Southeast Asia:
Dynamic Opportunities for U.S. Competitiveness
2006–2007
QDONQS
OQDO@QDC AX9
U.S Chamber of Commerce
Southeast Asia AmChams
Kathleen Connors
Director, Southeast Asia
AmCham Indonesia
AmCham Malaysia
AmCham Philippines
AmCham Singapore
AmCham Thailand
AmCham Vietnam
Table of Contents
A Message from Thomas J. Donohue . . . . . . . . . . . . . . . . . . . . . . . 2
Southeast Asia Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Map of Southeast Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Natalie Obermann, research assistant, Southeast Asia, also contributed to this report.
Indonesia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Report edited by:
Malaysia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Myron Brilliant
Vice President, East Asia
The Philippines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Murray Hiebert
Senior Director, Southeast Asia
Singapore . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Thailand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Vietnam. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Brunei . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Cambodia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
copyright 쑕 2006 by the Chamber of Commerce of the United States
Laos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Library of Congress Cataloging in Publications Data
Main entry under title:
Burma (Myanmar) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Southeast Asia: Dynamic Opportunities for U.S. Competitiveness
The U.S. Chamber of Commerce . . . . . . . . . . . . . . . . . . . . . . . . . 23
All rights reserved. No part of this work covered by the copyright herein may be reproduced or copied in any form or by means—graphic, electronic, or
mechanical, including photocopying, recording, taping, or information and retrieval systems—without written permission of the publisher.
Southeast Asia Resource Contacts . . . . . . . . . . . . . . . . . . . . . . . 24
SOUTHEAST ASIA:
DYNAMIC OPPORTUNITIES FOR U.S. COMPETITIVENESS
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3
Southeast Asia Overview
A Message from Thomas J. Donohue
O
n behalf of the U.S. Chamber of Commerce, the American Chambers
of Commerce (AmChams) in Southeast Asia and our members, I am
pleased to present this report, Southeast Asia: Dynamic Opportunities
for U.S. Competitiveness. The American business community, represented
by the Chamber and the AmChams, offers its views in the hope of expanding
dialogue and commercial relations between the United States and the countries of
Southeast Asia.
This is an important time in U.S. relations with Southeast Asia. New emerging
markets in an increasingly global environment are challenging traditional trade
and investment relationships. Regional economic integration has become the
zeitgeist in Asia, and bilateral and regional trade agreements are springing up
everywhere. The U.S. business community believes it is important for the
United States to recalibrate its role and strategy in Southeast Asia to ensure a
strengthened competitive position for American companies in this critical market.
The Chamber has prepared this report as part of its strategy of seeking to increase
the U.S. focus, resources, and presence in Southeast Asia. The Chamber, in
cooperation with the AmChams in Southeast Asia, is stepping up its regional
programs and initiatives and increasing its policy advocacy efforts in Washington
to reflect the heightened priority of Southeast Asia in the business strategy of
American companies.
F
ew regions of the world offer U.S. companies
as much opportunity as Southeast Asia.
As the 10-nation Association of Southeast
Asian Nations (ASEAN) has developed in recent
decades, the region has emerged as a prime target
in the trade and investment strategies of many
U.S. companies. In 2005, the region ranked as the
United States’ fourth-largest global trading partner.
The United States is second only to Japan in direct
investment in ASEAN.
The region boasts an array of natural resources,
including oil and gas, timber, gold, rubber, and
arable land for agriculture. It is culturally, ethnically,
and religiously diverse and is home to the world’s
largest Muslim population in Indonesia, Malaysia,
and Brunei. Its economies run the gamut from
highly developed Singapore and the middle-income
markets of Malaysia and Thailand to rapidly
growing Vietnam and the least developed countries
of Cambodia and Laos.
The AmChams of Southeast Asia are invaluable partners of the Chamber and
function as America’s commercial ambassadors abroad. Their members work
every day to increase American competitiveness and contribute to the economic
growth of the region.
The partnership between the AmChams and the Chamber aims to foster
greater dialogue on important commercial issues and ensure that the voice
of the American business community is heard both in Southeast Asia and in
Washington. As a team, we champion issues that promote open markets and a
level playing field for American businesses to compete and prosper on both sides
of the Pacific.
The Chamber is proud to cooperate with the AmChams that contributed to this
report and will continue to work hard to encourage increased U.S. trade and
investment in Southeast Asia.
Sincerely,
Thomas J. Donohue
President and CEO
U.S. Chamber of Commerce
4
Southeast Asia in the coming decade offers the
United States vast potential to enhance economic
growth, increase competitiveness, create new jobs,
and bolster its security. American products are
popular with the region’s large, youthful consumer
base. Trade with Southeast Asia already supports an
estimated 800,000 U.S. jobs.
The United States has deep geopolitical and security
interests in the region. Straddling the Straits of
Malacca and the South China Sea, Southeast Asia
occupies key strategic real estate along some of
the world’s busiest shipping lanes linking China,
Japan, and Korea to the Middle East and Europe.
Singapore, Thailand, and the Philippines have long
been strategic allies of the United States. In recent
years, Washington has strengthened its relations with
Indonesia and Malaysia—moderate, democratic
Islamic countries that serve as key partners in the
battle against terrorism.
The rise of China, India, and other emerging
economies is causing shifts in Southeast Asia’s
former regional economic, political, and security
arrangements and creating new regional alignments.
These dynamics have created new challenges and
opportunities for the United States and call for
Washington to re-examine its relations in the region.
Political and economic stability cannot be taken for
granted. The United States needs to seek ways to
remain actively engaged in the region and help create
an environment that will ensure that political stability
and economic growth continue.
The ASEAN Regional Forum (ARF), the
preeminent forum for dialogue on political and
security matters between ASEAN and its external
partners, is a critical venue for U.S. engagement in
the region. The continued participation by the
U.S. Secretary of State in the annual ARF
ministerial meeting sends an important signal that
regional security and stability in Southeast Asia are
key priorities of American foreign policy.
Beyond strategic reasons for U.S. engagement with
Southeast Asia, American business sees untapped
economic opportunities in the region in which it
would like to participate. To help ensure continued
U.S. access to open markets, it is crucial that
Washington help shape the emerging commercial
architecture and continue to push for a level playing
field for foreign companies.
U.S. efforts to negotiate regional and bilateral trade
agreements in Southeast Asia are an important
priority of American business. In addition, U.S.
leadership in the Asia-Pacific Economic Cooperation
(APEC) forum, in which the United States and key
Southeast Asian countries are major players, is critical
to addressing such regional goals as strengthened
intellectual property (IP) protection, customs
integration, and the harmonization of industrial
standards.
5
This is an important time in U.S. relations with
Southeast Asia. The U.S. government, with strong
support from the U.S. Chamber, the American
Chambers of Commerce (AmChams) in the region and
our members (hereafter referred to as the U.S. business
community), has a tremendous opportunity to shape
commercial trends and expand the American business
presence in the region. With bold economic leadership,
Southeast Asian governments can realize their dual
objectives of ensuring political stability and economic
prosperity for their people.
This paper describes ASEAN’s regional integration, the
grouping’s role in APEC, and the state of U.S.-ASEAN
relations. It also offers U.S. business recommendations
to policy makers on both sides of the Pacific on how to
increase U.S. trade and investment with Southeast Asia.
ASEAN REGIONAL INTEGRATION
ASEAN was formed in 1967, when the foreign ministers
of Indonesia, Malaysia, the Philippines, Singapore, and
Thailand met and agreed to cooperate to accelerate
economic growth, boost social and cultural development,
and ensure peace and stability in the region. Four
decades later, the expanded 10-member grouping—
now including Brunei, Burma, Cambodia, Laos, and
Vietnam—represents a dynamic and growing consumer
market of nearly 600 million people with an average per
capita income of more than $4,000.
