ANNEX B - REPORT OF 2013 APEC FINANCE MINISTERS’ PROCESS INITIATIVES

FINANCIAL INCLUSION

Two APEC workshops on Financial Inclusion were held during 2013 (Jakarta on 27-28 February and Manado on 23-24 May). Several common themes arose from these discussions which can be used as a reference in planning and implementing innovation in distribution channels, especially branchless banking, in APEC economies. These were the need:

(i)    to foster commitment of financial institutions to attend to the needs of the unbanked;

(ii)    to promote the development of sustainable business models and suitable products;

(iii)   for adequate infrastructure, including technology, and robust legal frameworks that can provide services efficiently and effectively;

(iv)   to develop a balanced, comprehensive regulatory framework that can promote financial inclusion;

(v)    to enhance risk management frameworks through identifying and mitigating specific risks;

(vi)    to develop customer protection frameworks to secure trust and to support demand for innovative financial services, complemented with a comprehensive financial education program;

(vii)   to strengthen collaboration and coordination amongst the stakeholders to improve effectiveness; and

(viii)  to develop clear and necessary requirements to regulate operational permits according to international standards and with the support of adequate monitoring and supervision mechanisms to ensure the program is in compliance with prevailing rules and regulations.

Asia Pacific Financial Inclusion Forum (ABAC, Indonesia, ADB)

Innovation promotes financial inclusion by significantly reducing the costs and increasing the efficiency of financial services being offered to low-income households and small enterprises. The 2013 Asia-Pacific Financial Inclusion Forum held at Batam Island, Indonesia on 11-12 June 2013 and convened by ABAC, the Asian Development Bank (ADB) Institute and their partner institutions and a training program hosted by the Australian APEC Study Centre at RMIT University identified various measures that can help governments harness innovation to promote financial inclusion.

Mobile and branchless banking is a key enabler to increase access to financial products and services and represents a significant opportunity to bank the unbanked. However, it is a multidimensional issue involving elements such as: domestic policies for financial inclusion, financial products and services development, regulatory frameworks, cooperation amongst stakeholders and consumer perspectives. As such, the development of mobile and branchless banking services requires a holistic approach to address challenges from multiple angles. APEC Finance Ministers received a full report on the key findings of the Forum. 

APEC BUSINESS ADVISORY COUNCIL (ABAC) ASIA PACIFIC FINANCIAL FORUM (ABAC, Australia)

The Asia Pacific Financial Forum (APFF), established by ABAC, is a regional platform for public-private collaboration to help accelerate the development of integrated financial markets. 

The symposium was held in Sydney, Australia on 10-11 April 2013. The symposium identified linkages and priority issues in the development of lending and capital markets, market infrastructure and institutions to mobilize long-term savings that APFF can help address. The symposium contributed to deepening public-private collaboration in the development of sound, efficient, inclusive, and integrated financial systems in the region.

TREASURY AND BUDGET REFORM

The APEC workshop on Treasury and Budget reform jointly sponsored by Indonesia and the APEC Secretariat, was held on 2-3July 2013 in Lombok, Indonesia. APEC member economies welcomed the exchange of knowledge and experience among APEC officials on reform initiatives. We note the key themes that emerged from the workshop discussions, including:

(i)   Institutional coordination, particularly between Ministries of Finance and Central Banks, as well as other government agencies and ministries, is an important component for all aspects of treasury and budget reform. Strong relationships between fiscal and monetary authorities can be underpinned by information exchanges, consultation and coordination. Many countries support this relationship with clear rules and arrangements among authorities, such as through Memoranda of Understanding to ensure clear accountabilities and/or protocols;

(ii)  The need to consider various elements of risk in managing treasury and budget systems, such as liquidity risk, political risk and the volatility of government revenue and expenditure flows;

(iii)  The importance of using the results of treasury and budget reform to improve and inform budgetary decisions; 

(iv)  The importance of Government Financial Report in enhancing fiscal transparency and promoting long term fiscal sustainability; and

(v)   For spending reviews, performance measures supported by sound methodology and program budget structure are important for improving budget allocation and efficiency over time. These performance measures also provide valuable inputs for governments in their budget policy decision making.

APEC economies welcome the voluntary sharing of information and lessons learnt amongst member economies and international financial institutions on appropriate reforms. This will engender a constructive dialogue to indentify and encourage ongoing reform within our region.

Asia Pacific Infrastructure Partnership (ABAC)

Since 2010, ABAC has created a regional structure to enable governments and the private sector to frankly and objectively discuss complex matters related to infrastructure finance and enhance the understanding of the issues and risks they face. This structure, the Asia-Pacific Infrastructure Partnership, involves key officials, experts from multilateral development banks, and senior private sector experts from a wide range of fields relevant to infrastructure PPPs.

In 2013, APIP Dialogues were hosted by the Philippines and Thailand. Finance Ministers were provided with a briefing on the outcomes of these discussions. ABAC will continue this valuable dialogue as part of the 2014 APEC Finance Ministers’ process. 

APEC FinancIAL Regulators Training Initiative (ADB)

Endorsed at the APEC Finance Ministers’ Meeting in 1998, the Asia-Pacific Economic Cooperation Financial Regulators Training Initiative (APEC FRTI) provides a systematic, integrated, and sustained approach to improve the quality and efficiency of financial supervision and regulation. APEC FRTI is the longest running APEC Finance Ministers’ initiative. The ADB serves as the APEC FRTI Secretariat.

In addition to technical and secretariat support, the ADB has continually provided financial support for FRTI activities. ADB has so far financed 7 technical assistance projects totaling $US 6.5 million to support APEC FRTI.

Since 2001, 4,263 financial regulators and supervisors have been trained in 105 training seminars. These included 58 banking supervision seminars, 45 securities regulation seminars, and 2 short training programs.

In 2013, six seminars—three for banking supervisors and three for securities regulators—have been organized and 277 financial supervisors and regulators have been trained (five more seminars are expected to be organized this year with additional financial support from the Republic of Korea). Requests for training in new learning areas followed the global financial crisis. The FRTI responded by expanding into new topics—including those relating to cross-border supervision and information technology.