Lawmakers debate funds for a planned agro-bank

The controversy over the draft of a proposed agricultural financial law (農業金融法) was rekindled yesterday at the legislature with opposition parties hoping to raise governmental funding for the establishment of a national-agricultural bank from 20 percent to 49 percent.

The Executive Yuan's draft, proposed by the Council of Agriculture (COA), stipulated that the national-agricultural bank have start-up capital of over NT$10 billion. In addition, the government is expected to purchase a 20 percent share in the bank.

While the council submitted the draft to the legislature for its first review yesterday, lawmakers from the KMT, PFP and TSU shelved the Cabinet's version and proposed their own versions, suggesting the size of the agricultural bank be expanded.

Hoping to boost the bank's competitiveness, PFP legislative whip Chung Shao-ho (鍾紹和) said the bank's capital should be raised to over NT$20 billion, while 49 percent of its shares should be owned by the government as one of the co-founders.

He added that the KMT and the PFP have decided to join forces and push through his draft's first-reading tomorrow. The TSU yesterday also endorsed the KMT-led draft.

In response, Minister of Finance Lin Chuan (林全) yesterday urged the legislature to reconsider original proposal.

Lin told the legislature that the government is bound by a ceiling limitation of a 20 percent share in state-owned banks and, therefore, he hoped the legislature would restrict discussions and revisions to the Cabinet's original draft. He did not elaborate.

Sharing a similar view, COA Chairman Lee Chin-lung (李金龍) also expressed difficulty in funding the bank.

As the administration's proposal is likely to be superceeded by a KMT-PFP-TSU majority vote, as DPP Legislator Shen Fu-hsiung (沈富雄) yesterday attacked the opposition's proposal, saying it would turn the agricultural bank into a "freak."

He said that opposition parties are taking advantage of both governmental funds and the fact that the DPP is in a minority in the legislature.

DPP Legislator Lin Cho-shui (林濁水) was even angrier, lashing out at both the government's and the opposition parties' plans to set up a mega-agricultural bank.

He argued that the establishment of a NT$20 billion agricultural bank would only encourage white-collar crime and deteriorate the financial sector's non-performing loan (NPL) problem.

The average NPL ratio at grassroots financial institutions is 21.5 percent.

Following a national agricultural sector reform meeting, summoned by President Chen Shui-bian (陳水扁) last November, the government reached a consensus to charge the COA with supervising farmers' and fishermen's credit cooperatives.

The move was designed to consolidate the nation's agricultural development and finance under the one regulatory umbrella so that the council will replace the Ministry of Finance and play a key role in grassroots financial reforms.

A consensus was also reached at the November meeting to form a national agricultural bank, which would absorb the nation's 278 agricultural lenders.