Finance Ministers' Process
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)
The FMP’s meetings in 2017 were held under the theme of APEC Viet Nam 2017 “Creating new Dynamism, Fostering Shared Future,” which is supported by four priority areas:
1) Long-term investment in infrastructure
2) Disaster risk financing and insurance
3) Base erosion and profit shifting (BEPS)
4) Financial Inclusion
Several activities have been carried out in line with these priority areas:
Seminar on Disaster Risk Financing and Insurance Policies, 21 February 2017, Nha Trang, Viet Nam: Attendees discussed an overview of the disaster risk financing and insurance initiative and the implementation process in the APEC region. Economies shared their experience and practices in developing their strategic approaches toward financial resilience against natural disasters and practices in financial management of public assets against disasters, including the importance and experience of development of public assets exposure and disaster risk insurance.
Databases: One of the tasks of the Disaster Risk Finance Working Group is to develop methodologies for public assets exposure, and insurance exposure and incurred loss databases. In 2017, APEC member economies and international organizations discussed priorities and activities in 2017 to implement the disaster risk financing and insurance initiative laid out in the 2015 in the Cebu Action Plan.
The initiative will be implemented as seminars, capacity-building projects and technical support from international organizations (World Bank, OECD, IDF, etc.), especially in developing financial strategic framework for disaster risks.
Workshop on Base Erosion and Profit Shifting (BEPS) Action Plan Deployment in APEC, 22 February 2017, Nha Trang, Viet Nam: The workshop’s objective was to discuss opportunities and challenges, and share practical experiences on the adoption and implementation of BEPS measures and actions from 2016 to 2017 onwards, concentrating on the four minimum standards under the OECD Inclusive Framework on BEPS (IF) and on the Multilateral Instrument. Members proposed next steps from the workshop, “BEPS Action Plan Deployment in APEC” to strengthen cooperation. They also encouraged future exchanges of good practices in relation to implementation issues.
1st APEC Finance and Central Bank Deputies’ Meeting of 2017, 23-24 February 2017, Nha Trang, Viet Nam: Twelve economies identified and updated initiatives/deliverables form the Cebu Action Plan and three of them volunteered to be champion economies to support others in their implementation. The Chair proposed these four selected priorities to be discussed during 2017 under Viet Nam’s host year theme:
- Long-term investment in infrastructure: to promote best practices in risk allocation matrices and risk mitigation instruments
- Disaster risk financing and insurance: to develop financial policy frameworks, policies to manage financial risks and risk insurance, and analytical tools to serve the financial policymaking system
- Base erosion and profit shifting (BEPS): to counter excessive interest deductibility, protect tax base through addressing poorly targeted and inefficient tax incentives, and make effective use of country-by-country reports and realize the benefits of APEC members joining the MLI
- Financial inclusion: to promote members to develop their own financial inclusion strategies
Seminar on Cross-border Credit Information Exchange, 16 May 2017, Ninh Binh, Viet Nam: Participants discussed the need for a cross-border credit information system and the key elements of successful mechanisms for data and legal frameworks. A number of economies shared their experience and the challenges they have met in creating and implementing the mechanisms. It was suggested that economic and social benefits from robust credit reporting can be achieved without sacrificing meaningful data protection and the rights of data subjects. It was also suggested that consumers may well benefit from the availability of independent, unedited sources of data to assess consumer credit risk and capacity.
Seminar on Long-term Investment in Infrastructure, 17 May 2017, Ninh Binh, Viet Nam: Participants discussed an overview of infrastructure financing, risk allocation mechanisms in public-private partnership projects, and highlighted the importance of diversifying sources of finance for infrastructure and risk mitigation instruments. Among the key findings were:
- Engaging the private sector in infrastructure projects is important
- Putting in place balanced risk allocation, along with risk mitigation instruments, can result in improved confidence
- Institutional investors (pension funds, insurances, sovereign wealth funds, mutual funds, etc.) play a role as potential sources for long-term investment projects
Senior Finance Officials’ Meeting, 18-19 May 2017, Ninh Binh, Viet Nam: Members continued their discussion on the implementation of the Cebu Action Plan and the implementation of the four priority’s for 2017. Senior officials also further explored collaboration between the APEC Economic Committee and the FMP for the 2018 APEC Economic Policy Report, which will focus on structural reforms and infrastructure.
