Danial Norjidi
Carrying the theme, ‘Advancing Digitalisation, Achieving Sustainability’, the Asia-Pacific Economic Cooperation (APEC) Finance Ministers’ Meeting 2022 saw finance ministers and high-level representatives from the 21 APEC member economies convene in Bangkok against the backdrop of an adverse global environment.
The outcomes of the meeting were reflected in a statement by the meeting’s Chair, Thailand’s Minister of Finance Arkhom Termpittayapaisith, in which he summarised the deliberations among APEC ministers with respect to heightened macroeconomic challenges, which include uneven recovery that may result in widening global inequality, volatility in energy and food prices, remnant effects of the pandemic – which would contribute to supply chain disruptions and surging inflation – as well as the consequent tightening of financial conditions.
In his statement, the Chair highlighted consensus outcomes of the region’s finance ministers in three key areas: sustainable finance, digitalisation for the digital economy and implementing the Cebu Action Plan.
With regards to sustainable finance, the Chair underlined that secure, efficient, and affordable access to sustainable finance for all sectors is paramount for an inclusive and sustainable economic growth.
“Economies are to take actions in support of global efforts to comprehensively address all environmental challenges including climate change, and APEC economies look forward to continued progress in mobilising global climate finance,” he said.
“APEC economies acknowledge the macroeconomic risks stemming from climate change and discussed the costs and benefits of different transitions. Building an ecosystem that enables both government and private sector participants to raise funds for sustainability-focussed projects will help APEC economies align with global efforts to meet these goals, including advancing progress towards the United Nations’ 2030 Agenda for Sustainable Development.”
He noted that alongside public financing, APEC economies will continue to promote the involvement of the private sector in realising market-based sustainable finance mechanisms, innovative financing instruments, and emerging technologies.
“Some economies stress that economy-specific policy instruments, such as fiscal incentives, public-private partnerships, taxonomies and other alignment approaches, standardised project finance loan document templates, and, if appropriate, carbon pricing and non-pricing mechanisms and international carbon credit markets, can support the alignment of financial flows towards a greener and cleaner global economy.”
The Chair said that although the practice of sustainable finance, such as the issuance of sustainability bonds and sustainable finance instruments for sustainability-aligned projects, has shown promise in its formative years, greater ambitions, coupled with further actions and a more proactive approach to achieve multilateral goals.
“APEC economies urge public and private stakeholders to take action to ease entry barriers and encourage further participation and investment to support transition towards sustainability by sectors of the economy. Nevertheless, it remains necessary for economies to make this transition based on their own circumstances and in the context of multilateral goals.”
The Chair further highlighted that APEC economies noted the results of the seminar on Developing the Ecosystem for Sustainable Finance in the Capital Market, where economies shared their experiences in developing sustainable finance instruments within their respective capital markets.
“Economies discussed the development of a capital market-friendly ecosystem for sustainable and transition finance, the importance of responsible business conduct, the establishment of taxonomies and other alignment tools, appropriate carbon mitigation measures, and the need to enhance interoperability and comparability of different sustainable finance standards, tools, and frameworks for emerging economies.
“The completion of the subsequent seminar report on Developing the Ecosystem for Sustainable Finance in the Capital Market and policy recommendation paper on Sustainable Finance is also noted. These knowledge-sharing processes serve as an invaluable reference of member economies’ approaches towards the promotion of sustainable finance and the ideas and propositions that APEC economies may henceforth look upon.”
Shifting focus to the area of digitalisation for digital economy, the Chair said that digitalisation has been a revolutionary force for economic growth, catalysing increased productivity and efficiency, reduced transaction costs, and enhanced connectivity among economic agents.
“APEC economies recognise the importance of digitalisation as a tool to deliver financial support and stimulus packages to the people, especially during the COVID-19 outbreak, and to facilitate tax administration and increase financial inclusion. APEC economies stressed the importance of fully harnessing the power of digitalisation for fiscal policy and inclusive finance, including reducing the digital divides between different socio-economic groups.”
The Chair proceeded to share that APEC economies welcomed members’ participation in the webinar on Digital Technology for Efficient Tax Collection and the seminar on Digitalisation for Inclusive Finance: Embracing the Digital Fundraising, both of which were held in June 2022, and the webinar on Strategies and Initiatives on Digital Financial Inclusion: Lessons From Experiences of APEC Economies held in July 2022, as well as the APEC Workshop on Building an Enabling Environment for Fintech: Towards Thriving Fintech Ecosystems that support a more prosperous, inclusive, and sustainable recovery held in September 2022.
“Through these seminars, APEC economies have learnt how both the public and private sectors can benefit from digitalisation, with more efficient revenue collection, more effective delivery of government services, and improved financial access,” he said.
“The key to capitalising on the benefits of digitalisation for financial inclusion is to create and maintain ecosystems that allows for the proliferation of financial innovation, while remaining vigilant of, and proactively managing, the potential risks. As such, the regulation of digital finance may need to be enhanced to protect investors and consumers, and the stability of the financial system as a whole.”
“APEC economies welcome the completion of the APEC Policy Considerations for Developing Cross-border Payments and Remittances, which covers key considerations and implementation options for, inter alia, risk management, and consumer protection for developing cross-border payment and remittance linkages.
“APEC economies welcome the Organisation for Economic Co-operation and Development’s (OECD) policy recommendation paper on Digitalisation of Fiscal Measures and Policy Innovations during the COVID-19 pandemic, which highlights the many ways in which APEC economies used digital tools when implementing fiscal measures during the COVID-19 pandemic. APEC economies also take note of the recommendations in the paper, which have shed light on the opportunities to optimise economic recovery through digital technology.”
Speaking on the third area of implementing the Cebu Action Plan (CAP), the Chair said that APEC economies welcome the contributions by members in nominating policies to be implemented as part of the New Strategy for Implementation of the CAP.
“This strategy identifies APEC economies’ new and existing initiatives under the different pillars of the CAP, as well as measures in response to the COVID-19 pandemic and actions aligned with the economic drivers under the APEC Putrajaya Vision 2040. So far, 15 economies have submitted a total of 62 initiatives, 58 of which fall under the CAP pillars,” he said.
He added that APEC economies welcome the Champion Economy workstream on Just Energy Transition Financing.
“APEC economies will continue to use the workstream as a mechanism to share knowledge and experience among APEC members, international organisations, and the private sector on relevant tools and approaches.”
It was further shared that ministers reiterated their commitment to implementing flexible fiscal policies to support inclusive economic growth and job creation. They pledged to use all available policy tools – monetary, fiscal and structural – individually and collectively, to the extent possible, to manage inflationary pressures and steer the global economy back to its growth path.
Ministers also pledged to not adjust exchange rates for competitive purposes, highlighting that strong fundamentals and sound policies are essential to the stability of the international monetary system.
