Mon, Jul 21, 2003 - Page 11 News List

Citibank chief confident about Taiwan's potential

The legislature's failure to pass a bill expanding the size of the Financial Restructuring Fund during its recent extraordinary session has worried many people, but not the head of Citibank Taiwan Chan Tze-ching. Chan talked to `Taipei Times' staff reporter Joyce Huang about the nation's prospects in financial markets

By Joyce Huang  /  STAFF REPORTER

Chan Tze-ching, head of Citibank Taiwan, said he's confident the government and legislature will be able to clean up the nation's non-performing loan problem.

PHOTO: GEORGE TSORNG. TAIPEI TIMES

Taipei Times: Hong Kong residents demonstrated "people power" in opposition to the passage of the so-called anti-subversion law, Article 23. How do you think that political rally will impact Hong Kong's economic future?

Chan Tze-ching (陳子政): Prior to the half-million demonstration, people outside Hong Kong thought that all the territory cared about was money and creating wealth. But this incident clearly proved them wrong and [showed that] Hong Kong people do have a political sense.

The target was to demonstrate against Article 23, which was seen as a potential threat to freedom of speech and expression as well as freedom of criticizing [political] leaders. Politics and economics are always intertwined. If you look at the global investment patterns nowadays, the markets that tend to attract the most inflows of foreign investments are those that are seen as politically stable, ruled by transparent laws and open to both local and foreign participants. If this event turns out to become a pat-tern, I would say it is pretty worrisome in Hong Kong.

It's a shame that Hong Kong people had to go through these in order to get what they ask for. But having more of these large-scale protests will not help Hong Kong's image as a financial center.

TT: Will Hong Kong's economy benefit from its inking late last month of the Closer Economic Partnership Agreement (CEPA) with China?

Chan: The CEPA will definitely help Hong Kong, though maybe not substantially in the near term. Under the CEPA deal, over 270 commodities can be exported to China from Hong Kong without customs duties, but the question is how Hong Kong can coordinate the other resources such as labor, land, water and electricity in order to make itself a viable manufacturing hub for those products qualified under the CEPA. The agreement is a way to reverse or slow down the capital outflow from Hong Kong to China. By doing that, Hong Kong can create more jobs, which currently is a big issue since the unemployment rate has reached a record high of 8.3 percent and may go higher in the remaining months of the year.

If this is done right, the benefits will be evident in one to three years. There won't be immediate benefits because Hong Kong is simply not geared up at this particular moment to take full advantage of the agreement.

TT: Do you see the trend of growing cross-strait trade helping to revive Taiwan's economy or simply crash it?

Chan: Cross-strait investments and trade flows are not a temporary fact. They are an irreversible trend that will continue to grow stronger. The question is how we can facilitate the process and also make sure both Taiwan's and China's economies benefit in the process. It's not easy to do because, in a way, China's gains have been Taiwan's losses and also Hong Kong's.

Take Hong Kong for example. Over the last 20-odd years, the manufacturing base has moved from Hong Kong to southern China, resulting in a big job loss at home. Fortunately, at the same time, the service industries provided a lot of new employment. Through the mid-1990s, this phenomenon was beneficial to both Hong Kong and China because China created a lot of wealth while Hong Kong moved up the economic ladder and became a more service-oriented economy with high-end jobs in the financial, property and logistics sector.

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