During the 1990s, the “tiger” economies of Southeast
Asia benefited from high levels of foreign investment
and growth. Economic integration was not a top priority
for the grouping. In 1997, the region’s dynamic growth
came to an abrupt halt when the Asian financial crisis
hit. Some countries saw their currencies depreciate
by as much as 80%, making repayment of foreign6
denominated debt impossible. Seemingly overnight,
banks closed, building cranes ceased operations, and
millions became unemployed as formerly booming
economies turned to global financial institutions for
massive bailouts.
While Southeast Asia has largely recovered from the
crisis, the region has not yet witnessed a sustained
return of high levels of foreign investment. Increased
competition for investment from other emerging
markets, particularly China and India, underscores
the urgency for a more competitive Southeast Asia. At
the 2004 ASEAN summit in Laos, the region’s leaders
launched a program calling for the comprehensive
integration of the regional grouping by 2020. Its aim is to
reduce all barriers to the free flow of goods and services,
liberalize the flow of capital, and provide national
treatment for foreign investors in an ASEAN Free Trade
Area (AFTA).
U.S.-SOUTHEAST ASIA RELATIONS
Although the U.S. government is active in the
region through APEC and ARF, there is a perception
by some in Southeast Asia that the United States
is inattentive to the region—except on issues of
terrorism and security cooperation. The recent U.S.
decision to appoint an ambassador to ASEAN as
a grouping and to assign a Treasury Department
representative to the region should help change this
perception. At the APEC summit in 2005, U.S.
President George Bush announced the Enhanced
ASEAN Partnership, which included the goal of
negotiating a regionwide Trade and Investment
Framework Arrangement with ASEAN.
ASEAN’S ROLE IN APEC
To improve economic growth and enhance political
stability, it is vital that Southeast Asia embrace regional
initiatives and institutions that foster regional integration,
transparency, and openness. One forum that plays this
role is APEC.
The five original members of ASEAN were founding
members of APEC, a loose 21-member grouping that
includes key countries in Asia as well as the United States,
Mexico, Canada, and Chile. APEC was formed in 1989,
and its members today produce 52% of the world’s gross
national product. The grouping focuses on promoting
regionwide trade and investment liberalization, business
facilitation, and economic and technical cooperation
with the goal of achieving free trade and investment
among its members by 2010 for developed economies
and 2020 for developing countries.
Southeast Asia’s goal of establishing an integrated free
trade area by 2020 tracks closely with APEC’s goals.
APEC offers a vehicle for Southeast Asian countries to
expand trade and investment liberalization with their
major trading partners. Progress on liberalization within
ASEAN can serve as a catalyst to advance trade benefits
to other APEC economies.
In addition to new opportunities for American
business, these bilateral negotiations can help spark
a healthy atmosphere of competitive liberalization
among countries. The U.S. business community
encourages U.S. leadership to promote regional and
bilateral efforts in ASEAN that would prompt a “race
to the top,” to advance development of economic
standards and create world-class competition.
MUTUAL OPPORTUNITIES FOR THE
UNITED STATES AND ASEAN
Regional integration in Southeast Asia is becoming
a growing priority for American companies. An
integrated ASEAN, under the AFTA framework,
would enhance the region’s competitiveness beyond
the benefits that are gained through bilateral trade
agreements. A Southeast Asia with a freer flow
of goods, services, and capital would attract U.S.
investors, while local consumers and companies
would have access to a wider range of competitive
services, products, and financing.
The U.S. business community recommends that
ASEAN governments take tangible actions to
enhance their competitiveness, including:
The United States has already begun efforts to build
a network of bilateral trade agreements in Southeast
Asia. In mid-2006, the U.S. Trade Representative
finalized an agreement to allow Vietnam to join the
World Trade Organization (WTO) and signed a
Trade and Investment Framework Agreement (TIFA)
with Cambodia. The United States is in the process
of negotiating a free trade agreement (FTA) with
Malaysia and has launched TIFA discussions with
Indonesia and the Philippines. The United States
already has an FTA with Singapore which, in its first
year, increased trade between the two countries by
more than 10%.
The U.S. business community supports efforts
to negotiate bilateral FTAs with Southeast Asian
partners. U.S. FTAs are considered the “gold standard”
of trade agreements, because they are comprehensive
and call on partners to open markets and reduce trade
barriers beyond the requirements of the WTO.
• Establish predictable investment regimes.
To encourage investors to pursue bases
of operation in Southeast Asia, regional
governments should clarify regulations,
reduce political risk, and spell out transparent
procedures for resolving disputes.
• Promote liberalized financial services
and good corporate governance. This
will strengthen capital markets, stimulate
innovation, and provide consumers with the
broadest range of products and services at the
lowest cost.
• Increase protection of intellectual property.
IP theft hampers investment and innovation,
threatens public health and safety, and
reduces government revenue. Governments
should launch regular raids on IP violators,
impose maximum penalties for pirates, and
initiate training for law enforcement and
customs officials.
7
• Harmonize standards. This will boost ASEAN’s
efforts to become a regional production
hub. Unifying regulations would enhance
competitiveness. For example, a single ASEAN
standard for labels that allows production lines
to use the same packaging throughout the region
would reduce production costs and provide timelier
introduction of new products to consumers.
• Integrate customs procedures. The introduction
of a single customs window, which allows for
single-channel clearance of goods for all ASEAN
member countries, is expected to be in place
by 2008 for the grouping’s six most developed
countries. The U.S. business community urges
ASEAN leaders to ensure that this goal is realized.
• Establish a more open and transparent
agricultural market. High tariffs and sanitary
and phytosanitary standards (SPS) can act as
impediments to trade. Lowering tariffs and
adopting a common SPS regime would enhance
trade within ASEAN and trade between Southeast
Asia and other partners.
• Encourage exploration of new energy resources.
A regional, liberalized approach to petroleum
exploration would enhance the potential for
investment and improve global energy security.
The region could gain from cooperation in
developing new and renewable energy sources
by developing a coordinated strategy to produce
ethanol and biodiesel fuels.
AMERICAN BUSINESS
RECOMMENDATIONS FOR THE U.S.
GOVERNMENT
It is important for the U.S. government to bolster policy
initiatives and programs that would help American
companies compete and prosper in this vital overseas
market. Free trade agreements are beneficial to economic
growth, but protectionist sentiment in Congress and
eroding support for export assistance programs mean
that many companies, particularly small and
medium-size ones, are not able to benefit.
8
Here are some of the American business community’s
recommendations for the U.S. government:
• Promote regular visits to the region by Cabinet
officials and lawmakers.
• Invest in capacity-building initiatives that support
regional economic reform and integration.
• Provide increased resources to bolster programs in
Southeast Asia by the Export-Import Bank, the
Overseas Private Investment Corporation, and the
Trade Development Agency.
• Support and participate in grassroots programs
around the United States to raise awareness of
economic opportunities in Southeast Asia.
• Ensure that U.S. tax policy does not impede
companies from sending Americans overseas to
expand business opportunities.
• Streamline U.S. visa procedures to ensure a balance
between maintaining security and promoting
American business competitiveness.
• Hold annual congressional hearings to monitor
the impact of U.S. policy on commercial relations
with ASEAN.
• Continue U.S. presidential participation at the
APEC Leaders’ Meeting and the APEC CEO
Summit.
