Response to Asia Region Funds Passport

Response to Asia Region Funds PassportThe Property Council of Australia states in a submission that the proposals contained in the federal government’s consultation paper on an Asia Region Funds Passport will not achieve the main objective of increasing managed funds investment in Asia. The Property Council supports the streamlining of regulations to make it easier for managed fund operators to offer collective investment schemes to retail investors in the Asia region. Reducing the regulatory differences between Passport member economies will lead to deeper and more efficient financial markets, as well as boost regional economic growth. However, the Property Council contends that unless amended, the Passport proposals will: bar investment in real property (ie, property funds are not eligible collective investment schemes). This will block the property industry’s access to regional investors and unnecessarily restrict retail investors’ participation in an important asset. fail to provide a uniform set of rules across the Passport member countries to simplify the licensing and marketing of managed funds. This will cause inefficiencies as eligible investment vehicles must meet additional host country requirements. constrain the ability of collective investment vehicles to achieve a diversified investment portfolio. This is because the rules cap investment at 5 per cent for each responsible entity/trustee, rather than 5 per cent for each investment fund. preclude many Australian responsible entities and trustees from establishing a Passport fund due to the minimum US$1 million capital adequacy requirement. The Property Council recommends: including property funds as eligible collective investment schemes as part of the Passport or, alternatively, implementing a timetable to include property funds developing and implementing mutual recognition arrangements for critical Passport rules, including local licensing and disclosure requirements adopting less restrictive portfolio allocation limits for fund operators – ie, a 5 per cent limit on investments in each investment fund rather than a 5 per cent limit for each responsible entity, and adopting the same capital adequacy requirements that exist for Australian registered scheme operators (which start at $1,000 and increase according to scheme assets).