Mon, Jun 07, 2004 - Page 11 News List

Planner says firms need deregulation

Hu Sheng-cheng, the academic-turned-chairman of the Council for Economic Planning and Development who doubles as a minister without portfolio in the new Cabinet, talked to 'Taipei Times' staff reporter Joyce Huang last week about his plans for a new blueprint for the nation's economic development.

By Joyce Huang  /  STAFF REPORTER

Hu Sheng-cheng, a Cabinet minister without portfolio, says the government will ``aggressively help China-based Taiwanese businesses expand elsewhere.''

PHOTO: GEORGE TSORNG, TAIPEI TIMES

Taipei Times: The Democratic Progressive Party government has vowed to reinforce its financial reforms to boost foreign investments in Taiwan's stock market [from 20 percent] to 30 percent. How would the government achieve this goal?

Hu Sheng-cheng (胡勝正): Financial reforms have been a top priority of President Chen Shui-bian's (陳水扁) administration, which has accomplished its first-phase goal, to turn around the distressed financial sector and clean up the nation's bad loans. According to government statistics, the nation's bad-loan ratio has dropped from a peak of 8.04 percent in the first quarter of 2001 [excluding loans under observation] to the current 3.8 percent.

Thus 2004 will mark a new year for the government to set new goals, including the creation of a profit-making environment to benefit the financial sector.

Ultimately, we want to develop Taiwan into a regional capital-raising hub, since our expatriate Taiwanese businesses have branched out globally. We also aim to turn the nation into a regional asset-management hub, since many foreign investors are interested in making investments here.

To achieve both goals, a further relaxation of controls on capital flow will be inevitable. This has motivated us to seek advice from the private sector on ways to cut red tape and facilitate a better financial-service and investment environment.

TT: Apart from measures to develop capital markets here, do you have any plans to address the importance of financial discipline and to monitor financial institutions' health?

Hu: To enhance the nation's capital markets, the government aims to facilitate a well-functioning financial supervisory system while adopting deregulatory policies to allow the private sector to prosper.

On July 1, the Cabinet-level Financial Supervisory Board (金監會) will be empowered to oversee the banking sector's performance.

The principle of corporate governance will also be emphasized to strengthen the sector's competitiveness while market mechanisms such as allowing hostile takeovers, as opposed to mergers and acquisitions, encourage its further consolidation.

TT: The private sector has long urged the government to relax cross-strait financial restrictions so that companies can branch into Chinese markets and gain market share in the greater China region. Will the government address this issue soon?

Hu: The Ministry of Finance has been considering a series of deregulatory measures to foster cross-strait financial development, which includes allowing China-based Taiwanese businesses to list on local stock markets. A freer flow of capital across the Taiwan Strait will also be taken into consideration, although some government agencies express concerns over the impact of this on national security.

I personally think businesses have a better understanding of where their money should go and should stay. What the government should do here is to respect the market mechanism and provide better information to enable businesses to make decisions, while adopting deregulatory policies to remove unnecessary restrictions.

TT: The economic recovery has turned solid, which should help the nation's economic growth rate [GDP] exceed 5 percent this year. But the economy still faces challenges and short-term disturbances, including skyrocketing oil prices, possible interest rate increases in both the US and China, and rising inflationary pressures in China after its measures to cool off excessive investment. How do you think those short-term factors will impact the local economy?

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