This is a delicate and critical time for the United States
in Southeast Asia. It is important for Washington to
recalibrate its role and strategy in Southeast Asia to
ensure a strengthened competitive position for U.S.
companies in this critical market. The American
business community, represented by the Chamber and
the AmChams, offers its views in hopes of furthering
dialogue as well as strengthening the U.S.-ASEAN
partnership.
In the following sections, we present a more in-depth
look at the individual countries of Southeast Asia. We
explore the challenges confronting the governments
in the region. We want to ensure that the U.S. and
ASEAN governments are working together to promote
growth and prosperity in the region. We look forward to
working with governments and the private sector on the
challenges and opportunities before us.
9
Indonesia
Economy
Per Capita GDP (PPP):
$4,458
GDP Growth Rate
I
ndonesia is the world’s largest Muslim country, the
third-largest democracy, and a key strategic partner of the
United States. This secular, religiously tolerant country of
more than 245 million has struggled to rebuild its economy
since the 1997 financial crisis. As the country hit hardest by
the crisis, Indonesia—which had often been lauded for its
earlier poverty alleviation achievements—saw millions fall
back into poverty, almost overnight.
The economic crisis led to demonstrations that toppled
autocratic President Soeharto in 1998, ending his 30-year
rule. While Soeharto’s rule brought economic progress
that lifted the country from poverty to low-middle income
status, political and institutional reforms did not keep pace.
Democratic elections, freedom of the press, and regional
economic decentralization were instituted following
Soeharto’s fall.
In 1999 and 2004, Indonesia held national elections that
were free of violence, fraud, and coercion for the first time
since 1955. The first-ever direct presidential elections in 2004
swept retired general Susilo Bambang Yudhoyono to power in
a landslide victory.
While Indonesia’s democratic transition has been successful,
the government’s economic reform efforts have been
hampered by a variety of challenges. The process of political
reform brought five different presidents to power from
1998 to 2004. The terrorist bombing in Bali in 2002 and
subsequent bombing attacks in other parts of the country
have hurt tourism and have increased government spending
on security and anti-terrorism initiatives. In recent years,
the devastating Indian Ocean tsunami along with droughts,
earthquakes, and avian influenza have added pressure on the
economy. Declining investment in the oil and gas sector has
strained Indonesia’s energy capacity, and the government’s
efforts to achieve a balanced budget prompted cuts in fuel
subsidies, resulting in a doubling of most fuel prices in 2005.
The new government has begun to tackle some of the most
difficult reforms on the country’s to-do list. Two months after
10
GDP Composition by Sector:
Agriculture: 14.7%
Industry:
30.6%
Services:
54.6%
Unemployment:
10.9%
Industrial Growth Rate:
2.1%
Imports from U.S.:
$3,045 million*
Exports to U.S.:
$12,016 million*
Demographics
Population:
245.5 million
Literacy Rate: 87.9%
Median Age: 27 years
Life Expectancy: 70 years
*U.S. dollars
Sources: IMF World Economic Outlook Database, CIA World Factbook and U.S Dept.
of Commerce. 2005 statistics
taking office, the Yudhoyono administration confronted the
tsunami that killed more than 160,000 people and destroyed
the coastal areas of Aceh, Indonesia’s western-most province.
Due to good management of the recovery and reconstruction
process by the Indonesian government—coupled with
significant aid from foreign governments and international
relief agencies—major progress has been made in rebuilding
Aceh. The devastation also provided an opportunity to
negotiate an end to the 30-year conflict between the local
separatist movement and the Indonesian government.
The country’s 5% economic growth is respectable, but
it is not enough to absorb the young people entering the
workforce and to reduce unemployment, which is just over
10%. To achieve the desired growth rate of 6.5%–7%, the
government must attract investment. Achieving this will
require liberalization of the country’s rigid labor regulations,
lower business costs, increased legal certainty, and stepped
up spending to upgrade the country’s infrastructure. The
government continues to adhere to sound macroeconomic
policies, focusing on balancing its budget and curbing
inflation.
With the support of the business community, draft
laws on taxation, foreign investment, and labor were
presented to Parliament in 2006 to improve the climate for
investors and streamline the country’s cumbersome labor
regulations. The government has opened a dialogue with
the business community to develop strategies to increase the
competitiveness of Indonesia’s exports. Eight new special
economic zones are being created to entice investors, boost
exports, and reduce high business costs. Corporate leaders
are confident that these measures will begin to improve the
business climate.
But many challenges remain. Indonesia in 2005 ranked
137th out of 158 countries on Transparency International’s
Corruption Perceptions Index. President Yudhoyono
has issued instructions aimed at improving integrity in
government institutions and in streamlining government
procurement procedures, including the development of a
national anti-corruption action plan. Business leaders hope
that replacement of the heads of the customs and tax revenue
agencies, along with the prosecution of a several high-profile
corruption cases, will begin to rein in graft.
transparency, protecting taxpayers’ rights, and
improving efficiency and compliance.
• Encourage liberalization of Indonesia’s labor law to
protect workers, settle labor disputes quickly and fairly,
and simplify the procedures for foreigners to obtain
business visas.
• Revamp customs regulations to speed up the flow of
goods, codify uniform rules and standards, enhance
anti-smuggling measures, and simplify administrative
procedures.
• Step up the drive to implement judicial reforms and
other anti-corruption initiatives.
• Encourage investment in infrastructure.
• Aggressively enforce anti-piracy laws. Prevent
corruption and irregularities in the seizure of pirated
goods and illegal pirating equipment.
Recommendations for the U.S. government:
• Continue regular consultations through the
U.S.-Indonesia Trade and Investment Framework
Agreement, and encourage private sector participation
in the process.
• Urge the Export-Import Bank to finance more U.S.
business activities in Indonesia.
• Acknowledge and encourage Indonesia’s continued
cooperation on security and on fighting terrorism.
• Encourage more visits by U.S. lawmakers to increase
understanding of the country’s strategic importance.
Business leaders also urge the government to mount an
awareness campaign to educate consumers on the economic
effects and dangers of piracy. Without proper enforcement of
laws on intellectual property, investors will continue to shy away
from Indonesia.
While the country’s external debt is at a manageable level,
economists say that the economy is still vulnerable to sudden
changes in investor confidence. Analysts think that there is
a risk that the public is unrealistically optimistic about what
the government can achieve. One of the big challenges that
the country faces is the loss of momentum in implementing
the economic reforms needed to promote sustained economic
growth.
RECOMMENDATIONS FOR IMPROVING
TRADE AND INVESTMENT
Recommendations for the Indonesian government:
• Reform Indonesia’s tax laws to make them more
broad-based and uniform while promoting
11
Malaysia
Economy
Per Capita GDP (PPP):
$11,201
GDP Growth Rate
M
alaysia, with its middle-income economy of
more than 24 million people, offers a significant
market for American companies. U.S. firms,
which make up the largest group of foreign investors in
Malaysia, are pleased that U.S. and Malaysian officials have
launched negotiations on a free trade agreement (FTA).
A comprehensive, commercially viable FTA would offer
increased opportunities for bilateral trade and investment that
would benefit companies in both countries.
Malaysia is the United States’ 10th-largest trading partner
and its largest trading partner in Southeast Asia. Two-way
trade in 2005 was more than $44 billion. More than 20% of
Malaysia’s exports are destined for the U.S. market.
This secular Muslim-majority country offers important
opportunities for U.S. trade and investment. With a highly
skilled, multilingual and multicultural workforce, excellent
telecommunications and road and port infrastructure, and
a stable economic and political environment, Malaysia has
attracted more than $28 billion in foreign investment over
the last 30 years.
