APEC Ministers Call for Strengthening Markets
Hon Lockwood Smith
Minister for International Trade, New Zealand
Chair APEC Ministerial Meeting
have strongly endorsed the importance of working together to
strengthen markets in the region, according to Lockwood
Smith, Chair of the APEC Ministerial Meeting and New Zealand
Minister for International Trade.
"Strengthening markets is one of New Zealand¡¦s key policy themes for APEC 1999," Dr Smith said.
"APEC Ministers agreed that a durable recovery and a return to sustained economic growth will require ongoing commitment to broader economic reform, in addition to trade and investment liberalisation.
"Minister¡¦s also stressed that as the region emerges from its recent period of economic difficulty, there was a real risk of complacency, and that APEC could play a central supportive role to keep the reform effort on track," Dr Smith said.
"Ministers also recognise that there is a need now to bring together APEC¡¦s work across key areas such as trade and investment, competition and regulatory reform, economic and corporate governance, trade facilitation and efforts to reduce administrative compliance costs on business. The strengthening markets initiative provides such an approach.
A core element of the approach is the APEC Principles to Enhance Competition and Regulatory Reform. Ministers have referred these principles, which are central to APEC¡¦s work to strengthen markets, for consideration of APEC Leaders.
"Ministers also approved a forward looking work programme which will see the strengthening markets approach underpin the full programme of APEC work," Dr Smith concluded.
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Attached: Highlights of economies¡¦ efforts to strengthen their markets.
APEC STRENGTHENING MARKETS HIGHLIGHTS
While the starting points, starting dates, the pace reform, and specific measures, vary considerably from one member to another, some general observations stand out:
„h reform, or measures which make broad changes to institutions and the overall framework in which economic activity takes place, continues apace in the APEC region and is a driving force for economic growth in the region.
„h reform measures are generally aimed at strengthening the role of markets in the region. The state is pulling back from directly providing goods and services, and paying greater attention to its role in setting the broad framework within which economy activity takes place.
„h increasingly policy frameworks recognise the need to improve the quality of government regulations, thereby enhancing the conditions for competition in each economy.
„h financial sector reform features prominently, especially in those economies most affected by the recent economic crisis.
The following provides a snapshot of some of the reform activities underway in the APEC region.
„h Competition Policy: Under Australia¡¦s National Competition Policy, Australian Governments (federal and state) are reviewing all laws and regulations to minimise restrictions on competition.
„h Transparency: Australia has prepared and publicly released a progress report on Australia¡¦s compliance with a range of international "best practice" codes, such as the IMF Code of Good Practice on Fiscal Transparency.
„h Reform of State Owned Enterprises: Australia has deregulated its telecommunications market to allow broader participation, including on the part of foreign players. The previously state-owned enterprise has been corporatised and a large portion of the Government¡¦s shareholding divested. A further portion will be divested in 1999.
„h Reform of State Owned Enterprises: Brunei is embarking on coporatisation/privatisation of public services and utilities.
„h Financial Sector Reform: On June 28, 1999, the foreign bank branching legislation and its related regulations came into force. The legislation permits foreign banks to establish specialised, commercially focused branches in Canada, whereas previously only separately incorporated subsidiaries were permitted. Branches will have essentially the same powers as domestic banks, except for restrictions on their ability to take deposits.
„h Legal Reform: Firm enforcement of Canada¡¦s Competition Act, one of the key framework business laws in Canada, has created a competitive marketplace in Canada. The Act is regularly scrutinised through the permanent Competition Bureau¡¦s Amendments Unit in order to ensure that it remains abreast of domestic and international developments.
„h Reform of State Owned Enterprises: Privatisation of the management of Chile¡¦s ports recently completed. Plans are underway to privatize Chile¡¦s water and sewage utilities.
„h Regulatory Reform: Revised regulations introduced to enhance performance in the electricity sector.
„h Reform of State Owned Enterprises: Programme underway to revitalise major state owned enterprises.
„h Financial Sector Reform: Asset management companies are being established to take over and recover the non-performing loans of the four major state banks.
„h Competition Policy: Enactment and implementation of the Law to Combat Unfair Competition.
