A proposal to scrap 53-year-old regulations on foreign currency exchanges stalled in the legislature's finance committee yesterday, upsetting its PFP sponsors.
PFP lawmaker Norman Yin (
"[He's] doing everything he can to hold off the nation's financial liberalization in accordance with WTO rules," Yin said.
The PFP lawmaker said current rules that regulate foreign exchange -- which were promulgated in 1949 and amended in 1987 -- are greatly outdated.
In addition, Yin said any measures to control capital flow in and out of the country would violate WTO regulations and discourage foreign investors from coming to Taiwan.
The PFP has proposed eliminating caps on the amount of money individuals and businesses can take out of the country. The proposal also contains provisions that would empower the central bank to enact emergency measures -- upon the president's approval -- in case of a financial crisis.
Officials from the central bank and the Ministry of Finance yesterday said they were strongly opposed to the PFP's proposal, saying the government has already begun to gradually deregulate foreign-exchange controls.
"Current regulations only aim to restrict short-term and speculative foreign currency transactions," Perng told lawmakers on the finance committee. "We have long allowed free capital flow for either inbound or outbound investments."
Perng said that only irregular capital flows would be restrained.
Currently, individuals are allowed to remit no more than US$5 million out of the country annually. For businesses the cap is US$50 million. Any amount exceeding the cap must be approved by the central bank.
Perng said the regulations should be kept intact as long as they are effective in maintaining financial stability and help prevent any possible financial crises from arising.
Also, scrapping the regulations will take time, longer than was originally expected, Perng said. Before the rules can be changed, revisions to related law such as the Central Bank Law (
"The timing [for axing the regulations] is not yet right," Perng said.
The committee yesterday asked the central bank and finance ministry to propose changes to the three laws within two months.
Chen Po-chih (
Chen said the nation's foreign-exchange controls are already lax. He said rules allow some businessmen to take advantage of legal loopholes and move capital to China through others' accounts while leaving unpaid debt behind.
Given cross-strait tensions, Chen said he opposes eliminating controls because Taiwan faces a higher threat to its national security that other countries don't have to contend with. In addition, while other nations can rely on the IMF in case of trouble, he said, that resource isn't available to Taiwan.
Still, Chen agreed that a review to modify several outdated regulations should be conducted to make the daily operations of the foreign exchange market more convenient.