SINGAPORE – On April 17 a consultation paper on the proposed Asia Region Funds Passport (ARFP) was issued by a group of six Asia-Pacific nations composed of Singapore, Australia, South Korea, New Zealand, the Philippines and Thailand.
If implemented, the “passport” would establish a uniform approval process for fund managers in a given passport member country to market collective investment schemes (CIS) in other member states across the Asia-Pacific region, provided the operator complies with certain requirements of the host country.
Passport members have expressed hopes that the system will facilitate investment management practices, capital market performance, and overall economic growth in the region. For investors, the takeaway of the agreement would be more choice in investment products, better access to capital, and a more efficient and stable investment market.
The consultation paper was issued with the intent of soliciting public commentary on the initiative to further refine its principles and drum up interest in it. Feedback is now being accepted by the Asia-Pacific Economic Cooperation (APEC) until July 1, 2014. Passport membership arrangements are expected to be completed by early 2015, with the initiative commencing sometime in 2016.
The passport was originally conceived in a 2008 report issued by the Australia Financial Centre Forum and subsequently proposed to APEC. In September 2013, the Finance Ministers of Singapore, Australia, South Korea and New Zealand signed a Statement of Intent to move ahead with the ARFP (the Philippines and Thailand joined later) and set out its guidelines and a timeline for development.
Australia has been a particularly vocal proponent of the initiative, with media sources noting the significant benefits the country could derive for funding infrastructure projects from opening its funds market to Asian capital.
To date, Hong Kong, Taiwan, Japan, Indonesia, Malaysia and Vietnam have also expressed an interest in the project. The consultation paper also suggests a future in which the ARFP is used to market investment products to Europe/the U.S.
Critics of the scheme point to the need for a commonly accepted offering document to be implemented before the passport can fulfill its real potential. There is also the problem of competing with other CIS regimes such as UCITS in the E.U., whose fund management activities in Asia benefit from well-established brand recognition.
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