What I just said about China hasn't become a reality yet except it provides low-cost production for exports to the US and Europe. As a market, no foreign investors have made significant profits in China, not even Citibank. But comparing Taiwan and China, take our franchise for example, Taiwan is still many times bigger. Why would I forsake this market, Hong Kong, which is our No. 1 market in the region, for something that could be years down the road?
In the near term, Taiwan is clearly attractive given the vibrancy of the stock and bond markets. The advantages of Taiwan lie in its industrial base, entrepreneurial experience and technology.
Moreover, Taiwan has found its niches in global markets. Since many Taiwanese businesses have also branched out to China, what Taiwan can do is to attract profits made elsewhere to finance and reinforce its R&D capabilities.
TT: As the biggest foreign bank in Taiwan, how do
es Citibank assess the impact of the legislature's recent failure to expand the Financial Restructuring Fund (金融重建基金), which was designed to help bail out distressed banks, on the local banking sector's health?
Chan: Taiwan has done a lot to clean up non-performing loans in the past years, but the job is not complete. However, there's a clear intention on the part of the government and all parties involved to proceed the reform. The problem is recognized, the intention is there and the resources also are there. The only hurdle is the delay of the allocation of the fund, which, to me, is an easier problem to deal with. One way or the other, the political impasse will get resolved.
I'm not too worried because there is no evidence that Taiwan has mismanaged the process. But if the problem is not solved, it could cause all kind of misalignment such as deflation and a credit crunch.
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