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US-ASEAN Business CouncilASEAN Economic Ministers Meeting 2017 White Paper The US-ASEAN Business Council (US-ABC) has been privileged to conduct an annual dialogue with the ASEAN Economic Ministers (AEM) during the annual AEM meeting for the past 18 years.

The Council strongly supports the establishment of the ASEAN Economic Community (AEC). The AEC represents a regional economic strategic imperative for sustaining both ASEAN’s global competitiveness and centrality in the evolution of Asia’s regional trade and financial architectures. The more efficient, unified, and free a single market and production base ASEAN can become, the more American companies can invest, employ, and trade. We are eager to continue working with ASEAN to fulfill the vision of the AEC and work towards the next set of goals expressed in the AEC Blueprint 2025. At the request of the AEM, the Council annually queries its industry committees on what they believe are the key issues affecting the ability of ASEAN to attract investment in specific industries. The input included in the following pages takes a regional perspective with suggestions that we believe reflect priority opportunities for ASEAN to achieve the AEC’s integration objectives and encourage foreign direct investment in ASEAN. Some of these suggestions are under the direct purview of the AEM, while others are primarily under the purview of other sectoral ministerials, but with a cross-cutting nature that warrants greater inter-ministerial cooperation.

Long-term U.S. business community priorities can be expressed by the acronym RICH:

Recognize qualified testing regimes from elsewhere in the world and follow best practices recommendations of global bodies, including for government procurement.

Implement current commitments, such as o The ASEAN Free Trade Areao The ASEAN Free Area of Serviceso The ASEAN Comprehensive Investment Agreemento ASEAN Master Plan on Connectivityo ASEAN Logistics Roadmap o e-ASEAN Framework Agreemento ASEAN Single Window o Mutual Recognition Agreements for skilled professionals

Consult with Stakeholders through expanded engagements Harmonize FTA agreements and existing regulations

o RCEP agreemento Negotiate commitments and disciplines on e-commerce, rules of origin, and

services

The thematic and industry-specific recommendations contained herein are organized according to the Characteristics and Elements of AEC Blueprint 2025.

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Table of ContentsExecutive Summary.....................................................................................................................................4

Trade in Goods............................................................................................................................................6

Financial Integration, Financial Inclusion, and Financial Stability..............................................................11

Transportation and Infrastructure.............................................................................................................15

Information and Communications Technology..........................................................................................17

E-Commerce..............................................................................................................................................22

Energy........................................................................................................................................................26

Food, Agriculture, and Forestry.................................................................................................................29

Healthcare.................................................................................................................................................33

Strengthening the role of MSMEs.............................................................................................................35

Strengthening the Role of Private Sector..................................................................................................37

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Executive Summary ASEAN’s continued efforts to develop the ASEAN Economic Community (AEC) represents a strategic imperative to both supporting inclusive, innovative and sustainable processes of economic development in each ASEAN nation, and to help sustain ASEAN’s trade and investment competitiveness and regional centrality in a constantly evolving global economy. As ASEAN's largest source of FDI in the world, the American business community remains committed to supporting the formation of a regionally integrated and globally connected ASEAN. Recognizing ASEAN's strong economic outlook and progress made to date in building the AEC, the recommendations offered are both practical and reflect an awareness of the challenges associated with the adoption of next-generation AEC-related reforms.

This year we have seen the emergence of new disruptive technologies which will affect every sector every business and every government in ASEAN, the region and, indeed the world. The digital economy is upon us and we are all working hard to deal with the challenges and opportunities brought by digitization. One thing is certain, whatever regulatory systems are going to be devised to work with these d=technologies they will have to be whole of government solutions. Whether we are talking about trade in goods, services, agriculture, finance, and, most especially, MSME’s, it is clear that we must approach the design of regulations from a whole of government framework. This is new and will be something with which many governments have little experience. Nevertheless, all of the recommendations and our suggestions for cooperation should have the while of government approach as its number one underlying principle.

In the post-AEC era, U.S. companies are focused on measures that can build transparency, consistency, and ease of access to information and technology: • Customs Mutual Assistance Agreements (CMAAs)• Global Data Standards (GDS) for transparent supply chain tracking• Full FTA rules implementation, ASEAN Single Window• Continued adoption of ASEAN insurance integration and banking integration frameworks• Free flow of data, no localization requirements• Establish central e-portals for government procurement activities • ASEAN privacy framework and coordinated cybersecurity policy• Over-the-top (OTT) services facilitation• Transparent and market-based energy pricing• Mutual recognition agreements (MRAs) to be used wherever possible to provide coherent

standards throughout ASEAN • ASEAN Intellectual Property Rights Action Plan 2016-2020

In the future, access to technology and cross- border e-commerce will continue to expand due to the region’s immense potential for growth. ASEAN needs to adopt regulations that promote innovation-friendly eco-systems and allow for the free flow of digital trade.

• Coordination of cross-sectoral e-commerce regulation• Investment in trade facilitation infrastructures and policies• Enhance the e-commerce and e-payments regulatory environment for businesses and

consumers

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• Encourage a digitized monetary system• Build a secure, trusted, and facilitating online environment• Empower ASEAN consumers and businesses through access to the internet, technology,

and skills required to build a sustainable digital economy

While the digital economy represents an incredible opportunity for the region, restrictions of cross-border data flows and overregulation of OTT service pose a threat to the development of ASEAN’s digital economy.

ASEAN’s network of free-trade agreements, reaching 50% of the world’s population, are potentially a game-changing competitive advantage, but it is important that they adhere to standards to make them meaningful to multi-national companies who will bring high-quality investment. US-ABC and U.S. business community hope that the key principles of transparency, protection of intellectual property rights, free flow of data and information and inclusion of services will be applied in the RCEP negotiations and future free-trade agreements between the U.S. and ASEAN member-states. The TPP has been used by many in ASEAN as a benchmark and could be useful as an aspirational standard for other regional trade agreements.

Ultimately, the potential of ASEAN’s economy has only grown, presenting new opportunities and challenges for economic policymakers. The Council views the AEC as the key to realizing the economic opportunity of the region, as it facilitates the policy coordination required to overcome the obstacles to ASEAN’s economic growth. Policy coordination and harmonization to international standards not only invigorates domestic economies of ASEAN Member States, but also attracts the continued interest and investment of American companies and companies throughout the world.

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Trade in Goods

Introduction

US-ABC’s Customs and Trade Facilitation Committee has joined the ASEAN Directors-General of Customs Meeting for the past 20 years. In 2016, US-ABC deepened its partnership with ASEAN customs officials by hosting seminars at the side-lines of the ASEAN Customs Enforcement and Compliance Working Group (CECWG) and the ASEAN Customs Procedures and Trade Facilitation Working Group (CPTFWG). In early 2017, US-ABC also began to directly engage the ASEAN Coordinating Committee on Customs to explore the potential for collaborative projects. In May 2017, US-ABC consulted with the ASEAN Customs DGs to identify themes for that potential collaboration. Those themes proposed by US-ABC are reproduced partly below and partly in the trade facilitation section of this paper’s e-commerce chapter.

In addition to our work with the Directors-General of Customs, US-ABC is enthusiastic about the activation of the ASEAN Trade Facilitation – Joint Consultative Committee and the ASEAN Coordinating Committee on e-Commerce, with whom we hope to work to support whole-of-government approaches to critical trade facilitation issues.

Key Issues and Recommendations: Supporting the ASEAN Integration Agenda for Next-Generation Trade

1. Valuation and transfer pricing

The Issue: Companies often face difficulties with respect to the valuation of goods because intercompany pricing is governed by both customs valuation and transfer pricing rules. These difficulties arise because both these regimes do not always result in the same conclusion on the acceptability of inter-company prices set by companies.

Considering the OECD’s base erosion and profit shifting (BEPS) project, US-ABC anticipates that the challenges in achieving consistency of customs and tax treatment of intercompany transactions will increase. Given that intercompany transactions account for a significant portion of global trade, providing in-principle guidelines on transfer pricing and customs valuation issues will provide greater certainty for companies operating in ASEAN and enable them to better address customs valuation and transfer pricing risks.

Recommendations: US-ABC recognizes the complexity of valuation and the work that improvements require, but also that these improvements would help companies in ASEAN operate internationally. To this end, US-ABC recommends the following actions and is interested in working with ASEAN Member States through seminars and other fora to advance these issues.

I. Establish greater information exchange mechanisms between tax and customs authorities. To implement this recommendation, customs authorities could explore sharing their databases with their tax authority counterparts to better understand customs valuation approaches to determining related party pricing.

II. Encourage ASEAN countries to publish guidance to align transfer pricing and customs valuation principles for common intercompany accounting arrangements in ASEAN.

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III. Encourage ASEAN countries to implement greater sharing of information between customs and tax authorities at the local level as well as more widespread adoption of Customs Mutual Assistance Agreements (CMAAs).

IV. Encourage ASEAN countries to provide clear guidance on the customs treatment and disclosure mechanisms for transfer pricing adjustments that may lead to shortfalls or refunds of customs duties and import GST.

V. Introduce customs valuation ruling procedures in ASEAN and establish a model Memorandum of Understanding (MOU) for such rulings to be recognized by national tax authorities of the customs agencies issuing such rulings. The approach to cooperation could depend on the country’s needs and circumstances, ranging from arrangements for cooperation to adopting formal MOUs. The MOUs will help provide in-principle mutual recognition by customs and tax authorities of customs valuation rulings and advance pricing agreements, encouraging further cooperation and alignment.

a. Support the understanding of arms’ length standards for customs and tax purposes through knowledge-exchange workshops.

b. Establish a working group involving public and private sector representatives to provide guidance for aligning transfer pricing and customs valuation rules with the intention of publishing such guidance within an agreed timeframe.

c. Publish guidance for aligning transfer pricing and customs valuation rules in relation to more commonly used transfer pricing methodologies for manufacturing and distribution activities. These guidelines should be easy to use and consistent with international customs valuation principles as set out in the World Trade Organization and World Customs Organization.

