APEC Finance Ministers and representatives of key international financial institutions (IFIs) held the 21st APEC Finance Ministers' meeting in Beijing, China on 22 October 2014.
The APEC FMP’s work in 2014 continued to focus on supporting the global recovery. Work also occurred on infrastructure investment, fiscal and taxation policies, support for SMEs and disaster risk financing. Current FMP initiatives include:
Roadmap to Develop Infrastructure Investment through Public-Private Partnerships (PPP)
Infrastructure Public-Private Partnerships (PPP) is a key policy focus for FMM. Public-private partnerships (PPP) offer a viable alternative to traditional procurement methods to support infrastructure development. PPP has many merits, such as expanding public infrastructure supply, improving service quality, maximizing the use of private sector capital and know-how through sharing of risks and responsibilities.
In 2014, two capacity building workshops were held for members to (1) outline the public sector’s role in improving the legal and regulatory framework, developing bankable PPP projects with appropriate risk allocation, and strengthening PPP delivery capability; and, (2) ways to mobilize long-term and stable funding for infrastructure development. 55 case studies across 18 member economies in key sectors from energy to transport were showcased as demonstrative infrastructure PPP projects. This work culminated in brainstorming and developing an Implementation Roadmap to Develop Successful Infrastructure PPP in the APEC region.
The roadmap aims to provide a useful reference for government officials to better understand, prepare, structure and implement PPP projects. The roadmap proposes some concrete actions including: establishing more PPP centers in the APEC region, strengthening infrastructure capacity building in developing member economies, accelerating capital market development to attract long-term institutional investors, mobilizing private sector expertise to help economies design bankable projects, and leveraging finance and knowledge from multi-lateral development banks.
Capacity Building: PPP Centers and the APEC PPP Experts Advisory Council
PPP Centers serve as a useful institutional instrument to enhance government capacity in implementing PPP Projects. The APEC PPP Experts Advisory Council—established to promote capacity building in PPP project implementation and to support newly established PPP Centers in the region—formally launched its activities in 2014 and endorsed its Terms of Reference. Progress has been made by the first Pilot PPP Center in Indonesia and in 2014, China established a PPP Center as well and identified standardized PPP projects. A formal training program was also launched targeted at government officials in charge of infrastructure development in member economies to enhance capacity building in the public sector for promoting PPP infrastructure financing.
Regional Financial Integration-Public-Private Collaboration: The Asia Pacific Financial Forum
The Asia-Pacific region needs deep and liquid capital markets, including institutions that provide long-term finance and expanded access of households and enterprises to financial services, supported by sound and efficient legal and regulatory frameworks and good governance. Regional financial integration has played an important role in achieving these objectives.
The Asia-Pacific Financial Forum (APFF) was established in 2013 and initiated by the private sector to create a regional platform for closer public-private collaboration to achieve the above objectives. In their Interim Report, the APFF has outlined 12 action plans to achieve two objectives (1) the development of deep, liquid and integrated capital markets and the region’s long-term investor base; and, (2) expand access of enterprises and individuals to financial services. In pursuit of these objectives, as part of the APFF, a large number of major financial industry firms and associations as well as multilateral organizations, academic institutions and the public sector have committed to collaborate in undertaking pathfinder initiatives, dialogues and workshops under the Interim Report’s 12 action plans. This pooling of talent and resources from both public and private sectors using the APFF platform provides an opportunity to achieve concrete progress in key areas that will help accelerate development of region’s financial markets.
Asia Region Funds Management Passport (ARFP)
Four economies (Australia, New Zealand, Korea and Singapore) signed a statement of intent and agreed on a framework to pilot the Asia Region Funds Passport. The Asia Region Funds Passport will enable operators of collective investment schemes based in passport member economies to offer their products to investors in other passport member economies, subject to a streamlined regulatory process.
The Passport represents a practical step towards better integrated financial markets in the APEC region. Economies moved towards implementation of its pilot phase through the release of a public consultation paper in a number of economies regarding the proposed principles and basic arrangements. For more information, visit website (http://fundspassport.apec.org/) or refer to study on Asia Region Funds Passport: A Study on Potential Economic Benefits and Costs. You may also read this news release.
