Finance panel has hard time coming to any agreement

The finance panel of the Economic Development Advisory Conference (經發會) held its second meeting yesterday at the Ministry of Finance.

Members of the panel discussed dozens of proposals on public finance, financial market reform and reducing the budget deficit. No major decisions have been taken.

A number of the proposals, such as on stock market intervention, contradict one another.

For example, panel member Norman Yin (殷乃平), a banking professor at the National Cheng Chi University, proposed that the Chen Shui-bian (陳水扁) administration ban interventions in the stock market by the National Stabilization Fund (國安基金) and four other governmental funds, saying that the markets are best left free of the distortions that come from government meddling.

Wang You-tseng (王又曾), chairman of the Rebar Group (力霸集團), however, suggested just the opposite, saying market intervention was sometimes necessary to maintain reasonable stock prices.

Fortunately, such contradiction were rare at yesterday's meeting.

On the foreign exchange market, panel member Hsu Cheng-ming (許振明), finance professor at National Taiwan University, proposed that the central bank avoid intervening in the foreign exchange rate. He also suggested that the administration quickly deregulate hedging tools for the NT dollar.

Another proposal attracting attention is a joint proposal by 32 members, all of them industry representatives, to suspend the securities transaction tax for one year and launch the suspension as early as the end of September.

To buttress their proposal, they introduced studies on the stock market's performance for 1973, 1987, and 1989. The representatives claimed that during the three years, the administration either suspended or lowered the securities transaction tax and that in the following six to twelve months (or longer), the TAIEX and trading volume climbed.

Finance ministry officials strongly oppose the idea.