2. Supply Chain Security, Traceability, and Visibility

The Issue: Supply chain security and the protection of intellectual property are important elements to ensuring the successful implementation of the AEC 2025 Blueprint. They are also important pillars for protecting public safety. Counterfeit goods (e.g. fake food and counterfeit pharmaceutical drugs) are also major health and safety risks for unsuspecting consumers.

US-ABC members are interested in working closer with ASEAN Member States to fight counterfeiting and developing new innovate techniques to approach the problem. In 2016, US-ABC organised a seminar alongside the Customs Enforcement and Compliance Working Group (CECWG) to discuss how the region can cooperate to tackle illicit trade and partner with the private sector to enforce intellectual property rights. Some of US-ABC’s member companies also routinely help train ASEAN customs officers in identifying counterfeit goods.

Recommendations: In addition to these activities supporting ASEAN customs enforcement, US-ABC is would like to propose tests for a new system, Global Data Standards (GDS). GDS enables transparent product tracking and tracing along entire supply chains, which creates global supply chain visibility from manufacturer to consumer for anyone with access to the data. It also enables more effective risk profiling, thereby improving effectiveness and efficiency of Customs operations. US-ABC would like to hold workshops with relevant parties in ASEAN’s governments to explore how GDS could be used and eventually develop a framework for a GDS pilot project. The project would test techniques and

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demonstrate the added value to industries, Customs administrations, and health and food safety authorities for multi-jurisdiction open-source data sharing through the GDS system.

In the past few years, APEC member economies have run successful GDS pilots. In one APEC pilot, GDS improved the supply chain efficiency of Australian companies exporting frozen beef to the United States. The pilot resulted in an annual potential cost saving of around US $15 million. In another APEC pilot, tracking durians exported from Malaysia to China, GDS increased supply chain visibility from 40 percent to 100 percent, allowing individual durian packages to be located and identified throughout the supply chain.

I. Customs administration support for GDS pilot projects. We seek an opportunity to work with ASEAN to: a. Organize a workshop to enhance awareness of technology solutions to Customs

challenges such as counterfeit product enforcement, and end-to-end visibility of e-Commerce shipments.

b. Based on interest level, work with ASEAN to pilot a program to support traceabilityII. Marshaling resources to increase the frequency of product identification training

III. Working with appropriate authorities to improve enforcement officers’ capacity for quicker and more accurate identification of infringing goods

Key Issues and Recommendations: Full and Inclusive Implementation of the ASEAN Customs Integration Programs

Intra-ASEAN trade will grow with the successful implementation of ASEAN’s trade facilitation commitments, fostering more cohesive regional integration. Thus, we encourage ASEAN Member States to continue the implementation process while engaging the private sector as a partner. US-ABC supports the full, uniform and inclusive implementation of the customs and trade facilitation provisions of AEC.

1. FTA Rules Implementation

The Issue: The ASEAN Trade in Goods Agreement (ATIGA) and ASEAN FTAs with Dialogue Partners are critical enablers for the AEC. Uniform implementation would ensure a smooth physical flow of goods in the region. US-ABC supports greater coordination and policy coherence among ASEAN’s Customs organizations, trade agencies and other relevant governmental bodies in their own countries and with ASEAN counterparts. Forming a working group that is accessible by businesses could also help with disentangling any conflicting opinions. In addition to uniform implementation of the ATIGA itself, ASEAN Member States should also strive to improve consistency and transparency in the application of the ASEAN Harmonized Tariff Nomenclature, potentially by establishing a classification rulings system or pre-classification process. Educating the public, especially SMEs, about how to properly use the FTAs would also help with increasing their value.

Recommendations: Increase uniformity of implementation of FTA rules and auditing, possibly with a working group to resolve conflicting interpretations Including working through the Trade Facilitation Working group

2. ASEAN Single Window (ASW)

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The Issue: Council members are excited to see that the ASW will soon go completely live. Since ASEAN decided to create the Single Window at the national and regional levels in 2005, there have been improvements at clearance in some ASEAN countries and Council members hope the initiative will lead to significant further progress on trade facilitation. We are encouraged by ongoing progress in the exchange of e-ATIGA Form D, ratification of the Protocol on the Legal Framework (PLF) to Implement the ASW, as well as plans to exchange of the e-Phyto certificate, and the ASEAN Customs Declaration Document.

Recommendations: ASEAN should accelerate efforts to develop their National Single Windows, ratify the PLF and interconnect with the ASW, add new documents to the ASW (including the e-Phyto certificate and the ASEAN Customs Declaration Document). After the ASW is operational, ASEAN should also explore adding additional functions to it and interconnecting it with the single windows of other countries outside ASEAN.

3. Certificates of Origin Procedures (COO)

The Issue: COOs are important to ensure that goods originating from FTA partner countries will benefit from tariff concessions. However, there has been a lack of consistency and clarity in the implementation of rules-of-origin, which poses a significant non-tariff barrier for importers. For instance, there is a lack of clarity on why COOs from one country have been rejected by another without validation from the issuing country and when the rules do not explain the reason for rejection.

Recommendation: More defined procedures for verifying and processing Certificates of Origin (COO).

4. Self-Certification of Origin

The Issue: ASEAN Self-Certification system has the potential to significantly reduce compliance costs and documentation burden of traders, encouraging intra-ASEAN trade and improving utilization of ATIGA. As such, US-ABC encourages ASEAN Member States to push forward with implementing the system and consult with the private sector to find common ground between the projects that will maximize the usability of the system.

Recommendations: Implement the ASEAN Self-Certification of Origin by merging the two ASEAN pilot projects and taking into account the following industry interests:

I. Allowing traders, not only manufacturers, to participate in the self-certification pilot project;

II. considering alternative documents instead of the commercial invoice for the origin declaration;

III. eliminating having authorized signatories of companies to issue self-certification, including the requirement for circulation of specimen signatures;

IV. amending Rule 23 of the OCP to allow the use of third-party invoice; andV. waiving of Certificates of Origin for intra-ASEAN goods movements that are

below a value of US$2,000.

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5. ASEAN Authorized Economic Operator

The Issue: In 2015, ASEAN Customs authorities committed to establishing national Authorized Economic Operator programs, based on the SAFE Framework of Standards (FoS) developed by the World Customs Organization to enhance supply chain security and facilitate trade. US-ABC encourages ASEAN Member States to develop mechanisms of cooperation with each other and work to promote Mutual Recognition Agreements (MRAs).

Recommendations: Implementation of the ASEAN Authorized Economic Operator programs and Mutual Recognition Agreements.

6. ASEAN Customs Transit System

The Issue: We commend the launch of the ACTS Pilot Project amongst three ASEAN Member States and the successful completion of “electronic testing of the system” on 16 December 2016. The ASEAN Customs Transit System is important because it enables traders to move goods across various member state easily, and with greater efficiency by reducing time-in-transit movement of goods. This is essential for deepening the regional economic integration. We also hope to learn the results of Phase B, the “Parallel Run”, which was concluded at the end of March 2017.

Recommendations: Fully ratify and operationalize the ASEAN Customs Transit System, including fully ratifying the ASEAN Framework Agreement on the Facilitation of Goods in Transit (AFAFGIT) and the ASEAN Framework Agreement on the Facilitation of Inter-State Transport (AFAFIST). USABC also recommends that ASEAN Member States provide a timeline for preparation and finalization of national legislation that operationalizes Protocol 7 of AFAFGIT as well as the ACTS.

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Financial Integration, Financial Inclusion, and Financial StabilityIntroduction

US-ABC remains committed to supporting ASEAN Ministries of Finance and Central Banks in realizing a stable, inclusive, integrated and open twenty-first century financial sector in ASEAN. In general, if ASEAN is to be a regional financial hub, ASEAN needs to work with the non-ASEAN financial institutions as well as ASEAN Headquartered institutions to take advantage of synergies and competitive development.

In addition to financial integration, modernization, and inclusion, the digital infrastructure that modern finance operates on is becoming increasingly important. Strong cybersecurity, practical and compatible privacy regulations, and ensuring companies can move financial data across national borders are all critical to facilitating the international integration and modernization of ASEAN’s financial sector. ASEAN’s financial industry policy makers in central banks, finance ministries, and regulatory agencies should increase their attention to these rapidly evolving issues, which are discussed in further detail in the Information and Communication Technology section of this paper.

Key Issues and Recommendations

1. Full and Inclusive Implementation of the ASEAN Financial Integration Programs

The Issue: Important agreements have been developed to advance the financial services industry in ASEAN and continued progress will take the industry and ASEAN even further. The financial industry continues to watch the ASEAN Banking Integration Framework, the ASEAN Insurance Integration Framework, and the ASEAN Capital Markets Forum with interest. US-ABC would like to see financial services and digital economy issues advanced in the ASEAN Trade in Services Agreement (ATISA).

Below are recommendations to enhance and support financial sector integration through the key financial industry initiatives: the ASEAN Banking Integration Framework, the ASEAN Insurance Integration Framework, and the ASEAN Capital Markets Framework.

