Taiwan Aims to Revitalize Asian Asset Management Efforts; P.K. Peng: Cross-border Finance is the Next Key

"If you can get service by going to Kaohsiung, why fly to Singapore?" Financial Supervisory Commission (FSC) Chairman P.K. Peng's words encapsulate his vision for the core of promoting an Asian Asset Management Center. Now, as the Kaohsiung zone for the AAMC approaches its first anniversary, and its pilot businesses gradually mature, the FSC plans to expand the successful experience nationwide. Regarding the zone's next phase of positioning and work, Peng revealed that cross-border finance will be a crucial direction for future promotion, continuously building the conditions and competitiveness required for an AAMC.

Last July, chairmen and general managers of financial institutions across Taiwan gathered in Kaohsiung's Asia Bay to celebrate the launch of the AAMC Kaohsiung zone with the FSC and the Kaohsiung City Government, signaling Taiwan's renewed pursuit of the AAMC goal and taking the first step in financial reform by opening up high-net-worth asset management business.

In an interview with CNA's team, P.K. Peng admitted that there were indeed many doubts at the beginning of the promotion. After all, Taiwan had proposed the AAMC vision multiple times over the past decades without realizing it. However, he believes, "Singapore took at least half a century to achieve such success (as Asia's largest financial center)." Taiwan cannot expect to achieve it in just a few years; rushing will make it difficult to go the distance.

At that time, the FSC considered finding a place to experiment. Through regional pilots, not only could financial institutions concentrate resources, but for the supervisory authority, the opening risks were also relatively controllable. By chance, the Kaohsiung City Government also expressed its willingness and support, and the two parties naturally joined hands.

Peng said that the Kaohsiung zone is experimental. After its term ends at the end of June this year, its business and work must be adjusted. Currently, the FSC is inventorying various pilot businesses, understanding their results and benefits, and categorizing them into three groups.

First, "If the pilot results are good and operations are mature, they will be expanded nationwide, allowing branches outside the zone to undertake them." If certain pilot businesses still need adjustment, they will remain in the zone until they mature. Meanwhile, the FSC will continue to relax regulatory restrictions and allow new businesses to be experimented with within the zone.

For example, the current sale of offshore funds "not of the nature of securities investment trust funds" has a limit of 99 entrusted persons. This means that the number of recipients for the sale of the same non-securities offshore fund cannot exceed 99. In the future, the number of recipients will be relaxed and tested within the zone.

In other words, the zone mechanism will form a model of "mature businesses expanded nationwide, experimental businesses retained," while the supervisory authority will also add new zone businesses. Through dynamic adjustments, not only can the high-net-worth client market continue to be invigorated, but Taiwan can also gradually become an AAMC.

However, in reality, the assets of Taiwan's wealthy are not limited to domestic holdings; they are often diversified overseas. Overseas asset management services rely on foreign institutions. P.K. Peng admitted that since the zone's pilot began, only one overseas account has been opened for offshore clients, reflecting that the real demand is not from offshore clients but from high-net-worth clients within Taiwan who need access to overseas asset allocation and cross-border financial services.

Therefore, to extend the service capabilities of Taiwanese financial institutions outward, P.K. Peng announced that cross-border finance will be a key focus for the Kaohsiung zone's next phase of work. The current direction of deliberation within the FSC is to allow banks located in the Kaohsiung zone to assist "domestic clients" in applying for overseas accounts.

The FSC further explained that cross-border finance means that domestic banks can assist clients in opening accounts at overseas branches in the future, eliminating the need for individuals to travel abroad for KYC (Know Your Customer) procedures. In the future, any bank located in the Kaohsiung zone can assist clients with form filling and account opening processes. For clients with high-net-worth overseas assets, this will significantly save time and costs, and further enhance the internationalization of Taiwan's financial services.

It is evident that the FSC's deliberation on cross-border finance opening and relaxation is not just aimed at a single business breakthrough but hopes to enable Taiwan's financial system to connect with the global market more rapidly, further strengthen international asset management capabilities, and retain high-end clients and assets, preventing them from flowing overseas.

Due to regulatory frameworks and risk control considerations in the past, it was quite difficult for the public to open cross-border accounts. P.K. Peng emphasized that the time and background have changed, and the FSC will clarify relevant risk controls before promoting the business, stating, "There won't be major issues."

Furthermore, regarding the special legislation research, P.K. Peng revealed that the scope of business will cover trust systems, offshore insurance, and reinsurance development, and will also include talent cultivation and introduction, such as work permits for foreign professionals coming to Taiwan. He emphasized that these plans are not solely focused on the high-net-worth asset management market but aim to comprehensively enhance Taiwan's international financial competitiveness.

Reviewing the effectiveness of the Kaohsiung zone, it has attracted 21 domestic banks, 6 life insurance companies, 16 investment trust and consulting firms, and 13 securities firms. As of the end of March this year, the zone had 3,736 high-net-worth clients, with an AUM of approximately NT$455.9 billion. This not only shows the gradual formation of new financial business opportunities in Kaohsiung but also symbolizes the first phase of success in Taiwan's promotion of the Asian Asset Management Center.

Despite achieving first-phase results, P.K. Peng still emphasized that promoting the AAMC cannot be rushed, and many business initiatives must proceed step by step. He remarked, "We have not allocated any budget for these plans; they are all funded by existing public budget resources," proving that the government's involvement incurs no losses.

As time progresses, financial institutions are gradually believing that the government is serious, and market trust is being built step by step. Taiwan has missed opportunities in the past but is now rising with renewed vigor. "It's okay to be slow, as long as the direction is right," P.K. Peng said.