In the early 1990s, Malaysia set the goal of becoming a
developed economy by 2020. It is on track to achieve that
target, despite the disruptive financial crisis in 1997. Two key
priorities of this ambitious development agenda, known as
Vision 2020, are education to produce a talented workforce
and poverty eradication.
Malaysia is strategically located between Thailand and
Singapore along the Straits of Malacca, the world’s busiest
shipping lane. The country has abundant natural resources
such as oil, gas, rubber, and timber. It has transformed
itself from a predominantly agrarian and mining economy
in the 1970s into a world-class center for electronics
manufacturing and a hub for high-tech investments. Services
and manufacturing now make up 80% of Malaysia’s GDP,
and the country ranks third (behind China and India) as
a destination for business-process outsourcing and sharedservices investments.
12
GDP Composition by Sector:
Agriculture: 7.2%
Industry:
33.3%
Services:
59.5%
Unemployment:
3.6%
Industrial Growth Rate:
4.8%
Imports from U.S.:
$10,451 million*
Exports to U.S.:
$33,703 million*
Demographics
Population:
24.4 million
Literacy Rate: 88.7%
Median Age: 24 years
Life Expectancy: 73 years
*U.S. dollars
Sources: IMF World Economic Outlook Database, CIA World Factbook and U.S. Dept.
of Commerce. 2005 statistics
Economic growth is a top priority of Malaysia’s government.
Its annual budget sets aside significant funds for infrastructure
development. In the late 1990s, Malaysia built a high-tech
Multimedia Super Corridor (MSC) just south of Kuala
Lumpur and focused resources on building an infrastructure
and developing policies to attract foreign investors. Malaysia
is now seeking to use the MSC as a model to attract investors
in biotechnology.
While export-oriented business still leads growth, domestic
consumer spending is becoming more important. Malaysia
ranks third among Southeast Asian nations in terms of
purchasing power, behind Singapore and Brunei.
Bilateral relations between the United States and Malaysia
have improved since Prime Minister Abdullah Badawi took
office in 2003.
American products are popular among consumers. In
2004, the two countries signed a Trade and Investment
Framework Agreement (TIFA), which helped expand trade
ties and created a forum to discuss issues such as market
access, intellectual property (IP) protection, investment, and
regulatory reform. Progress on these issues prompted the two
countries to launch negotiations in June 2006 on an FTA.
A comprehensive FTA with Malaysia would provide more
opportunities for U.S. companies. Key areas of interest for
U.S. investors include electronics manufacturing, oil and gas,
financial services, environmental technology, and information
and communications technology. Malaysia’s major exports to
the United States include electronics products, wood items,
textiles, and rubber goods.
An FTA is expected to open new opportunities for U.S.
companies in key industries such as automobiles and financial
services—sectors that are highly protected by the Malaysian
government. The U.S. business community supports an FTA
and will work to secure congressional passage of an agreement
after negotiations are completed.
RECOMMENDATIONS FOR IMPROVING
TRADE AND INVESTMENT
Recommendations for the Malaysian government:
• Address shortages of skilled labor in key sectors.
• Allow companies to bring in expatriates easily to
work in Malaysia.
• Further liberalize the protected automotive and
financial services sectors.
• Establish an IP court to improve intellectual
property protection.
• Increase transparency in government procurement.
• Ensure a level playing field for all players in the
proposed competition policy.
• Step up closer consultations between the government
and the private sector before key legislation is enacted.
• Enhance human capital development in the
knowledge-based economy.
Recommendations for the U.S. government:
• Support a comprehensive, commercially viable FTA.
• Encourage high-level administration and congressional
visits to Malaysia.
• Support a U.S. visa policy that encourages Malaysia’s
students to study at U.S. educational institutions.
13
The Philippines
Economy
Per Capita GDP (PPP):
$4,923
GDP Growth Rate
List” after the government took
steps to rein in counterfeiting
and piracy. President Gloria
Macapagal-Arroyo pledged
to strengthen and increase
funding for agencies protecting
intellectual property (IP).
D
espite economic ups and downs, the Philippine
economy has demonstrated considerable resilience,
and investors remain optimistic about the country.
Headlines often tout political instability and economic
problems, but the Philippine economy is relatively healthy,
due in part to the government’s commitment to fiscal reform.
The United States and the Philippines maintain strong
economic relations. A former Spanish colony, the 7,000island archipelago was ceded to the United States in 1898 and
became a self-governing commonwealth in 1935. The firstever American Chamber of Commerce abroad was established
in Manila in 1920. In the past, the country’s location served
as a gateway to Asia, and its English-speaking workforce made
the Philippines a popular destination for American investors.
But the Philippine government has faced some daunting
challenges in recent decades that have affected the country’s
political and economic stability. The Philippines was not
hit as severely by the 1997 Asian financial crisis as some of
its neighbors due to the high level of remittances from its
overseas workers. Despite the early 2006 coup attempt and
the imposition of a state of emergency, the stock market rose
and the peso strengthened a week after the crisis. The peso
remains one of the best-performing currencies in Asia.
Overall, however, the economic growth and competitiveness
of the Philippines have not kept pace with that of its
neighbors. High levels of government debt, rapid population
growth, an aging and inadequate infrastructure, endemic
corruption, and poor management have challenged the
country’s economy. More recently, rising energy costs and
natural disasters, including a drought that significantly
affected agricultural production in 2005, have hampered the
country’s development.
Even with these challenges, there is encouraging news.
The economy grew by 5.1% in 2005, exceeding market
expectations. The government has demonstrated a
commitment to reducing the budget deficit over the last
14
GDP Composition by Sector:
Agriculture: 14.8%
Industry:
31.7%
Services:
53.5%
Unemployment:
12.2%
Industrial Growth Rate:
0.5%
Imports from U.S.:
$6,893 million*
Exports to U.S.:
$9,248 million*
Demographics
Population:
89.5 million
Literacy Rate: 92.6%
Median Age: 23 years
Life Expectancy: 70 years
*U.S. dollars
Sources: IMF World Economic Outlook Database, CIA World Factbook and U.S. Dept.
of Commerce. 2005 statistics
three years. In 2005, an expanded value-added tax (VAT)
was imposed, which strengthened government revenues. The
Philippine Supreme Court also upheld laws allowing full
foreign participation in the mining sector.
The government moved to introduce market prices for
electricity, boosting revenue for the financially troubled
National Power Corporation and reducing pressure on the
national budget. These reforms, coupled with increased
remittances from overseas Filipino workers, the strong
performance of the currency, and growing tourist arrivals,
contributed to increased market confidence.
In early 2006, the United States downgraded the Philippines
from the special 301 “Priority Watch List” to the “Watch
The government has targeted
economic growth between
5.5% and 6.2% for 2006. This
forecast assumes that the peso
will remain strong, agricultural
output will increase, the
services and mining sector
will grow, and the amended
VAT will continue to bring
in government revenue.
Economic growth is expected
to increase employment by
about 2.2%.
The government’s challenge remains to turn the current
cautious optimism into stronger economic growth, greater
levels of foreign and domestic investment, and increased
consumer spending. This requires continued economic
reform, particularly fiscal reform, even though such measures
are unpopular among consumers. As competition for
investment in emerging markets grows, the Philippines will
have to improve its investment environment to attract the
foreign investment needed to create jobs and achieve growth
of 6%–7% per year to keep up with the number of young
people entering the work force.
RECOMMENDATIONS FOR IMPROVING
TRADE AND INVESTMENT
Recommendations for the Philippine government:
• Invest to improve air, land, and maritime transportation
facilities and bring down the high cost of electricity.
• Develop a more attractive contractual, financing, and
operating environment for private investors to fund
infrastructure projects.