I. Banking integrationi. While it is important to enhance the presence of ASEAN banks in ASEAN countries,

foreign banks also play an important role in the region and should also be able to use the ASEAN Banking Integration Framework (ABIF). Foreign banks provide core products and services to ASEAN firms in their home countries and, perhaps more importantly, to ASEAN-based firms investing, manufacturing, and trading with key global markets beyond ASEAN like the United States and the European Union. The presence of leading firms will also introduce global best practices, innovation, varied services, and competition to local markets.

ii. Recommend ASEAN develop criteria that allow foreign banks with substantial presences in ASEAN to be designated at ASEAN Qualified Banks in order to participate in the ABIF.

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II. Insurance integrationiii. ASEAN should invest more in expanding the ASEAN Insurance Integration

Framework (AIIF) and accelerate its development.iv. US-ABC hopes the new AIIF can grow to include larger segments of the insurance

and reinsurance market and come to be seen as a key pillar of the financial services integration agenda.

v. We recommend ASEAN Member States advance discussions around the harmonization of insurance standards and accelerating implementation of the AIIF standards across ASEAN.

vi. Recommend ASEAN develop criteria that allow foreign insurance companies with substantial presences in ASEAN to be designated at ASEAN Qualified Insurers in order to participate in the AIIF.

III. Capital market connectivityvii. US-ABC members value their regular exchanges with the ASEAN Capital Markets

Forum (ACMF). The ACMF has undertaken a range of important initiatives in the securities market that have helped push ASEAN integration forward, including the ASEAN Collective Investment Scheme and the ASEAN Trading Link. As US-ABC members are discussing with the ACMF, some changes could be made to these initiatives to make them more successful in attracting capital.

viii. Cross-border fundraising:1. Explore whether or not there is value in building a “private placement

corridor” to attract foreign investors from outside ASEAN (especially with regards to infrastructure and SME financing needs).

2. Identify bottlenecks within ASEAN in attracting foreign funds and factors that can help attract foreign funds.

3. Identify measures that can be undertaken to enable ASEAN issuers to raise funds outside the region.

ix. ASEAN Trading Link:1. The main challenge for the ATL is the lack of a central clearing and common

execution platform. Firms need to seek sponsor brokers in the local exchange and settle trades through them. Separate settlement processes (Confirmation, Reconciliation, Clearing) are required for each exchange.

2. Institutional Brokers and High Frequency Traders are deterred by high latency in the ATL. The ATL should create a common execution platform with low latency execution and increased connectivity.

3. The ATL should expand allowances for Third Party Clearing.x. Collective Investment Scheme

1. The requirement to obtain the approvals from both the home regulator and the host regulator makes the passport regime less attractive. If there is an intent to harmonize the requirements and fully permit passporting, then the regulators should consider rationalizing the requirement so that if the home regulator approves of the scheme, then it can be passported into the host country without more approvals.

2. Interested in discussing how the ASEAN CIS can converge with similar plans in other economies such as the Asia Regional Funds Passport (ARFP).

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3. Would like to discuss how to expand products allowed under the CIS to include real estate investment trusts (REITs), business trusts, and closed end funds.

2. Developing Payment and Settlement Systems

The Issue: US-ABC hopes to work closer with ASEAN to promote the integration and modernization of payment and settlement systems. Building innovative, secure, interconnected, and competitive payment and settlement systems in ASEAN is crucial to developing the financial sector, supporting financial inclusion, advancing new industries like e-commerce, and connecting ASEAN’s businesses to the rest of the world.

US-ABC would like to establish a dialogue with the ASEAN Working Committee on Payments and Settlement Systems (WC-PSS) to explore how the private sector can support and provide input to ASEAN’s efforts to develop payment and settlement systems. The consultations could cover how the private sector can help the WC-PSS advance its agenda, the effect of digitalization on the payments market, data management and protection methods, fintech innovation support, and financial inclusion.

Recommendation: We recommend that ASEAN respond favorably to a US-ABC recently submitted proposal to the WC-PSS to establish a cooperative relationship.

3. Cyber risk insurance development

The Issue: Property and casualty insurers offer cyber risk insurance to a small but rapidly growing market. With escalating cyber intrusions and mounting privacy regulations around the world, companies are seeking protection where available. Insurers work with brokers and their clients to conduct risk analysis and identify security measures companies should implement before coverage begins. Insurers also work with third party specialists who provide support to help manage crises.

Insurance coverage for cyber events is at an early stage of evolution in ASEAN. Companies offering cyber coverage are constantly considering broader terms to ensure that coverage keeps up with the evolving nature of cyber threats and exposures. Insurers offering cyber insurance tend to cover business interruption, data loss and restoration expenses, forensic investigation costs, legal costs, crisis communications, reputational mitigation expenses, liabilities from failure to maintain data confidentiality, liabilities arising from unauthorized use of networks, online media liability, and regulatory investigation expenses. Coverage of physical injury, medical bills, product recall, falls in share price, customer churn, and long term reputational damage have not yet been included in cyber insurance.

The growth of this new industry in ASEAN is only sustainable if companies have access to robust data regarding risk controls and loss information, to draw credible correlations between the two. Access to enhanced data would contribute to the long-term sustainability of the current market coverage standard and it would also allow carriers to expand coverage beyond current standards. A framework that enhances business and board accountability for managing cyber risks and obtaining insurance solutions will push increased focus on cybersecurity in ASEAN. Access to enhanced data sets will benefit both the insurer and the customer by improving the platform on which insurers judge the strength of an organization’s information security control environment, how that organization might deal with a

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significant cyber event, and the size of the financial impact that will result. Insurers will be able to improve profitability and offer more flexible and enhanced coverage while customers will be incentivized to improve controls to mitigate the cost of risk transfer while also benefitting from the feedback received during the underwriting and loss control process.

Recommendations: Develop frameworks for exchanging data on cyber threats to help the private sector develop insurance products, which will in turn benefit all sectors.

4. Financial Inclusion for Sustainable Economic Development

The Issue: Expanding citizens’ and SMEs’ access to financial services supports economic development, builds a broader financial sector, increases the availability of local capital, promotes transparency and, importantly, limits the shadow economy to the benefit of fiscal policy in the short to medium term. Financial technology can enable greater access and improved usage of financial products and services for more people at a lower cost, thereby assisting financial inclusion. Relevant, ongoing, and actionable financial education paired with products is also critical to helping consumers improve their financial health. At the same time, as financial services move to digital platforms, digital literacy will become as important as financial literacy. Mobile and internet banking and insurance provide great opportunities, along with electronic payments, savings, credit and micro-insurance, especially when paired with trusted intermediaries and distribution channels.

Digitization can connect more people to financial services, but changes to regulations are often necessary. For example, allowing institutions to offer a comprehensive range of products and services through online platforms, prepaid cards, mobile phones, and ATMs rather than physical branches dramatically extends the reach of financial services.

Recommendations: ASEAN members should review existing regulations to incentivize investment in fintech innovations and reduce barriers for financial services providers to use technology to expand the underserved’s access to banking, insurance, electronic payments, and other financial services, accompanied by appropriate consumer protection initiatives. This would also include clarifying, harmonizing, and modernizing microinsurance regulations in ways that evolve with generational appetite, technological and social network expansion, and rural outreach. Additionally, ASEAN members should also explore innovative financial literacy programs that take advantage of on-line and mobile resources in conjunction with support from the private sector.

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Transportation and InfrastructureIntroduction According to the ASEAN Investment Report 2015 on Infrastructure Investment and Connectivity, the infrastructure investment needs for the region through 2025 – covering power, transport, ICT, and water and sanitation – are huge. Given the current spending by ASEAN Member States, the infrastructure investment gap will be large and resources need to be found if the gap is to be filled and future demand is to be met. The infrastructure priorities of the AEC 2025 Consolidated Strategic Action Plan addresses this via Strategic Measure Number 137 -- Promote the use of Partnership (PPP) for infrastructure projects, where appropriate; and Strategic Measure Number 136 -- Encourage the ASEAN Infrastructure Fund (AIF) to study ways to act as a catalyst in order to attract private sector funding for financing commercially viable PPP projects that will contribute towards poverty reduction, inclusive growth, environmental sustainability and regional integration. US-ABC recognizes that ASEAN governments alone cannot deliver the resources needed to implement mammoth infrastructure projects; and that the engagement of private sector infrastructure firms and investors is necessary to achieve a more modern, efficient, and competitive infrastructure services and facilities. However, there are various constraints within the overall ecosystem for infrastructure project development and execution that may prevent private companies from fully investing in a market, and subsequently in committing to such PPPs.

Key Issues and Recommendations

1. Encourage the Institution of Life Cycle Cost Assessment in Government Procurement Decisions

The Issue: Many countries throughout the ASEAN region still rely on least-cost procurement practices that keep many of these emerging economies from receiving the high-quality goods and services they wish to procure with their limited funds. It is not uncommon for least cost procured projects to subsequently face unexpected operational, support and maintenance costs that were not anticipated at the point of procurement, resulting in delay in project execution and completion as well as unanticipated operational and maintenance cost.

The advancement of Life Cycle Cost Assessment in procurement decision making criteria can accelerate adoption of highest and best technology solutions available. This will require increased focus on lifecycle costs (the total cost of ownership, including acquisition and operating costs, net of resale proceeds, over the life of the machine, engine or industrial gas turbine). Financial and socio-economic benefits to the government would be immense in terms of project cost savings through productivity and efficiency gains in massive infrastructure development projects with the use of products and services that provide superior value and benefits through their extended life cycle.

Recommendation: Government procurement decisions should consider the total cost of ownership over an entire project/system life cycle.

