The agreement between Australia, South Korea, New Zealand and Singapore was penned at the Asia-Pacific Economic Cooperation (APEC) finance ministers meeting in Indonesia on Friday night and kicks off in early 2016.
Treasurer Joe Hockey said he hoped the signing would be a “path breaker” for others to follow.
“I would hope that Thailand and a number of other countries will join us in the near future. We need to get some common ground in relation to the principles, consult with individual stakeholders, get the regulators to sign up, legislate in our own jurisdictions and get on with it,” he said in a doorstop interview.
Financial Services Council (FSC) chief executive John Brogden welcomed the agreement, which he said paves the way for Australian fund managers to play a significant role in managing the growing savings in Asia.
“This landmark agreement will mean Australia’s fund managers will be able to access cross-border investment opportunities within Asia for the first time and take advantage of the strong demand for financial services in the region,” he said.
“To date, European funds have dominated the Asian market accounting for the vast majority of foreign funds sold in the region.
“With 60 per cent of the world’s population and 12 per cent of the world’s total funds under management, the funds market in Asia has the potential to grow exponentially and to become the global centre of GDP growth.”
The passport is essentially a collective investment vehicle passport that will facilitate the cross-border distribution of funds management products that are created, administered and distributed within a set region. Funds that meet the agreed set of regulatory requirements can be sold both domestically and across borders within the passport region.
Benefits include improved cost efficiency, increased investor choice, improved services, better consumer protection and wider economic benefits, according to a PricewaterhouseCoopers (PwC) analysis.
A recent FSC/PwC study found widespread support for the initiative, with 86 per cent of industry bodies and market participants from seven of the leading funds management industry bodies across the region endorsing the initiative.
Mr Hockey also announced the agreement of a joint proposal between Australia and Indonesia to establish a public-private partnership centre in Jakarta to drive infrastructure investment in Indonesia, supported by an expert advisory panel made up of technical experts from APEC economies, business, and development banks.
