Fri, Dec 27, 2002 - Page 11 News List

Investment ceiling may increase

INSURANCE INDUSTRY The finance committee and the finance ministry agreed to propose revisions to regulations that will allow more overseas investment

By Joyce Huang  /  STAFF REPORTER

The Legislative Yuan's finance committee reached a consensus with the Ministry of Finance yesterday, allowing local insurers to inject up to 35 percent of their assets into outbound investments, including those bound for China.

The finance ministry will now submit the proposed revisions of article 146 of the Insurance Law (保險法) to lawmakers for further review and passage.

In his proposal, DPP Legislator Yu Jane-daw (余政道) yesterday urged the ministry to raise the outbound investment ceiling to 40 percent of insurers' assets -- up from the current 20 percent -- a proposal local insurers have long hoped for. The move will make it easier for them to expand overseas, especially in China.

"Facing a saturated market and low investment returns in Taiwan, insurers can expand their economy of scale by making greater overseas investments," Yu told the committee meeting.

The finance ministry, however, disagreed with Yu. Vice Finance Minister Susan Chang (張秀蓮) said precautions should be taken before allowing more Taiwanese capital to flow into China.

She said that a drastic relaxation of restrictions on outbound investments by insurers is likely to generate rapid capital outflow, hurting the economy.

If the overseas-capital-investment ceiling is raised to 40 percent of assets, it is estimated that insurers will quickly move as much as NT$1.35 trillion out of Taiwan.

The finance ministry wants to raise the ceiling to only 30 percent, Chang said.

Chang's proposal was endorsed by several lawmakers, including the DPP's Alice Wang (王雪峰) and the PFP's Chen Chih-pin (陳志彬), who said they were concerned that too much capital would immediately flow into China, harming Taiwan's economic development.

Stepping in to mediate, DPP Legislator Chu Hsing-yu (朱星羽), who also chaired yesterday's finance-committee meeting, suggested compromising at 35 percent.

The nation's insurance companies have total assets of NT$3.88 trillion, 15.2 percent of which, or NT$510 billion, is placed in overseas investments, the ministry said. If the investment ceiling is raised to 35 percent, an estimated NT$500 billion would then be allowed to move out of Taiwan.

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