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2. Promote Fair Government Procurement Practices The Issue: Current procurement decisions are based on or influenced by non-performance/capability based factors such as the country of origin or local content/participation. Such criteria ultimately reduce competition and drives up costs. Short term benefits that may be benefited by such local requirements reduces the incentives for local players to innovate and play competitively against international players, thus resulting in limiting their ability to grow regionally and globally, and contribute towards the national economy.

Recommendations: Procurement decisions should be made on a cost-effective fit-for-purpose basis. Internationally accepted and endorsed standards should be used whenever possible in project bid specifications, as domestic or specialized standards would reduce the range of products and services that could potentially be used for the projects, thus increasing project and implementation costs.

3. Negotiate appropriate risk allocation for the private sector

The issue: One cause of PPP failure is the inability of the public and private sectors to agree on the allocation of roles and responsibilities (and hence risk and returns). Lack of clarity around policies, market structure, pricing and subsidies, and ownership and finance can lead to delays in implementation as the private sector is unable to accept the initial terms laid out for PPP projects. The ability of U.S. companies to bring its finance chain into play will be dependent upon the equitable and appropriate risk allocation and the application of this to the financial models for the project. US-ABC member companies can assist ASEAN governments to arrive at a proposed commercial structure that would make projects bankable.

Recommendations: Strengthen negotiations for assigning risk returns across the public and private sector because the terms that can be agreed upon upfront need to be upheld over the life of the PPP concession which can last decades.

4. Institute integration in PPP project planning The issue: Companies tend to have a limited visibility of details of bankable infrastructure projects on the horizon. U.S. companies seeking infrastructure investment opportunities in ASEAN value public, detailed information on projects. This also includes procurement process for a number of PPP projects which entail the participation of various governmental stakeholders. Investors want government agencies to be well coordinated. This includes adopting consistent practices across agencies that make processes straightforward and predictable throughout projects’ life spans. Investors prefer partnering with governments that implement PPP structures following project financing norms and use standard agreements that are recognized internationally. There must be robust interfacing with all key stakeholders, i.e. government organizations, government owned and/or controlled corporations (GOCCs), government financial institutions (GFIs) and other government offices and instrumentalities to execute mammoth infrastructure projects.

Recommendations: We recommend strengthening the robustness of the PPP mechanism by ensuring whole of government would integration in PPP planning.

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Information and Communications TechnologyIntroduction

ASEAN is one of the world’s most dynamic regions for information and communications technology (ICT) sector development. The potential is enormous, with social media being used by over half of ASEAN’s population of 630 million people, and online spending projected to rise 6.5 times to $200 billion by 2025. Digitalization brings increased opportunities for both ASEAN and US businesses to reach new customers and suppliers. Furthermore, digital commerce offers many opportunities as it is still a small proportion of the ASEAN marketplace. The region’s MSMEs have the most to gain, with abundant opportunities for utilizing technology for innovation, development, and growth in finance.

With the enormous potential for expansion and economic growth in this sector, it is important to address the barriers that act as a hindrance for development. There have been considerable challenges due to limited opportunities of sharing best practices, lack of standardization regarding frameworks and policies, and implementation of restrictive regulations. It is crucial to address these areas to further the growth of the ICT sector in each member state and for the digital economy as a whole.

US-ABC supports the efforts of ASEAN and its members to strengthen the region's ICT policies and regulatory frameworks. Recognizing the role of the private sector in leading innovation can produce win-win opportunities for both the public and private sector. We believe that encouraging the development of a flourishing ICT ecosystem will promote economic growth and connect people. With that in mind, the US-ABC recommends that the following issues be considered. The U.S. private sector stands ready and eager to assist ASEAN achieve these goals and goals of the ASEAN ICT Masterplan.

Key Issues and Recommendations

1. Free flow of data

The issue: Data naturally flows across borders, unless nation states choose to erect barrier to digital trade or access to data. When such barriers are put in place, they typically involve requirements to store data locally, to process data locally or to use local data service providers. Whatever the specifics, such barriers harm overall economic welfare in exactly the same way as happened in the past with goods and services through tariffs and non-tariff measures. Interest groups who press the case for data to stay local do so under the guise either of boosting local enterprise and jobs or of keeping data safe. In fact, the policies that they are advocating inhibit growth of local enterprise, either for small and medium size enterprises who are adversely affected disproportionately or by sending a very negative signal to global companies participating in local development. The reality, as demonstrated in a number of locations and by a wide range of independent experts, is that the harm of data localization far outweighs any benefits that are claimed. Specifically, data localization requirements:

I. Restrict businesses’ and consumers’ access to digital and e-commerce networks, causing fewer opportunities, less choice, less service and significantly higher costs.

II. Increase cyber security risks by creating multiple entry points in global platforms.III. Limit businesses’ and consumers’ access to online resources and innovative services.IV. Inhibit growth of local enterprise, with the largest impact felt by SMEs.

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V. Undermine the competitiveness of leading domestic and global businesses by imposing limits on the ability to utilize big data,

VI. Raise costs significantly – for example, Brazil’s proposed data localization policies would have increased prices by 54 percent for cloud-computing services.1

VII. May encourage others to retaliate leading to the fragmentation of the Internet and greatly limiting local startups from expanding regionally and globally.

VIII. Lead to lost trade and investment opportunities. 67 percent of investors surveyed are uncomfortable investing in internet businesses that are legally obligated to store user data on servers located in the same country where users are located and/or build their own data centers locally in each country of operations. This concern is most prevalent in countries that have discussed data localization, namely India (81 percent) and Indonesia (82 percent).2

In sum, data localization causes harm by reducing opportunity, crimping innovation, limiting choice, lowering service levels, creating cyber risk and raising costs.

Recommendations: There is a need to build a regional consensus and a regime that provides for the free flow of data across borders within ASEAN. We encourage ASEAN to make the adoption of a cross border framework that allows data to flow while protecting the privacy and security of data for Southeast Asian consumers a near term priority and ensure it embodies the best of what is available globally. To strengthen competitiveness and promote innovation, it is essential that ASEAN engage actively with industry to devise high standard, practical data management policies ensuring that data can flow free across borders. The free flow of data is essential for the emergence and productivity of cloud technologies, though it is also crucial to protect privacy and security. We also encourage ASEAN to support the development and deployment of cloud computing so that consumers and businesses have access to public cloud services and solutions with the best available security and privacy protections.

ASEAN is encouraged to further adhere to globally recognized frameworks and world-class data management policies and regulation to capitalize on the potential of this sector. Coordination with ICT and other related ministries is critical to the success of this process.

2. Implement an ASEAN privacy framework

The issue: It is encouraging that several ASEAN member states have begun implementing data protection regulations. These regulations vary considerably between jurisdictions, resulting in misdirected business and compliance costs, which particularly impact SMEs and create a barrier to cross border transfers of personal information. A regulatory policy that does not prevent misuse of data proportionate to uses harmful to consumers leads to customer confusion and, over time, reduces trust and confidence. Regulatory expectations to address accountability that follows the data would be similarly self-defeating.

Recommendations: A regional privacy framework was a great first step for ASEAN, especially for the ASEAN member countries which do not currently have privacy and data protection laws. However, we 1http://www.leviathansecurity.com/blog/quantifying-the-cost-of-forced-localization2http://static1.squarespace.com/static/5481bc79e4b01c4bf3ceed80/t/56f192c240261d4703566506/1458672343753/201603+Fifth+Er+Report+-+The+Impact+of+Internet+Regulation+on+Investment.pdf

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recommend that ASEAN and its member states review how other laws and frameworks can try to achieve both the protection of personal data and the promotion and growth of trade and flow of information. It is timely and important to refresh legal systems to achieve balance, flexibility and compatibility and to recognize that while there is no single agreed model for data protection laws today, there is more convergence than divergence around a core set of privacy principle. Specifically, in regards to:

1. Legal Bases for Processing beyond Consent. The first principle in the ASEAN Privacy Framework focuses on “Consent, Notification and Purpose”. We fully agree that notice and consent remains a very relevant and important basis of processing in appropriate context (especially where the data collected is particularly sensitive or the use of data is unexpected). However, obtaining individuals’ consent is not always feasible or desirable especially in the context of enabling innovation of products and services and emergency situations that endanger the life and property of individuals. For example, consent is a basis which does not lend itself readily to certain use cases such as the development and implementation of fraud prevention and security tools (as individuals may, for various reasons, fail to provide consent for such processing and as a result, expose themselves and other participants and stakeholders to risk due to the inability of processing personal data in the absence of consent). In addition, acts initiated by personal information subjects, such as sending personal emails to individuals or organizations, and making purchases and transactions online, shall be deemed as implied consent by the subjects. We encourage ASEAN Member states to look at more dynamic approaches to notice and consent, and at the same time, consider other legal basis for processing that is complimentary such as processing which is required for the performance of a contract, or where the processing is in the legitimate interest of the organization provided that the interests are not outweighed by the individual’s right to privacy. Striking a fair balance between the protection of data in an appropriate context and the responsible use of data would help ASEAN achieve flexibility in regulatory oversight and compatibility of systems across a diverse community.

2. Recognizing techniques which promote data innovation and data protection. As the importance of data analytics continues to grow, it is crucial that the ASEAN member countries be able to benefit from these trends and the innovations that arise from them. De-identification and its associated risk management measures provide various benefits for individuals and organizations by enabling organizations to innovate through the development of products and services that are increasingly data-rich, and strengthening the protection of individuals’ personal data through minimizing the use and storage of information that is personally identifiable (i.e. data minimization).

