ALFI Representative Office in Hong Kong
Since 2010, ALFI’s Asia representative office in Hong Kong has been monitoring the various exciting developments and raising the profile of the Luxembourg investment fund industry in the region.
Hong Kong being the Association’s bridgehead in the promising growth markets of Asia, its local RepOffice is naturally heavily involved in the organisation of ALFI’s Asia roadshows. The most recent one, in January 2017, led the Luxembourg delegation to Hong Kong, Taipei and Tokyo. Further to this, the RepOffice organised two breakfast seminars targeting the local audience in Hong Kong and dedicated respectively to Alternative Investment Funds and, more generally, to Luxembourg as a global fund distribution hub for Asian asset managers in Europe and beyond.
During the year under review, ALFI innovated by organising the first edition of the Hong Kong TA & Asset Servicing seminar, a half day discussion forum that attracted 150 fund industry experts from Hong Kong, Singapore and Taiwan.
The second novelty this year was the setting up of an ALFI Chapter in Singapore. The new forum aims to exchange ideas and stimulate collaboration and closer relationships between the fund management industries in Luxembourg and Singapore. It was officially launched in March 2017 in the presence of Luxembourg’s Minister of Finance H.E. Pierre Gramegna and now has 4 active sub-committees.
Regional cross-border distribution and passporting initiatives: Where do we stand?
Since its launch in August 2014, the Asean Collective Investment Scheme (CIS) recorded, on the outbound, 12 funds approved by home regulators (4 Singapore funds, 7 Malaysia funds, 1 Thailand fund) and, on the inbound, 6 funds approved to be distributed in host jurisdictions (4 Malaysia funds approved for sale in Singapore, 1 Singapore fund approved for sale in Malaysia, 1 Singapore fund approved for sale in Thailand).
Hong Kong signed a Mutual Recognition of Funds (MRF) agreement with Mainland China in May 2015. In April 2017, 6 Hong Kong funds (out of 21 which applied) were approved for northbound distribution and 49 PRC funds (out of 50 which applied) were authorised to distribute in Hong Kong. The jurisdiction has also signed an MRF with Switzerland in December 2016, however, no fund launch has been announced so far. Although the scheme is called “mutual recognition”, one will note that each eligible fund still needs to be approved on a case by case basis by the host jurisdiction, but will, nevertheless, benefit from a streamlined procedure.
Other initiatives in the region comprise the Asia Region Funds Passport (ARFP) which has been postponed due to a lack of taxation harmonization between participating jurisdictions. The program is now planned to be launched next year, once this point will be resolved.
Finally, Singapore announced its plans for the introduction of a new type of corporate vehicle, the Singapore Variable Capital Company (S-VACC). The consultation launched by the Singapore authorities has been closed and the authorities are currently analysing responses made by various stakeholders. With the S-VACC, the Singapore authorities aim to enlarge their legal toolbox with a vehicle that has proved popular in a number of jurisdictions and among a wide range of investors. It is anticipated that this new regime could become reality in the second half of 2018.
From an international perspective, UCITS (and increasingly AIFs) remain the vehicle of choice when it comes to cross-border distribution in a number of jurisdictions in Asia.
Ching Yng Choi
Head of the ALFI Representative Office