I tried using my own icon as background and your blue color foreground.png as foreground. And it worked - I could see my icon through a circle with blue color around, which I think is the intended behaviour. I even tried changing the blue colour in your foregound file using paint.NET to grey and it worked great.
Now I need to make the circle in your foreground.png bigger so that my app icon is properly visible. Since my designing skills are bad, I asked a friend of mine who used Photoshop to make a PNG file with bigger circle in the center and grey colour around it. But when I used that file, icon shows only background.png. That PNG file is just like yours - 108x108 with transparent circle in the center. And yet it won't work.
I again changed back to your blue PNG file and it works fine. I am stumped. This is the file my friend made for me. Could you please take a look and let me know what is wrong with it?
https://drive.google.com/open?id=10QLRe716tue4FjiRQkPrQ2tTeHuTgcEs
Also did you create the file in Photoshop or Android Studio? Any particular settings used? Your file is under 1 KB while my file is about 3 KB although both are identical PNG files with same 108x108 size.