3. Cross border data flows. Businesses today have a range of options to allow for international data flows with security and privacy in mind, and to remain accountable for such flows (hence, accountability follows the data). The importance of free flow of data is further emphasized by the practical reality of achieving further mutual recognition within the member states within the community, and as part of a cross regional initiative that reinforces what is in place between independent sovereign states.

The APEC Cross Border Privacy Rules (CBPR) system is another framework that ASEAN can look to as a positive example for the region. The APEC CBPR system requires participating businesses to develop and implement data privacy policies that meet the standards required by the APEC Privacy Framework. These policies and practices must be assessed and certified as compliant with the program requirements of the APEC CBPR system by an APEC-approved Accountability Agent (an independently recognized

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public or private sector entity) and be enforceable by law. Alignment with the APEC Rules would also support longer-term integration with the rest of the Asia-Pacific. The European Union and the United States are also working on a data transfer agreement under the Privacy Shield and may provide a useful point of reference.

3. Cybersecurity policy development

The issue: It is important to note that there is currently no common global standard that can be used in formulating cyber-security laws and regulations. Companies are beset by multiple cybersecurity regulations coming from different agencies and governments. These regulations are often onerous, ambiguous, and conflicting, thereby creating unnecessary friction for businesses to comply, and made difficult by limited resources and costly compliance mandates. Given the global scope of cyber risk, the regulations created should be flexible enough to encompass the diversity of organizations, the risks being regulated, and the differences in impact of cyber incidents, while also enabling innovation to thrive.

The private sector can and should have a large part to play in the development of the digital economy framework. It is private security companies and public cloud providers that are now frequently at the forefront of innovation in cybersecurity for data and communications. Their global experience, deep resources and expertise and multinational operations are invaluable in overcoming local vulnerabilities. Regulations that enable consumers and businesses to access these public cloud services and solutions is the path to greater security and privacy protection. Regulations that impose onerous business licensing constraints on the import, certification, or use of cybersecurity technology hinders innovation and limit the ability for end users to adopt the best available technology to protect themselves against the ever-evolving threats. Encryption technology, for instance, is fundamental to security techniques such as authentication, integrity and non-repudiation, and strict control over its use will inadvertently prevent related security solutions from being deployed to provide strong cyber defenses. Government requests for access to data should be exercised in a measured way that balances the need to address public interests with that of the privacy of individuals.

Recommendations: Introduce national cyber-security policies based on global best practices seeking as much consistency across ASEAN and with major markets as possible to allow interoperability and the effective management of threats. Inter-agency coordination will assist in this process. Key considerations include:

I. Establish multilateral cross-border forums to discuss cyber security policy between governments to help drive interoperable standards and manage threats.

II. Create a mechanism for regular cooperation between industry and government on cybersecurity issues at the national and ASEAN level.

III. Avoid creating regulatory mandates that limit the range of choices and innovation of technological solutions that provide cyber security defenses.

4. Over-the-top (OTT) services

The issue: OTT services and platforms offer small and medium sized enterprises (SMEs) the ability to expand their businesses to the global digital marketplace. Innovation in OTT services has led to a more rich and diverse internet, further generating consumer demand for broadband service and enhancing the experience that customers have on telecommunications network.

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While it is encouraging that ASEAN governments have placed great importance on protecting consumers, there has been misdirected efforts that result in overly-restricting regulations for Over-The-Top (OTT) Services in several ASEAN countries. The regulations that are under consideration not only limit consumer access but also inhibit the innovation and expansion of local app developers in the region and globally. Because the Internet is inherently global, regulation in even one country can adversely impact innovation, economic growth and the availability of services, particularly because it can start a trend in which other countries also impose rules to protect their own operators or users. This trend risks fragmenting the global Internet, resulting in irrevocable harm to the Internet’s openness and innovation.

Recommendations: It is important for ASEAN governments to create an environment that allows for the development of OTT services to thrive. One way to enable this is to ensure that foreign OTT service providers are not unfairly taxed, recognizing that these providers contribute to the development of ASEAN countries in various ways. Rather, it is recommended for governments to collect tax on digital services and intangibles in a principled way without creating a permanent establishment or local entity. OECD BEPS provides a framework to collect tax at the point of sale providing a solution for countries without forcing OTTs to onshore and thereby inhibiting the delivery of services and benefit of the global digital economy. Ambiguous, unnecessary or misapplied rules will harm innovation and pose significant jurisdictional challenges for enforcement, and so it is necessary to consider these when implementing regulations.

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E-CommerceIntroduction

It is forecast that by 2020 the internet user base in ASEAN will reach 480 million, up from 260 million in 2016. With digitalization comes increased opportunities for ASEAN businesses to reach new customers via e-commerce. The number of online shoppers in ASEAN, as a percentage of internet users, is set to increase from 19% in 2015 to 49% in 2025. In order to fully harness this anticipated growth, ASEAN needs to establish a supportive, forward-looking framework governing e-commerce, including cross-border data flows, logistics, e-payments, and connectivity.

The Council applauds the formation of the ASEAN Coordinating Committee on E-Commerce and the progress towards the adoption of an ASEAN Agreement on E-Commerce. This will build on the momentum of the ASEAN ICT Masterplan 2020 and the overall ASEAN Economic Community Blueprint 2025.

In addition to the e-commerce-specific recommendations outlined below, it is important to note that the aforementioned ICT issues (data flows, privacy, cybersecurity, OTT) are all crucial elements of a healthy e-commerce/digital trade ecosystem.

Key Issues and Recommendations

1. Competitive Logistics for E-Commerce

The issue: ASEAN’s efforts to improve physical connectivity must keep pace with the needs of e-Commerce so that more efficient and affordable shipping and delivery options can be made available. Today, restrictive cross-border transportation and last-mile delivery regimes prevent transportation and logistics services from optimizing their networks to lower the cost of trade. In addition, the logistics sector has undergone great transformation over the last decade and today’s challenges go beyond traditional market access barriers to fair competition, workforce and skills upgrading, urban congestion and environmental sustainability. The growth of e-Commerce has also placed new constraints on the logistics sector. All these require a new look at how to keep this critical sector competitive and future-ready.

Recommendations: The Council urges ASEAN to upgrade existing cross-border transportation, border clearance, market access, and competition policies to promote a competitive logistics sector that is well-positioned to support growth in e-Commerce. These include:

I. Operationalization of the ASEAN Customs Transit Agreement, ASEAN Inter-State Transport Agreement, and ASEAN Multi-Modal Transportation Agreement. We encourage ASEAN to consider how to put in place flexibilities so that logistics companies can exercise consolidation along the transit routes, allowing international pick-ups and drop-offs to further optimize their networks.

II. Elimination of market access barriers for logistics services extending to the full scope of logistics services such as customs clearance, multimodal transport, warehousing, and third-party logistics.

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III. Fair competition policies to level the playing field between Express Mail Services (EMS) and express delivery services; keep last mile delivery infrastructure (such as drop boxes) and national e-Commerce platforms open.

IV. Capacity building for ASEAN’s SMEs in the logistics sector to address emerging challenges such as talent and workforce upgrading; urban congestion/environmental sustainability; business continuity; and business ethics and compliance.

2. Regional Trade Facilitation for E-Commerce

The Issue: Complex border procedures and regulatory approvals are significant barriers to SMEs and are primary factors influencing their decision to sell outside of their own market. This is because unlike well-established businesses who execute repeat Business to Business (B2B) transactions and have dedicated personnel to support their trade and compliance needs, SMEs do not have the resources or expertise to navigate the rules of trade. As e-Commerce volumes grows, border agencies are saddled with new challenges, including increased compliance risks and resource constraints.

The Council recognizes that challenges that have emerged from the growth of e-Commerce import volume must also be addressed to support a sustainable e-Commerce eco-system. We encourage ASEAN to work closely with stakeholders such as shipper, consignee, e-Commerce platform, e-payments, and logistics to address specific concerns. The Council is pleased to be supporting capacity building to further educate online shoppers and SMEs on the rules of trade to promote compliance, and is happy to be a platform for coordinating further stakeholder consultations.

Recommendations: For a more connected ASEAN, the Council encourages ASEAN to consider establishing a set of customs procedures to further simplify trade, facilitate clearance, and simplify taxation for low-value shipments – a key characteristic of e-Commerce trade. The Council recommends the following specific actions for shipments valued at 1000 SDR (approximately $1400):

I. Simplification of Procedures and Documentation: simplified registration procedures for importers and exporters, electronic document submission, and further streamline documentation.

II. Facilitation of Clearance: Adopt simplified-entry clearance and immediate release procedures for such shipments in line with the WCO Immediate Release Guidelines.

III. Simplify Tax and Payments: Simplify and publish tax rates, review duty and/or tax waiver thresholds; allow for electronic payment of duties & taxes; and adopt smart tax collection methodologies.

IV. Simplification of Returns: Establish seamless returns procedures, including duty-drawback opportunities and informal declarations when matched with outbound invoice details.

3. A Cohesive and Coordinated Regulatory Environment for E-Commerce

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The issue: To enable the efficient exchange of goods, services, transportation, and information required for cross-border e-commerce, the regulatory environment must be conducive to such flows by means of coordinated policy and aligned regulatory structures. The current lack of coordinated policy on cross-border e-commerce makes such activities expensive for large companies and inaccessible for SMEs. In addition to coordination and coherence, a lack of clear regulation and transparency in the formulation of policy can make it difficult for companies to succeed in the e-commerce sector.

Recommendations: Cross-border and cross-agency policy coordination is necessary throughout the entire network of ASEAN and member-state regulatory actors. Involving private and public sector stakeholders in the formulation of new regulation, and in the adjustment of existing regulation would not only facilitate transparency, but also give the business community a greater understanding of policy expectations.

