6 APEC economies sign up for Asia Regional Funds Passport


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6 APEC economies sign up for Asia Regional Funds Passport
The Asia Regional Funds Passport is seen to generate savings of $20 billion annually in fund management costs, and create 170,000 jobs in APEC economies within 5 years

CEBU, Philippines – Six Asia Pacific Economic Cooperation (APEC) economies have signed a Statement of Understanding (SOU) on the Asia Regional Funds Passport (ARFP) on Friday, September 11.

Australia, South Korea, New Zealand, Thailand, Japan, and the Philippines signed the SOU on the ARFP which, once implemented, will pave the way for a multilateral arrangement that will facilitate the cross-border marketing of managed funds among participating economies.

Philippines Finance Secretary Cesar V. Purisima, host of this year’s Asia-Pacific Economic Cooperation (APEC) Finance Ministers’ Process said that “closer financial integration is a key pillar of our agenda here in Cebu.”

“We are optimistic that regional cooperation in building better financial linkages can smoothen our path to shared prosperity,” Purisima said.

“With 40% of the region’s Micro, Small, and Medium Enterprises (MSMEs) underserved, we expect easier cross-border flows of funds to accelerate trade and investment in the region,” he added.

The signatories are:

  • Senator Mathias Cormann, Minister of Finance, Australia
  • Isshu Sugawara, State Minister of Finance, Japan
  • Bang Moonkyu, Vice Minister of Strategy and Finance, Korea
  • James Beard, Manager for International Financial markets and Tax Strategy, Treasury of New Zealand
  • Apisak Tantivorawong, Minister of Finance, Thailand
  • Cesar Purisima, Minister of Finance, Philippines

The Securities and Exchange Commission (SEC) describes the ARFP as “a regional program that will enable investors in participating (APEC) economies to invest in eligible mutual funds (collective investment schemes) registered and operating in other participating APEC economies.”

The Philippines had earlier expressed interest in participating in the scheme. (READ: PH eyes active participation in Asia Region Funds Passport by 2016)

FINANCIAL INTEGRATION. Philippines Finance Secretary Cesar V. Purisima (front row, 6th from left), host of the APEC Finance Ministers' Process this year says, "we are optimistic that regional cooperation in building better financial linkages can smoothen our path to shared prosperity." Photo from the Department of Finance

Key initiative

At the the APEC Finance Ministers’ Process meeting in Bali, Indonesia, in  September 2013, Australia, South Korea, New Zealand, and Singapore signed a Statement of Intent on the ARFP. These countries undertook public consultations on detailed passport arrangements with the goal of a 2016 pilot implementation.

In 2014, the Philippines, together with Thailand and Japan, joined the 4 countries in the technical working group.

Initiated by Australia, ARFP will open the Philippine market to investments from across participating Asian economies, and in return allow local investment product providers to sell to the regional market.

For his part, Australian Finance Minister Mathias Cormann said that the ARFP is a key trade liberalization initiative which helps drive further important financial integration across the region.

“It will not only reduce the amount of red tape faced by fund managers across our region, but will provide investors with greater choice of investment products,” Cormann said.

“Specifically, ARFP aims to give investors access to a larger range of well-regulated funds. This will help to further strengthen the international competitiveness of our financial services sector across Asia in relation to other parts of the world,” Cormann said.

An APEC initiative under the Finance Ministers’ Process, it aims to establish a regional environment where operators of collective investment schemes, such as mutual funds, based in a member-economy will be able to offer their products to investors in other passport member-countries.

ARFP can accomplish this by reducing and streamlining regulatory inconsistencies and overlaps, factors for increased difficulties in offering products to customers in multiple economies.

According to a study by the APEC Policy Support Unit in 2014, by improving efficiency, the initiative will result in savings of $20 billion annually in fund management costs. It could also create 170,000 jobs in APEC economies within 5 years.

The statement signed by the ministries of finance or agencies of participating economies aim to provide investors in their respective economies a more diverse range of investment opportunities, to enable them to better manage their portfolio and meet their investment objectives.

Legal and regulatory frameworks will likewise be ensured to promote investor protection, fair, efficient, and transparent markets for financial services in support of financial stability and to provide high standards in the management and distribution of collective investment schemes.

The passport will remain open for participation by subsequent eligible economies from such time as is appropriate to their particular circumstances, the statement read. Rappler.com

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