• Accelerate implementation of the power reform law to
privatize the national power company. The government
must reduce its subsidies for power generation to avoid
a fiscal crisis and restore investor confidence.
• Increase tax revenue as a percentage of GDP through
better collection of taxes and the introduction of
additional taxes.
• Strengthen the protection of IP.
• Rein in corruption by holding officials accountable.
• Put increased emphasis on developing an economic
agenda that aims to avoid a fiscal crisis.
• Step up the approval of new legislation. At the midpoint
of its three-year term, the Philippine Congress is setting
a record for its low rate of legislation approval.
• Remove constitutional restrictions on foreign
investment and introduce legislation and executive
orders as needed.
• Increase the implementation and enforcement of
existing laws.
Recommendations for the U.S. government:
• Support U.S.-Philippine cooperation on anti-terrorism
activities as well as on trade and investment.
• Encourage the Philippine government to reduce its
budget deficit.
• Support capacity-building efforts to advance IP
protection. American companies are concerned about
legislation introduced in the Philippine Congress that
could reduce patent protection.
• Encourage high-level administration and congressional
visits to the Philippines.
15
Singapore
Economy
Per Capita GDP (PPP):
$28,100
10
GDP Growth Rate
8
The close political and security relationship between
Singapore and the United States buttresses their dynamic
economic links. Singapore supports a strong American
military presence in Asia. In 2005, the two governments
signed a Strategic Framework Agreement that updated a
1990 Memorandum of Understanding under which U.S.
forces exercise with Singaporean forces, and military aircraft
and warships regularly visit the Lion City.
6
4
2
S
ingapore, a city-state of 4.5 million people at the
southern tip of the Malay peninsula, was the
United States’ 16th-largest trading partner in 2005,
with two-way trade exceeding $35 billion. The island republic
is one of the United States’ strongest supporters in Asia.
Singapore is annually ranked as having one of the most
open and transparent business environments in the world. It
actively courts overseas investment and foreign professionals
as part of its strategy to develop into a regional hub for
transportation, financial services, health care, biotechnology,
and information and communications technologies.
Singapore tries to ensure that at least 25% of its GDP comes
from manufacturing.
The country, which boasts some of the busiest and most
efficient port and airport facilities in the world, aims to serve
as a gateway for western companies entering neighboring
Southeast Asia, China, and India—and for companies from
China and India looking for opportunities in Southeast Asia
and the West.
International trade and investment have played a key role
in the country’s steady economic growth, which averaged
8% a year between 1960 and 1999 and reached 6.4%
in 2005.
Singapore is regarded by many American companies as
one of the easiest countries in Asia in which to start a
business and from where to launch regionwide expansion.
U.S. companies are the largest investors in Singapore. By
2004, U.S. investments in the manufacturing and services
sectors reached $56.1 billion. The lion’s share is invested
in electronics manufacturing, oil refining and storage, and
chemical production. More than 1,500 U.S. companies
operate in Singapore and make up more than one-fifth of the
total number of foreign firms working in the country.
The U.S.-Singapore Free Trade Agreement (FTA)—the
United States’ first with an Asian country—took effect in
16
0
-2
GDP Composition by Sector:
Agriculture: 0%
Industry:
33.6%
Services:
66.4%
Unemployment:
3.3%
Industrial Growth Rate:
8.6%
Imports from U.S.:
$20,646 million*
Exports to U.S.:
$15,118 million*
Singapore is a member of the U.S.-led Container Security
Initiative, which establishes procedures to ensure that
containers posing a potential threat from terrorists are
identified and inspected at foreign ports before they are placed
on vessels destined for the United States. The two countries
have cooperated closely in investigating and interdicting
terrorist threats in Southeast Asia and in preventing the spread
of weapons of mass destruction through the Proliferation
Security Initiative.
RECOMMENDATIONS FOR
IMPROVING TRADE AND INVESTMENT
Recommendations for the Singapore government:
• Cooperate with the United States on strengthening
intellectual property enforcement in Asia.
• Continue to partner with the United States on
regional policy and security issues.
Recommendations for the U.S. government:
• Support joint U.S.-Singapore military and
anti-terrorism initiatives, particularly in maintaining
security in the Straits of Malacca.
• Strengthen U.S. Commerce Department and U.S.
Embassy programs that support increased bilateral trade
and investment.
• Support educational exchanges that encourage students
to study and do research in the United States.
Demographics
Population:
4.5 million
Literacy Rate: 92.5%
Median Age: 37 years
Life Expectancy: 82 years
*U.S. dollars
Sources: IMF World Economic Outlook Database, CIA World Factbook and U.S Dept.
of Commerce. 2005 statistics
2004 and has fostered increased economic cooperation
between the two countries. In the first year of the FTA,
bilateral trade increased almost 10% to nearly $35 billion,
and it rose by more than 2% in 2005. U.S. exports to
Singapore in 2005 grew more than 5% to $20.6 billion, after
having jumped by more than 18% in the previous year.
Most economic policy discussions between the
United States and Singapore revolve around technical
details in the implementation of the FTA. U.S. officials and
American-owned companies operating in Singapore have
an active dialogue with the Singapore government on such
regulatory issues as competition law, intellectual property
rights, telecommunications, health care, financial services,
and other market access issues. The Singapore government is
attentive to U.S. business concerns.
17
Thailand
Economy
Per Capita GDP (PPP):
$8,319
GDP Growth Rate
Treaty of Amity and Economic Relations. Under this treaty,
U.S. companies have been granted national treatment—a
privilege that Thailand has not offered to other trading
partners.
A
bloodless coup in Thailand in September 2006 toppled
a parliamentary democracy, raising questions about
the political direction of a key U.S. ally in Southeast
Asia. Thailand’s military rulers, who ousted Prime Minister
Thaksin Shinawatra while he was abroad, promised to draft
a new constitution and hold fresh elections by October 2007.
The immediate impact of the coup on the country’s business
environment appeared to be relatively mild.
The United States and other western governments criticized
the coup as a setback for democracy in the region. The U.S.
government suspended military assistance under a law that
forbids aid to a country in which a democratically elected
leader is toppled by a coup.
The coup followed nearly a year of political turmoil in
which many Thais mounted protests against the now ousted
prime minister. One of the protestors’ complaints was about
allegations of corruption stemming from the Thaksin family’s
sale of its telecommunications firm to a Singapore holding
company for a tax-free $1.9 billion. Growing protests in early
2006 forced Thaksin to call elections one year after his Thai
Rak Thai Party had won a landslide victory. The opposition
boycotted the elections, creating a constitutional crisis that
prompted Thai courts to throw out the results and call new
elections. Thaksin was serving as caretaker prime minister
when he was overthrown..
The ruling military Council for National Security in early
October 2006 named Surayud Chulanont, a retired general
approved by King Bhumibol Adulyadej, to be prime minister.
Council leaders, who retain the power to remove the interim
leaders, said the interim government would stay in office until
a new constitution is drafted and a new parliament is elected.
Thailand’s difficult road back to democracy could prolong the
country’s economic uncertainty, delay infrastructure projects,
and postpone free trade talks with other governments.
Even with Thailand’s political crisis, the country’s economic
prognosis remains relatively stable. The government has
steadily reduced the size of its debt and maintains a balanced
18
GDP Composition by Sector:
Agriculture: 9.3%
Industry:
45.1%
Services:
45.6%
Unemployment:
1.4%
Industrial Growth Rate:
8.2%
Imports from U.S.:
$7,233 million*
Exports to U.S.:
$19,892 million*
Demographics
Population:
65 million
Literacy Rate: 92.6%
Median Age: 32 years
Life Expectancy: 72 years
*U.S. dollars
Sources: IMF World Economic Outlook Database, CIA World Factbook and U.S. Dept.
of Commerce. 2005 statistics
budget. Unemployment and inflation remain low, despite the
rise of interest rates and higher energy prices. The government
has targeted spending programs on alleviating poverty in rural
areas and on upgrading the country’s infrastructure.