4. An Engaging Environment for SMEs in Regional E-Commerce

The issue: While it is possible for large corporations and international companies to fund the activities required to navigate complex and often differing regulatory structures across the ASEAN region, small and medium enterprises are often unable to succeed in this regulatory environment. The progress towards realizing the ASEAN Economic Community will make it easier for SMEs to trade throughout the entire region of 600 million people, allowing goods and financial transactions to cross borders without the burden of having to navigate varying regulatory environments. With SME’s making up 96% of the enterprises in ASEAN, it is crucial that an engaging environment for e-commerce be fostered and supported.

While the AEC Blueprint’s pillar of equitable development focuses on the success of SMEs, it remains difficult for SMEs to succeed in domestic and cross-border regulatory environments. SMEs find it difficult to access financial resources and services, and are often restricted from the use of information technology products due to prohibitive initial costs.

Recommendations: Assistance and consideration for SMEs would level the playing field for companies that are unable to overcome the regulatory obstacles of varying expectations across the ASEAN region. This assistance and consideration could come in the form of policies that ease the process for entrepreneurs to establish a business and that enable SMEs to participate in cross-border trade and transactions. Possibly through the use of tax exemptions and incentives, policies should be pursued to make information technology products and financial resources available to SMEs that are currently unable to utilize these crucial tools of business.

A further step to creating a cohesive regulatory environment would be to re-assess existing policies regarding SMEs, with the goal of decreasing the regulatory burden on smaller companies and encouraging them to operate in the cross-border e-commerce space. Overall, focus should be placed on streamlining the inter-state import/export process so that goods can be shipped throughout the region without undue burden.

5. Building a Secure and Trusted E-Commerce Network

The Issue: International and regional e-commerce companies rely on cross-border data flows to transfer payments, send products, and share sensitive data on customers and staff. Large and small

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companies find the use of cloud computing and digital payments to be incredibly cost effective and generally efficient, but several regulatory complications and shortcomings make the use of data storage and flow techniques insecure and unreliable.

Some ASEAN Member States have mandated domestic data storage, which is far less safe and more expensive than distributed online data storage. In regions where infrastructure is poor, the temporary loss of a domestic data center means the loss of all operations, whereas distributed data storage facilities would allow the continuation of commerce as infrastructure is repaired and updated. The increased price of data storage resulting from these mandates is also an eventual cost for the consumer. Privacy and data protection standards also fall short in parts of the ASEAN region, making cross-border e-commerce difficult for many domestic and international companies.

Recommendations: ASEAN Member States should enable strong cybersecurity defenses to protect the financial infrastructure of both public and private institutions alongside the strong encouragement of electronic payments, cloud computing, and internet purchasing. Cybersecurity initiatives must also include protection standards for data storage facilities to ensure the public’s trust in their use and inter-state trust between states while respecting privacy concerns. See Cybersecurity Recommendations in the ICT section of this report.

Efforts to encourage electronic payments must include assurances of their acceptance at point of sale locations, the inclusion of multiple electronic payment companies, and decreased reliance on a cash economy

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EnergyIntroduction

This section represents the views of the Energy Committee of the US-ASEAN Business Council (US-ABC) on ways that US-ABC members can support ASEAN-wide energy priorities. It offers recommendations for achieving the objectives of the ASEAN Plan of Action for Energy Cooperation (APAEC 2016-2020) as well as a proposal for elevating US-ASEAN business-government dialogue and cooperation.

While countries in ASEAN share some similarities, their supply and demand profiles and their national energy policies vary distinctly. Despite the differences there are several key trends that have emerged across the region:

Importance of energy security as demand rises exponentially Growing demand for coal Growing demand for natural gas Pressing need for improved energy infrastructure in many ASEAN countries Influence of climate and environmental goals and development of renewable energy Maturation of existing supplies (declining output) Projected shortage of key talent in the energy industry

The U.S. is the third largest investor in ASEAN, and, while U.S. firms want to continue to maintain existing investments and explore potential new investments in the region, they face some challenges. In order for U.S. firms to maintain and increase investment in energy projects, the following are critical prerequisites:

A strong commercial and legal infrastructure Secure rule of law and sanctity of contract Access to sufficient quantities of industry skilled labor Potential for stable returns on investment

Incentivizing sustainable energy development is essential to economic growth in the region, but it is beyond the scope or ability of any one country. This is why regional institutions such as ASEAN and international financial institutions can play an increasingly important role in both creating more conducive environments for private investment in sustainable energy development projects and improving market integration. We have listed below recommendations which we believe can contribute to creating the kind of trade and investment environment that will attract foreign investment and facilitate the kind of public-private partnerships that will advance the sustainable development of energy resources within the ASEAN region.

Key Issues and Recommendations

1. Adopt a regional model for stakeholder consultation in energy policy formation

The Issue: In many ASEAN countries, local and foreign businesses are providing very useful input in the energy policy formulation process. ASEAN would benefit from recognition of the benefits of such input and the adoption of a regional model.

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Recommendations: I. Develop an ASEAN-wide protocol for how ASEAN governments consult with

stakeholders on draft laws and regulations. US-ABC members would be happy to assist with sharing and discussing best practices and how that can be adopted.

II. Put draft energy legislation and regulations through a cost-benefit analysis by officials with expertise in the energy sector and make the findings publicly available.

III. Make regulations available online.

2. Improve transparency in procurement

The Issue: In several ASEAN countries where the need for infrastructure projects and investment is great, there is room for greater transparency in procurement processes. Restrictive rules that arbitrarily or categorically favor domestic over foreign bidders can result in uncompetitive companies winning tenders, leading to reduced economic and social benefits for ASEAN governments and their citizens. Even in cases where the law mandates non-discriminatory treatment, there are instances where in practice preferences are given to domestic proposals. Improved transparency of tenders that are well publicized to all potential bidders and clear and consistent procedures for registration and evaluation will encourage the best offers. Publicly available evaluation criteria that include life-cycle costs will ultimately result in lower costs to utilities and consumers.

Recommendations:I. Launch websites where procurement information is made available to all

bidders, including interactive functionality so that inquiries and their answers can be posted and publicly available to all.

II. Standardize the criteria by which proposals will be evaluated, taking into consideration the full life-cycle costs of a project and make it publicly available (see 2.1 above).

III. Support expedited procedures to speed up procurement processes where local content is not available.

3. Ensure contract sanctity

The Issue: Consistency in the rule of law is paramount for a sound commercial and legal infrastructure that provides security and confidence to investors. It is essential that there be an established and consistent mechanism for resolving disputes and upholding contracts. Contract sanctity is essential and companies who are forced to revise or renegotiate contracts may be discouraged from maintaining or increasing their investment position.

Recommendations: We recommend that ASEAN governments promote an attractive business environment by supporting programs that strengthen the rule of law and ensure against the co-optation

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of state institutions that uphold contracts and that provide investors with a stable investment environment.

4. Adopt market-based pricing

The Issue: U.S. companies support action by ASEAN governments to prioritize the movement towards free market principles in the pricing of oil, gas, coal, and electricity. Market based energy pricing is a fundamental component to making energy and industrial investment in ASEAN countries competitive, preventing energy shortages, and safeguarding ASEAN’s energy security. The way forward for ASEAN countries that want to encourage the private sector to take a larger role in providing sustainable energy solutions includes continued progress in scaling back unsustainable energy subsidies.

Recommendations: Move toward market-based pricing for fuel and electricity. We recommend that market-wide subsidies be replaced with smaller, more targeted subsidies designed to benefit those members of society most in need of assistance. Direct transfers to the poor can help to offset the effects of increased fuel prices and inflation on the most vulnerable members of society.

5. Incentivize foreign investment to encourage development of sector

The Issue: Limits on foreign ownership of land to only concessions and renewable leases make it difficult for companies to construct facilities and become a barrier to investment by foreign companies. Establishing rights to lease and operate on land are often complicated by coordination bottlenecks between regional and local authorities and confusing property laws.

While it might seem that local content requirements ensure local investment, there are several negative consequences from such requirements. Domestic labor requirements endanger efforts to raise skills in order to be more competitive and limit the ability of companies to move skilled personnel from one country to another when jobs require highly specialized expertise. Particularly for the oil and gas and mining sectors, which face high initial investment costs, long-term contracts for 30-50+ years are required in order to make investments attractive, as opposed to shorter contracts of 5-10 years. Countries with a history of increasing local content requirements in any of the above areas may find themselves at a disadvantage in attracting foreign investment, as policy stability is one of the key factors that companies evaluate when deciding where to direct these long-term investments.

Experience has shown that countries are far more successful at attracting value-added industries and highly skilled jobs through incentivizing investment. Investments in developing traditional energy sources in ASEAN countries, particularly in the oil and gas sector, are increasingly high risk/low margin endeavors and can require incentives to attract investors. Disincentives levied on investors intended to force them to raise domestic production, divest operations, and increase domestic employment seem to reap short-term results only. Moreover, they tend to backfire in the long run, making investments less profitable or even unprofitable, and can cause companies to relocate or shift new investment to more attractive locations. The promotion of technology transfer, domestic employment, and local content can be accomplished more effectively through incentives, rather than disincentives.

Recommendations: Provide incentives that encourage greater investment from foreign firms.

