Taiwan supports bond initiative

"Whether China revalues its currency or not won't have any impact on Taiwan's foreign exchange rate."

Lin Chuan, minister of finance

Minister of Finance Lin Chuan (林全) yesterday said that the government supports the consensus reached at the Tenth APEC Finance Ministers' Meeting concluded in Thailand last week, vowing to fully develop the region's emerging bond markets.

"Under the APEC framework, Taiwan would like to take part in the establishment of an Asian Bond Fund, which will be designed to boost bond sales in the region," Lin said yesterday at a press conference in Taipei, on his return from a four-day trip to Thailand.

As of the end of last year, the size of bond markets in emerging Asian countries amounted to US$1.2 trillion, which is half the size of all emerging bond markets in the world, according to Gary Tseng (曾國烈), director-general of the ministry's Bureau of Monetary Affairs, at the press conference, citing reports from the Asian Development Bank.

Based on five suggestions proposed by Thailand, APEC members will make efforts in incorporating each country's bond registration system, facilitating an interconnected platform for bond transactions in the region and standardizing the rating criteria with the long-term aim of founding a regional rating agency.

Moreover, each member country will address measures to relax foreign currency restrictions and provide tax incentives in order to boost its bond market.

Although he agreed with most of Thailand's suggestions, Lin said that "Taiwan may have difficulties in offering tax incentives to boost bond sales since it involves complicated revisions to tax laws and the nation's tax structure."

The controversial revaluation of Chinese yuan against the US dollar was a focal point of discussions at the APEC meeting. But yesterday Lin said that he made no comments on China's exchange rate policies at the meeting because Taiwan believes that a nation's foreign exchange rate should be decided by market forces.

"Whether China revalues its currency or not won't have any impact on Taiwan's foreign exchange rate," Lin said.

While it's believed that APEC offers opportunities for Taiwan to resume bilateral dialogues with China, Lin said that "no concrete conclusions can possibly be reached at such an occasion."

Lin, however, did approach his Chinese counterparts to learn from their opinions about cross-strait financial supervision. So far, eight Taiwanese banks have expressed plans open branches in China.

But Chinese finance officials skirted responsibility, saying Beijing's financial supervisory board is in charge of the matter, according to Lin.

When asked whether he has exchanged views with his Chinese counterparts regarding the inking of official cross-strait tax agreements, Lin said that China turned a cold shoulder by saying that the private sector across the Strait has already been organizing academic seminars to exchanges views on tax reforms.