Thailand is among the fastest-growing economies in Southeast
Asia, with growth rates averaging 6% per year in recent
years. The Thai economy has largely recovered from the 1997
financial crisis. The government has undertaken wide-ranging
reforms in financial services, bank lending, and corporate
governance, and it used the country’s sharply devalued
currency to boost exports. According to the World Bank,
1 million people have been lifted out of poverty since the
financial crisis.
The United States and Thailand have enjoyed a special
economic relationship for more than 170 years under the
In 2004, the United States and Thailand commenced
negotiations on a free trade agreement (FTA), which was
expected to expand trade and investment opportunities to
companies from both countries. But domestic criticism of
the agreement followed by the political crisis in Thailand put
the negotiations on hold after December 2005. U.S. laws
prevent the United States from resuming free trade talks until
after a democratic government has been elected.
Under the Thaksin administration, Thailand focused on
a dual-track policy of encouraging domestic consumption
while continuing to promote exports. The government had
aggressively pursued FTAs with its major trading partners
in an effort to expand its export markets. Thailand offers a
strong infrastructure and prioritizes resources to upgrade its
roads and port facilities. Tourism is a significant source of
foreign revenue and job creation and enhances Thailand’s
reputation of being foreigner-friendly, further contributing to
its allure for international investors.
Thailand bucked the trend of some neighboring countries
in the 1990s of protecting its domestic automobile industry,
and instead set its sights on becoming the “Detroit of the
East.” Its forward-looking strategy of encouraging foreign
automobile manufacturers to set up assembly plants in
Thailand has paid off. Automobile manufacturing is now a
major engine of economic growth, along with agriculture and
food processing.
While Thailand’s economy remains export driven, the
government has sought to increase domestic consumption
to lessen the country’s vulnerability to global downturns.
The government’s goal of making Thailand a world-class
competitor in agribusiness, automobile production, software
development, tourism, fashion design, and health care offers
many opportunities for U.S. companies. Thailand also
provides an array of natural resources, including tin, rubber,
natural gas, tungsten, lead, and seafood products.
RECOMMENDATIONS FOR IMPROVING
TRADE AND INVESTMENT
Recommendations for the Thai government:
• Restore quickly a civilian government, produce a new
constitution and hold democratic elections.
• Reduce business transaction costs, increase
anti-corruption efforts, and increase transparency,
particularly in government contracts.
• Strengthen protection of intellectual property rights.
• Open services, particularly the financial and
telecommunications sectors, to international
competition.
• Improve corporate governance regulations.
• Reduce environmental degradation. Pollution, poor
water quality, insufficient industrial waste management,
and deforestation are harmful byproducts of Thailand’s
rapid growth.
• Strengthen and implement educational standards
to encourage higher English competency and more
graduates with technical skills.
Recommendations for the U.S. government:
• Urge Thailand to restore civilian rule and hold
democratic elections.
• Support continued trade liberalization with Thailand,
including an FTA, once democratic rule is restored.
• Work to streamline the process and reduce delays for
Thais seeking U.S. visas.
19
Vietnam
Economy
Per Capita GDP (PPP):
$3,025
GDP Growth Rate
Vietnam has many natural resources and agricultural
products, including oil and gas, marine products, rice, coffee,
rubber, and tea. Some of the country’s top export industries
produce garments and textiles, footwear, furniture, and
seafood. Its major imports include machinery and equipment,
petroleum products, fertilizer, steel, raw cotton, grain,
cement, and motorcycles.
V
ietnam in recent years has emerged as Southeast Asia’s
fastest-growing economy and one of the region’s
hottest new destinations for foreign investors. Having
completed its bilateral negotiations with the United States,
Vietnam is expected to join the World Trade Organization
(WTO) in late 2006. Vietnam’s WTO membership will
require the country to merge into the global rules-based
trading system and increase transparency in government
decision making, speed up economic reform, and strengthen
the rule of law.
The year 2006 marks the 20th anniversary of the country’s
economic reform program known as doi moi. Vietnam is
in the midst of a transformation from an inward-looking
command economy with little space for personal initiative
to a more open society with a vibrant, free market economy
that seeks to engage with the wider world. Hanoi’s hosting of
the Asia-Pacific Economic Cooperation (APEC) summit in
November, along with a visit by U.S. President George Bush,
will mark Vietnam’s emergence as a key player in the regional
and global economy.
GDP Composition by Sector:
Agriculture: 20.9%
Industry:
41%
Services:
38.1%
Unemployment:
5.5%
Industrial Growth Rate:
17.2%
Imports from U.S.:
$1,192 million*
Exports to U.S.:
$6,630 million*
Demographics
Population:
84.4 million
Literacy Rate: 90.3%
Median Age: 26 years
Life Expectancy: 71 years
*U.S. dollars
Sources: IMF World Economic Outlook Database, CIA World Factbook and U.S. Dept.
of Commerce. 2005 statistics
prevention, law enforcement, and a growing militaryto-military partnership. The U.S. government is helping
Vietnam restructure its education system and reform its legal
system. The two governments are cooperating in accounting
for servicemen missing since the war, launching a human
rights dialogue, and establishing new forms of regional
security cooperation.
Religious freedom continues to be an issue of concern in
the United States, even with some recent improvements in
this area. The administration and Congress will continue to
urge reforms that expand respect for human rights, religious
tolerance, and minority rights.
The United States and Vietnam have forged strong
relations in recent years despite a tragic history, stepping up
cooperation in such areas as HIV/AIDS control, avian flu
20
Of equal importance are cultural links between the two
countries. In fact, more than half of all Vietnamese people
living outside of Vietnam live in the United States. Americans
of Vietnamese ancestry are playing a critical role in Vietnam’s
development. Their investments and entrepreneurship have
helped drive Vietnam’s impressive economic growth over
the past decade. In addition, there are more than 4,000
Vietnamese students studying at the university level in the
United States, and many more are studying in high schools.
The United States is now the largest foreign investor in
Vietnam, and bilateral trade has grown more than fivefold
to $7.6 billion since the U.S.-Vietnam Bilateral Trade
Agreement (BTA) was signed in 2001. Due to Vietnam’s
reforms, the country is now the world’s second-largest rice
exporter, and its overall exports make up about 60% of GDP.
While more than half of the population is still employed in
agriculture, industrial production now accounts for about a
third of the country’s domestic output. The United States is
the destination for about 20% of Vietnam’s exports.
The American business community is pleased with the
expansion of the private sector economy and the willingness
of the government to build a more stable legal environment.
However, foreign investors continue to face a number of
hurdles in Vietnam, including the lack of transparency, a poor
infrastructure, restricted market access, and licensing delays.
They are also hobbled by pervasive corruption and uncertain
tax regulations that dampen the opportunities for increased
American investment.
The Vietnamese economy offers many attractions for U.S.
companies. About 70% of the population is under age 30,
and the country has a literacy rate above 95%. Per capita
income has more than doubled in the past 10 years, and
domestic consumption is growing at more than 20% per year.
Vietnam’s increasingly affluent urban consumers think highly
of U.S. consumer goods.
As Vietnam joins the WTO, Hanoi will have to take
additional steps to meet international standards on such issues
as reducing tariffs, eliminating nontariff barriers, cutting
subsidies for producers, protecting intellectual property (IP),
and opening up financial services. Vietnam’s membership in
the global trading system will give increased legal protection
to U.S. investors and reduce barriers to entry for U.S.
products and financial, professional, and business services.