Hong Kong, China
„h Telecommunications Services: Subject to legislative amendments, implement measures to strengthen the regulatory framework for ensuring effective competition, streamline the licensing framework to cope with development in the telecommunications industry and improve interconnection and access arrangements to telecommunications services. Progressively liberalise the facilities based external telecommunications market, and further enhance competition in the local fixed telecommunications network services market.
„h Financial Sector Reform: Supervisory regime brought fully into line with Basle Committee¡¦s Core Principles for Effective Banking Supervision. Retail banking restrictions on foreign banks being relaxed. Policy initiatives to further promote competition and enhance safety and soundness in the banking sector. Comprehensive reform of the regulatory framework, market infrastructure and market structure applying to futures and securities trading.
„h Reform of State Owned Enterprises: The Indonesian Government continues to reduce its share in ten state enterprises in the short term and restructure all state enterprises in the medium term.
„h Financial Sector Reform: Restructuring of state owned banks and banks controlled by the Indonesian Bank Restructuring Agency. Recapitalisation and restructuring of private banks. Regulatory and supervisory framework revamped. Easing of limits on foreign ownership of financial institutions. Creation of an independent central bank solely responsible for monetary stability.
„h Legal Reform: Bankruptcy law rewritten and commercial court created to improve implementation. Anti-monopoly and consumer protection legislation adopted.
„h Financial Sector Reform: "Big Bang" Reforms. 12% GDP set aside to support banks with detailed restructuring plans. Nationalisation of Nippon Credit Bank. Three second-tier regional banks placed under government administration. Creation of the Financial Supervisory Agency to strengthen bank supervision.
„h Corporate Sector Reform: Recently amended the Commercial Law establishing the system of Stock Exchange / Transfer and enacted laws to streamline procedures for disaggregating companies to aid corporate restructuring. Also, the Law on Special Measures for Industrial Revitalisation was enacted in August 1999 to support business in the areas of strategic restructuring, new business development and enhanced research and development.
„h Legal Reform: Bankruptcy code for corporate rehabilitation.
„h Financial Sector Reform: Completed first round of financial sector restructuring in September 1998. This involved recapitalising banks to put them on a sound footing. Non-viable financial institutions were closed (including 16 merchant banks, 5 commercial banks, 6 securities companies and 4 insurance companies). Major programme underway to strengthen prudential regulation and supervision of the financial sector.
„h Corporate Sector Reform (with a particular focus on Korean chaebols): Measures to enhance transparency; resolve cross-debt guarantees; improve corporate financial structures; streamline business activities; and, strengthen accountability.
„h Regulatory Reform: 5,430 or 48 per cent of existing regulations abolished. Another 800 modified and/or simplified. A further 345 have or will be abolished and/or streamlined.
„h Financial Sector Reform: Bank consolidation programme under way to create six large domestic financial groups as well as measures to dispose of non-performing loans and recapitalise banks. Initiatives to strengthen bank supervision/management, including tightening loan classification requirements, increase the frequency of on-site examinations, augment supervisory staff and move toward consolidated supervision.
„h Corporate Sector Reform: The Government has signalled its commitment to implement the recommendations of the Report of the Finance Committee on Corporate Governance, released in March 1999. Key recommendations include: measure to strengthen the statutory and regulatory framework for corporate governance; the introduction of the Malaysian Code on Corporate Governance to promote good governance through self regulatory mechanisms; and, training and education to ensure that the framework for the proposed corporate governance framework is supported by necessary human and institutional capital. Notable measures undertaken before the release of this report include: a revised Take-over Code which now requires higher standards of, and more timely, disclosure strengthening the position of minority shareholders; revised listing rules for the Kuala Lumpur Stock Exchange; and, amendments to the Companies Act to strengthen creditors¡¦ rights.
„h Legal Reform: Legislation introduced to promote competition and allow increased private sector participation in a number of sectors. The Federal Competition Commission has reviewed arrangements for participation in auctions of national assets, including public service assets and public entities.
„h Financial Sector Reform: Restrictions on foreign investment in commercial banking, holding companies of financial groups, securities broking firms and securities market specialists eliminated.
„h Insurance Markets: Workers¡¦ compensation was opened up to competition from commercial insurers from 1 July 1999.
