The APEC Finance Ministers' Process (FMP) has served as a forum for APEC member economies to address regional macroeconomic and financial issues as well as domestic and regional financial policy priorities.

APEC Leaders established it during their first meeting in 1993 to consult on broad economic issues and address some of the economic challenges facing the region.

Finance Ministers have met annually since 1994, most recently in October 2017 in Da Nang, Viet Nam. Meetings are also held among finance and central bank deputies and senior finance officials prior to each Finance Ministers’ Meeting, with a view to conducting consultation on the priorities of the year and finalizing the deliverables for Ministers to endorse subsequently.

The strategic goals of the FMP are to promote sound and credible policies for:

• Sustainable, inclusive and broad-based growth and development in the APEC region;
• Macroeconomic stability in the APEC region;
• Prudent public finance management;
• Good corporate governance;
• Stable and efficient financial markets;
• Greater economic cooperation, integration and openness among APEC economies; and
• Facilitation of economic and technical cooperation within the region in pursuit of the above goals

These organizations are key external partners of the FMP:

• The World Bank Group (WBG)
• The International Monetary Fund (IMF)
• The Asian Development Bank (ADB)
• The Inter-American Development Bank (IADB)
• Organization for Economic Co-operation and Development (OECD)
• APEC Business Advisory Council (ABAC)

2018 FMP Activities

In support of Papua New Guinea’s APEC 2018 theme “Harnessing Inclusive Opportunities, Embracing the Digital Future,” the FMP supported four priority areas:

1. Accelerating infrastructure development and financing
2. Advancing financial inclusion
3. Fostering international tax cooperation and transparency
4. Implementing the Cebu Action Plan

Other initiatives on the 2018 FMP agenda included implementing the Disaster Risk Financing and Insurance (DRFI) work plan and exploring future collaboration between the FMP and other APEC fora.

Accelerating Infrastructure Development and Financing

Under the priority of accelerating infrastructure development and financing, the FMP explored the use of practical tools to help economies adopt policies and other measures to support infrastructure planning, financing and delivery, with a focus on continuing and extending the 2017 FMP agenda on long-term investment in infrastructure.

Several activities that were undertaken in line with this priority:

• Policy Seminar on Planning, Financing and Delivering Quality Infrastructure held on 13–14 March in Port Moresby, Papua New Guinea. Key issues explored in the seminar were:
  • The importance of robust governance and institutional frameworks;
  • Assessing the policy environment;
  • Building institutional capacity;
  • Expanding potential sources of long-term finance;
  • Prioritization and project selection; and
  • Promoting project opportunities.
• A capacity building package to accelerate infrastructure development and financing. Senior Finance Officials with the assistance of the Organisation for Economic Co-operation and Development (OECD), compiled a capacity building package on Selected Effective Approaches to Financing Infrastructure in APEC Economies. The report provides preliminary analysis of results from an APEC/OECD survey of policies that facilitates implementation of the voluntary and non-binding recommendations on Annex A to the 2017 Joint Ministerial Statement: Diversifying Financing Sources and Fostering Private Sector Involvement in Infrastructure Investment in APEC Economies.
• Senior Finance Officials and the APEC Economic Committee jointly developed the 2018 APEC Economic Policy Report on “Structural Reform and Infrastructure.” The report highlights a menu of structural polices aimed at the goals of delivering value for money and quality infrastructure, improving the efficiency of infrastructure and related markets and promoting inclusive growth, environmental sustainability and resiliency. It includes case studies from nine economies and individual economy reports from 17 economies.

Advancing Financial Inclusion

Under the priority of advancing financial inclusion, the FMP focused on the important role played by financial literacy and the opportunities presented by financial technology, prioritizing also the identification and sharing of good practices.

Several activities that were undertaken in line with this priority:

• Policy Seminar on Financial Inclusion: Financial Capability, Education and Technology held on 5–6 June in Madang, Papua New Guinea. The key topics covered in the seminar included:
  • Insights from financial education strategies
  • Challenges in implementation and effective delivery mechanisms
  • The scope of financial inclusion and the concept of financial ‘capability’
  • Measuring the impact of financial education strategies
  • Maximizing the use of digital financial services
  • Fostering financial innovation
• Work was commenced on developing a capacity-building package on advancing financial inclusion that focuses on financial innovation and consumer protection and, where appropriate, draws from existing work undertaken by other international organizations or relevant bodies. The aim of the package, which will be finalized in 2019, is to share economy experiences and good practices on how governments can foster financial innovation while ensuring consumer protection, including working in partnership with the private sector.
• A two-day workshop on Improving Digital Financial Literacy in APEC (pilot workshop for Papua New Guinea) was held in Port Moresby on 20–21 June 2018. The goal of the workshop was to improve the participants’ capacity to identify actions to improve consumer digital financial literacy and awareness by enhancing their understanding and knowledge of the characteristics, advantages and risks of digital financial services for consumers, and their knowledge of activities, channels and content that can be used to improve consumers’ digital financial literacy and awareness.

Fostering International Tax Cooperation and Transparency

Under the priority of fostering international tax cooperation and transparency, the FMP served as a forum to support member economy efforts to address the complex challenges of multinational tax avoidance focusing on base erosion and profit shifting (BEPS) and the tax challenges arising from digitalization. This focus represented a continuation and extension of FMP’s 2017 BEPS agenda.

• A four-day technical workshop on Advancing BEPS and AEOI priorities in APEC was held in Port Moresby on 23–27 July 2018. The workshop allowed APEC member economies to share their implementation journey in relation to BEPS, with a specific focus on the four minimum standards and on developing member economies. Additionally, member economies were invited to discuss transparency issues and the benefits and challenges of moving towards the Automatic Exchange of Information (AEOI), including the Common Reporting Standard (CRS).

Implementing the Cebu Action Plan

Launched by Finance Ministers in 2015, the Cebu Action Plan (CAP) has the goal of building a community more prosperous, financially integrated, transparent, resilient, and connected APEC community through promoting financial integration; advancing fiscal reforms and transparency; enhancing financial resilience; and accelerating infrastructure development and financing.

Under the priority of implementing the Cebu Action Plan, the FMP conducted a CAP checkpoint during the 2018 Senior Finance Officials Meeting (SFOM), where volunteer APEC member economies highlighted key achievements under their first package of CAP initiatives, shared experiences, and noted factors that supported or impeded their implementation. Additionally, member economies were invited to identify by the end of 2018 one to three additional initiatives for the second package, with a goal of implementation, on a voluntary and non-binding basis, before the end of 2020.

Under disaster risk financing and insurance (DRFI), the FMP continued to progress its work of several years on this topic, recognizing its importance to the effective mitigation and transfer of natural disaster risk. Through the DRFI Working Group and with the support of the World Bank as a lead technical facilitator, work was undertaken to promote the development of innovative mechanisms to enable APEC economies exposed to natural hazards to increase their financial response to disasters and to reduce their fiscal burden.

Key Dates of APEC FMP Meetings in 2018