Asia to streamline cross-border fundraising

Six Asia-Pacific Economic Cooperation (APEC) economies, comprising Australia, South Korea, New Zealand, Thailand, Japan, and the Philippines, signed a Statement of Understanding for the Asia Regional Funds Passport (ARFP) last week, expressing keen interest in facilitating cross-border offerings of eligible collective investment schemes.

The ARFP program 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.

Philippines Finance Secretary Cesar Purisima, host of the APEC Finance Minsters’ Process this year, said: “We are optimistic that regional cooperation in building better financial linkages can smoothen our path to shared prosperity.”

“The ARFP is a key trade liberalization initiative which helps drive further important financial integration across our region,” said Australian Finance Minister Mathias Cormann.

Cormann believes that it will not only reduce the amount of red tape faced by fund managers across the region but will also provide investors with greater choice of investment products, particularly well-regulated funds.

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 five years.

“I believe the ARFP program will have an important role in infrastructure financing in the region. It will potentially allow retail investors to participate in a broad range of investment opportunities and expand investors’ choices,” said Hon Cheung, head of the Official Institutions Group in Asia-Pacific for State Street Global Advisors.

“The idea behind ARFP is simple – to create efficient intermediation between those with capital and those who want capital,” he said. “Capital from developed economies can be invested in regional funds back into infrastructure programs in developing economies.”

“It’s a win-win situation for everyone,” concluded Cheung.

The ARFP Working Group also includes Singapore, which decided to defer its signing. The ARFP remains open for participation and is expected to commence in early 2016.