„h Agricultural Marketing: Legislation restructuring the regulatory framework for key agricultural producer boards (dairy, apples, and kiwifruit) has recently been passed.
„h Competition Policy: The Copyright Act was amended in 1998 to remove the prohibition on the parallel importation of goods prohibited by copyright.
„h Postal Services: The Postal Services Act 1998 removed New Zealand Post Limited¡¦s monopoly on the carriage of standard letters. Any company, individual or organisation may now compete in all sectors of the postal market. There are no foreign ownership or market access restrictions on postal operations.
„h Reform of State Owned Enterprises: Privatisation of a range of public institutions over the medium term with a Privatisation Commission established to manage the process.
„h Financial Sector Reform: A stock exchange has been established to develop capital markets in PNG and provide opportunities for the public to invest in PNG companies.
„h Reform of State Owned Enterprises: Privatisation of two major railway networks complete. Plans underway for the involvement of the private sector in the provision of sea and airports.
„h Financial Sector Report: Tightening of prudential standards related to loan classification and provisioning, thus bringing the Philippines broadly in line with international norms. Strengthening banking supervision through the adoption of consolidated supervision (which will be fully implemented once legislation currently before Congress is enacted) and the implementation of a risk management approach to supervision. Measures to raise minimum capital requirements, encourage the faster recognition of impairment of assets, and require higher general and specific loan-loss provisioning.
„h Reform of State Owned Enterprises: Undertaken major reforms to privatise formerly centrally-planned economy. 70 per cent of Russian GDP is now produced by the private sector.
„h Corporate Sector Reform: Special programme for the development of small and medium enterprises, including the establishment of a Ministry for Antimonopoly Policy and Support of SMEs.
„h Financial Sector Reform: Announced in May 1999 a three-pronged programme to:
„h liberalise Singapore¡¦s financial sector by implementing a five-year liberalisation programme improving access for sound and well-regulated managed banks to the Singapore retail market;
„h improve corporate governance practices; and
„h lift the 40 percent aggregate foreign shareholding limit, although the Monetary Authority of Singapore will continue to approve increases in the individual shareholdings above prescribed limits.
„h Reform of State Owned Enterprises: Programme underway to privatise 47 state owned enterprises by 2002. To date, 10 have been privatized and 2 closed.
„h Legal Reform: Task force established in 1996 to promote competition. Since this time, the transitional period for public enterprise exemptions under the Fair Trade Law has lapsed and the Fair Trade Commission has initiated a systematic review of exemptions and exceptions to competition rules as well as laws regulating anti-competitive practices.
„h Reform of State Owned Enterprises: Programmes underway to privatise and restructure energy, telecommunications water, and transportation agencies. Introduced new corporatisation law to facilitate privatization of SOEs.
„h Financial Sector Reform: Viable financial institutions segregated from insolvent institutions. This resulted in the closure of 56 financial institutions and the establishment of a mechanism to dispose of these institutions¡¦ assets. Measures have been implemented to strengthen the remaining financial institutions. Banks have been recapitalised and consolidated. Supervision has been improved and the regulatory framework strengthened.
„h Legal Reform: Bankruptcy Court established and Bankruptcy Act amended. Adopted tightened bankruptcy laws
„h Deregulation: Deregulation of the electricity sector, last of the utilities to deregulate and following deregulation of airlines and natural gas, creating competitive markets for electricity supplies.
„h Financial Sector Reform: Maintaining open capital markets to expose the market place to competition. Using market incentives to bring capital and private entrepeuirship to distressed urban and rural areas that mainstream business investors might otherwise have overlooked through the President¡¦s New Markets Initiative.
„h Legal Reform: Enterprise Law adopted in May 1999, to take effect from January 2000, is expected to provide a major boost to the private sector in Viet Nam by codifying the legal framework for its development. It:
„h permits the formation of new companies, and simplifies establishment and registration procedures;
„h introduces modern concepts of corporate governance, with improved transparency in accounting requirements and ownership disclosure;
„h encourages informal businesses to become properly registered and structured;
„h allows new forms of business entities, such as single member limited liability companies and partnerships;
„h facilitates the transformation of companies from one form of business entity to another; and
specifies what business activities and practices are not allowed, rather than seeking to define those that are.