The United States and Vietnam in May 2006 concluded
negotiations on Vietnam’s accession to the WTO. The U.S.
Congress will now have to vote to grant Permanent Normalized
Trade Relations (PNTR) to ensure that U.S. firms and farmers
will be able to access the economic opportunities created by
Vietnam’s WTO accession.
RECOMMENDATIONS FOR IMPROVING
TRADE AND INVESTMENT
Recommendations for the Vietnamese government:
• Improve IP protection and enforcement.
• Strengthen the legal system.
• Ensure appropriate public discussion of draft
commercial legislation before passing laws to create a
transparent and stable investment climate.
• Increase efforts to tackle corruption.
• Implement commitments taken under the BTA and
the upcoming WTO accession agreement.
Recommendations for the U.S. government:
• Vote to extend PNTR to Vietnam.
• Support capacity-building efforts to improve Vietnam’s
corporate governance and strengthen its legal system.
• Bolster technical assistance programs to allow American
companies to take advantage of the gains made by U.S.
negotiators during Vietnam’s WTO accession process.
• Support expanded export promotion efforts.
21
Brunei
Cambodia
Economy
B
runei, a tiny constitutional sultanate near the northern
tip of Borneo, boasts one of the highest per capita
incomes in the world. About the size of Delaware with
a population just under 400,000, Brunei is the third-largest
oil producer in Southeast Asia and the fourth-largest producer
of liquefied natural gas in the world.
Brunei’s known oil and gas reserves are expected to last
through 2015, but further offshore exploration could lead
to the discovery of additional reserves. In the late 1990s,
the government began a development plan to diversify the
economy. Opportunities outside of oil and gas include
fishing, agriculture, forestry, banking, and ecotourism.
Foreign investment, technology, and capacity-building
assistance are needed in these sectors to develop
viable exports.
The government would like to court more investment and
has introduced policies to make foreign investment easier.
It has set up a one-stop agency housed in the Ministry of
Industry and Primary Resources. Brunei does not have a
personal income tax or a capital gains tax.
While Brunei is technically a developing
country, its citizens enjoy a high standard
of living. From its oil and gas revenues, the
government provides free education and
medical care and subsidizes food, fuel, and
housing costs. With its high foreign currency
reserves, the government invests heavily in
world markets. It expects to use income from
these investments to support the economy
after its oil and gas reserves are depleted.
Brunei has been ruled by the same family
for more than six centuries. It became a
British protectorate in 1888 and gained full
independence in 1984. Brunei joined the
Association of Southeast Asian Nations one
week after achieving independence and later
that year became a member of the United
22
Per Capita GDP (PPP):
$24,826
GDP Growth Rate:
3%
GDP Composition by Sector:
Agriculture: 3.6%
Industry:
56.1%
Services:
40.3%
Unemployment:
4.8%
Industrial Growth Rate:
7.3%
Imports from U.S.:
$50 million*
Exports to U.S.:
$563 million*
Demographics
Population:
379,000
Literacy Rate: 93.9%
Median Age: 27 years
Life Expectancy: 75 years
Economy
A
lthough Cambodia is among the poorest countries
in Southeast Asia, it continues to emerge from a
brutal and horrific past. One of the brightest spots
in the country’s economy is garment exports, which received
a boost from foreign investors after Cambodia signed an
agreement with the United
States guaranteeing labor
standards for textile workers.
*U.S. dollars
Sources: IMF World Economic Outlook Database, CIA World Factbook and U.S. Dept.
of Commerce. 2005 statistics
Nations. It is also a member of the Asia-Pacific Economic
Cooperation group.
RECOMMENDATIONS: Brunei should more fully
open its markets, particularly in the petroleum and
financial services sector, and fully implement its ASEAN
Free Trade Area commitments to advance the goals of
regional integration.
GDP (PPP):
$2,399
GDP Growth Rate:
7%
GDP Composition by Sector:
Agriculture: 35%
Industry:
30%
Services:
35%
Unemployment:
2.5%
Industrial Growth Rate:
22%
Imports from U.S.:
$69 million*
Exports to U.S.:
$1,767 million*
Demographics
Population:
14 million
Literacy Rate: 73.6%
Median Age: 21 years
Life Expectancy: 59 years
*U.S. dollars
In July 2006, the United
States and Cambodia
signed a Trade and
Investment Framework
Agreement (TIFA)
which opens the door
for expanded economic
opportunities. Through
the TIFA, the United
States hopes to enhance its
dialogue with Cambodia
on deepening trade and
investment relations.
Restoring and developing the country’s economy have
remained a slow and difficult process. The country is largely
agrarian, lacks an adequate infrastructure, and suffers from a
poorly developed education system. Corruption is rampant.
The garment industry makes up most of the manufacturing
in the country, but it has faced stiff competition from China
since the end of global textile quotas in 2005.
Tourism is picking up, with more than 1 million people
visiting Angkor Wat and other ancient temple complexes in
2005. This has led to increased employment in hotel and
restaurant jobs. But with more than half of the population
Sources: IMF World Economic Outlook Database, CIA World Factbook and U.S. Dept.
of Commerce. 2005 statistics
under 21, limited job opportunities and few skills training
facilities, unemployment is a major problem.
Cambodia has the potential to develop exports in wood
products, rubber, rice, fish, tobacco, and the footwear industry.
Recent oil and gas discoveries could bring additional revenue
once production begins in the next few years.
But Cambodia will rely on foreign assistance for the foreseeable
future. Legacies from the years of war have created a highly
vulnerable population. The commercial sex industry and drug
abuse are increasing. Child labor and the trafficking of women
and children are on the rise. The growing HIV/AIDS infection
rate threatens economic development.
Cambodia became a member of the Association of
Southeast Asian Nations in 1998 and joined the
WTO in 2004, providing it increased access to world
markets.
RECOMMENDATION: Cambodia should work under
the TIFA mechanism to identify and resolve obstacles that
hinder the development of bilateral trade and investment.
23
Laos
L
ike Vietnam, Laos
in 1986 scrapped
many of its Sovietstyle economic policies and
began introducing freemarket reforms. Laos’ small,
underdeveloped economy has
begun to grow slowly—albeit from a very low base.
The United States signed a Bilateral Trade Agreement (BTA)
with Laos in 2005 to help support the country’s exports and
boost the economy.
Expanding economic development in Laos is difficult. It
is a landlocked, mountainous, sparsely populated country
surrounded by Thailand, Vietnam, and Burma. The country
lacks basic infrastructure, including roads and electricity outside
of major urban areas. It only has limited communication
networks. An estimated 80% of the population relies on
subsistence agriculture.
Laos has natural
resources of copper,
tin, and gypsum, and
its agricultural sector
could benefit from
investment in
food-processing
technology. Rice
production makes up
about half of GDP.
QDBNLLDMC@ SHNM9
Laos should fully
implement its
commitments under
the BTA to normalize
trade relations with
the United States.
S
ince 1962, Burma
(Myanmar) has been run
by a military regime and
its economy has stagnated. The
opposition party, the National
League for Democracy (NLD),
won a majority in relatively
free general elections in 1990. But the army annulled the
results and has held tight control over the increasingly isolated
country ever since. Aung San Suu Kyi, the NLD’s Nobellaureate leader, has been under house arrest for most
of the past 16 years.
The United States and Europe have minimal diplomatic
relations with the ruling military junta. New American
investment in Burma has been prohibited since 1997.