The meeting also listed updates from international financial institutions on the global and regional economic and financial outlook.
Participants discussed financial inclusion policies, disaster risk financing and insurance policies, and the implementation of the Base Erosion and Profit Shifting (BEPS) package.
Workshop on BEPS Action Plan Priorities and Deployment in Asia-Pacific Region, 22-25 May 2017, Hoi An, Viet Nam: Participants shared their experiences and perspectives on the implementation of BEPS measures. They agreed that BEPS presents a significant risk to the tax base and identified BEPS issues of highest priority. They agreed that they can benefit from mutual support as they develop their respective policies, regulations and administrative structures for the implementation of measures to address these issues. International organizations such as the OECD and the World Bank introduced their findings.
2nd APEC Finance and Central Bank Deputies’ Meeting of 2017, 20 October 2017, Hoi An, Viet Nam: Under long-term investment in infrastructure: members endorsed the policy statement on Diversifying Financing Sources and Fostering Private Sector Involvement in Infrastructure Investment (Annex A of the JMS) and the report on Selected Good Practices for Risk Allocation and Mitigation in Infrastructure.
Under base erosion and profit shifting: members reaffirmed their commitment to enhanced regional cooperation to address the challenges of base erosion and profit shifting (BEPS), and to create a community of APEC tax specialists to give members a technical platform through which to share information. Members look forward to seeing these efforts continue under the leadership of Papua New Guinea during 2018 and called for the continued support of international organisations throughout the process.
Under disaster risk financing and insurance: Members agreed to enhance experience sharing and cooperation in refining legal and policy frameworks on disaster risk finance and insurance, including solutions on the risk management of public assets. Economies were encouraged to improve their risk information systems and explore stronger partnerships with the private sector for potential solutions. Members also welcomed as good reference the report on Financial Risk Management of Public Assets against Natural Disasters in APEC Economies, developed by the WBG in coordination with member economies, and the report on Managing Disaster-related Contingent Liabilities in Public Finance Frameworks, developed by the WBG and the OECD, in coordination with the ADB and with the active participation of a number of member economies.
Under Financial Inclusion: economies recognized the contribution of agricultural finance in the sustainable development of agriculture and rural areas. They welcomed the progress report on Financial Literacy and Financial Consumer Protection and recommendations in the Role of Digital Payments in Sustainable Agriculture and Food Security report.
Other ongoing policy initiatives:
- APEC Finance and Development Program (AFDP) (since 2002)
- APEC Financial Regulators Training Initiative (FRTI) (since 2000)
- APEC Financial Institutions Dealing with SMEs (since 2004)
- Financial Inclusion Forum (since 2010)
- Developing Capacity for Cross-Border Recognition of Equivalent Regulatory Regimes for Issuing and Trading Financial Products and Services (since 2010)
- Asia-Pacific Infrastructure Partnership (since 2011)
- Asia-Pacific Financial Forum (since 2012)
- Financial Infrastructure Development Network (since 2015)
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The APEC Finance Ministers’ Findings, Kyoto 1996 had identified Policies Contributing to Stable Capital Flows, Policies Fostering Domestic Financial and Capital Market Development, and the importance of developing policies and financing techniques which attract and channel private investment in infrastructure development.
Australia Treasurer Joe Hockeyat the APEC Finance Ministers' Meeting news conference in Bali, Indonesia
Korea's Deputy Prime Minister Hyun at APEC Finance Ministers' news conference
Indonesia Finance Minister Chatib Basri at the APEC Finance Ministers' Meeting news conference in Bali, Indonesia
Chinese Finance Minister Lou Jiwei at the APEC Finance Ministers' Meeting news conference in Bali, Indonesia
Advancing BEPS and AEOI priorities in APEC WorkshopPort Moresby, Papua New Guinea
Senior Finance Officials’ Meeting (SFOM)Port Moresby, Papua New Guinea
Finance and Central Banks Deputies Meeting (FCBDM)Port Moresby, Papua New Guinea
Finance Ministers Meeting (FMM)Port Moresby, Papua New Guinea
Mr Andrew OAEKE
Department of Treasury
Papua New Guinea
Mr PABLO Forastieri Murrieta