Asia Funds Passport Could Save Investors Billions

By Editorial 14 July, 2014

In a study, entitled the "Asia Region Funds Passport (ARFP): A Study of Potential Economic Benefits and Costs," which has been issued by the Asia-Pacific Economic Cooperation (APEC) Policy Support Unit, it has been estimated that the passport could save the region's investors USD20bn annually in fund management costs.

Singapore, Australia, South Korea, New Zealand, the Philippines, and Thailand have agreed to develop the ARFP, which was initially conceived through APEC, and which, when implemented, will allow fund managers operating in a passport member economy to offer their funds in other passport member economies under a streamlined authorization process.

It should facilitate the cross-border offering of collective investment schemes (CIS) in Asia, while investors in the region will also benefit from having access to a broader range of quality investment products. As an inclusive regional initiative, it is hoped that the ARFP will strengthen the region's fund management capability, deepen capital markets, and provide finance for sustainable economic growth.

In fact, the Policy Support Unit's study has found that ARFP implementation, which is planned by 2016, is likely to create a significant number of new jobs and channel more of the region's savings into investments that promote economic growth and prosperity, at lower cost.

"There is a strong business case for introducing a funds passport in Asia," said Quynh Le, an APEC Policy Support Unit analyst and lead author of the study. "By improving efficiency within the sector, the passport could save the region's investors USD20bn annually in fund management costs and offer higher investment returns at the same or lower degree of risk."

"Once the passport is fully up and running, it will encourage the establishment of locally domiciled funds which could create 170,000 jobs in APEC economies within five years," he added. "The passport will also help to steer capital from markets where it is in surplus to those where it is in short supply and, in the process, recycle savings into investments that fuel commercial innovation, productivity and long-term growth."

A public consultation opened in April this year on the proposed substantive rules and arrangements that will apply to participating fund managers and passport CIS, and closed on July 11. It set out, for example, common standards and expectations among regulators from passport member economies on the supervision of passport CIS, including the protection of investor interests, the procedural requirements for passport CIS, and the processes relating to their supervision.

Membership in the ARFP remains open to other APEC economies, and those that have expressed an interest in the project include Hong Kong, Taiwan, Japan, Indonesia, Malaysia, and Vietnam. The next passport working group meeting is scheduled to take place in August this year, in Seoul.

Tags: Investment | Business | Capital Markets | Investment Funds | Australia | Philippines | Singapore | Thailand | Korea, South | New Zealand | Expats | Investment | Asia-Pacific | Invest | Investment |


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