held a ceremony to mark the completion of a 180-foot-high lighthouse on Subi Reef, a disputed feature in the Spratly Islands that China has reclaimed. Chinese Foreign Ministry spokesman Lu Kang said the lighthouse, which is now in operation, is designed to provide public services by ensuring maritime safety and freedom of navigation. Lighthouse construction projects on nearby Cuarteron Reef and Johnson South Reef are also under way.

China warns U.S. over operations in the South China Sea. China’s Ministry of Defense on March 31 issued a stern warning to the U.S. Navy to “be careful” with its operations in the South China Sea. Chinese defense ministry spokesman Yang Yujun criticized a defense agreement signed between the United States and the Philippines that gives U.S. forces rotational access to five military bases in the Philippines, claiming that bilateral military cooperation should not “undermine a third party’s interests.” Yang called an increased U.S. military presence in the Philippines a move to promote militarization in the South China Sea.

China summons foreign envoys over G-7 statement mentioning South China Sea. China’s Foreign Ministry on April 13 said it has summoned diplomatic representatives of “relevant countries” from the Group of Seven (G7) nations to express its dissatisfaction with the joint statement issued by G7 foreign ministers at a meeting in Japan on April 10-11. The foreign ministers expressed concerns about the situation in the East and South China Seas, and emphasized “the fundamental importance of peaceful management and settlement of disputes.” China is not included in the G7 grouping.

Pentagon official, admiral deny “gag order” on military officials discussing the South China Sea. U.S. Department of Defense press secretary Peter Cook on April 7 said reports claiming the Obama administration issued a “gag order” on senior U.S. military officials discussing the South China Sea are false. Reports that National Security Adviser Susan Rice ordered the head of the U.S. Pacific Command, Admiral Harry B. Harris, to stay silent on South China Sea tensions ahead of the late March Nuclear Security Summit in order to give President Barack Obama room for maneuvering with his Chinese counterpart, Xi Jinping, had surfaced a day earlier. Harris also rejected the claim. Obama held a bilateral meeting with Xi during the summit, during which he said sea disputes should be resolved peacefully.

Trans-Pacific Partnership

New Zealand reveals legislative changes to meet TPP commitments. The New Zealand Ministry of Business, Innovation and Employment on March 28 publicized legislative changes that will be required to meet the intellectual property requirements of the Trans-Pacific Partnership trade agreement. They include reforms such as extending the patent terms for pharmaceutical products to compensate patent owners for any “unreasonable” curtailment of patent use, and prohibiting measures to circumvent technological protection measures. The ministry is seeking public input on issues raised in the proposed changes.

USTR releases final legally scrubbed TPP side letters. The Office of the U.S. Trade Representative released final versions of the Trans-Pacific Partnership side letters to which the United States is a party. The topics covered in the side letters included, among others, market access; textiles and apparel; sanitary and phytosanitary; intellectual property; service, financial services, and e-commerce; government procurement; state-owned enterprises; environment; and pharmaceuticals and medical devices. The final side letters also included bilateral non-tariff measures between the United States and Japan.

Senators says bilateral labor plans must be implemented before TPP can be considered. Nineteen senators who had opposed Trade Promotion Authority legislation advocated on March 22 the need to implement the Trans-Pacific Partnership’s bilateral labor plans before the U.S. Congress takes any legislative actions on the trade deal. In a letter to U.S. Trade Representative Michael Froman, the senators expressed concerns about whether Brunei, Malaysia, and Vietnam can comply with the respective labor plans they have signed with the United States. One of their main concerns was Malaysia’s status upgrade from the Tier 3 to Tier 2 Watch List in the 2015 Trafficking in Persons Report.


Opposition, labor activists protest recently passed union law. A law regulating trade unions that was approved by the National Assembly on April 4 has been met with domestic protests and international criticism for being too restrictive. Critics say the law allows the government to suspend or eliminate unions that go on strike, and complain that labor groups’ recommendations were ignored. Parliamentarians voted strictly along party lines, with the ruling Cambodian People’s Party largely in favor of the law.

Hun Sen says he will arrest public servants who criticize government. Prime Minister Hun Sen on April 5 threatened to arrest civil servants from outside of his Cambodian People’s Party who criticize the government, and he encouraged officials to take part in prosecuting such individuals. Hun Sen also lashed out at commentators critical of his recent cabinet reshuffle. This follows the government’s arrest of two Cambodian diplomats, including Cambodia’s ambassador to South Korea, on corruption charges.

Voter registration in Cambodia encounters delays. Several election-monitoring nongovernmental organizations, citing “inexplicable” delays, warned on April 5 that an effort by the National Election Committee (NEC) to rebuild the national voter registry may not be completed in time for the 2017 elections. The process was supposed to begin in May but has now been pushed back to September. The creation of an electronic voter list is one of the primary functions of the NEC, which was created in April 2015 following political turmoil over Cambodia’s 2013 elections.

Ministry defends controversial telecommunications law against fears of eavesdropping. The Ministry of Post and Telecommunications on April 5 issued a “clarification” of its controversial telecommunications law in response to claims that the law restricts freedom of speech and allows the government to conduct eavesdropping. The law, passed in December 2015, allows the government to monitor telephone and electronic communications as well as prosecute perceived threats to national security. The government claims that definitions in the law aim only to regulate Cambodia’s telecommunications sector.


Thai Ex-Im bank to set up office in Laos. The Export-Import Bank of Thailand hopes to establish an office in Laos within this year, according to an April 6 Bangkok Post report. The Laos office will be Thailand’s Ex-Im Bank’s first foreign office. It is expected to serve as a source of information for Thai investors at the outset, and may later be upgraded to a full branch.

Malaysian telecommunications company plans to expand into Laos. Telekom Malaysia said on March 29 it will partner with the Lao National Internet Centre to offer Internet services in Laos. The center will use its international data facility in Vientiane to host and provide infrastructure for Telekom Malaysia’s operations in the country. Only 14 percent of the Lao population currently has access to the Internet.

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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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