The Washington Diplomat / July 2013
By Larry Luxner
Walking into the Washington headquarters of the US-ASEAN Business Council, it’s difficult not to be dazzled by the organization’s impressive collection of paintings, travel posters, official gifts and tchotchkes that decorate the walls and fill the bookcases.
In one corner, there’s a vase given by U Khin Maung Thet, director-general of Myanmar’s Posts & Telecoms Department, and in another, a book of Indonesian commemorative stamps. On a nearby shelf sits a colorful scale-model jitney bus from the Philippines, while off to the side is a ceramic plate from the National Assembly of Vietnam.
Look hard enough, and eventually you’ll find a souvenir from every one of the 10 countries that make up the Association of Southeast Asian Nations (ASEAN).
Few Americans know more about ASEAN than Alexander Feldman, president of the US-ASEAN Business Council — a 29-year-old organization that aims to foster economic and trade ties between the United States and ASEAN’s 10 member states.
Feldman’s group, with headquarters in Washington and branches in Bangkok, Hanoi, Jakarta, Kuala Lumpur, Manila and Singapore, represents 125 of the biggest U.S. corporations, from Coca-Cola, ExxonMobil and General Electric to Intel, UPS, FedEx and Google.
“While we don’t preclude smaller companies from joining, our fee structure seems to more easily appeal to larger companies,” said Feldman.
No wonder. Dues are set at only two levels: corporate membership at $10,000 and chairman’s council membership at $25,000. Feldman declined to discuss the US-ASEAN Business Council’s annual budget, but did say it employs 27 people full-time and that membership has grown by 40 percent in the last three years.
In 2012, the council hosted 200 programs, and this year’s calendar is even busier; last month was particularly eventful. The 2nd US-ASEAN Economic Ministers Roadshow to Los Angeles, Silicon Valley and D.C concluded today with a gala dinner at the Mandarin Oriental, while the 20th ASEAN Regional Forum took place June 27 to 28 in Bandar Seri Begawan, capital of Brunei.
“We believe that helping spread the good news about ASEAN to American businesses is beneficial to our members,” Feldman told The Washington Diplomat in a lengthy interview. He noted that the US-ASEAN Business Council is the only U.S.-based organization specifically enshrined in the ASEAN Charter, adopted in November 2007 at the trading bloc’s 13th annual summit in Singapore.
“The idea when we were founded in 1984 was that Southeast Asia was going to be important and that it would need a voice to speak for our companies and also to promote opportunities,” explained Feldman, who’s been head of the council since June 2009. “At the time, China wasn’t really a market for us. It wasn’t even open. Neither was India, so Southeast Asia was the next big thing.”
Back then, ASEAN consisted only of the five countries that had established the group in 1967: Indonesia, Malaysia, Singapore, Thailand and the Philippines. Since then, five more have joined: Brunei, Cambodia, Laos, Myanmar (Burma) and Vietnam.
Today, the 10 countries that form ASEAN are home to 600 million people — 8.8 percent of the world’s population — and boast a combined GDP of $2.1 trillion. Indonesia alone accounts for half of ASEAN’s total population. If ASEAN were a single country, its promoters like to point out, it would rank as the world’s eighth-largest economy — ahead of Russia and right behind the United Kingdom.
Feldman said President Obama’s enduring focus on Asia has been crucial to the deepening of economic ties between the United States and the region. He said U.S. companies have invested far more in the 10 ASEAN countries — $157 billion to date — than in either Japan or China; the top recipient of U.S. foreign investment is Singapore.
“ASEAN is so critical to the U.S., not only because of foreign direct investment but also because it’s our fourth-largest export market,” said Feldman, noting that 2012 exports of U.S. goods to the 10-country bloc exceeded $75 billion, while imports came to $125 billion.
“We’re seeing incredible growth in trade,” he said. “Since the free trade agreement with Singapore took effect in 2004, we’ve seen overall trade [with Singapore] grow 62 percent.”
Feldman also pointed to the Trans-Pacific Partnership, which started with Singapore, Brunei, Chile and New Zealand and has now attracted a diverse roster of nations such as Australia, Canada, Malaysia, Mexico, Peru, Vietnam and the United States. More recently, South Korea and Japan have also expressed interest in joining TPP trade talks. With Japan’s entry, the Office of the U.S. Trade Representative notes that TPP countries would account for nearly 40 percent of global GDP and about one-third of all world trade.
Feldman said that in addition to trade, connectivity is the region’s latest buzzword — with countries racing to build fiber-optic networks and bring the Internet to every village, no matter how remote. But there’s also an emphasis on physical infrastructure such as roads, bridges, ports, airports, hospitals and railroads.
“Indonesia is building a bridge between the islands of Sumatra and Java,” Feldman pointed out, referring to the 27-kilometer-long Sunda Strait Bridge, which will link Indonesia’s two most heavily populated islands and cost at least $10 billion.
“When we were in Thailand, the prime minister [Yingluck Shinawatra] told us her government will spend 2.2 trillion baht ($76 billion) over the next seven years on infrastructure, mostly on high-speed rail,” he added.
That encounter with Thailand’s prime minister took place during a recent business mission celebrating 180 years of diplomatic relations between Washington and Bangkok. The Treaty of Amity and Commerce, signed in 1833, was the first U.S. diplomatic agreement in Asia and is the cornerstone in the bilateral relationship today.
“With U.S.-Thai bilateral trade at an all-time high of $37 billion in 2012, the role of business in the U.S.-Thai friendship has never been more important,” Feldman said in a press release following that trip. “Thailand’s ability to play a leadership role in driving regional economic integration efforts is incredibly important as ASEAN nations gear up to implement the ASEAN Economic Community in 2015.”
