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Cabinet defends foreign exchange reserve loans

Despite criticism over its proposed plan to earmark part of the nation's foreign exchange reserves for loans to businesses, the Cabinet yesterday said it will stick with its plan and come up with concrete measures in two weeks.

"We have commissioned various government departments to study measures for implementing the plan," Minister without Portfolio Hu Sheng-cheng (胡勝正) told the Taipei Times after co-hosting an ad hoc Cabinet meeting regarding the plan yesterday afternoon.

During a regular weekly meeting Wednesday, Premier Yu Shyi-kun assigned Hu and another minister without portfolio, Tsai Ching-yen (蔡清彥), to take charge of the plan.

STUDY PERIOD

At yesterday's ad hoc meeting, Hu appointed the Council for Economic Planning and Develop-ment to convene departments of the Ministry of Finance to study issues such as how high the interest rates for the loans should be, to what degree the interest subsidies should be backed by the government and for what amount of time the special loans should be offered.

As for the purpose of loan usage and which industries are qualified for applying the loans, Hu said these issues will be jointly discussed by various ministries, including the Ministry of Economic Affairs, the Ministry of Transportation and Communications and the Council of Agriculture.

INFRASTRUCTURE

Although the concrete measures are under study, Hu said the money will first be lent to investment projects that will spend foreign cash, especially those that need to import heavy equipment from abroad.

The central bank yesterday reported that the nation's foreign exchange reserves rose to NT$6.91 trillion (US$202.83 billion) at the end of last month, up NT$212 billion (US$6.22 billion) from October.

But critics have said the proposed plan, which may help consume some foreign reserves to ease the pressure of the New Taiwan dollar's appreciation, may not help improve domestic investment.

Hu shrugged off such criticism.

"I think the plan will still spur on some domestic investment if proper incentives were in place," Hu said. "Like consumers who always want to get better deals, I think businessmen like to find advantages, too."
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