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Food, Agriculture, and Forestry Introduction

Agriculture is the principal economic activity in Southeast Asia. The majority of ASEAN members rely heavily on the agri-food sector for economic growth, trade and investment. 38% or 235 million of the 620 million ASEAN population is involved in the agri-food sector, making agri-food the largest employer in the ASEAN member countries. While most of the agriculture in the region is predicated on a small-scale basis, commercial cash crops have become progressively more important as increasing numbers of farmers have been incorporated into national and international economies. Despite these profiles, and dynamic economic growth rates, the achievement of food security remains a key challenge in ASEAN. Demographic trends, transformation in agriculture, degradation of the natural resource base for food production, food price rise and volatility add to the pressure on agricultural sustainability and in turn food security in ASEAN.

As ASEAN Member States (AMS) consider different options for accomplishing food self-sufficiency goals, U.S. companies are eager to be a part of that solution through trade, investment and capacity building. Creating a food secure future for AMS will require partnerships and cooperation among the AMS government, its farmers, food producers and international food companies working together to make sure AMS consumers have access to safe and affordable food – whether it is produced in AMS or somewhere else in the world. The Council continues to affirm our support to the ASEAN Ministers of Agriculture and Forestry to support a food secure future for all ASEAN, and provides the following four recommendations to achieve this. The first two recommendations are aligned with the Food, Agriculture, and Forestry section (C5) of the AEC 2025 Consolidated Strategic Action Plan, specifically Strategic Measure Number 99: Enhance trade, facilitation, and remove barriers to trade to foster competitiveness and economic integration.

Conclusion

Essentially, we would like to create and ensure a level playing field for both multinational and domestic companies – including low/zero tariffs, removal / reduction of import quotas or export bans, reasonable registration procedures and timelines. To reach food security and spur increased investment, we believe that more science based regulations; regulatory coherence and harmonization across the region and internationally; and the application of market based principles will provide an environment for both domestic and internal businesses to grow and thrive. The Council renders our full support and commitment on the successful outcome of the region’s food security initiatives and our desire to ensure food security to all of ASEAN’s citizens as defined by the WHO as existing “when all people at all times have access to sufficient, safe, nutritious food to maintain a healthy and active life”.

Key Issues and Recommendations

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1. Strengthen market access for agricultural exporters

The issue: While AMS have made “major strides” in lowering and eliminating import duties, “Non-Tariff Barriers (NTBs) are increasingly replacing tariffs as protective measures and, unless addressed, can stand in the way of the success of the ASEAN Economic Community. A research study undertaken by the University of Southern California’s Marshall School of Business also states that Sanitary and Phytosanitary (SPSs) and technical barriers to trade (TBTs) requirements are have increased substantially over the last ten years. In addition, in some AMS, existing ownership structure requires foreign companies to enter joint ventures with local partners. Such restrictive ownership requirements have impeded the inflow of substantial U.S. foreign direct investment in the agriculture sector due to challenges associated with joint venture operations. A key challenge for example is the difficulty in finding a suitable and reliable local partner that can meet strict compliance requirements by the U.S. government, as well as possessing in-depth experience aligning with key international standards for quality control, workforce safety, and corporate social responsibility.

Wider participation by foreign companies via full ownership in the agriculture and livestock sector can bring about various benefits and add value to local businesses and consumers in ASEAN. Such benefits include opportunities for ASEAN farmers to expand the export destinations for their crop products; facilitate and boost the growth and efficiency prospects of the local agricultural value chain which requires the integration of imported raw materials unavailable in the domestic market; and improving local consumers’ access to safe, quality and affordable food. Additionally, besides augmenting employment opportunities in ASEAN, U.S. businesses transfer world class technology and global best practices through skills development and training programs for local farmers and workforces. Allowing for the dissemination of the best technologies will generate greater inclusive economic growth in rural areas and help farmers become more integrated into competitive international markets, leading to a rise in income.

Recommendations: Wider participation by foreign companies via full ownership in the Agriculture Sector

2. Develop harmonization of standards through mutual recognition agreements (MRAs), and improve adherence to international science based standards

The issue: Many companies are impeded by the complexity and multiplicity of regulatory systems, which reduces the efficiency with which technology can be introduced, meaning delays in producing the best crops, and improvements in farmers’ productivity and yield. This lack of regulatory consistency imposes significant transaction costs on companies that focus on innovation and investment to develop new technologies for farmers. The time taken to bring new products to market is substantially higher than it is in develop markets such as Australia, and the United States.

ASEAN’s ability to compete regionally and internationally will be enhanced if there is harmonization of regulatory regimes that regulate the introduction of new technologies, the cross-border movement of biological materials, mutual recognition of standards and the adoption of sensible, science-based consistent policies to key issues. The adoption of mutual recognition agreements (MRAs) on a number of topics such as licensing and registration, product standards, customs procedures, SPS equivalency can be a good step towards removing technical barriers to trade, which may make harmonization of standards easier as well as promote food safety and help to facilitate expanded trade in agri-food

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products. ASEAN should also continually adopt and adhere to international science based standards as Codex, World Organization for Animal Health (OIE), International Plant Protection Convention (IPPC) and SPS measures.

One key example and consistent request is for ASEAN countries to change their regulatory requirements on the import of grains & oilseeds to have an international, science based standard in alignment with CODEX as it relates to GM crops. Some ASEAN countries’ import regulations have a zero-tolerance level on agricultural shipments that contain any GM event that has not been approve by their government. This means if a shipment of 50,000 tons has one, single seed with a GM event that has not been approved, the entire shipment can be rejected. The zero-tolerance level on GM crop imports is not scientifically based. CODEX has conducted a risk assessment that has shown no risk to human or animal health from low levels of unapproved events in shipments up to 5% of the unapproved GM event. This is referred to as Low-Level Presence or LLP. We request that ASEAN Agriculture Ministers revisit their GM agriculture import regulations and adopt an international, scientifically-based LLP standard in alignment with CODEX on agriculture imports that allows a tolerance of GM events in shipments that have not yet been approved for import. By adopting an LLP regulation, ASEAN countries will not only increase its food security, but also lower costs to food manufactures, farmers and consumers.

Recommendations:I. That ASEAN adopt MRA’s in the areas of as licensing and registration, product

standards, customs procedures, and SPS equivalency.II. That ASEAN revisit their GM agriculture import regulations and adopt an international,

scientifically-based LLP standard in alignment with CODEX

3. Embrace and develop new and appropriate technological innovation to address demographic trends, and climate change

The issue: The agricultural system in ASEAN is highly fragmented and replete with a complicated supply chain. Adding on to the challenge to achieving sustainable food security is increasing population growth and climate change variables. Farmers are increasingly under pressure to deliver better and more productive yields while also reducing their carbon footprint.

New innovations and technologies in smart seeds, smart plant protections solutions, and in general, Climate Smart Agriculture, can significantly increase agricultural output and efficiency. ASEAN countries can gain significantly if they accelerate efforts to achieve harmonization of standards in seeds and biotechnologies. Differential standards & regulations can serve as major obstacles for producer & exporter nations, while harmonizing standards & regulations can facilitate smooth trade of agricultural inputs and produce, create consumer confidence in food & agri products, improve the access & availability of food & agri produce – enabling food security, and strategic country-specific investments in food & agriculture.

Additionally, the incorporation of new digital technologies is predicted to benefit the agricultural sector in numerous ways. However, despite the potential benefits of adopting ICT technologies in agriculture, there are still challenges to increasing the incorporation of ICT into agriculture in ASEAN. ASEAN governments will not only need to put in more effort in reducing the gap between rural and urban access to technology, but also moderate information made available to farmers. Information needs to be tailored and targeted at farmers specifically, as it would directly impact farmers’ production and marketing decisions. In addition, a key priority under Strategic Measure Number 98 (Increase crop,

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livestock and fishery/aquaculture production), is to develop Public-Private Partnership (PPP) regional framework for technology development in the agriculture sector. While the Council fully supports such PPP initiatives, ASEAN need to be cognizant of the various key regulatory challenges in the plant science, agricultural trading, and animal health sectors that may prevent private companies from fully investing in a market, and subsequently in committing to PPPs.

Recommendations: That ASEAN work towards regulatory coherence in agricultural trade and development; specially to develop common approval standards for new agricultural technologies including ICT and new generations of seeds.

4. Strengthen and implement the ASEAN Intellectual Property Rights Action Plan 2016-2020

The issue: Farmers in may ASEAN countries are producing low yield crops due to the inefficient use of agricultural resources, inability to safeguard crops from rampant diseases as well as their lack of up to date agricultural knowledge. This has contributed to rising food security concerns, making it imperative for the farmers to increase domestic food production through improved yields. One feasible solution to address this challenge would be to promote reliance on seeds that produce higher yield crops. However, weak intellectual property rights (IPR) legislation has been consistently identified as a key variable inhibiting foreign direct investment in the agricultural sector, resulting in weak transfer of technology. The lack of concrete IPR legislation exposes foreign business ideas to the vulnerability of being replicated by counterfeit products. Besides impacting potential foreign direct investment, the prevalence of counterfeit products causes harm to farmers such as crop damage, not to mention the potential health and environmental issues from using products that have no purity guarantee.

Recommendations: We hope that the ASEAN Intellectual Property Rights Action Plan for 2016-2020 will strive to develop an ASEAN IP system that takes not only will be able to address such issues, but also take into account the different levels of capacity of the Member States, balances access to IP and protection of IPRs, and responds to the current needs and anticipates future demands of the global IPR system. The Council’s Food & Agriculture Committee also stands ready to work with ASEAN governments in terms of public policy related activities to support efforts via public private partnerships to help address IRP issues and their food security goals.

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HealthcareIntroduction

The health objectives of the AEC 2025 Consolidated Strategic Action Plan are to promote the development of a strong healthcare industry that will contribute to better healthcare facilities, products, and services to meet the growing demand for affordable and quality healthcare in the region. There are two priority issues that are important to the US-ASEAN Business Council’s Health and Life Sciences committee (HLS Committee), which would help achieve these objectives.

