APEC Finance Ministers Meeting: Financial cooperation, towards Long-term development

As chair of the APEC Finance Ministers' Meeting 2017, what has the Ministry of Finance prepared for this event so far?

In 2017, Vietnam was honored to assume the role of host of the Asia-Pacific Economic Cooperation (APEC) forum. The Ministry of Finance is assigned to chair the APEC Finance Ministers' Meeting 2017 process. So far, the Ministry of Finance has accomplished important tasks such as the successful presidency of the Deputy Finance Minister and the Deputy Governor of the Central Bank (FCBDM) in Nha Trang; successfully chaired the Senior Finance Officials Meeting (SFOM) in May in Ninh Binh; In collaboration with international partners, many international workshops on priority topics were highly appreciated by APEC partners and members. Discussion results and reports on the four APEC 2017 Priority themes will be reported to the APEC Finance Ministers at the October 21, 2017, Conference.

In preparation for the APEC Finance Ministers' Progress 2017, the Minister of Finance has decided to establish a Subcommittee on Protocol - Logistics. This subcommittee has been active throughout the APEC Year 2017. In particular, in preparation for the APEC Finance Ministers' Meeting, the Protocol and Logistics Sub-Committee has calculated and elaborated plans, organize the implementation and follow up the implementation of members of the Subcommittee and at the same time work closely with the People's Committee of Quang Nam to ensure the best conditions available for the APEC Finance Ministers' Meeting 2017.

Could you share some of the content that Ministers will discuss at this conference?

At the conference, Finance Ministers will discuss global and regional macroeconomic and financial developments; Review the progress of the financial cooperation on four priority themes in the year, update the implementation of the Cebu Action Plan and discuss other issues of concern. In addition, Ministers will hold a dialogue session with the APEC Business Advisory Council (ABAC) and senior executives of a number of large enterprises in the region. On the sidelines of the conference, Ministers will have a closed-door meeting to discuss issues of concern separately.

Based on the national theme of APEC 2017 "Creating new momentum, fostering a shared future", at the FCBDM Conference in February 2017, the Vice Ministers and the Deputy Governor agreed on 4 priority themes in 2017, including: Long-term investment for infrastructure; erode the tax base and shift profits; financial and insurance cover for disaster and financial coverage.

APEC Finance and Central Bank Deputies’ Meeting 2017 held in Nha Trang on 23/02/2017. Photo by H.V.

Could you elaborate on these four priority cooperation topics?

On long-term investment in infrastructure, the theme focuses on addressing the issues of mobilizing long-term private sector funding for infrastructure projects, particularly the benefit-sharing mechanism. Benefit and reduce risks for private investors when participating in PPPs. The experience of international organizations and economies in dealing with issues related to PPP projects, especially the issue of risk sharing between the public and private sector, is one of the Topics were discussed at FCBDM, SFOM and the Workshop on Long-term Investment in Infrastructure (May 2017). APEC financial officials also discussed with international partners about effective project management tools and the coordination of skills training using these tools for project managers at the APEC member economies.

On the erosion of the tax base and the transfer of profits (BEPS), this issue is of particular concern to many APEC member economies and is strongly supported by international organizations, especially the OECD and WB. Through discussion at the BEPS Action Plan Workshop - experience in APEC economies (February 2017), FCBDM and SFOM, financial officials agreed to increase knowledge sharing, experience, and training activities in the region to raise awareness about BEPS and actively participate in the G20/OECD BEPS project.

In terms of finance and disaster risk insurance, the focus is on financial solutions and insurance against natural disasters and disaster damage. During discussions at the Conference on Financial Policy and Disaster Risk Insurance (February 2017), FCBDM and SFOM, APEC financial officials exchanged experiences on developing a strategy for finance to response with disaster risk at national and local level, and financial risk management policies for public assets in APEC member economies, as well as activities of the APEC Work Team on disaster risk management Finance.

In terms of financial coverage, priority topics will focus on developing credit markets and financial products and services to meet the needs of agricultural and rural development, aiming at sustainable poverty reduction, restructure and develop a quality agriculture. Financial officials also collaborated with international partners to share research reports to promote the financial envelope in the APEC region and to launch collaborative activities to enhance credit information sharing. Comprehensive financial topics were discussed at FCBDM, SFOM, Cross-border Credit Information Exchange Facility (May 2017), and the APEC Forum on Financial Matters and the Financial Infrastructure Development Network Forum (July 2017).

As you have said, the erosion of the tax base and the transfer of profits (BEPS) is a matter of particular concern and strongly supported by international organizations. How will this impact on Vietnam, sir?

BEPS is an act of tax evasion by taxpayers, many businesses have taken advantage of the gaps and limitations of tax policy in countries where enterprises conduct business operations to transfer profits to countries/territories with a lower or zero tax rate.

At the Antalya summit in Turkey in November 2015, the G20 leaders adopted the BEPS Action Package with 15 specific actions aimed at limiting BEPS tax evasion/evasion. Accordingly, the OECD has set up a Joint Cooperation Forum, which is jointly implemented by member countries and is not a member of the OECD/G20. BEPS requires a comprehensive solution based on multilateral cooperation.

Under the framework of APEC financial cooperation, the BEPS initiative was first put on the agenda in Peru 2016. APEC 2016 focused on encouraging member economies to adopt tax transparency standards and signatory to the Convention on Administrative Assistance in Tax Matters (MAAC) and the Agreement between the competent authorities on the exchange of reports between States.

Practically, BEPS has become a global issue, so there must be a comprehensive solution based on multilateral cooperation while the ability to block BEPS by unilateral and bilateral trade is not feasible now, as the number of multinational companies is increasing, large-scale and complex transactions.

Vietnam has signed 76 bilateral tax avoidance agreements and is the 100th member of the BEPS Collaboration Forum. In the process of integration, tax revenues may be scattered and eroded. Vietnam proactively proposes to share and learn experiences from previous countries in order to have appropriate tax reform roadmap to avoid double taxation, ensure the implementation of taxation rights of APEC economies. This will be a valuable lesson for Vietnam to develop policy in the long term.

Thank you, Sir!