Policy Initiatives Review

1) Voluntary Action Plan for Supporting Freer and More Stable Capital Flows (New Zealand and Chile)

As part of this ongoing initiative, New Zealand and Chile have proposed a policy dialogue on savings and the role of the state. The objective of this multi-year dialogue is to provide an opportunity to exchange views on the role of the state in enabling and providing for structured savings, and the attendant policy and design issues that governments interested in promoting savings need to consider.

Chile and New Zealand will be further developing the initiative over the next few months. In particular, the intended scope of the initiative in terms of policy areas to be covered will be refined in consultation with interested member economies. Chile and New Zealand welcome the interest in the initiative expressed by Vietnam, and look forward to working closely with Vietnam on the initiative during 2006.

2) APEC Finance and Development Program (AFDP) (China and the World Bank)

China reported to the meeting the progress made under the initiative since the last FM TWG meeting, as well as plans for the remainder of 2005. The Chinese government has announced the establishment of an Asia-Pacific Finance and Development Center (AFDC) at the APEC Leaders' Informal Meeting in 2004 in Chile, to further contribute to capacity-building in the region. The three main types of activities carried out under the AFDC are training workshops, a biennial forum, and the funding of research projects. The first biennial forum will be held in 2006. The themes are currently being decided on. AFDP has funded 13 research projects from 2003 to 2004, and 12 research teams have submitted their reports before November 2004. Among these reports, 11 were evaluated as qualified by the AFDP Academic Committee and compiled for dissemination. CDs were available at the meeting for those interested.

The AFDC will continue to fund research projects and is currently deciding on research themes.

3) Deepening Financial Regulatory Capacity (Australia)

Australia received endorsement for this initiative to run a life insurance and pensions' capacity building training course at the Finance Ministers' TWG meeting in Gyeongju (Korea) in December 2004. The training course is intended to take the form of a six day intensive format and is based on the model of the highly successful Managing Regulatory Change Finance Ministers' initiative which concluded in November 2003.

The core objectives of the training program are to develop an understanding and awareness of the International Association of Insurance Supervisors' core principles and their implications for 'best practice' international regulatory approaches; and to expand an understanding of the risks of life insurance and pensions and recognition of the roles and importance of the various stakeholders. The economies targeted for the training program include: Brunei Darussalam; Chile; China; Indonesia; Malaysia; Mexico; Papua New Guinea; Peru; Philippines; Russia; Thailand; and Viet Nam.

Funding options (including an APEC TILF application) are still being pursued to run the training course in 2006, and the training course is being revised to include casualty insurance. The Finance Ministers' TWG agreed to extend the endorsement of this initiative to 2006 at the Gwangju meeting in June 2005.

4) APEC Future Economic Leaders' Think Tank (Australia)

The annual Think Tank initiative, which was proposed by Australia and formally launched at the Beijing TWG meeting in December 2000 without a sunset limit, aims to identify participants who will probably play a significant future leadership role in their home economies and institutions and to provide an experiential program that facilitates networking, problem-solving, and the development of creative solutions for priority regional economic and financial challenges.

The 2005 Think Tank was held in Sydney on 22-24 June, addressing the theme Meeting the Challenge of Ageing Economies. Thirty-two participants from a record 19 APEC economies considered the key policy challenges of ageing populations; suggested policy responses; and proposed a road map for reform.

The key policy challenges recognised by the participants include a slowing effect of population ageing on economic growth by reducing the proportion of populations within traditional working ages. The participants suggested that ageing may also slow the growth in public revenue at a time when many governments will face additional fiscal pressures associated with funding pensions, aged benefits, aged care and health care.

The participants also suggested that policy responses will need to focus on supporting strong economic growth; ensuring the sustainability of retirement incomes; and meeting aged care and health care costs. As a roadmap for reform, the delegates called for Finance Ministers to encourage dialogue between technical experts from APEC economies and international financial institutions; to publish regular long-term economic and fiscal projections of the impacts of ageing; and to prepare a policy framework to address these challenges, drawing on the experiences of other APEC economies and long-term projections.

5) APEC Financial Regulators Training Initiative (ADB and the United States)

The FRTI advisory groups are chaired by Malaysia (Central Bank of Malaysia, Securities Commission). At their meeting in Manila on 19 July, 2004, the Advisory Groups discussed regional training priorities, regional cooperation and delivery mechanisms for the financial regulators training. It was decided that:

Member economies were invited to lodge their training syllabus and training materials in the FRTI website.