The ASEAN Economic Community envisions region-wide economic integration by 2015, including a single market and production base. However, unlike the 27-member European Union, a euro-like common currency to replace the Thai baht, the Indonesian rupiah, the Singapore dollar and the Vietnamese dong is not in the cards.
“They’ve never talked about a common currency and definitely won’t be talking about it anytime soon. But you can still have lots of benefits to free trade,” Feldman said. “The largest countries [already] have zero tariffs at this point. Those who joined later, including Vietnam, will have zero tariffs by 2014.”
Feldman, 46 and a native of Philadelphia, said his fascination with Asia began while he was a student at the University of Pennsylvania.
“At the time, the tigers of Asia were hot, and one of them was Singapore. I wrote my thesis on comparing the development of Malaysia and Thailand, and then I spent a summer in Singapore working for an investment bank,” he told us. “My primary project was to write a report on the growth of air cargo in Asia as it related to Singapore Airlines. That piece actually moved the market.”
After college, Feldman got a job at the Commerce Department’s International Trade Administration, then spent 11 years based in Hong Kong and Singapore representing a variety of media conglomerates, including STAR Radio, MTV Networks, CNBC Asia-Pacific, NBC Universal, News Corp. and Viacom.
“I got firsthand experience working in every country in Southeast Asia. That gave me a great basis to come back and help Secretary [of State Colin] Powell figure out how you communicate with the world in the 21st century” as an official in the State Department’s Bureau of International Information Programs, he said.
Feldman’s last government position was to promote American higher education around the world.
“We had never really taken on a full marketing campaign in Asia, so we did that in India and China,” he said. “This set me up perfectly for the job I hold today, which is to help U.S. member companies grow their business in Southeast Asia. We do that by removing obstacles and opening up trade opportunities.”
And perhaps one of the biggest growth opportunities in the region is Myanmar, whose military junta has been gradually opening up the nation’s political and economic system. As a result, sanctions have been falling by the wayside as companies from Coca-Cola to GE fight to break into this virtually untapped market of 52 million.
Last July, Feldman — along with Caterpillar’s Kevin Thieneman and Chevron’s Mariano Vela — led a delegation of more than 70 senior executives from 38 leading U.S. companies to Myanmar. The trip coincided with the arrival of the first U.S. ambassador to Rangoon since 1990, Derek Mitchell.
But Feldman insists it’s not about taking advantage of some of the lowest wages on Earth — in what was, up until just recently, one of the most repressive nations in the world. It’s also about tapping into the country’s enormous oil and gas potential; Myanmar’s Ministry of Energy recently announced the presence of 140 million barrels of proven oil reserves and 11.4 trillion cubic feet of gas.
“The companies that are most interested in Myanmar are not those who want to compete on low-cost labor. They’re actually going in to supply products,” he pointed out. “Coca-Cola will potentially have a bottling plant there, P&G [Procter & Gamble] is distributing its products from Thailand, and General Electric has seen tremendous growth from its health care business, helping Burmese hospitals upgrade their power plants. And there’s obviously tremendous need for new construction.”
Yet several dark clouds loom on the ASEAN horizon. One is endemic corruption throughout Southeast Asia — a problem that hasn’t gone away despite numerous government promises to clean up business practices that keep many honest companies away.
A recent report by the Washington-based Center for International Policy said that in China alone, $2.74 trillion in illegal funds left the country between 2001 and 2010 through criminal financial schemes, corruption, tax evasion or other illegal activities. For Thailand, the figure stood at $64 billion over the same period, while in India — the focus of major anti-corruption rallies last year — it’s about $123 billion.
A study by the Thai Chamber of Commerce concluded that just over 2 percent of national output, or around $11 billion, will be lost to corruption this year.
“All our members are well aware of the Foreign Corrupt Practices Act. None of them bribe government officials,” said Feldman. “However, good governance is a challenge in Southeast Asia. Some companies intend to invest but find levels of corruption too high and don’t make investments because of that. There are ways to do business without getting involved in corruption, but it certainly is the top issue for us across the region.”
Another potential flashpoint: continued hostilities in the South China Sea, where six nations — China, Taiwan, Brunei, Malaysia, Vietnam and the Philippines — claim ownership of the Spratly Islands. All except Brunei occupy some of the barely inhabited islands, which are important because the area is highly productive for commercial fishing and holds tens of billions of dollars’ worth of potential oil and natural gas reserves.
In November 2002, a Declaration on the Conduct of Parties in the South China Sea was signed by the ASEAN countries in China, in which all parties promised “to resolve their disputes by peaceful means, without resorting to the threat or use of force.”
The United States has urged all parties to resolve the territorial claims through dialogue in a multilateral setting, although Beijing prefers to settle the matter bilaterally with individual states — an approach whereby it’s likely to wield more influence.
China has also been angered by Washington’s attempts to reassert itself as a Pacific power. With its Asian policy pivot, the Obama administration has capitalized on China’s growing assertiveness over the strategic waterways to step up U.S. relations with nations such as Vietnam and the Philippines.
Feldman says ASEAN member states, wary of taking sides, would like to see a balanced relationship between the United States and China.
“They don’t want either country to dominate Southeast Asia, but for commerce and trade to be the focal point,” he told us. “And the U.S. interest is to keep sea lanes open to international commerce, because so much moves through the South China Sea — and that trade is growing substantially.”
He added: “This is not just about China vs. ASEAN. It’s about trying to resolve overlapping claims in peaceful ways that open up opportunities for investment. Vietnam and the Philippines have overlapping maritime claims. So do Cambodia and Thailand. But some disputes have been resolved peacefully, and Brunei and Malaysia are held up as examples of how to do just that. Now both countries are sharing in the fruits.”