Lin: The banking sector has been very aggressive in writing off over NT$200 billion in bad loans for the past year. Honestly, we're no longer worried about their ability to write off bad loans themselves in lieu of government help. I believe the nation's bad-loan ratio including loans under observation may soon be lowered to below 5 percent.
This perfectly explains that we don't have to count on the governmental fund to make headway on financial reforms although it remains the driving force behind the push for a better financial environment. It's more important for the private sector to take the initiative in consolidating and improving their business performance.
TT: Many financial institutions have been vying for the Chinese markets, where they complain that the government has stood in the way of their move into them. Have you felt that pressure is mounting on the government to ease cross-strait financial restrictions?
Lin: We are not forbidding our banks from branching into China, where business opportunities are plenty. However, it's very clear that Chinese authorities intend to leverage their markets for political gains by downgrading Taiwan as a local government under China, which we will never accept while inking any cross-strait agreements. We hope to create a win-win situation by dismissing the non-economic factors, especially political interference.
Taiwan's entrepreneurial know-how can be great benefit to China, whose markets are maturing to attract many Taiwanese investments. The inter-dependency can be looked at from what perspectives you're standing at. From the perspective of globalization, the trade relationship between Taiwan and China can be competitive, complimentary and reciprocal to each other by forging a closer tie while putting aside political differences. Domestically, many expressed concerns that the relaxation of cross-strait trade restrictions will fuel China-bound capital flights. The capital flights may not be a bad thing if the local economy is instead rewarded.
Therefore, we need to devise an internal mechanism to avoid the capital flights to China being good for nothing. The mechanism should be able to create value-added investments to benefit the local economy while allowing the business sector to make good use of Chinese primary markets. Take the policy of allowing China-based Taiwanese businesses to list on the TAIEX for example, if the open-up policy can further attract businesses to take root locally by, for example, re-locating their headquarters back to Taiwan.
Taiwanese businesses should also learn to look at Chinese markets as part of the bigger global market and become as internationalized as possible. They need to try to understand that Taiwanese government will never cave in unreasonable pressures from China in order to develop economic ties with it.
TT: Now that you have touched on the policy of allowing China-based Taiwanese businesses to list on the TAIEX, when does the ministry plan to kick-start it?
Lin: We have no timetable now that it hasn't matured yet. To avoid business and political risks, we'll gradually remove restrictions. We may first open up a small door to test waters and see how it goes from there. But we're open to all suggestions.
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