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Delayed birth of Asia Region Funds Passport Scheme
The Asia Region Funds Passport scheme has been gestating for about five years. Workshops among the thirteen APEC economies (excluding China) were followed by a statement of intent in 2013. Four days ago, finance ministers from seven of the region’s leading nations met at Cebu in the Philippines to announce that its birth was on schedule for early next year.
Except, they didn’t. Singapore declined to add its signature because the statement of understanding failed to address the crucial issue of equal taxation, a Monetary Authority of Singapore spokesperson told AsianInvestor today.
The passport scheme would allow asset managers from countries within the region access to each other’s retail investor markets through the distribution of their products. According to the APEC Policy Support Unit, it could save the investors $20 billion a year annually in fund management costs, offer higher investment returns at the same or lower degree of risk, and encourage the establishment of locally domiciled funds which could create 170,000 jobs in APEC economies within five years.
But, clearly the scheme will be still-born if the tax issue is unresolved. South Korea and Australia, especially, have unequal tax regimes for domestic and overseas fund providers – and basically shut foreign interlopers out.
Singapore, with its highly sophisticated fund management industry, would be a likely winner if taxation is neutralized across the region. It’s just as likely that the rest of APEC know this – and are fearful.
Photo: Chris Guillebeau