The ARFP is a passporting scheme that will connect the fund markets of Australia, Japan, Korea, New Zealand and Thailand.
According to the annual report, Japan is aiming to amend domestic financial regulations by the end of 2017. The country expects that it will be able to accept ARFP funds from the beginning of 2018.
New Zealand plans to finalise regulations by late 2017 in order to be ready for full implementation of the ARFP regime.
In Korea, in the second half of this year, the government is preparing a legal amendment for the implementation of the ARFP.
Although the signing of the statement of understanding on the establishment of the ARFP scheme took place in 2015, the various jurisdictions involved have been under negotiation for years as they have not been able to reach an agreement on taxation.
The annual report noted that Australia will convene a meeting of the tax reference working group. It consists of tax specialists from participating and prospective ARFP economies who will work on tax neutrality arrangements for the passporting scheme.
Separately, the ARFP joint committee also released a draft guidance paper centering on the laws and regulations that are expected to apply to imported funds in host economies.
The guidance sets out a number of key regulatory matters applicable to asset management firms aiming to join the ARFP. Matters covered include disclosure, capital controls, distribution, local agents, access to financial markets to sell ETFs and privacy and anti-money laundering legislation.
The guidance, which was released late last month, is open for consultation for eight weeks.
The annual report noted that based on the Asean CIS passporting scheme experience, having a standardised entry processes for funds between ARFP economies is needed in order to ensure that the streamlined regulations are effective.
Other fund schemes
Another fund passport programme, the Asean CIS scheme, which connects the fund markets of Singapore, Malaysia and Thailand, has not gained much traction since its launch in August 2014. So far, only six funds have been approved for retail sale by both home and host countries.
The Hong Kong-China Mutual Recognition of Funds has been the most successful fund passporting effort in Asia. About two dozen mainland funds are selling in Hong Kong but only eight Hong Kong- domiciled funds have been approved for sale in China. Total net sales from January 2016, just after launch, to the end of June 2017, are roughly $1.5bn.