Fiscal and Taxation Policies and Reform for Economic Restructuring
Six years after the global financial crisis, APEC economies are still recovering from the impact but the process is slow and uneven, and downward risks remain. In the new normal of the world economy, APEC economies not only face the task of economic growth, but also how to revitalize the economy, promote innovation and achieve balanced development through economic restructuring. Fiscal and taxation policies can play a critical role in economic restructuring. It is acknowledged that open and transparent procurement has virtue in advancing public policy objectives and nurturing healthy and competitive service sectors. Capacity building workshops for members this year included topics such as nurturing the market through government procurement of public services, fiscal and taxation policies for job creation, promoting prudent treasury and debt management, supporting small and medium enterprises (SMEs) and green growth, among others. Fiscal and taxation policies play an important role in fostering sustainable growth by supporting a comprehensive reform agenda toward better resource allocation, more efficient investment and better economic growth patterns.
Improving SME Access to Finance
APEC recognizes that SMEs are the backbone of the regional economy but many face barriers in accessing financing. APEC members are working to address the financing difficulties of SMEs by improving the legal and regulatory environments, further developing capital markets, and promoting innovative financial instruments such as supply chain financing. Studies on this issue include the Asia SME Finance Monitor by the Asian Development Bank.
Enhancing Disaster Risk Financing
FMP is also committed to improving APEC’s approaches to disaster risk financing to build resilient economies in the region. This includes ensuring sound fiscal management of disaster risks and supporting effective risk transfer instruments in insurance and capital markets. FMP is working with the Asian Development Bank, the OECD, the IMF and the World Bank to collaborate with APEC member economies and provide capacity building, introducing good practices and identifying effective approaches. APEC is also working with the private sector to provide micro-insurance for low-income households to help re-build their businesses and homes in the event of a disaster. See recent OECD report on Fostering Good Practices in Disaster Risk Management for More Resilient Economies and Public Finance Frameworks. More information on APEC's work with the OECD on disaster risk financing can be found here.
The next APEC Finance Ministers’ Process will be hosted by the Philippines, at the Finance Ministers’ Meeting scheduled for September 2015 in Cebu, Philippines.
The Joint Ministerial Statement issued by APEC Finance Ministers in Beijing in October 2014 emphasized the importance of APEC economies strengthening cooperation among themselves and with other multilateral cooperation mechanisms such as the G20 in order to maximize chances of leading the global recovery towards strong, sustainable and balanced growth. They noted the following achievements in 2014:
Implementing the Multi-Year Plan for Infrastructure Development and Investment through preparing a compilation of Public-Private Partnerships infrastructure case studies to showcase experiences and lessons learnt; preparing an Implementation Roadmap to Develop Successful Infrastructure PPP Projects; and launching an APEC Training Program for officials in charge of infrastructure development.
Continuing the work of the APEC Public-Private Partnership (PPP) Experts Advisory Panel to assist infrastructure development and capacity building on public-private partnerships, including progress achieved at Indonesia pilot PPP Center and the establishment of a new PPP Center within the Ministry of Finance in China.
Four economies (Australia, New Zealand, Korea and Singapore) signed a statement of intent and agreed on a framework to pilot the Asia Region Funds Management Passport. The Asia Region Funds Passport will enable operators of collective investment schemes based in passport member economies to offer their products to investors in other passport member economies, subject to a streamlined regulatory process. The Passport represents a practical step towards better integrated financial markets in the APEC region. Economies moved towards implementation of its pilot phase through the release of a public consultation paper in a number of economies regarding the proposed principles and basic arrangements. For more information, visit website (http://fundspassport.apec.org/) or refer to study on Asia Region Funds Passport: A Study on Potential Economic Benefits and Costs. You may also read this recent news release.
As outlined in their Interim Report, the private sector initiative called Asia Pacific Financial Forum (APFF) is making good progress. They will be implementing 12 action plans to achieve two objectives: (1) the development of deep, liquid and integrated capital markets and the region’s long-term investor base; and, (2) expand access of enterprises and individuals to financial services.
The upgrading of the Asia-Pacific Finance and Development Center to the Asia-Pacific Finance and Development Institute will also meet the emerging demand of regional knowledge sharing in financial areas.