Identifier
Created
Classification
Origin
09BANDARSERIBEGAWAN120
2009-05-27 04:22:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Bandar Seri Begawan
Cable title:  

BRUNEI'S ABAC CONFERENCE: TOUGH ECONOMIC TIMES

Tags:  ECON ETRD EINV BX 
pdf how-to read a cable
VZCZCXRO3450
PP RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHBD #0120 1470422
ZNR UUUUU ZZH
P 270422Z MAY 09
FM AMEMBASSY BANDAR SERI BEGAWAN
TO RUEHC/SECSTATE WASHDC PRIORITY 4531
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
UNCLAS BANDAR SERI BEGAWAN 000120 

SENSITIVE
SIPDIS

DEPARTMENT PASS FOR AMBASSADOR HASLACH, EAP/MTS/COPPOLAMG

E.O. 12958: N/A
TAGS: ECON ETRD EINV BX
SUBJECT: BRUNEI'S ABAC CONFERENCE: TOUGH ECONOMIC TIMES

SUMMARY
--------
UNCLAS BANDAR SERI BEGAWAN 000120

SENSITIVE
SIPDIS

DEPARTMENT PASS FOR AMBASSADOR HASLACH, EAP/MTS/COPPOLAMG

E.O. 12958: N/A
TAGS: ECON ETRD EINV BX
SUBJECT: BRUNEI'S ABAC CONFERENCE: TOUGH ECONOMIC TIMES

SUMMARY
--------------

1. (SBU) Brunei recently hosted APEC Business Advisory Council
(ABAC) meeting. Ambassador Todd attended a number of sessions, in
addition to meeting with the U.S. delegates. The meetings resulted
in wide ranging recommendations for APEC trade ministers. This
included a rare mid-year letter with short term recommendations. In
addition, a summit was held on promoting small to medium enterprises
(SMEs) during an economic crisis. Governments' role was heavily
debated, with some coming down strongly on the side of limited
government intervention. The U.S. delegates told Ambassador Todd
that Asia remains a critical market for each of their firms. The U.S
delegates reviewed with Ambassador Todd the challenges and
opportunities their firms see in Asia. End Summary.

RECOMMENDATIONS GALORE
--------------


2. (SBU) APEC's Asia Business Advisory Council (ABAC) issued their
traditional letters and recommendations to APEC Trade Ministers.
Meeting in Brunei during the week of May 12-15, 2009, ABAC delegates
debated a number of proposals and recommendations. The conference
also resulted in a mid-year letter, an unusual occurrence, with
short term recommendations in response to the current economic
crisis. The short term recommendations support the Free Trade Area
of the Asia Pacific (FTAAP) as well as ensuring countries maintain
their commitments to resist enacting trade barriers. Partnering
government and business to provide stimulus packages to increase
consumption, on a regional and global level versus domestically, was
also encouraged. The long term recommendations focused on lower
trade barriers and ratifying outstanding trade agreements.
Harmonizing trade frameworks, including customs, transportation, and
safety was also suggested.

PROMOTING SMALL BUSINESS IN TOUGH TIMES
--------------

3. (SBU) Ambassador Todd attended ABAC's summit on supporting small
to medium size enterprises (SMEs) in turbulent economic times.
Business leaders from both Brunei and the APEC region spoke at
length on how to encourage SMEs development. However, a number of
presenters simply noted their companies' efforts to promote SMEs,
most especially Brunei Shell Petroleum (BSP). A more lengthy
discussion was held on the role of government in SMEs development.
Some presenters were adamant that governments should not play a role
in SME promotion both in terms of specific programs or policy
development. The successful small business owners noted their
frustration with bureaucracy and a changing policy environment.
Ambassador Todd and others highlighted the need for governments and
business to work together not only on SME promotion but also in
reacting to the current financial situation.

U.S. FIRMS VALUE ASIAN MARKETS
--------------

4. (SBU) Ambassador Todd met with ABAC's U.S. delegates throughout
the week. The delegates, representing J.P. Morgan, Proctor and
Gamble (P and G),and General Motors (GM) all shared with Ambassador
Todd their perspective not only on general economic conditions but
their companies' thoughts on the Asian market. All agreed the Asian
market was a key factor in world-wide economic recovery. Given the
differing financial conditions of each of the companies, their
approach to the Asian markets are vastly different. Some seek more
direct investment (GM),while others see opportunity for growth (P&G
and J.P. Morgan). All agreed that the likelihood of more
restructuring within U.S. firms is high, with larger companies
either declaring bankruptcy or making strategic mergers. Some U.S.
firms may move to break out Asian operations given their higher
profit margins.

AMBASSADOR TODD COMMENT
--------------

5. (SBU) Brunei's ABAC conference reaffirmed the importance that
Asia's markets and economies will play in the world economic
recovery. There was a real concern regarding a rise in protectionist
measures. The continued lack of consumer demand in the U.S., along
with the H1N1 virus scare put an additional damper on the
proceedings. While the focus on helping SMEs was laudable, there
was a lack of understanding of the joint role that the private
sector and government can and should play, especially in these
turbulent economic times. Many participants did not appear to value
or understand the key role SMEs play in the economic stability and
growth. J.P Morgan, P and G, and GM represented a broad spectrum of
U.S. businesses and their financial health. Asian investment, be it
in U.S. firms or regionally, is fundamental to recovery. The
mid-year recommendations, while not overtly forward leaning, provide
one indication of ABAC members ongoing and significant concerns
regarding regional and global economic recovery.

TODD