FastTrack to accessing the APAC funds market

What are we seeing in the APAC market?

Inflation rates globally increased from 4.71% in 2021 to 7.4% in 2022³. APAC has so far avoided the worst of the inflationary impacts seen elsewhere in the world, increasing from 3% to 5.6% year-on-year⁴, given the more measured monetary and fiscal policies from authorities in response to the pandemic. On top of which, countries such as Singapore offer an attractive corporate tax rate, tax exemptions for newly incorporated businesses, no tax on dividends and an extensive network of tax treaties, making it a business-friendly jurisdiction.

Despite lower inflation, statistics show the ranks of the middle class in Asia-Pacific are swelling fast, as are the institutions managing their savings and surplus capital⁵. According to China’s National Bureau of Statistics, around 400 million Chinese are categorized as middle income – which is generally defined as a family of three earning between RMB 100,000 and RMB 500,000 annually. China accounts for half of the planet’s middle class; their growing purchasing power is a source of opportunity for foreign businesses across a wide range of sectors. At least 58% of Chinese households are likely to be mass affluent (or above) by 2030⁶.

One of Asia’s strengths, namely digital and mobile technologies, has accounted for a large regional share of global growth in key technology metrics over the past decade. Australia has a thriving tech sector and its fintech industry ranks sixth in the world and second in the Asia-Pacific region. As a result, it has grown as a hub for tech investment in critical areas including finance, regulation, medicine and education.

³Statista: Global inflation rates
⁴Statista: Annual inflation rate for consumer prices worldwide
⁵Preqin Markets in Focus: Alternative Assets in Asia-Pacific 2021
⁶ McKinsey

Funds structures in APAC

Apart from offshore funds structures, it is not uncommon for Fund managers expanding into APAC to setup fund using local fund structures. There are multiple structures to choose from in various locations each with its own benefits. To name but a few, here are some of the funds structures in APAC:

Why choose a third-party fund services provider?

Expanding into new APAC jurisdictions can be extremely complex and, depending on resources available to support the process, the variety of countries and their diverse legal frameworks can be daunting.

Funds considering entry into APAC come across similar challenges:

• No existing presence in the new jurisdiction or the region
• Limited awareness of local rules, regulations or requirements
• Little or no back-office support functions or infrastructure
• Recruiting or transferring employees to new entities in new jurisdictions
• Managing the complexity and requirements of the various partners, authorities and regulators involved in establishing a new presence

Added to this, where companies do have an existing presence, they often struggle with streamlining the management of operating entities outside their home region and the significant time involved in keeping those entities compliant. With these challenges in mind, how are fund managers looking to expand in APAC?

Using a third-party fund services provider not only provides economic substance for non-APAC fund managers but provides a trusted partner who understands the region and can handle the complexity of regulatory compliance, risk management and other services.