Work plan/training programmes for 2005 are as follows:

a) Under the Banking Supervision component:-

Anti-Money Laundering Examination course was held in Sydney from 14 -18 March, 2005;

Market Risk Analysis Seminar was hosted by the Central Bank of Malaysia from 18 - 22 July in Kuala Lumpur with speakers from the Federal Reserve. 34 participants attended the seminar, including 11 from the Central Bank of Malaysia.

b) Securities Regulation component:-

The 10th Meeting of the Advisory Group (AG) on Bank Supervision was held in Kuala Lumpur on 15 July 2005. It was attended by Australia (via teleconferencing); Hong Kong, China; Indonesia; Chinese Taipei; Singapore; and Malaysia. Representatives from the SEACEN Centre, the Asian Development Bank and the Federal Reserve were also present. Decisions taken at the AG's Meeting, chaired by Central Bank of Malaysia, were as follows:

Other planned regional seminars for 2005 include:-

The Advisory Group (AG) on Securities Regulations also met in Kuala Lumpur on 15 July, and among others, discussed and assessed the 2005 training needs. The meeting noted a strong need for Anti-Money Laundering training courses as well as training programmes on Enforcement / Investigation among APEC securities regulators. Training continues to remain a priority among most members. The Securities Commission will, as in the past, continue its work with the ADB Secretariat to develop/host training programmes for the initiative. The Securities Commission also offered its SIDC AMLA E-Learning course to all APEC securities regulators.

Since the inception of the FRTI in 1998, about 1400 junior/mid-level supervisors and regulators have benefited from about 40 regional and national courses relating to banking supervision and securities regulations.

6) Initiative on APEC Financial Institutions Dealing with SME (Thailand, China)

The Second Annual Meeting of APEC Financial Institutions Dealing with SMEs was held on 21 July 2005, in Beijing, China, under the chairmanship of China Development Bank. The Second Annual Meeting was made up of two parts: (1) a review of cooperative activities during the past year and discussion of future initiatives, (2) a conference with the theme of "Better Environment for Financing, Stronger Development of SMEs." Delegates from all 12 signatory member institutions attended the meeting. Invited guests from other government and non-government institutions also took part. Members agreed to establish a secretariat to administer the website of the MOU and take charge of daily maintenance and updating of information. China Development Bank would like to host the secretariat and play a leading role in its daily maintenance work.

7) Insolvency Reform Initiative (Australia)

This initiative was endorsed at the December 2004 TWG meeting in Gyeongju, Korea. The aim of the initiative is to raise awareness and exchange views on key frameworks for insolvency reform.

The initiative will discuss the United Nations Commission on International Trade Law (UNCITRAL) and World Bank guidance on insolvency systems, effective institutional frameworks for insolvency systems, and frameworks for cross-border insolvency.

A policy dialogue will be held as part of the next Forum on Asian Insolvency (14 15 December 2005) which is organised by the OECD and sponsored by Japan, the World Bank and the Asian Development Bank.

Discussions with the OECD and other key stakeholders regarding the forum agenda are underway.

8) Initiative on Financial Reform in the APEC Region (Australia and Indonesia)

This initiative received endorsement at the APEC Finance Ministers' TWG meeting in Gwangju on 17 June 2005.

The aim of the initiative is to discuss how APEC member economies have developed and implemented reforms to improve their financial sector. Key issues include how economies are coping with the challenge of carrying out financial reform; prioritisation of the implementation of remaining reforms and assessing whether there are gaps in expertise and existing capacity building efforts.

A policy dialogue will be held in mid 2006 to exchange views on the progress of financial sector reforms in the member economies. The dialogue would cover the broad range of regulatory measures relevant to financial stability including capital standards and credit assessment, standards and practices in prudential supervision, and underlying legal frameworks (including insolvency regimes). The dialogue would involve the World Bank and the Asian Development Bank carrying out reviews of the progress of reform in the financial sector across the region. Member economies would discuss how their reforms fit together, their policy development processes and their forward plans. Reform gaps and capacity building needs could then be identified and expertise sought from other forum members.

9) Fiscal Management Initiative (Viet Nam, Indonesia and Australia)

This collaborative initiative received endorsement at the APEC Finance Ministers' TWG meeting in Gwangju on 17 June 2005. The aim of the initiative is to build on the broad-ranging fiscal policy report to Finance Ministers in 2004 by undertaking a dialogue on a practical issue - the management of significant off-balance sheet risks, such as the contingent liabilities associated with financing of infrastructure projects or with explicit guarantees to public or private institutions. The extent to which these risks are reflected in government reporting and the potential impact on an economy's overall fiscal position are issues that are important to the sustainability and transparency of fiscal policy.

The initiative will discuss the measurement, monitoring and management of these fiscal risks and the consequences of contingent liabilities for the operation of fiscal rules. A policy dialogue is proposed to be held in early 2006 to discuss international experience and best practice, and share experiences in the Asia-Pacific region. The dialogue will be an important input to the development of principles to provide guidance to member economies and the identification of capacity building priorities.