Key Issues and Recommendations

1. The HLS Committee encourages more Public Private Partnerships investments in the provision of Universal Health Coverage.

The issue: One of ASEAN Health Priority is that ASEAN Community would have universal access to [essential] health care and good quality medical products, including traditional and complementary medicines by 2020. However, ASEAN is facing several barriers to achieving UHC. For instance, financial barriers to obtaining care, having a sufficient skilled healthcare professionals, and profound changes in the burden of diseases and age-structure of their population.

Recommendations: US-ASEAN Business Council member companies are involved in several PPP projects that can help governments overcome these barriers and would like to continue to partner with the governments in the areas of:

I. Encouraging the Adoption of International Best PracticesIn several ASEAN countries, with the joint efforts of the industry, hospital and regulatory authorities, there has been a steady improvement of shortening of timelines for clinical trial approval process for adoption of international standards and guidelines, such as international clinical trial guidelines. This has helped to foster a health environment where patients can access newer and higher quality drugs, medicines and services, leading to increased access to care under the health system and improved overall public health. The private sector has also designed workshop to help governments understand the impact specific regulations have on the industry and shed light on international practices.

II. Exchanging Thought-leadership in Healthcare Advancement US-ABC member companies have worked with governments to strengthen their procedural capacity on specific health interventions by supporting workshops, and providing courses to ASEAN officials.

III. Sharing and Supporting of Research Findings to Help Increase Access to Medicines and to find Breakthroughs in TreatmentsUS-ABC member companies have worked with governments in the areas of translational research in Singapore on liver cancer, research and consultations into priority health issues in Philippines with the aim of making innovating medicines more affordable.

IV. Capacity BuildingUS-ABC Member companies and Vietnam’s Ministry of Health signed a Memorandum of Understanding (MOU) in 2015, under which capacity building is an area where both

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parties are keen to collaborate. Members have provided training for healthcare providers and capacity-building workshops for local hospitals on a variety of topics, from technology awareness and training workshops to introducing new technologies to specialty physicians, to workshops on technical solutions using clinical simulations and training labs.

2. Support the further harmonization of standards and conformance in healthcare products and services, such as common technical documents required for registration processes and nutrition labelling.

The issue: US-ASEAN Business Council member companies encourage the ASEAN Economic Ministers to prioritize continued cooperation on standards and regulatory harmonization in line with international standards. There are several positive impacts on harmonization. First, market access would be accelerated, costs of production and barriers to regulatory processes patients and consumers would be reduced. Second, the improvement in market access would avail patients and consumers to higher quality products and services. This would in turn support a higher quality and safety of public health.

Recommendations: US-ASEAN Business Council member companies would like to encourage the full and consistent implementation of AMDD across ASEAN. AMDD is a guidance for ASEAN countries that would help achieve minimum consistent requirement across ASEAN with regards to Medical Device regulation. Member companies would be willing to work with governments to build capacity and knowledge on implementation of AMDD. We encourage ASEAN Member States to sign Memorandum of Understandings that will either a) recognize cross-border specific article within AMDD, as this will break some technical barriers and possibly expedite product registration or b) recognize cross-border product approvals, as this will allow products that are already approved in one country to be automatically accepted or approved in another country.

Additionally, US-ABC member companies support the Pharmaceutical Product Working Group under the ASEAN Consultative Committee on Standards and Quality (ACCSQ), which aims to develop harmonization of technical procedures and requirements including appropriate MRAs applicable to the ASEAN pharmaceutical industry, considering other regional and international developments on pharmaceuticals.

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Strengthening the role of MSMEsIntroduction

Micro Small Medium Enterprises (MSMEs) are the backbone of the ASEAN economies. ASEAN and its Member States play a critical role in defining the policy and regulatory landscape in which MSMEs operate. This landscape forms the foundation of a broader ecosystem that determines the scope and extent of benefits that will accrue to ASEAN MSMEs. Together with the support of and investments made by a range of development and private sector actors, ASEAN and its Member States have a real opportunity to change the structural dynamics that govern competitiveness of MSMEs in the region.

The US-ASEAN Business Alliance for Competitive SMEs is an example of private sector stakeholder support for MSMEs development in ASEAN. Established in 2014, the Business Alliance is a joint initiative between USAID and US-ABC, through its ASEAN Committee. Since its inception, the Business Alliance has administered trainings to more than 5,000 MSMEs in all 10 ASEAN Member States. To further support its effort to enhance small businesses’ competitiveness in Southeast Asia, the Council launched ASEAN SME Academy, an online portal with interactive training and mentoring resources and business information for ASEAN small businesses on May 31, 2016.

According to the AEC Blueprint 2025, initiatives towards improved conducive policy environment for MSMEs and enhanced market-related measures are required to support MMSMEs. The Council recommends that ASEAN articulate a set of policy priorities that will enable the international market expansion; facilitate the availability and application of technology; promote regulatory simplification, standardization and mutual recognition; and enhance accessibility of financing. The Council also supports the continued development of policies supporting ethical business practices and corporate governance that will open-up opportunities to work with US companies and other multinationals.

Key Issues and Recommendations

1. Access to International Market

The Issue: The implementation of AEC and the Free Trade Areas with ASEAN’s plus one partners can create great market expansion opportunities for MSMEs.

Recommendation: Support modern manufacturing and supply-chain patterns to facilitate MSMEs participation in global supply chains.

2. Regulatory Simplification, Standardization, and Mutual Recognition

The Issue: While complying with standards, technical regulations, and conformity assessment procedures can be costly for larger firms, it is potentially prohibitive for MSMEs because many costs are fixed, regardless of a firm’s size or revenue. The national level policy environments conducive for SME development vary across the region. Today, MSMEs with strong products and value propositions are unable to grow their business due to artificial constraints imposed by differential and complex regulatory requirements between ASEAN countries.

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The AEC 2025 Blueprint stresses the importance of an enhanced MSMEs policy and regulatory environment that promote intra and inter-governmental cooperation and coordination mechanisms, involve MSMEs in the decision-making process to enable better representation of MSME interests, provide support to micro enterprises in the informal sector and their integration, and streamline processes involved in obtaining of permits and business registrations to enable less costly and faster business formation. Eliminating regulatory barriers to trade will provide the most opportunities for ASEAN MSMEs to expand through the region, thereby realizing the potential of AEC. ASEAN should continue to deepen this critical aspect of its reform agenda to ensure complete implementation of regulatory reforms, broader standardization across sectors, and expanded mutual recognition of standards and conformance.

Recommendations: ASEAN should continue to deepen support of MSME’s by strengthening its reform agenda to ensure complete implementation of regulatory reforms, broader standardization across sectors, and expanded mutual recognition of standards and conformance.

3. Access to Finance

The Issue: After achieving the hurdle of business start-up, often the next major challenge for MSMEs is securing capital for business growth. There is a substantial unmet demand for credit among ASEAN MSMEs who cite the lack of financing as a major growth inhibitor.

Recommendations: To support the sustainability and growth of MSMEs, we recommend that ASEAN establish policies to promote product innovation in the financial market, considering alternative finances and diversified financial markets, ranging from microfinance, leasing, factoring, venture capital, equity funds, business angels, to stock markets. Policies supporting retail financing and e-payment systems such as debit and credit cards, mobile phone payments and online banking by individuals also support MSMEs as a means to expanding reliable and verifiable financial transactions.

4. Access to Technology

The Issue: In today’s digital economy, an SME without an understanding of available technology and innovation, and how to use it to reach customers, partners and new markets, is at a severe disadvantage. The lack of access to modern technology and tools, especially the Internet which is the greatest opportunity equalizer in modern business, is a severe constraint on MSMEs’ participation in e-commerce and on MSMEs development in the less developed countries in ASEAN. ASEAN needs to facilitate and incentivize the use of technology to enable MSMEs to access markets and innovate. These incentives are needed by companies from all sectors including manufacturing, agriculture, retail, and banking who leverage technologies such as cloud computing to store and share data in an increasingly collaborative business world and especially a conducive environment for cross-border e-commerce in the Asia Pacific Region.

Recommendations: ASEAN should adopt policies supporting creativity, entrepreneurship, and the flourishing of technology, including the protection of intellectual property rights, and the free-flow of data across borders.

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Strengthening the Role of Private SectorIntroduction

The AEC 2025 Blueprint stressed the important role of private sector in ASEAN integration is crucial and will be beneficial to achieve ASEAN Goals. The ASEAN Business Advisory Council (ASEAN-BAC) is tasked to take the lead in coordinating the established business councils including the US-ASEAN Business Council in the interactions with various ASEAN sectoral groups. The Council is supportive of ASEAN’s effort in implementing a more inclusive and consultative process involving the private sector. The Council also supported an enhanced role of ASEAN-BAC in coordinating inputs from various business councils as tasked in the AEC 2025 Blueprint.

Activities

Over the past few years, the Council has been consistently engaged in all joint business council meetings which were coordinated by ASEAN-BAC. The Council has also provided inputs to ASEAN-BAC’s policy recommendations to ASEAN Economic Ministers. We are very pleased to have been continuously holding exclusive dialogues with ASEAN-BAC and working together with ASEAN-BAC members on various activities and initiatives.

The Council applauds ASEAN-BAC’s coordinating efforts in engaging with sectoral Working Groups, especially at the ASEAN Trade Facilitation – Joint Consultative Committee (ATF-JCC) meetings in 2017. The Council looks forward to participating in other ASEAN Working Group mechanism.

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