Sanctions imposed in 2003 and renewed in 2006 ban the
import of Burmese products to the United States.
Burma was admitted into the Association of Southeast Asian
Nations (ASEAN) in 1997, hoping that engagement would
encourage gradual moves toward democracy. Increasingly, ASEAN
leaders complain that the Burmese government’s intransigence
is causing difficulties for the grouping in international meetings
with the United States and Europe.
Per Capita GDP (PPP):
$2,124
GDP Growth Rate:
7%
GDP Composition by Sector:
Agriculture: 48.6%
Industry:
25.9%
Services:
25.5%
Unemployment:
5.7%
Industrial Growth Rate:
13%
Imports from U.S.:
$10 million*
Exports to U.S.:
$4 million*
T
he U.S. Chamber of Commerce helps U.S. businesses compete in
the global marketplace by providing its member companies with
valuable tools and resources, as well as cutting-edge events that
bring world leaders to meet with its members. The Chamber’s experts,
policy specialists, lobbyists, and lawyers make up the world’s largest notfor-profit business federation, representing:
• 3 million businesses
• 2,800 state and local chambers
• 830 business associations
• 102 American Chambers of Commerce abroad
Demographics
Population:
6.4 million
Literacy Rate: 66.4%
Median Age: 19 years
Life Expectancy: 56 years
*U.S. dollars
Members include businesses of all sizes and sectors—from large Fortune
500 companies to home-based, one-person operations. In fact, 96% of
the Chamber’s membership encompasses businesses with fewer than 100
employees.
Tom Donohue, President and CEO of the
U.S. Chamber of Commerce, with Indonesian
President Susilo Bambang Yudhoyono.
Sources: IMF World Economic Outlook Database, CIA World
Factbook and U.S. Dept. of Commerce. 2005 statistics
Burma (Myanmar)
24
The U.S. Chamber of Commerce
Economy
Neither U.S. and
European sanctions
nor ASEAN
diplomatic efforts
have been able to
affect change in
Burma. Observers
remain concerned as
more refugees move
across border areas.
In May 2006, the
United Nations (U.N.)
under secretary for
political affairs visited
the country for the
first high-level talks in
two years.
QDBNLLDMC@ SHNM9
Economy
Per Capita GDP (PPP):
$1,691
GDP Growth Rate:
5%
GDP Composition by Sector:
Agriculture: 56.4%
Industry:
8.2%
Services:
35.3%
Unemployment:
5%
Industrial Growth Rate:
NA
Imports from U.S.:
$5 million*
Exports to U.S.:
$0
Demographics
Population:
47.4 Million
Literacy Rate: 85.3%
Median Age: 27 years
Life Expectancy: 61 years
*U.S. dollars
Sources: IMF World Economic Outlook Database, CIA World
Factbook and U.S. Dept. of Commerce. 2005 statistics
The U.S. government
should work with other countries and support U.N. efforts to
improve the political and economic situation in Burma.
A
s one of the most
dynamic regions
in the world,
Southeast Asia is a key
target for investment and
commercial activity.
Under the direction
of Lt. General (Ret.)
Dan Christman,
senior vice president,
International Affairs,
Dan Christman (center, left), senior vice president, International Affairs of the Chamber, with regional AmCham
and Myron Brilliant,
leaders and Chamber staff during the May 2006 Chamber/AmCham ASEAN roundtable meeting.
vice president, East
Asia, the U.S. Chamber
has increased the size of its Southeast Asia team:
who shape outcomes. Drawing on the full weight of
the Chamber, as well as the American Chambers of
Murray Hiebert, senior director
Commerce (AmChams) abroad, the team gives voice
Kathleen Connors, director
to policies that benefit American companies and
Catherine Mellor, associate director
reaches out to top government officials and corporate
Natalie Obermann, research assistant
representatives in ways that few organizations can.
The Chamber’s Southeast Asia team helps member
companies compete in Southeast Asia by identifying
business opportunities and challenges, facilitating
contacts with senior officials, and presenting business
views on critical issues to U.S. and Asian policy makers
25
We Thank The U.S. Chamber’s 2006 East Asia
Sponsors For Supporting Our Asia Program
Southeast Asia Resource Contacts
U.S. CHAMBER OF COMMERCE
Southeast Asia Department
T: (202) 463-5652
www.uschamber.com
United States Embassy in Malaysia
T: (60-3) 2168-5000
http://malaysia.usembassy.gov
Chairman Level
BRUNEI
Embassy of Brunei
T: (202) 237-1838
www.bruneiembassy.org
PHILIPPINES
American Chamber of Commerce in the Philippines (Manila)
Rob Sears, Executive Director
T: (63-2) 818-7911
www.amchamphilippines.com
United States Embassy in Brunei
T: (673) 222-0384
http://bandar.usembassy.gov
Embassy of the Philippines
T: (202) 467-9300
www.philippineembassy-usa.org
BURMA
Embassy of Myanmar (Burma)
T: (202) 322-3344
www.mewashington.dc.com
United States Embassy in the Philippines
T: (63-2) 528-6300
http://manila.usembassy.gov
United States Embassy in Burma
T: (95-1) 379-880
http://usembassy.state.gov/rangoon/wwwh-default.html
SINGAPORE
American Chamber of Commerce in Singapore (Singapore)
Nicholas de Boursac, Executive Director
T: (65) 6235-0077
www.amcham.org.sg
CAMBODIA
Embassy of Cambodia
T: (202) 726-7742
www.embassy.org/cambodia
Embassy of Singapore
T: (202) 537-3100
www.mfa.gov.sg/washington
United States Embassy in Cambodia
T: (855-23) 728-000
http://phnompenh.usembassy.gov
INDONESIA
American Chamber of Commerce in Indonesia (Jakarta)
Pat Warman, Executive Director
T: (62-21) 526-2860
www.amcham.or.id
Embassy of Indonesia
T: (202) 775-5200
www.embassyofindonesia.org
United States Embassy in Indonesia
T: (62-21) 3435-9000
http://jakarta.usembassy.gov
LAOS
Embassy of Laos
T: (202) 332-6416
www.laoembassy.com
United States Embassy in Laos
T: (856) 2126-7000
http://vientiane.usembassy.gov
MALAYSIA
American Malaysian Chamber of Commerce (Kuala Lumpur)
Vince Leusner, President
T: (60-3) 2148-2407
www.amcham.com.my
Embassy of Malaysia
T: (202) 572-9700
www.kln.gov.my/mission/?mid=MFMY002
26
United States Embassy in Singapore
T: (65) 6476-9100
http://singapore.usembassy.gov
THAILAND
American Chamber of Commerce in Thailand (Bangkok)
Judy Benn, Executive Director
T: (66-2) 254-1041
www.amchamthailand.com
Presidential Level
Embassy of Thailand
T: (202) 944-3600
www.thaiembdc.org/index.htm
United States Embassy in Thailand
T: (66-2) 205-4000
http://bangkok.usembassy.gov
VIETNAM
American Chamber of Commerce in Vietnam (Hanoi)
Adam Sitkoff, Executive Director
T: (84-4) 934-2790
www.amchamhanoi.com
American Chamber of Commerce in Vietnam (Ho Chi Minh City)
Herb Cochran, Executive Director
T: (84-8) 824-3562
www.amchamvietnam.com
Embassy of Vietnam
T: (202) 861-0737
www.vietnamembassy-usa.org
United States Embassy in Vietnam
T: (84-4) 831-4590
http://hanoi.usembassy.gov
Executive Level
U.S. Chamber of Commerce
1615 H Street, NW
Washington, DC 20062-2000
Telephone: (202) 463-5461
www.uschamber.com
pub#tk 0496