Pan-blues cut development fund

Opposition parties in the legislature yesterday cut the annual budget of the Cabinet's National Development Fund (開發基金) for next fiscal year by NT$3 billion, which is originally allocated to fund the nation's venture capital companies to invest in high-tech start-ups.

"Most of [the fund's] investments in high-tech start-ups are not worthwhile," People First Party legislator Norman Yin (殷乃平) told reporters yesterday, rationalizing his proposal to scrap the budget allocated for venture capital investments.

The budget cut is expected to negatively impact the Ministry of Finance's plan to relax restrictions on the nation's venture capitalists, who will be allowed to expand their business scope in the near future.

"We'll first discuss the budget cut's impact with the fund's committee before coming up with a proposal [to restore the budget]," Finance Minister Lin Chuan (林全) told reporters after a meeting of the legislature's finance committee yesterday at which committee chairman Chen Chih-bin (陳志彬) refused to reject Yin's proposal.

According to Vice Minister of Finance Yang Tze-kaing (楊子江), the ministry plans to deregulate venture capital companies' sources of capital and what they can invest in by the year's end so as to allow the operation of merchant banking businesses that include managing corporate revitalization and restructuring.

Currently, most of the nation's venture capitalists are bound by the Development Fund's (開發基金) regulations and refrain from making investments in industries other than manufacturing-based high-tech startups.

However, the to-be-announced relaxation of the regulations will allow venture capitalists to invest in the service sector, Yang told a press conference late last month.

In addition, the ministry plans to sell its shares in blue-chip Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), Powerchip Semiconductor Corp (力晶半導體), Vanguard International Semiconductor Corp (世界先進) and China Bills Finance Corp (中華票券) next year.

Next year's share sale is expected to bring in revenues of NT$45 billion in total to the government coffers, Lin said in his report.

According to the ministry's estimates, the selling price of TSMC shares will be NT$71.

Meanwhile, the ministry yesterday finalized a new tax-cut proposal that lowers the transaction tax on futures contracts by up to 60 percent.

According to Lin, transaction tax rates on stock-index futures contracts (股價期貨契約) will be lowered from between 0.025 percent and 0.15 percent currently to between 0.01 percent and 0.06 percent.

Interest-rate futures contracts, to be launched next month, will be levied with a transaction tax of between NT$6 to NT$13 per contract.

"The tax-cut proposal aims to boost the development of futures markets, which may end up increasing tax revenue for the government if more contracts are made," Lin told a press conference late yesterday evening.

The new tax-cut proposal will immediately take effect after receiving approval from the Executive Yuan and the legislature.